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next the keiser report. i.m.s. kaiser this is the kaiser report so goldman sachs caught breaking the law again stacy herbert max kaiser indeed s e c fines goldman sachs twenty two million dollars over a holes the securities and exchange commission on thursday fined goldman sachs group twenty two million dollars over allegations that the wall street bank didn't how policies to prevent analysts from sharing nonpublic information to the firm's traders the exchanges took place and weekly huddles where goldman's research analysts met to provide their best trading ideas to the firm's traders and later passed them on to a select group of top clients the f.c.c.

said well yeah. a lawyer called glass steagall was present prevented this exact thing from going on the communication between the analysts of the bankers within the organization and this was there after that last crash and depression in america and they pass some laws to try to keep these groups from talking to each other but now goldman has formalized their fraud with this weekly huddle that they get together i suppose it shows the the huddle it's like a football huddle because you blankfein likes to touch the little guys but behind so i think is the main objective of this organ of this meeting well in fact you said it was a crime but this is a fine they're paying so i think the f.c.c. is actually treating it like it was cuddles that went a little bit wrong i mean this is their mollycoddling that weren't very well what happens when coddles turn into something more than that you say and you know they should sign when you join one of these firms very strict rules and regulations

about getting a little bit too cuddly but so they have to be careful that they're just whispering a little nonchalant so and so's each other. cares about so and so being bought and sold it's called inside information isn't and they've they've created a weekly meeting of basel called the inside information meeting yeah exactly ok they're trading information back and forth with their between the bank and the analysts and the traders which they're not supposed to do and they claim all the time they're not doing and they're claiming we don't need any more regulation we don't need a restoration of classical because we don't do this we're perfect guys and if we do we'll pay our for the crime right but they're paying just a small fine twenty two million dollars how much does that represent of their profits it represents six months bill it sparks steakhouse basically is what it amounts to luckily they'll get whacked and one of these times are going to get whacked if they keep doing this so max in two thousand and seven according to the f.c.c. the new york investment giant began a program known as a symmetric service initiative where analysts shared information and trading ideas

for meetings with some investor clients yeah asymmetric warfare exactly there's a some the asymmetry here is that the clients are getting hammered their clients are getting. screwed the insiders at goldman and their privileged clients and make money trying to get inside information by lobbyists and by congressmen to pass laws to make it easier to read inside information those filling the end of the weekly asymmetry information meeting with even more grist for their insider trading mark manipulation mill that they use the pot line their pockets i'm told they're lucky not to be done it strikes in appropriate well that's where gangsters hung out in the seventy's and eighty's and these are the new gangsters of new york you know they said the f.c.c. said these meetings these so-called huddles these little cuddles in one blankfein steam happened between two thousand and six and two thousand and eleven they do leave out max a very important huddle or several huddles between lloyd blankfein his traders and

their analysts and certain. treasury secretary who would that be bought. paulson i mean you go to the two thousand and eight period we find out later that paulson thanks to a whole with the insiders on wall street told folks that the government was going to bailing out these institutions printing money to do sell the banks all tripled and quadruple during that period of time based on all between hank paulson congress and wall street and billions of dollars were siphoned out of the economy and put into the pockets of you folks who used most of that money to pass laws to make it easier to commit the same crimes over and over again yes those hurdles you were talking about with hank paulson they were actually involved he met with these bankers from goldman sachs he met with hedge funders who used to be at goldman sachs we told them despite going in front of congress and telling congress. we will not bail out fannie mae and freddie mac.

they will not be put into receivership into conservatorship and in fact he was telling them that we're going to do it so you cannot this is our little huddle our little cuddle i won't but that's exactly right and this is a one of the most blatant examples of really this modern crypto engineer financial fascism when you've got the hank paulson's of the revolving door between wall street and washington trading on inside information leading to this amalgam of fraud that poisoning the waters of our financial system and causing widespread austerity despair discussed outrage pre-revolution well max you bring up the word fraud and according to joseph devore an attorney at close in o'connor in new york and a former assistant regional director and as he sees new york office he said the fine was not in consequential for a settlement that involves technical violations of internal policies and procedures oh that's the best best thing the technical violation so that's that's that's i'm

talking about technically they need to take the money that they make from training us inside information to go and pass laws to eliminate each subsequent technical aspect of the laws that were there to stop this violation of these chinese wall conversations from happening to begin with so when you replace the word law when you hear the word technical no matter what they do if lloyd blankfein came into this room do you multiple times live here on camera it would be a technical violation of knife was. exactly this a technically he was a violation of the no into the lunchroom a lot but the fact that there is a pool of blood underneath the t.v. presenter is really not to be focused on at this time because technically he's not violating anything of substance so he can. walk weather is it's completely rob ing

the end of global customers and having the us bail them out is ok because he was wearing using the right fork at lunch and so finally on this goldman sachs story of this guy joseph devore the former s.e.c. guy he says that it makes sense that the commission was able to negotiate a penalty settlement over four times the two thousand and three pound offaly settlement so yes goldman sachs already paid a penalty in two thousand and three for this exact same tactical violation but they have more leverage now because of the financial collapse to clean with goldman sachs and pay a little bit more money to stagger around. a little more money for your lawbreaking and your crew a little bit. please go through those two to school goodness one if you could. just poor bureaucrats you do low skilled. you know this is outrageous that the f.c.c. is begging goldman to to write up the fine at their cough the bill with yeah it's sort of actually you know saying you know what you guys are shameless lawbreaking

thug banks are scum and how about we bring it out of sparks and wacky you know i love these chinese banks who give you know they take the breakers out back and like to kill him that's a deterrent death is a deterrent now speaking of technical violations we have some more technical violations from another big day you and me you kill me over here did technical violations graham a go go boots technical violations little so this approach to look ok if i could park anywhere although i do still live audio what it is but. that's me i don't need ok i don't want to well these are technical violations from the other big. on the street who's a bigger group bob. paul says bluebird fun. look the look is j.p. morgan stanley guy he's the shiksa of the. this is like a little blow on their little piece to me below the table to respond dollar j.p.

morgan said to transform treasury to prop trading this is again brings us back to the last eagle j.p. morgan chase and company chief executive officer jamie diamond has transformed the bank's chief investment office in the past five years increasing the size and risk of its speculative bets according to five former executives with direct knowledge of the changes achilles machree hired in two thousand and six as the chief investment officer as top executive in london led an expansion into corporate and mortgage debt investments with a mandate to generate profits for the new york based bank three of the former employees said diamond fifty six closely supervised the shift from the c i o's previous focus on protecting j.p. morgan from risks inherent in its banking business such as interest rates and currency movements. oh or do we begin first of all they said they're increasing the size and the risk yes they triple that they tripled it we're living in an era of

the too big to fail banks acting like purana eating our everyone's lunch so here's a guy in a mecca. for a least a killie's backus. achilles macro killie's a mackerel this comes into the into the coliseum where the plan to transform yet another market into an over secured toxic waste dumps the jamie gun is going to extract these from well max some of macro says bets are now so large that j.p. morgan probably can't online them without losing money or roiling financial markets the former executive said based on knowledge gleaned from people inside the bank and dealers at other firms who know excel another london based trader in mattresses group gained attention last week after moving markets with his trades drawn comparisons to federal reserve chairman ben s. bernanke he's power in the government bond market will bring and he is to the treasury market excell is to the derivatives market but they're too big to unwind

right without causing massive financial disruption did they get too big unwind by accident no that's the idea we get too big to unwind on purpose so that we don't need to on wind because this is a scheme where we are out there extract ing rant from everybody who's even tangentially connected to this economy they must go through this interest rate scheme perpetuated by the bernanke and the j.p. morgans of the world and the costs are rising and they can go suffering and these guys are mafioso they're the mafioso well you mentioned mafioso so let's turn to this further information about this story here the cia is growing size and market power have made it an increasingly important customer to wall street trading desk in a market influenced by head. loans and other investors the former employee said positions and credit derivatives have become so large that some market participants dubbed him baltimore it's after the villain of the harry potter series who is so powerful

he can't be called by name this is not good when you have bankers who people are afraid to mention their name yet and who brings us back to that first story about goldman sachs the f.c.c. is afraid to mention goldman sachs is crying spy name so it's called a technical violation please don't tell us lloyd blankfein writes the sole idea that too big to fail was a problem so we need to rein in we need to bring graham we need to bring in the volcker rule we need to bring in new legislation we need to have elizabeth warren do a tad table dance for a couple of congressmen got a sparks in d.c. you know to try to stop all this was a complete farce because it got much bigger they got much worse the whole thing just go and completely out of control stays there but thanks so much for being on the kaiser report thank you max dugway much more coming away so stay right there.

i am back as a welcome back to the kaiser report special in studio guest matt taibbi matt welcome to the kaiser report it's great to see you and course reading all your stuff in the rolling stone and first of all course a quick question i mean you're writing all these stories about banks and and what's going on on wall street but are you writing about finance or are you writing about crime stories basically it's funny the ones have gotten so blurred it's basically an organized crime story and that's really that's what i'm trying to do legally is just convince readers that it's not really a you can amik story or a fine and story it's organized crime there's no difference at all yeah i mean the language that people use the bankers it sounds so highfalutin and they use these very very full swaps and derivatives and collateralized debt obligations but they could just as well be talking about you know whack a guy behind the. dumpster at sparks total essentially it's the same thing so you write gangster banks keep winning public business they're the in the business of doing the business of the public in essence and they even though they're clearly by

laying the law they're continuing to get these contracts so tell us about it yeah this is an example where it's exactly like the old mafia business in the old days we had municipal bid rigging and it was a mafia group that would prey upon some local municipality in and different mafia groups would divide up between each other which tear which town they got the service their garbage who got the service the laundry here who got to do this and that the cement the construction and that's exactly what we have with modern. investment banking all these investment banks have essentially divided up their territory they are artificially lowering their bids for investment banking business so a town goes out and it wants to issue a bond and all the banks all of them good usual suspects bank of america chase are all colluding to submit artificially low bids and everybody is losing out and it's

exactly the same activity that we had with mafia groups it's just that it happens to be bonds that are garbage well junk bonds as they're called. which runs right exactly so now another interesting aspect of this is that they know the mob has gone global the great wall street mob and you see and has seen no italy there's a big story raises re another and you've covered this extensively so it couple highlights there again given that global the globalization of this absolutely the that's one of the problems with prosecuting this kind of crime is that it's it's so good it's so cross territorial and you're across jurisdictional that there is no one law enforcement body that can really aggressively prosecute this kind of crime and they also have a tendency to go. regulatory shopping essentially a bit if they seek out the. areas where the regulations of the weakest are the regulators for the weakest and that's where they will base their operations that the laws are are less powerful so it's very hard to nail them down for things like

the swap manipulations or the really big story i think this is about it this year is the manipulation of a lot of bore which is a this new burgeoning case that's coming out and nobody really knows where they're going to prosecute the case yeah that story and i don't know if you call this one or not but bank of new york was caught in a multi-trillion dollar custodian business for pensions and and what not they were stepping in front of all the trading the foreigners throat running for explorer and just scalping the pennies billions and billions and now they're saying oh we're not sure we can prosecute that story and put off a speech that movie. in one period of time but you do it a million times right now that's initially rolling stone of course is a pop culture a great magazine and it got back to the hunter s. thompson days and the coverage of the politics of the sixty's and the nixon and there you are you're at the in the magazine in the writing is different then you're going to find the wall to wall street journal or financial times because you bring in a real literary sense to it it's great to read even if you're not interested in the

in the details of the stories it's well written so that as a writer one of the challenges it's kind of i have bit of a tangent story because most want to ask this as a writer when you're talking in this space because the material so well paid for any crimes are when you talk about inflation it's a crime that no one is really aware of happening it's creeping it's all around you how do you deal with that i mean as a writer as a journalist and go through your thought process on that a little bit yeah it's incredibly complicated challenging because there and this is part of the reason that these guys get away with as much as they get away with because the instant you try to explain some of these crimes you know you can't do it in a thousand words you can't even do with three thousand words it takes sometimes six seven eight thousand words to. knowing how many people ation of the municipal bond market works or you know what p. was doing before the crash all those things so the first thing that i try to do

always is i try to connect the activity to a real world consequence so i find somebody who actually ended up losing money and then i'll try to connect that consequence to the crime so for instance in jefferson county alabama you start with you know somebody who got laid off or somebody you had to pay a sewer rate that was five or six times what it should have been and then you kind of work back from there and you show how j.p. morgan chase's the solution to this sort of bribe its way into the lap of the local infrastructure resulted in that person having to pay all that money and so it's definitely a challenge to i mean you yourself know the verbiage and all it is is is a camouflage for all these crimes that it's very very difficult to sort through and the crisis that happened in two thousand and eight the result of this was not any reform but that the two big to fail got even more to big to fail they got too big to fail yeah let's talk about that specifically

a piece that you've written the bank of america too crooked to fail. so it's a great another fantastic you know home run piece to walk us through it a little bit talk about it we just tried to do with this piece of this is kind of walk people through what the consequences of too big to fail are and what what it really means where people go to understand is when these companies get this big and bank of america this is backup bank of america show you got out of business in two thousand and eight they made two catastrophic decisions back during the crash one was to acquire countrywide which is the giant subprime lender and the other one was the money when they were essentially forced to acquire merrill lynch so they had these two gigantic albatross around their neck but instead of putting it out of business it had to conversely had the opposite effect the company got. so big so artificially big because of these acquisitions and now we couldn't let it go out of business and now we're stuck with this company and it essentially no matter what

they do no matter how many different kinds of ethical misdeeds they get involved with we really don't have a choice anymore but the slap them on the wrist kind of hope to get better and continually bail them out and this is this is what we tried to show in the piece we sort of just listed all the different things that they're involved with from i mean it's. ridiculous to reading live boards or all the mortgage backed securities rip offs that these guys were involved with ripping off the hamp program you know that obama's mortgage program ripping off people who have prepaid great america cards to get their unemployment insurance benefits it's just one scam after another but we have to turn the other cheek and to sort of let it happen what mainstream media like and less seen basically which is cable network educated to the ticker tape basically and cheerleader for all this so you've got to go to warren buffett will come on is celebrated as america's sweetheart billionaire and he's got a big position a bank of america wells fargo bank he's directly involved in this fraud wells fargo bank the story with the drug laws on the mexican cartel. acquired by wells hundreds

of billions of dollars regularly connected to the chain may change in mexico twenty two tons of cocaine basically what the what it what they covered well and so you have a warren buffett will go and see him b.c. he's investing in these companies and but you get these are places you go alley you know i mean he's the great genius the oracle again from the pop culture side the rolling stone side you go from jimi hendrix star spangled banner you know what stock to warren buffett playing a ukulele is ending a meeting. and people are celebrating that as a milestone and cultural you know achievement how did we get this far down the slide what happened it's amazing you know i remember i'm not a group. going to family and journalists and i remember when i was a kid reporters hated powerful people it was a sort of a thing that was part of this business we we have a thing we wanted to stick it to the man if he was doing something wrong different

but he kind of what we've been taught that it was their role to kind of take people down a page when they when they got too big for their britches but i don't know maybe i don't know if you have the same experience but in our business something's changed there's a completely opposite dynamic now in the media which is that we worship powerful figures we grovel and slobber at their feet and it's been a terrible thing for america because there's nobody really asking these questions and these guys are allowed to get away with a lot more because they have the presumption of correctness every time they come out with some new horrible scam they're always given the benefit of doubt by reporters and it's the unfortunate thing yeah whistleblowers are being attacked because you know ministration but much more than any other administration in history is attacking whistleblowers right right and journalists are under attack all over the world or it's stopped at borders in our own country in the u.s. and it's become you know as you say the dynamic has completely changed but leslie

got to touch on this john course and scandal and m.f. global because here is kind of a new chapter because what we what we have discovered is that the discourse zine scandal he reached into customer accounts right any took money a segregated customer money so it's not just billionaires playing with each other in ways that ultimately do cause problems this was a direct this is just stealing stealing you know no way to round it it's so but of course iran is nothing has been for brought against him was right let's talk about this oh this is an incredible thing i was just out in california last week and i'm doing some research about how we prosecute say welfare fraud in america right and there was a case that i heard about where a woman who was on welfare she was on public benefits and she. she used a public. daycare at a time when she was not allowed to use it and they prosecuted for fraud and put her in jail because she used the government service at

a time when she wasn't supposed to technically right so we actually put people that they meet they make forty or fifty felony cases a month in these california counties against these very very small time. people but you know john course i'm he steals how many how many hundreds of millions of dollars it was i mean and again it wasn't a sophisticated operation it was just like you're talking about it's like one big you know a businessman gets desperate he reaches that embezzles his own company to pay off a drug habit or whatever that's what this was how is this guy still walking around how is there no case it's worse than the trayvon martin thing and this is this well in a way i mean it's it's just it shows you we live kind of in these two different worlds where there's one set of rules over here and one of the rules over here well it would be to make the trayvon martin comparison it's you know here's a guy who's getting murdered in the street overregulate and karzai is committing a fraud openly and with in the street in the glare of the spotlight great and

people are wondering what is that really a crime there's a similarity there like there's only just got murdered in the street people. i wonder if that's wrong right here the guy course i he just glue in this just stole this money and light is that is that wrong well finally that's eighty given the arc of the story here you think you can run out of stories in this on this topic because it's funny i was just talking to about that with another journalist and we both we both talk about how it's like a lifetime job security thing with this with this topic there's a salute and was a bottomless well of these of these scams and you know if you do appeals to your sense of humor i mean the good there are incredibly dark in there and some of them are quite ingenious actually but they just never end i mean is that your experience is just simply never run out of iowa going to be leaving this post anytime soon right exactly and that's a big thank so much by. on the kaiser report thank you all right that's going to do it for this edition of the kaiser report with me nice keyser and stacy herbert i think my guest matt taibbi of rolling stone got some e-mail please do so at kaiser reported r t t v dot ru intellects imax guys are saying.

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