this is top stories now the un's observer mission in syria comes under attack in a damascus suburb with news crew which one of the monitors also caught up in the trouble. convicted of illegal trafficking and facing twenty five years in a maximum security jail for the russian businessman victim who calls the case against him which in an exclusive interview with. protesters attempt to storm the local tax office while deadlock in greece political . new financial chaos in the euro zone. and hopes of finding survivors from a plane crash in indonesia failed as

a rescue team discovers the first victims from the fatal. demonstration. but for me and the news team for the moment will be back with more. on its financial. system from our washington studios. good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. these are headlines for may tenth two thousand and twelve a group of u.s. house republicans are calling for the department of justice to appoint an independent counsel to investigate possible criminal wrongdoing surrounding the collapse of m.f. global we will speak to the man who's been touted the face of m.f. global's customers he's been in d.c. this week a lot being lawmakers to support this latest effort james good to les joins us in studio and from lehman brothers to bernie made off to m.f. global is bankruptcy law stacked against customers trying to get their money back

and does the law enable financial institutions to commit fraud enable fraud and come out unscathed we'll look at the bigger picture and ben bernanke is out today saying the banking sector has gained a much more solid footing in the past few years but is this based on a flawed examination of the foundation and will discuss let's get to today's capital account. so if you watch this show then you know the story behind m.f. global and if you want to take stock of where we are now well customers this includes of course farmers mom and pop investors they're still missing their money

regulators and prosecutors are reportedly investigating this one point six billion dollars shortfall in customer money money that went missing in the firm's bankruptcy customer money that should have never been touched that we haven't seen a lot of progress least not that we've heard about as for junk or zine the former m.f. global c.e.o. goldman sachs c.e.o. obama bundler new jersey governor u.s. senator he reportedly hasn't even been questioned by the prosecutors we're told that's as a mouthful so what is happening now well a republican member of the house financial services committee michael graham you see him there and a group of republican lawmakers have signed on to a letter asking the justice department to appoint an independent counsel to take over investigation of criminal wrongdoing surrounding the collapse of m.f. global the letter cites the law that take a look provides for the attorney general to appoint an independent counsel in cases

where an investigation or prosecution of a person by the d.o.j. may result in a personal financial or political conflict of interest a letter states clearly the case of m.f. global and mr poor design falls under this section if you want an example of an independent counsel in the past being appointed it can be found you may recall in the case of ken starr during the clinton administration he investigated whitewater the death of deputy white house counsel vince foster and of course the monica lewinsky scandal now here this week a lobbying lawmakers in support of this letter is james could two lists president and co-founder of the commodity customer coalition working pro bono mind you on behalf of m.f. global customers trying to get their money back he's also c.e.o. of the head. fun typhon capital management i should mention he's a lawyer too so he wears many hats he's been on the show before and we're great happy to have you here give us an update thanks a lot of thanks for ran here so i want to get to all your efforts on the hill over

the last couple days but first let's talk about why you're pushing for an independent counsel because i from what i understand these are attorneys who investigate and prosecute criminal activity in government corazon obviously is no longer in government is this because you want to independent counsel to investigate him due to his connections or does this also have to do with possibly regulators an investigation of their acts who are in government what we want to impartial investigation and the conflicts aren't limited simply to obama's pursuit of phones from course on which all the it is a potential conflict but gary gensler at the chairman of the c.s.t. see also a close friend of course i mean he recused himself an essentially de facto recused the entire agency from from investigating corazon about four days after the bankruptcy so i mean this is a case where really there's a there's a big an intersection between government and wall street and i think when you talk about the revolving door. this this is it i mean this guy went from goldman to the

governor to senator back to wall street where it blew up m.f. global and now there's one point six billion in customer madi missing. we've done our own criminal investigation and we think with information that's in the public domain right now it's clear clear crimes were committed here and all the farmers ranchers retirees traders brokers who have money in their home their heart and property that has not been returned home seven months later really haven't seen evidence. but we give them an investigation they need an impartial investigation and they have that's what we're trying to do here what crimes because you say you have evidence of crime so what crimes and by whom first one it's i mean the overarching ok so so you see. published brief written by our co-founder john rowe that outlines seven batches of fraud and among them are facts that on october twenty seventh four days before the bankruptcy the c.m. he told him of global that no transfers were allowed out of segregated accounts

without the scene at least for mission also on the twenty seventh and global reported that they had excess funds of one hundred eleven million dollars in the customer account so that's the house money that's like a buffer of money. twenty eight they published a falsified segregated report that said that they had two hundred million in excess of that to see and me as i write i want to report so falls out of project network that's right and chairman duffy. chairman of the c.m.a. said back in december on capitol hill that that report was falsified while under oath to congress right after course i testified and i said next to john rowe that i said on the i'm coughing course i'm for perjury right here right now. i mean when you're regulator under oath directly contradicts your testimony right come on i mean you know it's it's over five months since their testimony you think these crimes fall on john course signs shoulders not edith o'brien not the counsel of

m.f. global or any of the other executives this is john corazon responsible you know i can't unequivocal he say corazon is guilty of a crime i can't say that the executive offices were and i think you know we really need investigators to ferret out is is that the c.e.o. is a chorus line is that both of them is it someone else and that's the sweet. but it came from the top and i've personally met with enough m.f. global employees interviewed them got in their facts it was well you know f.b.i. the o.j. should be doing right well i mean no because i know you have been you know in the trenches and i know you there are limitations to what you've had access to but you have also gotten some access and i know you've been on all over again. and that sort of thanks that would do you know the status of the d.o.j. investigation more than than we do from what we're seeing come out why no one prosecutor told me that the d.o.j. receipts are brief months ago they're interested in speaking to me as soon as

possible and it's been months and i think out of my call you know so i mean just anecdotal but i don't see any sense of motivation here at i.b.m. slow it's used very slow and you know if o'brien i could attest with pretty good confidence has enough information to blow this wide open and. we're sort of unity so you think she should get immunity you know hundred percent think she should get a new interesting and we haven't seen that yet we have no we haven't seen it you know let's talk about this letter so i know when we last spoke you wanted to get some democrats signed onto it any luck any democrat signed on and why aren't they try and i mean i had several good meetings today on the hill and. staffers today were not rather than members but i mean they listen to me they understand the issue and you could tell the police the guys about what they were good guys they care about this issue they you know they want to see justice done. but you go out of politics at work here i mean this is an election year the president's biggest ball

matters here i think people are so traumatized by ken starr and how he went all over the place with is that with his investigation and you know our intent isn't so i could investigate obama have him you know get impeached or didn't serve as i like what we want just a truly independent impartial investigation so you're saying that essentially they don't want to go after the obama administration in election year that's their own party i think there would be there's some perception on the hill that it would be kind of breaking step with obama and you know what we were we've reached out to the administration and we spoke with someone pretty high up today who said that they're going to reach out to the administration on our behalf and see if you know if we can work with them and explain how we think an independent counsels are actually good for democrats again coming into this election cycle i think they don't they want to be seen like they're doing something about john chorus line. right now no i mean what i don't want i don't that serve their interests to not look like they're

trying to brush this under the rug which i'm not saying they are but it looks a little fishy to me that's our case right i mean obama said after two thousand and eight he's going to be tough on financial crimes and tough on wall street and all that and we haven't seen it no one got indicted no one got charged no one got prosecuted for anything that happened in two thousand and eight and now you've got the president's biggest bumbler who was at the home of unprecedented failure one point six billion missing that belong to the whole cross-section of america and if he doesn't do something to get serious about this investigation it's going to be a lightning rod against him in this election if enough people know about i don't know i was watching this congressman who is kind of the guy who's pushing this letter along with you guys and mainstream media was pretty in the dark about what the heck this m.f. global thing was i was quite surprised at their lack of knowledge at all our awareness of it of these anchors that were interviewing him along those lines he is a republican he's on the house financial services committee it's understandable why

republicans would want to sign on to this because for political reasons it looks like they're being tough and going after obama's guy whatever so where is the support from say the chairman of the house financial services committee who is a republican spencer baucus or the chairman of the subcommittee on oversight and investigations neugebauer where is their support or i mean i think you know i'm new to politics right i mean most of these guys i've met with i walk into their office have no idea if they're republican or democrat obviously you know so i'm still kind of feeling my way around the hill here. but i think from what i understand graham's a freshman congressman these guys have been around a while and i think that maybe there's a little reluctance to kind of back someone new i mean do i think a little differently than politicians and i think that the groom is doing the right thing here comes from the f.b.i. were he to some pretty heroic stuff. and on. you know to me it's simple it's right or wrong yeah well this is politics so in with graham do you think that the

fact that he is a freshman has allowed him to do this because he's not so entrenched with say big wall street money spencer baucus sixty three percent of his contributions in two thousand and ten when he became the chairman of the house financial services committee reportedly were from finance. well you don't want i'm in the finance industry right i mean i support this i think that really if you if you're in this industry and you think rationally it's in your best interest to restore integrity to its markets course hold that thought we're going to come back we're going to go to a quick break and then i want to talk bigger picture about the bankruptcy laws we'll have more of james could you list president and co-founder of the commodity customer coalition to lead to fact or fiction does money really motivate people it's the behind bonuses and rewards given to top bankers and exact but we'll give you our three cents on the growing field it looks like a science aiming to debunk this tall tale first or closing market number that.

technology innovation all the latest developments from around russia we've got the future covered. thank. all right welcome back we're talking to james cook tulis president and co-founder of the commodity customer coalition he's been all over the hill this

week talking to get people to sign on to this letter you're calling for an independent counsel and a republican in the house along with how many republicans did you get on that on that letter and i think by the time i hit it over here we're pushing sixty sixty what a long way from knowing what most of them what their reasoning why are they signed on i have no idea no idea maybe they believe they believe i feel like. they don't tell you. there are no you say great fabulous i've got your signature that's amazing ok let's talk about the bigger issues here because i want to connect this because there are issues here that are that are bigger than just m.f. global issues we've seen in other bankruptcies and the maid off scandal and lehman brothers so i just want to ask if there's anything about the bankruptcy law that you feel is stacked against customers like the ones you're fighting for and maybe in favor of big creditors like in this case d.p. morgan and same thing with j.p. morgan in a case like made off yeah so in two thousand and five there was a big revision of the bankruptcy code that added were known as safe harbor

provisions which sound like warm and cozy but are horribly anti-consumer long story short the bank lobby somehow got these changes and that. one financial firm goes down the priorities don't go to the customers like an m.f. global where you know their accounts were looted it doesn't go to secured creditors or or people who are owed commission checks number one priority somehow public policies that. over the counter derivatives should have absolute priority over everything else on bankruptcy and not only that over the counter drew out a river for anybody that doesn't know most of our audience does are basically negotiated a nontransparent way they don't go through a clearing house they don't there from one party to another saying hey we're going to make this deal and nobody really knows about it they escape regulation yet they have priority under the law under bankruptcy code right so this kind of simplify it basically what it says is. you could like cover your eyes and take stolen property

customer property as long as you don't always go to the property ok so a big issue in this case is according to reports people organs probably received five to six hundred million at least of all of the missing customer money and much of that was to me margin calls on course and is incredibly risky trades. and i don't want to give it back i mean they admitted in front of congress that they received that i believe was the last hearing or maybe the one before that but they have the money and not only you know they have the money they knew it was going to money or they should have known it was custom only because they were one of the main custodians of the customer. they sent not one not two but three letters the amount global asking them to sign saying this isn't customer money because if they had that they'd say ok then we're good to go because i don't want to try to see or they can't get it back let me ask you this because i didn't get those letters or maybe they never got sent three they got none back they took the money anyway and

they still have the money yeah well ok i want to ask about that because james gettings the trustee for the customers recently before a senate committee i believe he said that that one point six billion dollars in missing customer money has been accounted for so where is it where is it been found if you know and i know we're covering whole different issues so our customer is going to get this that right so it's kind of a nuance answer but of the one point six billion the money it's a kind of force not missing anymore right. but it's money that's not under the trustees control it's not under the control of its rightful owners the customers ok so of the one point six billion seven hundred million as in the u.k. the u.k. has even worse customer protection laws than we do right here and apparently m.f. global did not segregate the funds properly so they told customers that good these thirty point seven accounts are segregated they're just going over the u.k. so you could trade for the futures but apparently the one they set up these accounts they didn't non-segregated basis now a month ago the u.k.

supreme court ruled it lehman case that if that money could be traced back appropriately it can be treated like a segregated account and that's now what the trust that our us trustee giddens is trying to do he's suing. over in the u.k. and trying to get that money treated it like it was so we could have a return to customers no idea how long it could take years it could take years for customers to ever see this money so if you had to pinpoint because we talked about similar trends in now m.f. global lehman brothers bernie made off what would be the one thing that would really make a difference for customers having the priority that it seems like they should. really of course but all this is the number one thing that that's missing in this case ok if we go back to we're talking about a few minutes ago fraud was committed here ok if i think you'll do you believe you found fraud which means intent to do the wrong thing that's right i mean there you

know and in most white collar cases you know fraud isn't course i'm saying steal the money right it's circumstantial and there were enough badges of fraud in this case where i think any reasonable person would say that the guy that joe biden described is the smartest guy he ever intended to to do something wrong here hopefully hopefully being a reasonable person translates into law because i understand the burden of proof for fraud is difficult and credit is difficult but you know what if we could get an independent counsel if we could get an impartial investigation here. i mean you're guaranteed to not get a conviction if you're not even a question it's a great point because he hasn't been question that we know of right ok before we go i want to show you i want to bring up an article with how writers they profile do and how they're touting you take a look at this if wall street power broker and politician john chorus line is the face of m.f. global commodities trader james has become the face of its customers the other

interesting thing about this article you've been very outspoken and crane critical bad critical about j.p. morgan. what did they say in this article a spokesperson let's bring it up if we could advance that said j.p. morgan spokeswoman mary said i guess i did say they could toolis is general criticism of the bank was riddled with misinformation and totally without merit so when you say that. it's sounds like i should talk to my attorneys and get that slander cause of. a lawsuit i'm actually personally preparing to go straight to the very get go you call this slander definitely i've been the i think when you go in front of congress and you admit you received customer money you should know you didn't get a letter signed saying i was a consumer model that what i've been saying all along is true so i don't know j.p. morgan where where's my misinformation please please explain there you have it please explain because we're going to leave it there for today thanks so much that was james could do list president co-founder of the commodity customer coalition.

let's wrap up with loose change dimitri and shannon let's talk about ben bernanke your favorite person to talk about with yeah he gave a speech at the chicago fed conference today saying that the banking sector is on more solid footing saying that banks have made considerable progress repairing their balance sheets building capital he cited evidence from the stress test in millions administered back in march as one of the examples showing this here's what he said the latest c.c.a. are the stress tests conducted earlier this year demonstrated that most of the one nine hundred firms would likely have sufficient capital to withstand

a period of intense economic and financial stress and still be able to lend to households and businesses but here's the problem let's talk about the baseline assumptions because there are poor. with those stress tests according to guess that we interviewed so are his arguments based on a total belief faulty examination of the very foundation that he's talking about here is a look back at chris whalen after the stress test came out talking about just one of the major issues with them which was that they didn't properly deal with real estate and foreclosure rest take a listen we still have a very serious problem in the us in the fed seems to want to ignore it so they don't talk about litigation in the stress test and only one fifth of the losses that they generate in their scenario come from real estate which is crazy more than two thirds of the exposure in the banking system in this country comes from residential and commercial real estate. does this just show my question to you how deep our problems are when we look at these issues because he's using you know the

stress test as an example to prove that our banking system is better but the whole issue of the stress test is that they're flawed there's just too many layers to go through so mainstream media headlines are banks they're on better footing but based on what we're going to repeat this over and over again as there's no there's no other point we have to do it if the banks were healthy you would have zero percent interest rates you wouldn't have quantitative easing ok it's like being the captain the titanic and saying the ships fire and you have a zillion water pumps pumping water out of your busted up hole twenty four seven ok yeah your sim your ship your ship is sinking the only reason that it's afloat is because you've got emergency lines on the water oh the reverse is true in the banking system you have emergency liquidity facilities pumping money in you have interest rates at zero ok the economy is on life support so then very good point all the stress has he likes to say look at my beautiful ship look at my titanic it's great and it is sinking yeah and we know it because your interest rates are at

zero and you've been opening up credit facilities it's a great point if banks are better then just show me the money you know raise interest rates stop saying you're going to print more money and we'll see what happens moving on we spoke yesterday about the growing protests among shareholders regarding executive pay and bonuses and you see that a number of banks have not only made a difference though now a growing body of scientific evidence is suggesting that increasing financial rewards and may not be his performance at all here is a portion of an interview with daniel pink who wrote a book on it called drive the surprising truth about what motivates us. the evidence i mean it's not even a close call in behavioral science that these if then rewards if you do this then you get that they're terrible for creative task they simply don't work my favorite part about that is did you notice what i was talking about creative tasks i like this ok compensation it don't work when you're executing creative tasks as we know

the banking system has become well look you know what that aside because i could argue that in a different way with these guys fail to recognize is that when you're giving the bankers more money you just incentivize them to steal more but it's a reverse cycle it works differently in banking than anywhere else the way the banking has evolved ok over the years it's like you're giving them a bigger ransom all right of course we're going to kidnap more children that's what they're going to do you're giving them more money all right the last thing the jamie dimon is. of course getting back staff so they make their money yeah so that's how they're going to get a bigger raised by stealing more. you don't add new thing. and it's time to professions. ok. there for all good fun this is what work harder. is if you standards point let's move on i don't think we have time to play you a really nifty commercial of avon ladies but we should tell you that the door to

door cosmetics company avon has more decisions to make than which shade of lipstick to carry because this library fragrance maker cody is trying to attract avons attention for a second time hoping to purchase avon but this time they have some flashy company warren buffett because he released in a letter this morning that buffett's berkshire hathaway is one source of funding j.p. morgan is another two so it's warren buffett right there once warren buffett's in the mix does that mean then basically going to taken over warren buffett who were above us because he's basically become like the he's become like the sales pitch for anything and then there's this word if you slap warren buffett over so that's philanthropy they're older so that's good for you so he'll use coming out of the lipstick bubble i love that he's like a torpedo yeah he's going to be capitalism. for lipstick let's leave it there that's all we're not going to. say about joker next time because we're out of time thanks for tuning and don't forget to follow me on twitter out lauren lyster

give us feedback on the show at youtube dot com slash capital account you know i read it tomorrow response to it and from everyone here thanks for watching and have a great night.