mark you. find out what's really happening to the global economy with my stronger run over the global financial headlines tune into a report on our. top stories tonight over two thousand people have been killed and many more injured than the security to the heart of the syrian capital it's a desperate attempts at the u.n. to bring the conflict to a peaceful resolution. to mend from guilty of last year's terror attack in minsk have reportedly been executed despite calls from international human rights groups for the death sentences to be reconsidered. and small issues inside the e.u. nazi soldiers heralded as heroes in latvia in a rally enjoying top level support but triggering public outrage. to washington now and laura distance covered writing more of the latest financial turbulence.

good afternoon and welcome to capital account i'm lauren lister here in washington d.c. and these are your headlines for march sixteenth two thousand and twelve first are we think an emerging market for this. imo glow in the wet ball perspiration it now a congressional budget office with the war has come out alleging she was not accepting the wall street party line pressure not to be perhaps a mistake about banking and housing outlets it's certain to feel a little like this. is this guy. that's right nancy. we'll see where it goes with the twenty five billion dollar mortgage settlement was states 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 who want to judge ged rakoff rejected the f need 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 saying he overstepped his authority come on what is it going to take as these them the nation's guilt and speaking. simply do not know where the money is or why the accounts it's not been working so well to. 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 well another of the trustees had been asked by u.s. lawmakers to abort his mission to pay bonuses to m.f. global exacts so just who are these trustees we'll 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 naysayers too big to fail banks at the crux of a lot of it the question of trustees 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 dui 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 band was 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. 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 for 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 hot on the trail mark melinde host of the uncorrelated investing show and author of this book you see here high performance managed futures and we've had him for it's nice to have you here in washington d.c. thanks for being on the show that this is good to see you so now we have talked about the john prison angle extensively and i talked about the end. global angle with you now i want to talk about the too big to fail angle because and the global wasn't too big to fail it did fail and obviously there is that too big to fail angle and it is goldman sachs alum and very connected but there is a too big to fail angle in this story and i want us to set that up i want to play a sound bite from john corazon talking about customer money to put it in context. the park office in chicago explicitly confirmed to me that the phones were properly transferred and i understood that the morgan chase was satisfied since the executed

billions of troops billions of dollars of troops with m.f. global they sure did and j.p. morgan with m.f. global's largest creditor ran the documentation i've seen is j.p. morgan as much of a story here as m.f. global and how so well it's a fascinating about for certain j.p. morgan had a number of conflicted rules that were stored in. clear and settled the trades so they were in a 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 in morgan has and well for one well there are a number of 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 be essentially have

a significant role in selecting the creditors bankruptcy trustee who my sources tell me is given the task of investigating fraud but 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 not the money. let's get our to make that clear let's get on on the talking points 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 and the trustee is as you said tasked with the credit 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 j.p. morgan is essentially operating the. creditors committee and why what right did j.p. morgan have to select the bankruptcy trustee and it 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 and then they had to come it adam with the 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 question will be on the shadow of a doubt and for people to say that there is not a fraud investigation ongoing i just don't get it it was not about what you think that's about ok well if fraud is investigated and fraud is determined is the key customers have the priority rights they should have had ok because right now the way this bankruptcy is being handled creditors have a priority there any footage 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 occur. and how this whole thing went down the those people that are managing those documents are the scene people who may be and did something along these lines and louis freeh cording to media reports has incentivize them by saying they may get

bonuses if they turn up the most amount of money for creditors what exactly is the incentivizing them for he's in son of lies in them and it is his legal duty to to get the money for the creditors so he isn't son of eyes. nor 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 global ok well if the department of justice is relying on louis freeh unintentionally because he's the 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 in the customer rights fight has an e-mail from the department of justice where he essentially complain to the department of justice about some of the obvious what he considered obvious fraudulent behavior and apartment of justice said to him you need to talk to louie freeh really nice so you think louis freeh is the eyes and ears and building any

kind of a fraud case against 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 that 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 a segregated accounts come before all else are you implying that regulators. the i guess department of justice by putting louis freeh and charge of he 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 want to be a conspiracy theorist baronet i don't either ok well we're building a case here let me preface it by saying there has been some significant really

questionable activities by certain regulators and i've run into great regulators in 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 i don't know if that john corps apparently had set the straight up so all the risk was associated with these 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 the these documents were received by the f.c.c. on may thirty first two thousand and eleven the facts are these time stamp a document september second which is not in accordance with their traditional

policies then after they filed the documents after m.f. global floated the bonds then they went back down and took the document down and refile stamped it with the correct date. 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 go to break in about a minute before we do because we're going to keep going i want to talk to you more about this here just briefly tell our audience why do we care why are you investigating that's why you're looking into this i know you've been in this industry a lot and a lot of people would say what i am well 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 defending the industry and defending 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 is occurring is a lot stand ok we're going to have you on 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 the too big to fails we'll be right back with more with mark in the lead 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 from this week while you will find out just ahead but first your closing market numbers.

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 this the wall street journal had reported that louis freeh said that he wanted to pay out bonuses possibly and that

global exacts well now the senate agriculture committee sent him a letter opposing the bonuses he said this it is they said this 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 firm's operational legal and financial management at the time that the customer money disappeared mark i want to bring you back in this is mark will lend host of uncorrelated investing show a veteran of the futures commodities industry how significant is it that they wrote him this letter well i think it sends a much deeper message that 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 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 or nothing happens well i can't guarantee about congress and i don't you know pretend to be my subject matter but i can tell you this i've learned some congressmen who i think are a little ridge and look you know this is a fact is this affecting farmers ok so it's one thing for too big to fail to pick on a limb and pick on a bear stearns and 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 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 peril if you have all of that's nothing new come on that's been going on since the financial before the financial crisis obviously you can guess i mean 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 saying that 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 law st and dismissed when she did not you also have a backlash coming out against that and with greg smith the thing i've heard repeatedly from people on wall street in the end oppressed in the business press is it will never work 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 the some of the situation who's fighting it's individuals you know we're the major institutions in our industry or the final battle or frankly we're in a battle for our lives and there's been

a cone of silence in our industry and there's been a sweep under the rug attitude and you know i think that's 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 one headed for debt crisis let's just face it and to be to fail is 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 in a broad country i think i can answer that i want to talk about one other aspect of this and the 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 an out but 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 still the store whole process with the bankruptcy trustee to me is unusual while i want to bring up an unusual aspect of that according to you you have this chart that you sent me of 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 first to get an 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're from out of global to j.p. morgan it would be one of those five lines you want doesn't need to be in and simple and there are a number of things you came out when when this first started he was prepping the media to assume your customers have to share customers have to get used to the idea that they might not 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 on to it loopholes makes it too confusing for people to understand 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 a life and before we go who are those entities in your view i can't name this one oh come on give us one or two if you morgan obviously there are a number of these if you look at who profits off of this global spark it's fascinating the carcass will bring you back on to talk about the carcass and who the glossaries are for now that's it mark mellon mark millennium excuse me host and author thank you.

the length. 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 with these last three guys get out to just 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 there percent interest rates there's so many more

levels these days speaking of that we talked this week about the ben bernanke a cover 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 eve smith of naked capitalism on this week talking about the greg smith no relation some of the viewers asked 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 heads of on a.k.a. the vampire squid protecting its power ever possible and 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 tens of goals to all over the globe so i have to hand it to you good metaphor there and if our market said love the bank man and robbers that was a plasma graphic we put up with jamie diamond and lloyd blankfein is a man and robber when we compared their p.r. now the bottom line he said according to our of your we all know how corrupted banking system is and how it 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 call it to actually listen to citizens who lack the political capital of the banks it's no secret and we talk about on the 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 and out 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 bool investigative journalist was on this week she's talking about her latest story about scandal in the hedge fund world money and sex and

a research 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 but the rest of us are thinking lauren you of course are the show thanks for. much but could you all none of the different from asian 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 tragedy 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 great news on our show is just not like us we have a great producer it's all over and this week we had grease to teens so we didn't really talk about the troika moving forward on the greek bailout which happened but we did see finance minister venezuela's 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 pressed 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 have a 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 wanted 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 as lauren mr 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 and good night.