at least four people reportedly killed in fresh clashes as thousands continue to demonstrate across egypt angry at the country's military rulers after violence at a football match on wednesday left seventy four dead police in cairo fired volleys of tear gas into the crowd says they rallied for a third day. the united nations security council is set to vote on a resolution on syria amid reports of escalating violence in the country according to a syrian human rights group the army is shelling the city of homes with reports of fresh clashes between breaking out in other towns. and all polling stations across russia are to get their own digital observers as prime minister

putin orders at the installation of webcams to counter a potential pronged ahead of the march presidential elections the move comes after tens of thousands protested in moscow and st petersburg following december parliamentary elections alleging a widespread vote rigging. next we head to the u.s. to get the big picture on american politics from tom hartman don't go away. launch already in washington d.c. and here's what's coming up tonight on the big picture. does mitt romney really just like poor people i will work for work right to work for less laws in indiana affect workers in that state was not a dog cage on top of his jet answer those questions and more insights big picture

rubble and our nation was founded on the promise of a representative democratic republic however it's becoming more like a corporatocracy how did this happen and who's behind it but i will lead our show with conversations with great plans. for tonight's conversations of great minds i'm joined by michael w. hudson like his reporter former reporter with the wall street journal also an investigator for the center for responsible lending his writing has appeared publications like forbes magazine the new york times mother jones and much of their writing has been devoted to the foreclosure mortgage crisis still plaguing our nation today as well as the corruption in the big banks on wall street which underlie our current financial crisis mike is widely recognized for his work has

been a ward of the george polk award for magazine reporting that john hancock award for business journalism has received multiple accolades from the national press club an american bar association among others currently mike is a business and finance writer with the institute for public accuracy and is the author of the book the monster a gang of predatory lenders and wall street bankers fleeced america and spawned a global crisis mike welcome. but thanks for having tom i just want to correct you upfront it's an easy mistake to make actually work for the center for public integrity center for public integrity thank you very much where does your interest in exposing corporate corruption and greed come from and what attracts you to this field of reporting. you know it as a reporter i try not to come into things with sort of big picture ideas or with an ideology of what's happening. you know i was just reporting on. what was going on at individual lenders individual mortgage companies individual financial

institutions and you know as i was doing that i came to see that one of the things one of the questions that maybe at first not consciously but then later consciously that it was really asking is how do you in a large institution how do you get thousands of people who may be spread out branches all over the country even all over the world how do you get them to tell a lot to tell lies to fuel your business model. either either tell lies or sort of accept the party line ignore or condone these lies how does this happen so that's kind of been the focus of my work over the last few years in writing the book the monster but also in my more recent work for the center for public integrity i'm doing a series called the great mortgage cover up which is really about what happened to the people who spoke up within the mortgage industry you know there's a lot of you have a lot of c.e.o.'s lot of their supporters in the fancher press who have said well

how could we have known this is this was like a financial act of nature it just happened we was so unexpected but the truth is there were people working inside almost every one of these large institutions who at some point or another was were raising the questions or blowing the whistle and saying you know there's there's fraud here there's there's serious dangers going on this is going to crash the company this is going to hurt bars it's going to hurt the economy and. and the truth is that they weren't listened to and in many cases they were actively silenced and i'd like to get into that the fate of the whistleblowers the difference between the corporate whistleblowers and government was of wars in just a minute but you just mentioned you know how do you get people to lie. how do they get people to lie and also what what's the genesis of a business model that requires people to lie. right yeah you know nobody course

nobody wrote a memo nominee or wrote an email and said here's a liar going to jail here's how we're going to screw borrowers here's how we're going to take advantage of people but you know there are a number of things that i think happen a lot of this happens informally a lot of this happens with winks and nods a lot of this happens with what what isn't sad rather than what's said but you know a number things one thing is you guys people you pay them lots of money and you give them goals and say if you make if you had this number if you make this x. million x. thousand x. x. number of dollars in sales this month or this quarter this year we're going to pay this much so figure out how to make that happen the other thing is you do play to people's cratylus in this to their naivete you know you tell them you're doing a good thing and you know in the mortgage space this was well you know a lot of these folks are poor they would never have a house without us so we're doing them a favor we're helping them out giving them a house course you know there was a mention that that the likelihood is they would be able to hang on to these houses or that that were were refinancing people who are already in houses and were instead of help and they were actually making it more likely that they're going to

lose the house the other thing is this is something interesting that whistleblower work for countrywide told me is you really divide the work load you divide the task so it's a bit like a factory line so you have lots of folks at countrywide who are doing bits of a transaction they were doing pieces of it they were they were filing one document or they were doing one function and they were unable to see the big picture because they were sort of info barriers in between and people weren't weren't allowed to talk to each other or didn't talk to each other so that's the other way and then the then the i think the fourth way that brings us back around to what i said before is you is you punish the truth tellers you silence the whistleblowers and and mike. this to the best of my recollection this wasn't going on in the ninety's certainly doesn't seem to have been going on in the fifty's sixty's thirty's forty's fifty's sixty's seventy's maybe until the eighty's you draw. some parallels between this in the in the s. and l. crisis during the reagan administration but what is the what is the what is the

thought when did it start and what's the thing that started. with a tough question but you know it's very true you know after the stock market crash of one thousand twenty nine after the new new deal reforms of the one nine hundred thirty s. you had a long period throughout the forty's fifty's and sixty's and into the seventy's where we had basically no banking crisis crises very few bank failures and that's not to say that there wasn't bad things there was an occasional fraud on wall street there were occasionally banks that were doing bad but in terms of sort of systematic endemic corruption you just didn't see it and part of that was because because there were there were strong reforms and there were some rules of the road but as those rules began to be weakened as they began to be loosened and we went to an ideology will let the industry police itself starting in that sort of mid to late seventy's with the carter administration and then going into the reagan era in

the eighty's things started to change and we had for instance the savings and loan crash which was just really an orgy of corruption throughout the country. you know thousands of. institutions when under. and then in the aftermath of that you know there weren't lessons learned a lot or if they were they were quickly forgotten and we continued on this path deregulation and really i think deregulation isn't even the right word it's really self policing allowing the bank and history allowing wall street to to watch themselves some years ago when he was still alive we did a fair amount of coverage of william seaman who was the guy that ronald reagan appointed to take to add the agency that he started up in i think was eighty six when the s n l's crashed the resolution trust corporation as i recall was the name

of it and they said they they sent you know prosecution efforts to over six hundred people over a thousand people went to jail if by recollection is correct it's been a few years and it is a. what did you say nobody learned anything from that because that was largely a direct result of of you know arguably the last two years the carter administration jimmy drinking margaret thatcher's deregulation kool-aid and then reagan deregulated the us nels but you know i did well i guess that's the question did we learn nothing from that going forward well i mean we should have learned something and they were certainly lessons were there laid out bare and you know and the prosecutions of people like charles keating of the keating five and lincoln savings and loan fame but it was quickly forgotten and i think there was a backlash and a really aggressive campaign from the banking industry to soar paper over

the problems and blame it on other things and say moving forward we need to continue down this path of of deep policing the market and and what was driving that i mean who was behind that effort. you know it was it was both the industry itself but also a lot of free market economists who basically believe that. any sort of regulation was was wasn't even a necessary evil it was just a plain evil well there's and there were yes there were a lot of people in government who bought into that you know i those same people super bowl's coming up those same people would never in their wildest dreams imagine a football game with no rules or where the referees could be could be bought out by you know whichever member on whichever team had the most money or you know whatever team decided they wanted to or had the most money could actually move the goalposts

i mean they they get it in sports why don't they get it business well because it's so profitable at least in the short term for the individuals not message for their stations you see the institutions in the long run folks like bear stearns and and lehman brothers i mean they crash and burn but the people who work there aren't incentivized. to worry about about long term safety they're incentivized to worry about short term profits and especially their short term bonuses and short term sours that's how they're rewarded it's for him that meant that next quarterly number for increasing their profits in this quarter for increasing revenue is why mention that there were a thousand people who went to jail by the reagan administration in the s. and l. crisis why do you think it is that i mean this is an order of magnitude larger than the s. and l. crisis why was it that no one went to jail this time. it's

a good question it's really sort of inexplicable to me i think part of it is that. it takes political will to prosecute people and president obama is very much a meat in the middle kind of guy. and you really you know and in some political issues that may be effective but it's you know you really can't if someone commits a crime and somebody commits fraud compromising with them other than say you know doing a plea bargain which which in which they then. point the finger up the line and provide evidence on people higher up the line that's not something you can really do if you're going to prosecute people if you prosecute people you've got to be willing to kind of grit your teeth and just do it yeah and in both bush and the obama administration seems that perhaps some of the people involved in that were fairly close to their administrations or even in them but i want to get into the role of whistleblowers and in fact to that issue but we've got to take

a break here first so we'll come back with more with mike hudson right after this break more conversations the great minds of micros. from los angeles to chicago to birmingham twenty trauma centers have closed since two thousand severe problem is not enough in-patient beds not enough urgency department beds and not enough nurses to man those there to take care of all the people who are the only real health care system that we have in the city of los angeles is the los angeles fire department in fact when i started my venture is a firefighter i didn't want to do you mass and i started out going to just do firefighting it's about eighty two percent of what we do the fire department is medical and i've had a risk you couple weeks and waited for hours for big i've waited sometimes three hours i was it's a st francis in lynnwood for four hours and fifteen. it's standing against

a wall of creation and we have a federal law that mandates that he can turn no one away who seeks care in the emergency room. we have the most expensive health care system in the world and it's probably valued the least.

of it. well go back to conversations of great minds i'm joined by mike hudson business and finance writer for the institute for public integrity and author of the book the monster a gang of predatory lenders and wall street bankers fleeced america and spawned a global crisis let's go back to it mike when we were talking as we ran into the break. i said rather you know kind of just off the top of my head that it seemed to me that some of the people who might have been involved in crashing our economy were actually inside the bush and now obama administrations and that implicitly might have had something to do with their reluctance to prosecute we're trying to figure out why is it that a thousand people went to jail in the reagan administration for

a small crisis in s n l and there's a huge crisis and nobody has and you started to say something let me just toss it back to you. well yeah i mean there were definitely folks who were working inside wall street who who are now in high places in the in the obama ministration folks who were who worked on wall street banks or folks who were corporate defense attorneys that doesn't mean that they're incapable of prosecuting it just it just may give you a sense of the this sort of. ideological bent of some people within the administration so. do you think that well ok so let's talk about the role of the whistleblowers you you you mentioned earlier that there were people within the industry who were who were yelling hey yet at the same time i think all the public saw was all this advertising about hey you know low rates you can get all this and i remember the seminars so you know they were

they were posted on. lamp posts and things you know they heard the ads for them on radio and t.v. cause like come to the seminar and learn how to be a million. there and the way the way basically that they were teaching people how to be millionaires in fact i had a friend who got into this and and was you buy a property no no money down and your rented out and then you take that rental money in as income and then you buy another price and you just you know build a little real estate empire that's all based on debt is all based on the assumption that the value is going to go up forever and. that that kind of burst too so so where why did why were the whistleblowers not heard by the general public and who was listening to them and how did they respond. right well i think part of the problem is with the general public is the general public. you know i think when we talk about lies and how lies survive i think about homer simpson and you know marge

it takes two people to lie it one one person to lie to tell the lie and one person to believe it and the fact was during the mortgage boehm and really the mortgage mania because of you know all that you know all the spam mail would get about you know great deals on mortgages unbelievable deals on mortgages you're going to miss out all the television shows flip this house all the backyard conversations people did buy into this myth that real estate was somehow magically exempt from basic you know rules of economics and that real estate was going to go up and up and up forever and everyone can get rich and you know that's very appealing like the idea i'm just an average blue collar guy or middle class. homemaker and i can get rich in this you know the other thing that i think people bought was the idea the idea that the people who are running the global finance system who are running wall street running the big banks running the mortgage lenders they were the smartest

guys in the room they were the best in the brightest you know which is interesting because of course the smartest guys in the room is what the folks at enron like to to think of themselves as and by two thousand and two two thousand and three two thousand and four and iran had been exposed as a scam and should have served just as just as a savings and loan crash should have served should have served as a warning about accepting. the you know this kind of idea the idea of the the the cult of the of the expert in this idea that we should defer to to see superstars and to math geniuses who who they know better than we do so that was kind of the context in the environment that we were operating in and why so many americans are one reason why so many americans were willing. are or were to believe the fall so that they were told by sales people for these large. banks and of course the other thing is that the time you know there was

a lot of respect for places like bank of america and countrywide. but so when you had inside the companies they were folks that they didn't even get to the point of telling the public they were just trying to internal report folks who worked as fraud investigators risk managers compliance officers within places like countrywide and wells fargo and many other of the largest financial institutions they raise these questions they said this particular own appears to be fraudulent it's based on inflated income the signatures on this loan appear to be forged because they don't match up on the other signatures in the loan file or they said this pool of loans that were selling off to a pension fund in california and australia it appears that a large percentage of the loans are fraudulent are certainly extra much higher risk than them were telling the investors and you know what happened the folks when they did that now talk with a lot of folks. was you know they were either ignored or marginalized

or. punished demoted or fired or some combination of above and in my reporting out of a den of five more than sixty former employees that twenty different financial institutions who said they were either either do not just ignore it but they were either demoted or fired for reporting for audit or or for using to commit fraud the you mentioned enron and you know with a few exceptions most of the people at enron who made millions and millions and millions of dollars still have that money and they're living in their mansions and they got the private jets and they're doing just fine thank you very much i mean them many of them a lot of the investors got screwed but the a lot of the executives made off ok and and i'm so you know why wouldn't the banks look at that and say you know the risks aren't all that bad you know looks like something can be and also i'm curious

back to enron wendy gramm was on the board of directors of enron in the late ninety's and her husband phil graham proposed both the commodities futures modernization act which allowed for this explosion of c.d.o. is made out of mortgage debt that was traded on these black markets nonexistent markets and phil gramm also proposed the grammys bliley bill which blew up glass steagall in this was these were in ninety nine and two thousand my recollection is correct to what extent does a lot of the responsibility for those lay right of phil gramm as feet are at you know coming out of the enron model and phil gramm perhaps even being influenced by his wife being on the board of it. you know i haven't done enough reporting on phil gramm to say definitively clearly. folks like phil gramm and other people in washington played a significant role in and pushing this because the reason that that folks at the big banks were emboldened to do this is they knew that that the shackles have been

taken off that there was little chance that there was going to be any kind of enforcement any kind of rule making and often you know as they say you know what was what the crime was was what was legal it was sort of an anything goes. and vironment right which brings us to the philosophy of the phil gramm was pursuing or pushing and not just him i mean in this whole thing as you point out you know from from carter forward and in and reagan put it on steroids and really nobody has challenges since then although i would submit that in some ways the obama administration is now starting to aggressively challenge it eric schneiderman today in. new york really going after some of these guys but but this neo liberal notion using the european word today we hear in america we might call conservative or libertarian notion that markets automatically self correct you know the austrian school of economics that is the von nice is always stuff the markets are smarter than the regulators could ever be doesn't this profoundly give the lot of

that. it certainly it certainly raises lots of questions. the idea that markets correct themselves and you could argue that the markets didn't correct themselves they crashed but the problem is what happens when they correct themselves who suffers while the people who suffered were millions of americans people who lost their homes are in danger of losing their homes people lost their jobs because the economy had tanked and. what seems to be true is that markets do eventually correct themselves but the folks with the most money and the most political power usually come out pretty well and then everyone else suffers well that's that's kind of a variation on the same argument that's being made by by conservatives libertarians that we shouldn't have agencies that overlook the safety of our food because you know if a few people die from

a particular company's food than everybody else sales stop eating that and the market will correct itself and it doesn't envision or doesn't deal with the problem of those few people who died you know where those many people who died right and is this an argument then ultimately for a kind of a precautionary principle for for as they have in europe. broadly speaking or she should we just keep this narrowly focused on banking and on the fire industry on banking and finance and and real estate. well you get you get folks who are consumer advocates and labor advocates. who will argue that environmental lived advocates who argue that that we need some sort of rules of the road that we need some sort of guidelines with how to act because you know using the example of polluting a river you can say will you know things correct themselves eventually like the company will will be punished or maybe. the public will be angry and stop buying

its products but it but the river is now polluted and as we know what this you know it could take you know decades if not lifetimes for for the for the poison to leach out of the river. so we have sort of lost in our financial system we've lost the idea of precautionary action of harm reduction and it's sort of sort of really an it and anything goes but again you know you had the folks at the you know at the top levels who were saying don't worry trust us we you know we are better i mean the argument was we're better at policing ourselves then then these pointy headed government bureaucrats are because we're smarter than they are we're at the top and you had company you know two years before the crash. the number one and number two most respected securities firms in america were according to you know surveys by big business magazine were lehman brothers and

bear stearns and within and less than two years both of them were you know had crashed and burned amazing michael and mike in the in the half a minute or so we have left what's the biggest lesson that you got out of all this all this research i think the biggest lesson is that we need to have you know everybody talks about having companies that have open door policy as in people you know and they encourage whistleblowers and then encourage information flow but the truth is in reality. human relations people don't want to hear bad news that they don't want people to muck up the works but we need to have a real protections for whistleblowers and right now we don't know within corporations and certainly not within within the federal government like codes and thanks so much for being with us tonight. great thanks for having me on and if you want to see this come again or for more conversations the great minds go to conversations of great minds dot com after the break from the right to work for

lust to mitt romney's distaste distaste for impoverished americans we have it all covered in tonight's big picture.