video on demand exceeds mine rolled costs. are a sense for you now in the palm of your. machine on the call. five thirty pm in moscow these here are the headlines of pressure outburst of heavy handed u.s. policing against demonstrators as officers pepper spray students at a california university young people peacefully protesting against social inequality in tuition hikes who assaulted by riot police after refusing to remove their tents. in syria the deadline set by the arab league for the country's authorities to end the violence expires this saturday but fresh clashes have claimed a dozen more lives this as russia says the bloodshed will only end if both sides lay down their arms spain in the spotlight has had next possible break in the

spiralling new crisis as its borrowing costs and unemployment rates soar people are skeptical whether the outcome of the upcoming parliamentary election will bring salvation. more news coming your way in about half an hour kaiser report next stay with us. max kaiser this is the kaiser report hey you there in london i'll be asking set of borough at eight pm for my max range live show yeah i'm still on tour taking it to the packers station what's happening with the bankers and other frauds the max is here presidential tour because i see from this little video here somebody in pennsylvania is driving around with a nice what is that in eldorado. and it says kaiser selenski two thousand and

twelve yeah well something was going to fund our campaign until he lost it all i'm f. clogged all what's up with that general yeah no i think that's a fleetwood cadillacs likud. well speaking of it and i have quite a few stories on that first going to turn to a video here and this is bill fleckenstein and he's being interviewed on c n b c and he's asked by the presenter whether or not he thinks they'll see his money back but i do think there's some possibility that the money will show up because it occurs to me that if in fact funds were misappropriated. it would have had to be several people involved with that and i'm surprised if that were the case someone has been tried to decline yet and that has no occurred it might be the sheer volume of people heading for the exits combined with. this. resulted in

six hundred million that like a lot of bill fleckenstein steam is a or he's desperately trying to talk his way into getting his money back or both this is kind of interesting about professionals who written books you know bill's written a book about corruption in the banking sector and when it happens to them whether it's bill fleckenstein or a gentle soul. of course there's a little more savvy in terms of the fact that he got on mercifully appends stated by the banks bill fleckenstein same to still in denial he's like a wife beating victim oh oh i got my money stolen please do it again well you must have heard this many times when you. lost money for clients as a banker they blame themselves that's was fantastic about having customers when i was working on wall street you lose a money and they blame themselves pass to you just keep still no money and their keep crying about. me help me relieve me of my money of guilt so here's bill

fleckenstein praying hoping and believing that all the good faith in the world that the money will be found well let's turn to another clip or one of the executives at the c f t c which is regulating this market well he's asked the same thing where is the money good question i've been doing the jury require show us the money for a couple of weeks here we've had people there and it's not where it should be but it looks suspicious as heck to me it's either nefarious or illegal. but that's why we have an investigation the money should be there in drew it's not that money should be sacrosanct it's really troubling oh no bart chilton has been coming up reminder remember a lot of months back he was involved in a cancer exchange h s x box office features scandal we got inside information about how he was working with n.p.a. and all the skullduggery get done behind the scenes on that one now he's claiming

anger and like all we don't know where the money went of course they went into the account as so one day has says eloquently they stole it for a good movie they're just steal money now and that pretty soon they'll still money accompanied by a knock on the head and thrown into prison that's what happens when you look close the cracks around the system whether it's in greece ireland america the u k. this is their methodology well he refers to rule one point two five and this is regulation right if. what rule yeah there are a lot of rules that they are there to see have to see oh yeah so from two thousand and five bankers the brokers trading on this exchange share were able to use internal repos to basically buy any debt in the world here he explains that a little bit and one of the things that we did was we allowed these internal reposed back in two thousand and five just to explain to people this is something where you can internally some of the accounts for the part of the day that we're

not supposed to co-mingle exactly what you do is you take the segregated customer money which is supposed to be sacrosanct job number one for us they take that money and they use it for something that is supposed to be a safe investment like maybe a aaa sovereign debt or u.s. treasury but it's a temporary thing you agree to buy it back that's the internal report let me explain something about the so-called rules and rule one point two point five all of the banks on wall street doing what they're doing today the money center banks the too big to fail banks if they were being governed by the laws that were in place fifteen years ago they would all be in jail today. however because of all the money they've made stealing buying congressmen buying senators buying the supreme court buying the distal system buying the political process those laws don't exist anymore or they change the law here's rule one point two point five what year two thousand and four regulation one point two five which was. relaxed in two thousand

and nine further relaxed in two thousand and four two thousand and five yeah well this is a what is the example of there's a rule in place a law to keep people from stealing like you see a geek in front of winston's jewelry down here on the plaza it's in a paris that gate that former guard the the goal of proof glass is there for a reason because otherwise people would just take all the jewels so there's rules so here you have in two thousand and two thousand and four or two thousand and five every single year the banks or the criminals or people who ninety seven hundred ninety three in paris got their heads cut off because of their existence i call it the good maybe they should go to those people decided to rewrite the laws because they want to steal the money with impunity and the regulator said if there's a bride well max you mention winston jewelers that i do believe it was actually robbed a few years ago by a man dressed as a woman don't look him in

a bowler can't live now but i would never get caught in public with high heels of that color i wish to know ma'am so let's turn to this woman in this next story laurie ferber she's keefe counsel m.f. global and prior to that she was chief counsel at goldman sachs for twenty years ok she'll be very rich will be with us she's at the heart of this the relaxation of regulation one point two five ok so tiny rules change at the heart of m.f. global failure from december two thousand to c f t c that's when they first agreed to. amend regulation one point two five to permit basically riskier investments i could make more money for wall street i mean they didn't have to share any of those profits with their clients but they were taking their clients the customer funds the segregated funds and setting it overnight but they had to replace it in the morning so then in february two thousand and four in two thousand and five

regulation one point two five was further amended refined to the liking of ferber and the banks in the end the door was open for firms such as m.f. global to do internal repos of customers deposits and invest the funds in the general obligation of sovereign nations ok well here's the here's the thinking that went on here you see because sovereign debt to play rated or double a right of sovereign debt is considered to be credit worthy but of course the c f t c c c. c f o o p p p all these regulatory agencies that add up to big bold up a spread soup of nothing they didn't bother to take a look at the fact that concurrently was the sovereign that being is the collateral to perpetrate fraud there is collateralized i'm sorry i credit default swaps and other derivatives that are created to do an end run around the. margin requirement the minimum capital requirement the sovereign debt requirement as stipulated by

basil was a long battle to battle three so they went around that because they've got ten twenty thirty times more credit default swaps and there is sovereign debt how come greece's debt keeps getting downgraded how tomorrowland keeps wanting itself in the pooper how come the entire euro zone is collapsing because every time they announce a bailout of a one trillion or five trillion wall street the crooked banks just issue fifty trillion more part of the fault swap doesn't matter if you put up one hundred cents on the dollar in a triple a rated sovereign credit if i've got three trillion c.d.'s to sell naked in the market and drive your sovereign debt down i'm going to win and i'm doing the penn state on the fact is here that they were leverage fifty to one so all they needed was a decline of two percent overnight and this was on european debt which was moving at three four five six seven eight nine ten percent overnight so of course there was a run on their banks right with it but rode it that luba debt is not a market it's behavior it's manufactured through market manipulation let's be clear

about that that's not a normal market is the normal price discovery happening in this market the prices are determined ahead of time goldman sachs manipulates the markets or j.p. morgan it relates to markets and to the price they pre-determined that's where we're at now free market capitalism is dead well i'm surprised you didn't pick up on how i set you up there for it this laurie farber and relation to the jeweler theft at winston's because i think the sooner that she could be goldman sachs's own lloyd blankfein just as the general counsel going into these meetings and to see if you see. the you suggesting that lloyd blankfein is a cross dresser who dress up like this regulator for the see if you're seeing those in the meetings a lobbyist for behalf of his firm playing the woman card he's trying to seduce how many how much does oh my god now do i just very strange thought of her early on in here it's not a no but i mean what how far did he go. oh. lord and lloyd go to get these rules

change the law if you're a bad boy finally i am a cuckoo pig fast twenty eleven bank of america merrill lynch is offering to buy claims against m.f. global so bank of america is merrill lynch unit is soliciting for the purchase of claims against m.f. global as you may recall max bank of america is one of the major creditors of m.f. global with j.p. morgan and is reported to be one of the debtors along with j.p. morgan involved of the litigation trying to obtain superiority of their claims over customers whose money was taken last stolen by parties unknown for now that work plus their balance sheet is owned by the federal reserve right so they say oh bank of america wells what others. call bank of america merrill lynch yes they're. just joined into that. was a federal reserve bank was just going to expand their balance sheet by however many trillions of top requires to make all these these unholy security but it's also max

the case is here that because of their power in this mafia this syndicate this racket they're able to put these segregated account holders in a distressed position by being more powerful to be able to step in front of them in this chain of creditors standing in line at the trustees you know well that's true there is another leg of the massive manipulation scam of putting these people into a stress position similar to what they do in guantanamo bay and finally on this story just these cafe american says i have nothing against vulture funds per se although what i hear a few of them have done with two of the failed icelandic banks and their former directors proves rule for of zombie banking land always use the double tap. example prefers of course to two shots to the head two shots through the head which . brings me to more giago art center and max kaiser them prior

banker gunther there i am i think. all right stacey hammer thanks so much for being on the kaiser report thank you max that going much more coming a way to stay right there. twenty years ago this country. was how did. you get a job. where did it take them. i

am as kaiser welcome back to their cars the reports on how to go to new york city speak with barry ritholtz of ritholtz dot com barry is a market analyst blogger journalist and author of bailout nation welcome back to the kaiser report barry thanks for having me back all right very first post talk about your piece in the washington post what caused the financial crisis the big lie goes viral tell us about it well there's been this tendency amongst people who helped create the crisis and rather than admit that radical deregulation and allowing bankers to set their own rules and granting special exemptions for the five largest banks ignore the leverage limitations or allowing derivatives to be. unregulated with no reserve requirements and no counterparty disclosures rather

than say hey this was really a big mistake hoops instead they've created this false narrative this argument that you know what really caused the crisis that was the government forcing banks to lend all that money to minorities and inner city poor people that's what caused the crisis the fascinating thing is the data overwhelmingly says that's not the case we know they took leverage as soon as they were given permission from twelve to one to nearly fifty to one we know that they engaged in all sorts of speculative activity where they didn't understand the risks their models were just wildly optimistic they were so busy counting profits and bonuses that they didn't pay attention to the bottom line look it all comes down to some very very simple rules banking is supposed to be boring the job of a banker is to make decisions about who is credit worthy and who is not to give you

an idea of how were reckless the banking industry became not only did they create these no doc loans they stopped validating loan to value of the home they stop valuating credit scores and most importantly they stopped asking borrowers how much money they earned and that is the single most important factor in determining if someone's going to repay a mortgage or a loan how much do they actually i want earn can they service that debt so when i hear this nonsensical things banks were forced to make loans to poor people nobody told the banks don't check income don't check credit rating don't check all the usual metrics that have worked for thousands of years it's just nonsense and when i see people propagating the big lie like that in a stop and say what are these guys hiding and it's pretty clear what they've been hiding they haven't into law. actually bankrupt ideology and it's causing global

damage to the economy are you mentioned the leverage ratios being increased from twelve to one and the banks are leveraged fifty to one even the federal reserve bank itself has leverage fifty to one that goes back to two thousand and four i believe when greenspan lifted that cap but you refer to that as ignoring leverage limitations but isn't that a hard coded law in terms of what the leverage limitations are corning under laws in place is it going back to the balance all yes ok so they are there for now it depends on who matched it depends on which financial institution talking about if you're talking about depository banks they have reserve rules which are implemented by the f.b.i. cia and others if you're talking about investment banks there's the one nine hundred seventy five rule that limited them to twelve to one of the five biggest investment houses in the u.s. got a waiver of that ironically it was called the bear stearns waiver bear stearns lehman merrill morgan and goldman the only ones somehow exempted from that law stop and

think about what that means here's a lot applies to everybody except you five guys who happen to be the single biggest donors to congress and that by the way that waiver was granted by the security and exchange commission the bezel rules for depository reserves how much they have to hold what's fascinating about those is that they've been whittled away over time so the amount in reserve has come down fairly substantially which allows their leverage to go up so anything that gets in the way of profit regardless of risk there is a lobbying effort to try and reduce that it was very successful with the f.c.c. it's been somewhat successful with the federal reserve and the f.b.i. see and that's why there's so little capital in all these banks both in the u.s. and europe in fact the underlying cause of the entire global headache that we're still dealing with is. too little capital too much leverage all right. though the

law is that they have to have certain amount of capital versus a leverage on the books and what happens and what we've seen is that when if anyone starts to sniff around then they do something about lehman brothers did with the famous republic one of five scam where they simply moved debt off the balance sheet temporarily to satisfy a regulator that might be looking at them and then when the regulators leave the room they put that back on their balance sheet isn't that also the case these off balance sheet entities are hiding huge debt first of all what lehman brothers did with no five that's just broad says this let's not mince words let's not pussyfoot around with this they're a bunch of criminals some of those some could go to jail and unfortunately most of our prosecutorial staff are too busy chasing all their nonsense but there's just no doubt in my mind that the folds and his c.f.o. should be wearing stripes suits with numbers that is criminal you cannot hide one hundred billion dollars or fifty billion dollars at a time in spending and then put it back at the end of the quarter i don't know

where the f.c.c. is i don't know where the u.s. attorney general is this it's laughable that's number one number two if you look at the the movement that's starting to pick up a little speed in the united states people have been moving their money away from the big banks to the small local community banks and what we found is that these small community banks they're much more solid they weren't involved with the rivet if they weren't involved with subprime lending they embrace what we call boring banking they borrow money at four percent they landed at six percent and they're out on the golf course at four pm and that sort of local community backing but that's sort of credit union banking is potentially the biggest threat to the major banks there's six or seven thousand of these banks in the united states some. of them are five and ten branches large some of them are one or two they're all

insured by the f.b.i. i see so your money is safe there it hasn't been enough to affect their quarterly earnings yet but if that were to happen i think you would really start getting people's attention i very we've been watching these banks commit massive fraud not not the community banks the credit unions as you were just mentioning but the the too big to fail banks the big wall street banks they're in violation of the minimum capital rules without a doubt they're violating the law every day we've been watching this grow over the past few years but recently just this past week i think we're setting a new standard for criminality with this with the i.m.f. global scandal it seems that they're just reaching right into people's accounts and taking their money directly what's very talk to me is this the new chapter in in the fraud max what do you think it's your money you think you're entitled to your money that's our money and if we decide we're going to need it to leverage up even more the hell with you we're taking it m.f. global there's just a whole different order of magnitude of this basically you know when you fill out

an account form or all sorts of things about what the bank or the investment house can do with your stock let's say we can hypothecate it we could short against it we can lend it there's a bunch of things that could be done and it's supposed to be governed in regulated pretty clearly this there's a pretty bright line as to what you can do and what is just out now to theft at least what it appears so far down of global and maybe they'll find the missing missing six hundred million dollars maybe you know it's in a draw or someone made a line entry somewhere that's wrong but from the the appearances we've seen this looks like someone just backed up the truck wiped out the clients' money and said the hell with them we're stealing it it's just beyond outrageous and i think if anybody is going to jail in this whole past five year period it has to be someone from him. global if they can find this money there's no other description for it

it's just grand theft all right now i j.p. morgan bank of america creditors to m.f. global are saying our claims come ahead of the customers is that it's not proper you know when you're involved in this sort of bankruptcy litigation everybody says that sort of stuff i think that there's some insurance on the accounts and there's some guarantees but if it turns out that the creditors have a superior claim to people who are opening accounts why the hell would i ever open an account with anyone again mattress sales are going to pick up because that's going to become the new banks it's unthinkable that somehow an outside credal or is going to have a superior claim to. somebody who actually had their money with a brokerage firm in this case it's a combination of s.c.c. and commodities futures regulators who are supposed to be watching this look at the key takeaway from all of this is regulators can only do so much if someone is

intent on stealing they going to steal what you have to do as a regulator or a government is make sure that when these people get caught they're get thrown in jail as a discouragement to other people might take away from the crisis of zero seven zero eight zero nine is still whatever the hell you want and run for the hills nobody cares no one's going to prosecute you maybe m.f. global get get us to the point where someone goes to jail and that acts as a as a discard judgment to future people but right now the lesson that they're going to be teaching in business schools is don't do what lehman did don't just screw up a little bit do it bear stearns did screw up really big and don't worry if you're a bond holder you'll be made whole yeah i don't think a lot of people realize that when you open a brokerage account you sign off on documents that you're bound. to arbitration for any disputes you don't get to go to

a jury it's growth going to go to a judge ninety eight percent of all the complaints against the industry are on resolved nobody ever gets their money out of the industry and the purpose is that a judge rake off on the citi group case the two hundred eighty five million us and stall judge are a cross says that yes the c's going to have to figure this out because the defender will just roll system doesn't have dominion over these criminal acts so there is no law governing the criminal acts of these various banks is there it's good to be the king listen you know when you have a congressional system that is based on e.-bay when you could buy a congressman or senator or when they get sold to the highest bidder who gives a good out regulation who cares about any of that you can do whatever you want about thirty seconds left what do you think about this story that congress is legally allowed to engage in insider trading with pre i.p.o. stock given to congress people it's not legally considered to be

a bribe your thoughts it's consistent with everything else we know about the parliament of wars that is the us congress they are up for bid you know we really need a third party to actually see if we can maximize how much we can sell them for place your bet by a congressman you know whatever regulation you want passed that's how america works in two thousand and eleven all right private all right also dot com thanks so much for being on the kaiser report my pleasure max sort of make your work with the. problem that's going to do it for this edition of the kaiser report with me max kaiser and stacey herbert our thank my guest barry ritholtz of riddle's dot com you can follow us on twitter you can follow us on facebook you can follow me max kaiser on twitter and follow me instead of stacy her because i'm trying to stay heard ahead of her and trust me that's what you want to do is going to send me an e-mail sen kaiser reported r t t v dot ru until next time x. guys are saying.

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