spondon i for bennett let him do it for the news from more of the stories we covered you can head on over to youtube dot com slash arts america and just because the show stops doesn't mean the news does for the very latest information you can also head over to our web site it's r t dot com slash usa so you're right back here in a half hour. you know sometimes you see a story and it seems so poorly you think you understand it and then you glimpse something else here so you saw the part of it and realized everything you thought you knew you don't. charge bloggers a big. news

today violence is once again flared up. these are the images go girl she's been seeing from the streets of canada. trying to corporations are on the day. good afternoon now welcome to capital account i'm lauren lyster here in washington d.c. these are your headlines for march twenty ninth two thousand and twelve and of global's collapse has taken center stage on the hill as justice and the safety of customer money in the u.s. banking system hang in the balance so what executives have to say about how things unfolded with an unprecedented one point six billion dollars in customer money missing. i really i don't recall.

well thank goodness we have our sources we speak with the fund manager whose money was vaporized by m.f. global and has been working with customers to get it back also with lawmakers on these hearings and he has the real story for us and is it reminiscent of enron and what can we learn from the clean up of these disasters that we continue to see more and seemingly worse versions of continuing to happen also here in the u.s. after the free market seemed to say it didn't want ammonia and left over meat was pink slime in its neat guess who was fighting back the g o b i'm talking about the u.s. department of agriculture and the governors of our lives states that want to bring pink slime back to earth everywhere but what you know we think let's get to today's capital account.

yesterday the m.f. global collapse took center stage on capitol hill as the threat of crony capitalism and the sanctity of customer money in u.s. markets really remains in the balance and as the unprecedented unprecedented ok disappearance loss. whatever you choose to call it of customer money one point six billion dollars of that money kept in segregated accounts supposed to be protected remains unexplained unaccounted for and is most horrible executives yesterday the legal counsel c. oppose assistant treasurer came to answer eagerly anticipated questions eagerly anticipated issues what did they reveal do you intend to invoke your fifth

amendment right to any question. to the ira i was not aware of the transfer before it was made. but it was a way for the majority of that week and i apologize in advance if i'm unable to agree to a veto but so my responsibility was to oversee the global finance function i was not responsible for i know you weren't responsible for ridge testimony apparently you weren't responsible for anything and that really sums up the tone of those executives up there and what they actually said now speaking of the lawmakers you heard from one and whether their motivation was political theater or they genuinely care i have to give them credit for a much better performance and this guy took the words right out of my mouth pretty much the entire time. how am i supposed to ask you questions if none of you apparently knew what was going on apparently no one did anything wrong but there's

a billion dollars missing that's fair enough i appreciate your consistency in having nothing to add to this discussion this hearing after reading this testimony listening you reminded me an awful lot of hearing we had in this committee i don't know how many years go on in one interesting comparison at the end you catch that he compared it and run it have been some time but let's work all day at enron. i must respectfully decline to answer on fifth amendment grounds all the questions of this committee and served committee for you invoke your fifth amendment rights in response to all questions here today yes i will i respectfully decline to answer the question based on the protection afforded me under the constitution of the united states. you know how much things change how much stays the same so what does that say about the progress in stopping these kinds of frauds in the financial system as they progress to new seemingly worse levels and with more and more

politically connected people and more consolidated power of too big to fail banks and the alumni they produce behind them to help us answer that stanley harz here he's president of heart capital management he has been involved in this in the sense that he's been in congress talking to these lawmakers he's been an m.f. global customer that's affected a fund manager and also the founder of the commodity customer coalition that's helping customers in this case so we're really happy to have you here thanks for being on the show thank you for inviting me i would just correct them i'm one of the founders one of the art of the team many of whom have been on you have orderly actually thank you in this network one of the few places on the air that has given adequate coverage to this issue most of the others are just ignoring it and speaking on behalf of all of us we're very appreciative of the work you're going well you know thank you for that because as we were talking about before we started this interview you know this has so much bigger ramifications than just this one

case which has affected so many people and you can't discount that but this is a good set of precedents about customer money that's supposed to be protected in the banking system for everybody i mean this is just a bigger deal than i think as you said a lot of the mainstream media has has credit for and i think it's a super important story to cover for that reason let's get into it because i know you have been talking to members of congress on behalf of the customers that you are working to help in sending questions to ask gary gensler the head of the c.s.c. see that you get your wish list that sort of thing my question to you what is your sense of how much members of congress and lawmakers get this really understand what's going on and care you know well it is a complicated area there aren't that many people mostly come from. our cultural background or have worked in this specific corner of the financial industry the know much about the futures market and kind of the other side so to speak has been a pretty good job through their lawyers and leaking information etc but this is all just a confusion a possibly an accident no criminality and so i think many congressmen have kind of

avoided it for that reason i do want to thank a chairman of our and the members of this specific committee the house financial services committee the oversight subcommittee in particular has been the only place in congress and i would say in my opinion the only place in the u.s. government that seems to care about this situation about justice for customers and trying to get us restitution of our money the other branches of government including to to sherry as well as the executive branch of the regulators like this you have to see have really been largely missing in action and again we appreciate what they're doing and we're trying to help them any way we can whether it's providing background information and educating them as to the nature of futures trading and why this should never have occurred and was clearly illegal i mean the commodity exchange act is a seventy year old law that basically protects customer funds that need to be segregated you know even you showed the clip of congressman cup want to our respect

and at some point questions yesterday but at the end of the hearing he was still saying if criminality has taken place well there's a concept in the law. the the translation from the lion is it is what it is on its face and in other words the very fact that the money is missing shows that a crime took place so we should really be moving beyond that to figure out who committed it and how can we rectify the situation and recapture the money for clients right well why do you think everybody is so afraid to use the courts like fraud or that you heard the general counsel yesterday for m.f. global who was just bumbling over whether to call this missing money that should never have been missing that thing she avoided why is everybody so great at that well i think because deep down inside particularly mr. who is not some innocent country lawyer or someone who is just providing general corporate invites she's in my opinion probably the mastermind behind a lot of what took place in the structure of the repos etc she's on the international advisory council of the c f t c she is one of the most famous

derivatives and futures attorneys in the world and her experience and connections with mr corazon goes all the way back to the time they were together at goldman sachs and whenever there was an attempt was made to restrict for example the use of customer funds repose in the kind of investments they could make if she and mr corps i want to play in or on the phone speaking with gary gensler with our children in order to keep the rules as they were to enable them to leverage up the bets and continue basically using our money. at risk to support their bet how important you think that all new connection is oh i think i think in terms of a connection with the existing goldman sachs' company there were a number of transactions that i remember reading a report that a lot of the assets that were sold in the final days of the company were purchased by goldman so there's an involvement there i think what's more interesting and this is not proof of any kind of criminality or whatever but it is kind of an interesting coincidence that almost all of the key players involved you can find

a connection back to working together at goldman sachs and that's what i mean i'd have been fact the vampires wakin accent ferber who resigned william dudley at the fed who gave the primary dealers status j.c. flowers who hasn't been mentioned very much but he placed from what i understand for a brit who resigned in the role of leading m.f. global because he had an investment in a global and it wasn't doing well and he thought this was a way to maybe try to energize his investment it's curious that only this has been brought out anywhere that actually mr gore's and remains a managing partner of j.c. flowers company remains on the one that boards of his they and yet no one stopped about the conflict of interest possible dealings between those two companies etc so you find goldman everywhere and yet of course gary gensler. gary gensler sure i mean how how would someone a farmer. who contributed to mr reelection campaign in new jersey and he's supposed to be in charge of regulating it you know a lot of the spin masters from the other side were leaking stories and the rest of

the means to the press are going to get by you guys who are on top of it that the trail has one cold yeah what i would say to that is if you haven't even taken the bloodhounds out of the kennel how can you say the trails won't quote there's been nobody looking after what really happened behind the story again with one exception of this committee which i'm very grateful for but they are not a court of law they can indict anyone they can't force via clawback or money to come back to us so at some point and sign hopefully what we hope is that we can kind of change the investigators in a sense because of these hearings into doing what they should have been doing already five months ago which is actively pursuing this case well let's talk about if anything came out of the hearing yesterday in regard to that because we did hear a few of the executives at least say that they've been questioned by investigators who are due to be questioned by investigators do you not take that to mean that there is an active d.o.j. or f.b.i. investigation and i was in the room and listening very carefully you know these people were well ordered up if they're not lawyers themselves like mr verver right now they're very careful in what they say and how they say it and if you kind of

roll back the video or are the transcript from that. mr steenkamp said that his lawyers have been in contact with he had never personally never been questioned right was ferber so that it was going to be questionable april sixth by the d.o.j. that's right this is an event that happened on october thirty one billion dollars goes missing and you don't you don't question the top executives in the company you know if i steal one of these chairs that we're sitting on here today i'll be in d.c. lockup in about five minutes being interrogated a billion dollars disappears and the head of the company who are clearly involved in the decisions that caused this to happen aren't interrogated to me that smacks of if not cover up a lack of desire to really get to a rapid conclude. because. one can attribute political motives to that because of the corazon obama connection of course on biden because of the cronyism that we talked about before without i don't have no proof of that you know of the obama team doesn't come to me to consult on the campaign trail you know you're going to

they're presenting it up to last at least they would come to but i think certainly it's smells of a lack of desire to aggressively pursue this case and that's one of the things that's been most frustrating it's not that complicated i think congressman posey had it right yesterday when he made the casino analogy that if you and i are in a casino and all my chips are growing i can't get more credit at the window of the casino i can just reach over and take your chips and use them for my bed i'd be in custody in two minutes yeah but i certainly think you can if you're john karr as i wrote today and isn't it just to make to remind our audience of all of those connections you have corazon who has been a bundler for obama he way he goes and testifies before members of congress those were his former colleagues some of them because he was a member of congress you have again the goldman sachs connection you have there's sound bites have vice president biden saying when they have a problem when they're figuring out how to solve it economically they call up john for his i'm you know so it's really throughout this whole thing obviously we don't you know know exactly what i like but it's important but i mean being the genius

that he is if you look at those sound bites both obama and biden attributed the stimulus plan through to the genius idea of john but of course biden always has to go over the top if you play back those videos which are available online he calls words i want most honest people he's met. and still ahead where do you and a global customers think their missing money is and do they stand a chance against that screw big to fail interest in getting it back we'll have more with stanley hard at first their closing market numbers. you just put a picture of me when i was like nine years old i couldn't tell the truth.

i'm a confession i am a total get a friend that i love brad because he is a manuscript. that he was kind of the jester. i'm very proud of the world with its place. oh. you know sometimes you see a story and it seems so easy to understand it and then you glimpse something else and cheers you some other part of it and realize that everything is ok if you don't i'm sorry welcome to the big picture. what drives the world the fear mongering used by politicians who makes decisions to

break through. who can you trust no one who is you with a global mission a region where we had a state controlled capitalism was called sessions when nobody dares to ask. we do our tea question more. welcome back now as i said earlier our guest was also an m.f. global customers so he's been personally affected i asked what it's been like trying to get his money back he explained how different spin from past bankruptcies in this industry the firm that preceded them of global was rescued they went bankrupt i had an account there at the time and basically the account and all the money was seamlessly moved to another broker within

a matter of twenty four hours and that's the way the system is supposed to work and so really our commodity coalition came together about a week after the bankruptcy when we were all kind of in shock and it was and growing despair of the day because now there's nothing being done no one was even saying anything there were no pronouncements by the city if you see the c.m.e. nothing was being done the money was gone we were left with our response systems wide open by the world so we were left with the worst of both worlds we had one hundred percent of our risk and zero percent of our equity at that point and the whole manner in which the bankruptcy was structured is in my opinion critical to our ability to get money returned to us and hasn't really been explored a lot in these hearings but i hopefully it will be hopefully it will be we've explored it a lot on this show so i don't want to spend too much time on that i do want to talk about how corazon got into this position of risk in the first place and we have this rhetoric that comes out from executives that these were these chaotic final

days but were they really i want to play what janet have a holy who was on this show earlier this week said about her due diligence what it tells her about this cataclysmic trade with involved in. given what he was long and given what he was short as stated in the march report at least when you looked at what was happening during two thousand and eleven i believe that there were several days in two thousand and eleven when m.f. global was in negative equity position and there should be investigated. so of course the saying is true but that would imply that they had been short many days or more than one day in two thousand and eleven it would have possibly needed to dip into customer money other occasions and maybe did and it is this time they were caught is there any merit to that and you know i think that's exactly correct and again i've heard reports like i don't have a smoking gun if you happen to present it you hear that they were really playing games for months in terms of intraday borrowings intercompany between the broker

dealer and the commodity side also different parts of the world you know when a company gets really short of cash and if they're trying to hide what's going on they'll pick play games like going during going into a company repos taking advantage of different time zones between japanese. affiliates etc so we believe there was probably some of that going on but again i keep it although i can't prove it there's a pattern here going back to the fact that this came out of the feb second degree that they were had already worked on to break the glass for mergers you claim they knew they were they were really skating on very very thin ice and from this further yesterday to say they all should know that was a big problem and next essential threats of the company its all that weekend saturday sunday why did you hire bankruptcy attorneys on the day before on friday that having arps the contracts out there it's in the it's in the documents from the bankruptcy court and obviously should must have spoken to them even a day or two days before that they knew this was coming or that were potentially

coming and speaking of hiding risk i want to talk a little bit about the repo to maturity degrade that was what eventually caused the demise of m.f. global i don't want to get too technical but our viewers are down there quite smart and i want you to kind of speak to how this exactly works and in what way and the couple and other firms have done this in the past have used an instrument like this to hide risk and therefore undertake work that's exactly you know i'm not an expert in this area because that's not my major even though i've worked as a. and an executive of some some large companies in the in the agribusiness area this is not something that i would have ever complicated because contemplated because of the risk involved and because it really does involve kind of hiding what you're doing in terms of the accounting treatment of it but it is off balance sheet it's off balance sheet and that's the question of the congressman have been asking at face value whether whether it's going to continue to be off balance sheet but in essence and this goes back you can actually go back to the december fifteenth

hearing and congressman's posies questions some of which i helped him with. what you generally want to do in these situations is get the money to london via the internal repos or some other mechanism why because of what london the london financial markets are wide open to rico i thought the cation has no limits on leverage so once you get the money there you can leverage it practically to infinity and john corazon being again i've never met the man but from what i've read vanity fair and elsewhere having an extremely large ego and being on most addictive in terms of his trading style i wanted to get as big as he could get with almost really no trading capital you know a math problem was it was a small stodgy brokerage firm to get a very good job growth which was but they didn't have the capital to support those kind of trades so he wound up taking a little bit of capital that they had a lot of capital that was on their books that was ours that was costing the funds moving up to london leveraging up through the repos keeping it off the balance sheet and hiding it from regulators and from their accountants until about august

until finra kind of caught them already in this very exposed position and you know that's in essence what happened do you think that if it's found that j.p. morgan does have this customer money there is any way that you guys can legally get it back and do you think a part of being in a position to do a lot of due diligence on a global economy they would have had suspicions about their ability to meet this in march a lot of due diligence is really an understatement and one of the most interesting points that came out yesterday is. they were already on the no i'm no dad but they were in a close watch because j.p. morgan very well that they had run out of money and why didn't they ask for the comfort of your yesterday's you can work and said it's an extremely rare occurrence to ask for that letter they knew that that money was not money that they should be touchy to pay back the shipping with the credit on your question from day one of the all of us have very strong suspicions and nothing's happened since then that our money isn't cheap in working the only way we're going to get it back however is to great through the safe harbor provisions of the bankruptcy code because they've

already grabbed the collateral and you can do that if you show that some sort of criminality took place and there's criminality of all different flavors and varieties that we throw all through this situation and remember j.p. morgan had its hands all over m.f. global as the largest creditor also the underwriter at m.f. global's revolving credit facility their custody and it goes on and just a reminder he mentioned we hypothecation how major of a part of that place you can find our breakdown of that very important term on our you tube channel we get a word of the day on it. all

right before we go let's wind down with some loose change we've got to me terry and shannon to talk about this first mcdonald's called away and then picked titian's to and what's been dubbed pink slime found in ground beef in school lunches in grocery stores went viral on the internet and then this. maker of the meat additive known as pink slime is suspending production at all but one of its plants the ammonia treated filler came under fire and social media and so people got laid off pink slime closing down people calling it oh but wait not everyone hates pink slime after all the u.s. department of agriculture the governors of five states are coming out supporting the company's beef products that makes this pink slime are going pink slime has been unfairly labeled and is actually a safe low cost way to make ground beef leaner and cheaper so my take on this is that the free market basically decided we don't want pink slime in our meat once

they knew what was in it and then the government said oh no wait we don't care what you want this is good you need this disgusting animal byproduct ammonia treated by pot product in your burgers here well that's that's the government's job the government says uncle sugar says this is this is what's good for you want to help you but with the really doing is doing the bidding of large corporations ok so this is once again uncle sugar coming to the rescue with legislate with this was saying let's shove your face full of pink slime balls and. we're going from the great outdoors and our dogs put all in your mouth. and get this commercial and we're doing a favor so just to remind you of what's in pink slime because i actually didn't know animal by products including low grade beef trimmings from connective tissue spinal rectal intestinal material all treated with ammonia gas to kill food borne illness that causes bacteria now this is

a government who has caught people's ability to drink raw milk or distribute it but they want you to eat ammonia laden rectal tissue this is good for you. good for you yes good stuff shannon the only thing i can say is somebody needs. where's the beef. where is the beef i don't know the fingernails in the rug exactly ok let's move on the fourth annual summit is going on in new delhi and these are some of the largest and fastest growing emerging countries brazil russia india china south africa now they did some business they reportedly did agree to the to work on a common development between the five countries that something we've talked about is along the lines of the world bank some analysts are saying it could be an alternative to the world bank and i.m.f. for these countries they also sign two packs which would increase trade or encourage trade between nations because they're offering loans to each other in

their own respective currencies so are countries trying to send the message they've had it with the dollar circumvented and are they trying to answer this. the question is how do you bury it so the way that is like you want to do what slowly you don't want to do it suddenly but three politely they'll tell us here it was over so is that what they're trying to say to the dollar they say no dollars a pariah currency as michael has been told me in that interview which was a great interview on this very issue but i mean a year ago this is not a new issue well the developing world is trying to find a way to gently booth and i was the dollar that's the thing so you know but i think people speak to look i want people to use this we don't have it up here but the brics logo looks a lot like a marijuana plant on god i think of this is a part of a marketing campaign by the bridge hunters to make their alternative currency look cool ok so now i'm going to look about i'm going to look for one coming camp and we've seen a lot of these deals in between countries to train their own currencies and i do think that they're meaningful also they take some time so you have some time to

prepare took about three years for russia and china to train local currencies so there's a lot of food for thought but that's all we have time for thanks so much for tuning in don't forget to follow me on twitter at lauren lester and give us give us q.'s me feedback on the show in you tube dot com slash capital accounts from everyone here thank you so much for watching and have a great night.