free. three stooges free. download free blog videos for your media project free media ghar ghar t.v. dot com. good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. and here are your headlines for february twenty ninth two thousand and twelve u.s. regulators are holding roundtable talks today about how to protect customers money to keep it from basically being stolen this is of course in the aftermath of the m.f. global collapse we will speak to a lawyer representing eight thousand and the global customers in the bankruptcy he says new u.s. regulations will not stop firms from going the way of m.f. global as long as they can go to the u.k. to take on virtually on limited leverage they'll tell us how m.f. global was getting around us leverage limits this way similar to

a idea in two thousand and eight and why it's going on unchanged and federal reserve chief ben bernanke he gave his economic checkup to lawmakers today which meant a real acquaintance with republican presidential hopeful ron paul. something that i think would be a compromise that we could work along those of use. good to see you again a christmas miracle. that's always entertaining while in europe eight hundred banks head of the e.c.b. for liquidity the longer term refinancing operation for five hundred thirty billion euro will fill you in on the easy money makers of the central banking regime meanwhile bank of america find yet another way to cash in on taxpayers and j.p. morgan c.e.o. jamie dimon finds yet another way to cash in on attention as a drama queen or king i guess soundings gets a friend of on regulation wall lashing out at us the us media will tell you what we think let's get to the day's capital account.

the u.s. commodity futures trading commission is having roundtable talks a woman today they'll go on tomorrow to talk about how to protect customer money in the aftermath of the m.f. global collapse you know remember the eighth largest bankruptcy in the u.s. where they are still looking for a reported one point six billion dollars in missing customer money the firm run by former goldman sachs c.e.o. senator also new jersey governor john corazon well james good to less is our guest he's a lawyer representing eight thousand and the global customers in the bankruptcy proceedings pro bono mind you so he tells me and he has told me that any new u.s.

regulations won't be very effective as long as firms can just skirt them skirt u.s. regulators by going through the united kingdom where they can take on essentially on limited leverage in the first place this was what m.f. global was doing this was what ai g. was doing back in two thousand and eight this is what lehman brothers did through its english subsidiary to notice any similarity all of those firms imploded now bear with me because i have to break down a few things so that you can get the most out of my guess breaking down all of this first you need to know that there is reportedly no regulation t. equivalent in the u.k. or reg as it's known so reg t. is the federal reserve board regulation that governs customer cash accounts and the amount of credit the brokerage firms and dealers may extend to customers for the purchase of securities now according to regulation t. you may borrow up to fifty percent of the purchase price of securities that can be

purchased on margin this is known as the initial margin but where really comes into play in this story is with regard to really hypothecation of collateral first let me explain what hypothecation is this is where a borrower pledges collateral to secure a debt but the bar retains ownership of the collateral but it's controlled by the. creditor who has the right to take it if the bar are defaults so let me give you a really simple example because i think it's a little confusing to explain on t.v. so say this is the borrower this is the bank so the borrower goes to the bank and they borrow money to buy a house they keep the collateral even though they pledge this house as collateral to the bank but the bank doesn't keep it ok the borrower lives in the house and they keep it however if they default on their mortgage the bank can so that's hypot . the house as collateral now what if this bank pledges this collateral this house that the car was living in as collateral to somebody else

that they are borrowing from or to cover trade that sort of thing that is really hypothecation and collateral can be rehired pocket katydid again and again that's known as turning so that is really hypothecation you need to know it now let's go back to rugby it says in the us a prime broker pocketed assets to the value of one hundred forty percent of the client's liability to the prime broker let me give you an example and by the way big thanks to this example so if a customer has a positive five hundred dollars in securities and other debt deficit of two hundred dollars there's three hundred dollars in equity the broker dealer can read hypothecate up to two hundred eighty dollars ok for one hundred forty percent of that two hundred dollars in the u.k. however there is no limit no statutory limit on the amount of money they can be read hypothecated

a broker dealer can really hypothecate all the assets deposited by clients one hundred percent of that five hundred dollars and securities and this is where the thought that ends now let's bring in james catalyst president and co-founder of commodity customer coalition and thank you so much for being on the show because i know you're in town for this roundtable and we feel very lucky to get to talking about this issue thank you for having me yeah so let's start first thank you for bringing this issue to light because i was tweeting about why is the u.k. so much tougher on banks than the u.s. they claw back bonuses they take away knighthoods and you said hey you know talk to me when they have some kind of equivalence of regulation greg t. so you've been focused on this m.f. global case breakdown of how this whole issue comes into play with this two hundred million dollar margin call with j.p. morgan. so basically m.f. global had transferred a substantial portion of assets into its m.f. global u.k. subsidiary so we could take advantage of things like the absence of

a right to. underscore signs watch global was about thirty one. european sovereign territories ok and so then how did that and in the two hundred million margin call of j.p. morgan. basically in the fall of last year there were concerns about greece defaulting. basically increase the amount of margin that was required to keep these positions on and course was utterly in love with it rather than just reduce the size of its positions he wanted to keep the trades on and forth which may put him collateral from anywhere that he and the firm could grab it and they got it from customers which were allegedly ok let's talk about how allows for this now you mentioned they had enough global had transfer funds to its u.k. subsidiary and from what i understand it's

a very it looks it's very desirable for us firms to move money to the u.k. into subsidiaries in the u.k. to get around us regulators this is what m.f. global with ewing right right and every us what every major u.s. financial institution is doing is every major u.s. financial institution is shifting their customer money to the u.k. to get around regulation yeah so you'll see just about every how do we know that. i mean that's a good question and you know the. people who know of the existence is existence of the system call it the shadow banking system because it's done in the shadows so the way a normal bank works is with fractional reserve whereas if you have one hundred dollars you could you know essentially one hundred dollars ten times if you reserve requirement it is ten percent well for the shadow banking system it's all done with unregulated derivatives that are generally off balance sheet and what is sort of

the u.k. there is no statutory limit on how many times you could cover it up so now thirty to forty one is a pretty common practice. for global financial institutions and not of its regular good. generally none of it shows up. on balance sheets or i.c.c. thoughtfully and it's very hard for investors and regulators to figure out exactly what's going on right and this is the whole issue that is so much bigger than m.f. global but one thing i noticed a lot of these firms that looks like they get around moving customer money to the u.k. by it looks like they're basically put in a fine print and it looks like m.f. global did this it says you know we are there people that have accounts we can use your money for hypothecation hypothecation so. does this make the case for m.f. global customers more difficult and does everybody need to be looking at the fine print of whoever they have an account with to make sure their money's not being moved in rehab complicated over and over again. quite frankly it's my belief that

even if there are losses stemming from a loss in the value of securities due to read hypothecation that should not impact customers rights of recovery especially in this case for monies that were transferred to j.p. morgan j.p. morgan was the custodian of clients or good funds they were also the primary lender . and they were clearing and settling the trade so. global's house train operation because of this they had a lot a lot of insight into the activities going on there and when they received. you know several hundred million dollars in transfers that looks like it came out a customer money they asked them available for a comfort letter saying will you please sign this saying that we're not actually receiving customers the reason they did all this is because in two thousand and five there was a provision to the bankruptcy code that was passed providing for what's called

a safe harbor which means that if you are a counterparty accepting cash for assess the action of a margin call you don't have to do any due diligence. you know to ascertain whether or not that's a proper transfer or whether it's stolen money whether it's customer money or anything like that but the safe harbor does not apply if you actually know what's going on so our boy jamie diamond who is not a big fan of how much you get paid apparently errantly is trying to hide behind this two thousand and five act. at least three hundred forty million of house response i've seen some reports and they might have six hundred million or more of customer funds here and they had to go back and in fact in the in the lehman bankruptcy. they took about seven billion. songs that were due to barclays that barclays. you know put into for a bought out a bankruptcy process ok i'm fine with a little bit for me though because i understand the issue every have competition

and firms moving their money to the u.k. to the law and you have all of these all of it leveraging great public pretty and that risk. how does this unwind balance where i know the way that a bankruptcy was treated with m.f. global also plays a role in who gets paid you know dissect the that for me break that up for me how does this i'm going to consider ok well you have a couple different issues here so what we have is that makes a blow out perfect leader of the firm a lot more likely so see if you're thirty to one leverage if you have a move of about three point three percent against you or whatever you're you know invest in a you're a margin call ok so you don't have any kind of cushion due to you know the amount of leverage you know the news m.f. global base of their entire firm and a large portion of their customer accounts on one trade you know i mean they were all in on this one for a year you know and some of it's been

a very volatile trade due to. is there going to be a bell is there going to be a thaw and that creates a lot of volatility in this european sovereign. so now the reason you know of global the customers are involved in this is because they actually took customer money to set aside margin calls so in the future system. there had been a shortfall in customer from going to. see about seventy five years. there is a concept of a consideration that a sane person that's never been violated there's very strict rules governing this and m.f. global is trying to hide behind in defense of our systems were so bad it was so chaotic that we didn't intend to use customer thought it was it was just an accident and they're trying to use that to stay out of jail by that i don't buy for one second i don't either i want to get in this conversation i want to come back and talk more about how this case will work out in

a little bit more about this shadow banking system and we have an issue this is a little dance for t.v. but it is so super important that i cannot stress it enough and i want to continue talking about it so we will have more we can't control if the president and co-founder of commodity customer coalition. and still ahead if you thought bank of america debit card fees were a thing of the past think again we'll give you our three cents on how the bank is cashing in on one state's tax returns but first your closing market numbers. we just put a picture of me when i was like nine years old i want you to look through.

i confess and i am a total get over friends that i love driving because he is that the district. that he was kind of yesterday. i'm very proud of the all the dogs and she has played. oh. you know sometimes you see a story and it seems so. you think you understand it and then you glimpse something else and you hear see some other part of it and realize that everything is ok you don't know i'm sorry welcome to the big picture. what drives the world the fear mongering used by politicians who makes decisions

compared to breakthrough. who can you trust no one who is your view with a global missionary see where we had a state controlled capitalism was called satchels when nobody dares to. asshole we do our tea question more. all right we're back with james get us president and co-founder of the commodity customer coalition he's representing eight thousand people missing their money and the global collapse the also run the hedge fund so he is telling us all of the problems with regulation that are not likely to get fixed and will allow this to continue and possibly be worse so with this issue we're talking about real hypothecation this is allowed unlimited amounts of real propagation it's called

churning it's basically opening the door unlimited leverage it goes on in the u.k. because there is no rule against it why is there no rule against it is my big question in the u.k. it's an absolutely huge money maker for for them it's one of the reasons that one that is one of the world's financial centers because every major financial institution is engaging in this practice. so they're really the ones where you can do it so there's really no incentive to stop it because this is the moneymaker right ok i want to bring up was there he says the cost of it ok they say that m.f. global is essentially an example an equivalent example to a.g. in two thousand and eight and virtually unlimited leverage via the shadow banking system and which there are practically no hard assets backing the internet layers of debt created above and which when finally unwound will create a cataclysmic cataclysmic cole lapse of all financial institutions and this is because of this daisy chain

a real high population of when that line so my question to you and the global it's horrible the customers lost money it wasn't too big to fail it didn't bring down the system when it went bankrupt. is there another any idea out there and how would you even find it if all of this is off balance sheet and unregulated but probably i mean i think one of the. goals so to speak of the major financial institutions is to make sure that they take so much risk that if they win they're going to win big but if they lose they are going to lose so badly that they have to be bailed out and i mean we've seen this i think it sort of in this country is really in the classic long term capital management when they were taking this kind of leverage in the in the crime brokers of l.t.c. and were actually mirroring their trades because one of the reasons because i asked was so bad because they were you know everybody thought these guys were so smart that the brokers are like me too and that you know the ultimate exposure for the

financial system was was so great now what happened two thousand and eight was many many many multiples bigger frailties and now one thing that's changed we haven't done anything like that frank it has eight hundred fifty pages does nothing to address the core problem and it's the shadow banking system and two percent interest rate is just unable to write of a neighbor that kind of money because when you actually have to borrow for leverage there's that's creating a market based restriction on how many times you can run. you know by the interest rate you've got a. product in finance product so this is this shadow banking system is kind of courtesy of the central banking regime i mean the whole system works together to to enable this i mean that's. you know it's essentially like a drug and banks now you know lending is not really a problem priority for them anymore i mean they could borrow from the fed window

and zero they could take the proceeds from that they could take the customer half and shift system all along and invest thirty on and off balance sheet derivatives and the korean zero hesitating morgan has over five hundred billion and we have thought the case. well. let's talk a little bit more about john brabender. if i don't get to this i'm going to i'm going to beat myself up there have been reports some sources told box news that there may not be a criminal case against it that there was some maybe shoddy accounting but it doesn't look like they can really pin him down on anything my question to you how is it possible that they could not build a criminal case against him it's not possible if there's a political will there's a case here i mean they were transferring. they transferred over three hundred million dollars on october thirty first outside of it looks like to j.p. morgan when they knew a bankruptcy filing what was it and they knew there was a shortfall already and they're still selling running out the door i mean if

there's not a criminal i don't know what it is but how could he avoid having it pinned on him i mean shouldn't you as a c.e.o. be responsible. so you're right you should be responsible and you should be accountable but we don't we've forgotten those concepts in this country i mean any military officer worth his salt knows that you can delegate responsibility but you can never delegate accountability but those rules don't apply in our financial system here in corazon for example is obama's biggest fundraiser yeah i mean he personally contributed seventy thousand to this reaction campaign and bundle another four hundred thirty thousand obama gave back to seventy but he kept the four hundred thirty so one of the things we're doing with the c.c.c. is we're asking obama to donate their four hundred thirty thousand dollars to the legal defense fund for clients who were our property and real quickly you mentioned in the break that you know why the heck is j.p. morgan and all have it having its hands in all of these pots is this the result of having no class people equivalent that's right and i mean the repeal of glass

steagall is an example of the revolving door between washington ruben you know come over a strike or treasury secretary. led the charge to get glass to go removing the one over the city where he made over one hundred million dollars that it basically said there i mean as a reward. i mean glass steagall should exist i mean banks there are public policy is to hold deposits and so making loans and if they're going to do that then you could somewhat justify the bailouts of keeping banks you know intact because there's a functioning economy needs a banking system yeah but if if they're going to sit there and borrowed zero percent from the fed they're going to make loans in very limited circumstances and they're just going to act like a giant hedge fund with customers money where the customers don't share in the upside and go to london and go thirty to one leverage you know why are we propping them up before we go broke with this yes or no answer are your customers going to get their money back you think i am right they will yeah right there well thank you for being on our show to explain why they should and why there should be

a criminal case against and why you should be very afraid about the shadow banking system that was james president co-founder of money comes from a coalition. all right before we go let's lighten it up a little bit something a little lighter than your money being populated over and over and over again creating unlimited leverage and destruction or the potential for it there and let's bring in dimitri copying us and they can and you're on the floor here in the studio in san antonio in the control room to talk about these stories which are actually incendiary on a different level so you got bank of america debit these were annoying and i think

in the past because people were so up in arms about them well think again if you are getting a tax return in south carolina because unless you state specifically that you want your tax return by check or direct deposit you'll get a bit of a credit card attached with these facts to fifty for any withdrawal and a.t.m. not be a big fan of dollars if you have to replace it more than once ten dollars for taking you know more than once dollars to closure or. saying ok i evidently the state is doing this to save money this is b. bank of america gets to cash in on people's heart burn money that they get back in their tax return this is absurd why don't they give this to a community bank. oh you have to say to me i mean this is just post. morgan gets to make money off. really america was third on the list of banks

getting money from the from the feds would put it into so if you're into those and some of the point then was over twenty billion dollars a day on average right so it's absurd them we talk about all the time these guys run a feudal system or close the crowds all right you and i can borrow but they can take our lunch i mean it's crazy i just think it's very incendiary how it just there is no stopping them on any level they have create crept into every single aspect of lives to where they can even despite all of the anger against them despite all of the anti banker sentiment they can still cash in on just average people's tax returns with five dollars here ten dollars there you know whatever fees to the merchants that you're using them at kennedy if you want to add anything go to a credit union and read your tax forms very carefully i think that i think the real lesson to be learned here is read the fine print everywhere you look because that's where they're going to screw you let's move on to another banker jamie diamond is

once again cashing in on attention from being a drama queen kind of like this. so you see what he just did. what did he do he blew a bottle with his gum while i was singing he can't sing. ok meantime and remind us of that character because he just seems like such a drama queen ok this he's of course the c.e.o. j.p. morgan anybody watching the show knows that he was quoted as saying this in the financial times at the company's investor day he said i'll be damned if we don't have a record profits for the next year or two when he was talking about regulation so now he's not worried about regulation even though he's been bitching about it time and time again that we've seen in the past and then he went on to criticize some of the members in an audience aka the media saying worse than that you don't even make any money i mean this guy really has no shame or humility where do you get off yes you're right he cries of riches whenever it is and doesn't go

his way and then when things are going well for him it's about a bruise right your face we're looking we're very sorry the camera to the clippers owner i don't care who steal money from the big biggest what if. he'd like to yeah he's like i get that you're a fighter who doesn't work in the work he just does the public good always garbage and. that's where they are at this point though you know what we really want to wait for a group where you can steal money out of a customer accounts that's what we're going to do because that's where the thing that comes to mind there was a report that evidently the number of psychopaths in the financial services in wall street one out of ten are right here whereas one percent of the general population are psychopaths so to say i'm sorry but i feel like all of the evidence points in fact it can examine the site. and shows would learn from as. and they're all so

sure this is just the law ok and we're out of time then you good but that's all we have time for thank you so much for watching feel free to follow me on twitter out lauren lyster give us feedback on the show at youtube dot com slash capital accounts and from everyone here at the show thank you for watch. have a great night. culture is that so much going to each musician on the fence the right to protect the rights to penetrate as syria continues down the path of destruction and civil war there are a loud voices on the international. world . science technology innovation all the list of elements around russia we've got the future covered.

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