good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. and these are your headlines for march sixteenth two thousand and twelve first are we seeing an emerging market for this. glow in the west called first greg smith now a congressional budget office with a lower has come out alleging she was fired for not accepting the wall street party line pressured not to be pessimistic about banking and housing outlooks it's certain to feel a little like this. is a story. that's true since. we'll see where it

goes in the twenty five billion dollar mortgage settlement was dates and bank shows whistleblowing can actually payoff we'll talk about it but that brings me to is there just no winning against the too big to fail banks when one judge jed rakoff rejected the f.t.c. need two hundred eighty five million dollars settlement with citi group it was over toxic mortgage debt well it was because citi group wasn't forced to admit liability that he rejected that will now a federal appeals court has stopped just short of rejecting his rejection thing he overstepped his authority come on what is it gonna take to these them admission of guilt and speaking. simply do not know where the money is or why the occurrence is not going to work and. remember that while the end of global brokerage trustee says they know more some more of the money is they want to distribute another six hundred eighty five million dollars to customers while

another of the trustees have been asked by u.s. lawmakers to abort his mission to pay bonuses to m.f. global execs who are these trustees will explore this and more let's get to today's capital account. where do i begin on this friday we've got whistleblowers we've got whistleblower and days sayers too big to fail banks at the crux of a lot of it the question of trust steve and courts regulators the congressional budget office maybe all doing their bidding at least that's how it seems sometimes from the outside and we have a few people coming now from the inside seeming to confirm that now the latest

whistleblower comes from the nonpartizan arm of congress the c.d.o. she alleges in the wall street journal and fully on zero hedge that she was fired for not telling the wall street line here's an excerpt of what she says she says i was repeatedly pressured by the c.d.o. assistant director deborah lucas to not write nor discuss issues in the banking sector and mortgage markets that might suggest weakness in these sectors and their consequences on the economy and households now land fanboys the senior staffer she says she wants to work around the policy framework of a v.p. for morgan stanley with analysis shared from goldman sachs to speaking of toeing the line of wall street let's switch gears to m.f. global now we have followed the john corazon line quite extensively on this show but now let's talk about this why on earth would the trustee want to pay out bonuses to executives of

a firm that went bankrupt taking one point six billion dollars in customer money with it at least in the sense that money is still missing so we can just go with that or now here to talk about that is someone from the futures industry he is a veteran of the industry has been following this very closely on the trail martin the lead host of the uncorrelated investing show and author of this book you see here high performance managed futures and we've had you on for it's nice to have you here in washington d.c. thanks for being on the show good to see you so now we have talked about the john corazon angle extensively and i talked about the globe. angle with you now i want to talk about the too big to fail angle because i'm available wasn't to develop a did fail and obviously there is that too big a bill angle and that junk or zine is goldman sachs alum and very connected if there is a typical fail angle in this story and i want us to set that up i want to play a sound bite from john course i'm talking about customer money to put it in context

the purple office in chicago it's illicitly confirmed to me that the phones were properly transferred and i understood that j.p. morgan chase was satisfied since they executed billions of truly billions of dollars of turrets with m.f. global. they sure did j.p. morgan with m.f. global's largest creditor the documentation i've seen is j.p. morgan as much of a story here as well one house well it's a fascinating about for a certain j.p. morgan had a number of conflicted rules that were could still be and. cleared and settled the trades so they want to position to pretty much see everything that was going on and probably better than us in the futures industry and in the futures industry there was significant talk about what was going on and what transpired that week before the bankruptcy that is not being made transparent to us and what is that and what role do you think it can work and has been well for you well there are

a number of angles that i think j.p. morgan is interesting for one they received a significant wire transfer but what we haven't discussed is j.p. morgan's role in the bankruptcy process you know they essentially have a significant role in selecting the creditors bankruptcy trustee who my sources tell me is given the task of investigating fraud remember there's no fraud in m.f. global we don't talk about fraud that's the unmentionable topic just like in your intro you said the money vanished you know the money they. are to make that way let's get on the talking point with the party line a bit of the terminology you just said something really interesting i want to get into the trustee in what way was j.p. morgan involved in the trustee is as you said tasked with being responsible for the creditors louis freeh or louis freeh louis freeh the former director of the federal bureau of investigation essentially my sources tell me that j.p. morgan was the person who requested

a louis freeh to be the creditors trustee of j.p. morgan is essentially operating in the. creditors committee why what right is j.p. morgan to have to select the bankruptcy trustee in this in a case like this. well they've been through a number of bankruptcies don't forget so this isn't their first rodeo the lehman bankruptcy i mean j.p. morgan in the lehman bankruptcy i'm told essentially went in and took seven billion dollars out of the lehman states and then they had to come it out and with lawsuits to get the money back and that's essentially what's happened here you know money has been taken out of customer segregated accounts under what many people including myself in this industry say are questionable circumstances the question will be under the shadow of a doubt and for people to say that there is not a fraud investigation ongoing i just don't get it at all it's not about what you think that's about ok well if fraud is investigated and fraud is determined here's

the key customers have the priority rights they should have had ok because right now the way this bankruptcy is being handled creditors have the priority they're on equal footing and how whole bankruptcy process started was just phenomenal it should have been a chapter seven bankruptcy in my opinion written into the bankruptcy code is chapter seven provisions for a brokerage firm m f global is a brokerage firm by all practical standards the reports they filed with the government so they were brokerage firm why is this a chapter seven as opposed to a chapter eleven we're not reorganizing but what the chapter eleven allowed to have happen is top management is running the company so right now the people who have the documents that most people i've spoken to and myself included exist that clearly define who gave instructions to wire money when those instructions occurred

and how this whole thing went down the those people that are managing those documents are the same people who may be indicted and something along these lines and louis freeh cordingley your part has incentivized them by saying they may get bonuses. is if they turn up the most amount of money for creditors what exactly is the incentivizing them for his and sodomizing them and it is his legal duty to get the money for the creditors so he isn't son of. more money to come back for the creditors and that's that's what he's assigned to do but my sources tell me the department of justice has given him the title of eyes and ears in a must global ok well if the department of justice is relying on louis freeh unofficially because he's a bankruptcy trustee well it hasn't been officially announced by the department of justice a lawyer that i'm familiar with in the situation in the customer rights fight has

an e-mail from the department of justice where he essentially complained of the department of justice about some of the obvious what he considered obvious fraudulent behavior and the department of justice said to him you need to talk to louis freeh really just so you think louis freeh is the eyes and ears and building any kind of a fraud case against and a global yet he is there to get money back for the creditors and has been appointed by j.p. morgan who stands to lose if this is found to be fraud because customers will be prioritized over them which is how the law is written the law is written so that customer segregated accounts come for us so the law says customer segregated it segregated accounts before all else are you implying that regulators. the i guess the department of justice by putting louis freeh and charge of them being eyes and ears. as well as the trust in this case are doing the bidding of

j.p. morgan essentially i don't want to too far and i don't want to be a conspiracy theorist. i don't either ok well you're building a case here let me preface it by saying there has been some signal. diffidently questionable activities by certain regulators and i've run in the great regulators to this process i've run into great congressmen through this process but there was a case where the f.c.c. apparently with held critical disclosure documents and allowed m.f. global to float a three hundred million dollar bond offering now the reason these documents that they withheld were critical is because it identified that john corps sign up parent we had set this straight up so all the risk was associated with the segregated accounts and all the reward went over to london where obviously we know the regulations might be a little different they're very different so are you saying the f.c.c. purposely. i don't i can report the facts the facts are that these

documents were received by the f.c.c. on may thirty first two thousand and eleven the facts are these time stamp the document september second which is not in accordance with their traditional policies then after they filed the document after m.f. global floated the bonds then they went back down and took the document down and refile stamped with the correct dates. i've submitted this information to congress i know that a number of congressmen are very concerned and i have been told that there is an a c c investigation ongoing and i think i saw something alluded to that in the new york times article mark real quickly we're going to got a break in about a minute before we do because we're going to keep you i want to talk to you more about this he just briefly tell our audience why you would care why are you investigating that's why you're looking into this i know you've been in this industry a long time a lot of people would say what i am well i'm in this industry and they were one and

so i think that. you know we have to defend our industry i profit based on the success of the industry and you know i'm in the industry so initially when this all came down i was found in the industry and defended the interests of the industry because quite frankly if if this is allowed to stand customers could lose money again this could happen again and i think it will do irreparable damage to the commodity markets if what has occurred is allowed to stand ok we're going to give you all we're going to get a break for just a minute but when we get back we're going to talk about the other trustee and stick on that too big to fail so we'll be right back with more with mark author and host of the uncorrelated investing show and also still ahead you commented were listening so am i going to respond to your comment and viewer feedback next week well you'll find out just ahead but first our closing market numbers.

we just put a picture of me when i was like nine years old on the job the truth. i mean i am a total get of friends that i love rap and hip hop music and. it was kind of a yesterday. i'm very proud of the world with its place. you know sometimes you see a story and it seems so silly you think you understand it and then something else here's some other part of it and realize that everything. you don't i'm. charge the

big chunks tsk. us. what drives the world the fear mongering used by politicians who makes decisions break through. who can you trust no one. is you who would have noble mission to receive where are we heading state controlled capitalism is called sections when nobody dares to ask we do our t.v. question more. think. all right welcome back we're talking about m.f. global and we're looking into a nother player in this case which is the trustee or the trustee so i mentioned

earlier that and this was something we reported on prior to this the wall street journal had reported that louis freeh said that he wanted to pay out bonuses possibly to m.f. global exacts well now the senate agriculture committee sent him a letter opposing the bonuses he said this it is they said that excuse me it's difficult to understand why you would even consider pay anyone a bonus while nearly one point six billion dollars in customer money is still missing and it is absolutely outrageous to propose paying bonuses to the very people who were responsible for the operational legal and financial management at the time that the customer money disappeared mark i want to bring you back in this is mark maleng host of uncorrelated investing show a veteran futures commodities industry how significant is it that they wrote him this letter well i think it sends a much deeper message it sends a message that they're dissatisfied on the whole bankruptcy process is entirely

questionable and people familiar with this industry and familiar with this process are just outraged do you think that this will will have any teeth though because to be honest i mean i work in washington i see letters like this written all the time i see hearings all the time and nothing happens well i can't guarantee about congress and i don't and you don't pretend to be my subject matter but i can tell you this i've been in some congressman who i think are a little ridge and look you know this is a front to this effect in farmers ok so it's one thing for too big to fail to pick on a limb and pick on a bear stearns now they're picking on farmers and retirees included in professional investors but you know i look at a guy like senator roberts from kansas he seems to have some passion you know congressman posey congressman grimm these are guys that in my opinion are stepping up their their their little little it's time that we stop this. in my opinion the too big to fail banks and everything that surrounded them is putting the economy

and if if well that's nothing new come on that's been going on since the financial wealth or the financial crisis obviously gets higher and it's bigger than that because here is what's going to happen if enough global is allowed to stand in my opinion people are going to be afraid to invest in the united states i already speak to a lot of people who feel that way as a result of m.f. global i'm sure you do as well i question to you because we're talking about the threat of some of these too big to fail banks and the actions we have seen this week a lot of whistleblowers coming out same doubt i mean greg smith came out obviously in an op ed that just made huge waves now we have this c.d.o. whistleblower coming out saying she was essentially asked to do the bidding of wall street and get some rest when she did not and you also have a backlash coming out against that and then with greg smith the thing effort repeatedly for people on lost in the press in the business press is you'll never work on wall street again you know forget it you don't you don't talk out of you don't speak out about it is there a code of silence absolutely there's a cone of silence look at what's happening in this and of global situation who's

fighting it's individuals you know where are the major institutions in our industry or the final battle where frankly we're in a battle for our lives and there's been a corner of silence in our industry and there's been a sweep under the rug attitude and you know i think that's the you know the whole thing about too big to fail is some of the arguments you know we can't attack them because they're so critical to our economy well you know what we're headed for a job crisis let's just face and to get to fill it entirely correlated to economic prosperity that's how wall street for the most part we need to take a look at it and you know when too big to fail fails who's going to bail amount and you know i don't i think we need to ask that question now can grow taxpayers and or grow country i think i can answer that i want to talk about one other aspect of this m.f. global case because there is another trustee that is i believe representing the customers right ok so this is james gets right ok. so there's actually news out he came out last night i believe that he's trying to get six hundred eighty five

million back to customers six hundred million of it is the it is on the business down on us exchanges right he had he had a little more he knew he had a little cushion in there ok you know this whole process with the bankruptcy trustee to me is unusual what i want to bring up an unusual aspect of that according to you you have this chart that you sent me where kind of this web of money what is it about this that you think is unnecessary or fishy oh my gosh to me that charts are ok this is trying to explain the money flow and the way i look at this these people are trying to confuse the issue this came from trustee giddens office who's allegedly working on behalf of customers if you want to show the money flow you know you could have done it with five lines five lines five there are a lot more than five lines there mark you know from m.f. global to j.p. morgan would be one of those five lines you know it's doesn't intervene and simple and there are a number of things he came out when when this first started he was prepping the

media to assume more customers have to share customers have to get used to the idea that the. funds might not come out first which i'm almost out of time i just have a minute the question becomes why because this is an argument that happens with regulation all the time which is that it starts out small and then there's all of this confusion piled onto it loopholes makes it too confusing for people to understand and at the end of the day that serves the wall street players because no one can understand it but that is do you see this is similar i do here's the bottom line that isn't being discussed global is worth more to certain cities dead than it was alive and before we go who are those entities in your view i can't name this man oh come on give us one or two few morgan obviously there are a number of these if you look at who profits off of this global markets it's fascinating the carcass will bring you back on to talk about the carcass and who

the vultures are for now that's it with mark mellon mark the lenox here's the host and author thanks and i thank you. there's growing a. growing. all right it's friday time for viewer feedback we took a little break last week but we are back because there's so much to respond to turbo trana one said such an informative show i asked my dad when i was ten which is about thirty five years ago about why he does not invest in superannuation his answer was that they will rob you i learned very early never to trust anyone with your investments but i'm surprised how many have so much faith in their investment adviser and third party controlled investments what these wall street guys get up to does not surprise me at all well let me just say your dad sounds very smart i

wonder if only then he knew that not only could wall street be stealing from you but also the federal reserve was zero percent interest rates there's so many more levels these days speaking of that we talked this week about the ben bernanke you see there on the magazine which asks if he's a hero or villain and mr jim jack noted the atlantic made a typo it should say the heat. that's supposed to be here of course we thought that was very clever and we had even smith of naked capitalism on this week talking about the greg smith no relation some of the viewers that an assistant to sixty six said great to have even on the show you're slowly peeling the onion of banking corruption going back two hundred years in the usa i'd also suggest that there is a bigger picture at play here namely american ethics and lack thereof the u.s. approach in all matters is one of the hedging on a.k.a. the vampire squid protecting its power over possible but we thought i was

a really great point because the reality is no you can't legislate or regulate or ality or greed and that seems to be a recurring theme that you cannot get away from and so much that we cover with the banking industry and wall street and the things we've seen over the past several years and the vampire squid which is goldman sachs for anyone who's living under a rock or not watching this show regularly. it is a really interesting metaphor to the u.s. approach especially as you see u.s. military bases spread out like tentacles to all over the globe so i have to hand it to you good metaphor there and f. our market said love the bank man and robbers that was a plasma graphic we put up with jamie diamond and lloyd blankfein as man and robber when we compared their p.r. now the bottom line he said according to our of your we all know how crooked and corrupt the banking system is and how it's aided by paid for politicians and of

course aided by the leader of the banking cartel the federal reserve is a problem that will never be corrected until the citizens of this country demand more from their elected officials in short due to the revolving door and other issues we will always have the fox guarding the henhouse knowledge is our protection now i think it really remains to be seen how much politicians actually listen to citizens who lack the political capital of the banks it's no secret and we talk about on this show all the time how powerful the banking lobby is the top one or two in contributions to members of congress and the president no matter how much citizens demand it doesn't really seem to be getting through so we'll wait and see on that i'm not convinced but as for the knowledge part of your comment i do i couldn't agree more fully and i really hope that we on this show are helping you with that and i agree about how truly important it is more people need to learn and understand what is going on in the economy and finance moving on terry boule

investigative journalist was on this week she's talking about her latest story about scandal and the hedge fund world money and sex and a racer seven six two two said great guest and loose change which is our banter segment is that's becoming my favorite part of your show dimitri prompted me to be there is the only person on television saying the things he's saying that the rest of us are thinking lauren you of course are the show thanks for. much but could do you all none of the just information being spewed about r t is working even the real news network is jealous and trying to lash out at r.t. unfortunately we need to get organized on the same team on the side of truth and intra gritty and yes i am with you i would blow my whistle if it wasn't so loud i couldn't agree more now a week without news on our show is just not like us we have a great producer it's all over and this week we had grease fifteen so we didn't really talk about the troika moving forward on the greek bailout which happened but we did see finance minister that is a victimized by

a drive by yogurt attack there is the aftermath there and then another viewer tipped us off to this story that's pretty intriguing it also didn't get much press about another alleged attack plot look at this a great prosecutor press charges of treason and trying to destabilize the country against a known suspects on wednesday over an alleged two thousand and eight plot to overthrow the then conservative prime minister caused this court officials of the plan was hatched a war efforts by the government to improve energy relations with russia and included overthrowing and even killing the premier it was not clear who was behind it now our producer it's no secret is great and he remembers hearing about this story over the summer but didn't really go anywhere but these charges have been filed now so it is kind of interesting so we'll keep our eye on it we want to throw you that greeted because it wouldn't be a good week without one but that's it for now and that's all we have time for thanks so much for watching the show do not forget to follow me on twitter out lauren lister give us feedback on the show at youtube dot com slash capital account

because i will respond to it too next week because we have a great lineup of guests including gingold in who is an amazing guy he's over at oxford school thinking of new ideas for our globe and you'll share them but for now for everyone here capital account have a great weekend it is good night. culture is that so much seven and there's a huge visitation time in the market for a killing spree by a u.s. soldier the burning of korans in the just a creation of taliban forces the u.s. says it remains committed to its. mission and free couldn't take three months for charges free to make amends three. priests accused priests the old screen blown

chancellor video for your media project a free media oh god r t dot com. plug. plug. plug. it's c. c .