welcome to the ilona show where you get the real headlines with none of the mercy for live in washington d.c. now tonight we're going to take a good look at all the wall street corruption out there from the live or scandal to p.s.g. best will we ever see effective regulation and accountability then the n.s.a. chief is calling on congress to move ahead with cybersecurity regulation and he promises they won't be reading your e-mails but somehow find that one hard to believe less if you want to know how many new contracts the pentagon is getting in this age of austerity but we have a pretty shocking list for you just from two weeks we'll have all of that work in

a night including a dozen happy hour but first take a look at what the mainstream media decided to miss. arias so i know that i use this term all the time but if you ever needed a quick easy very clear example that the mainstream media loves nothing more than horse race political coverage today is the day. the presidential race deadlocked president obama and governor romney are deadlocked at forty seven percent among registered voters president obama and mitt romney ties forty seven percent president obama taking his middle class tax cut pitch to iowa the race for the white house apparently a dead heat according to a new poll just plain call for president obama and mitt romney to battle ground states their target taxes in the middle class he's visiting the battleground state of iowa and reaching out to middle class voters one hundred nineteen days away from

the vote candidates competing for a tiny number of independent voters in swing states he will be pushing his plan to extend tax cuts for those making two hundred fifty thousand dollars a year mr romney takes his tax argument to the swing state of colorado back to the future president obama kickstart another fight over the bush tax cuts if you're a republican is class warfare if you're a democrat it's paying your fair share president obama threatening to block any bill that would extend the bush tax rates across the board is determined to raise taxes for top earning americans. all right so the number one issue for the upcoming election is the economy that's understandable with unofficial official unemployment at eight point two percent the u. six or real unemployment at fourteen point eight percent millions of people have lost their homes are underwater in their mortgages and more than forty nine million people that are living in poverty and millions more just above that line wealth is also being increasingly concentrated at the top the middle class is shrinking and

that's not going to change unless we drastically change our system some kind of thing that the mainstream media does that usually like to talk about when they are obsessive we covering the president's call to end tax cuts on the highest earners or push congress on a jobs bill again it's a little too comprehensive for them i guess what we're finding just obsessively cover the campaign trail they've got a sound bite from every day that you can play over and over again that really just represents who's done who war instead of. who their policies would affect but that's one big thing the other big thing in all of this is of course talking about what got us into this mess do you ever notice that we hear a lot more about the politics of politicians pissing off wall street than we do about wall street pissing off the american people i mean face it our political elite are stablished media the guys that run the economy well they just matter more than the average american worker we saw that on painful display when jamie dimon was testifying on the hill but hey these guys they donate a lot more so why wouldn't our bought politicians favor them anyway this kind of

favoritism mixed with some fierce independence that's all what led to the lack of political will to put in effect of regulations regulations that we desperately need and a spy wall street's constant cries the regulation is burdensome unnecessary if you ask me it's just become completely impossible to hear that argument without laughing or crying in disbelief there is a culture on wall street of greed profit motive if fosters corruption and rewards cheating and as if we haven't seen enough examples of that here's just one more for you today a new survey has been released by whistleblower law firm and it surveyed five hundred senior executives in the united states and the u.k. basically its results say that at least a quarter of wall street executives see wrongdoing as the key to success twenty six percent of respondents say that they had observed or had firsthand knowledge of wrongdoing in the workplace twenty four percent said they believed financial services professionals may need to engage in unethical or illegal conduct in order

to be successful sixty percent said that they would commit insider trading if they could get away with it and thirty percent said that their compensation plans created pressure to compromise ethical standards or violate the law not sure these might not be overwhelming majorities but something tells me everybody surveyed probably wasn't telling the whole truth just look at some of the scandals that are in the news lately the live or scandal j.p. morgan's to bill. dollar loss and that's global now the possible m.f. global redux p.f.g. best we're going to get into the details of these scandals with our panelists tonight but i'd say that overall it's safe to say that wall street won't change until you force it to change and that's something that neither the president nor mitt romney are really to do despite the fact that wall street is a whole lot to do with the state of the economy right now but again if they don't see it on the campaign trail that probably doesn't exist that at least seems to be the mainstream media's approach while the rest of it they choose to miss.

all right so let's roll up our sleeves dig into the details of the latest scandals to rock the financial world new information has come out of the new york fed may have known about flaws with live bores early as august two thousand and seven so the blame game begins as the investigation spreads to top u.s. banks like citigroup j.p. morgan and b. of a deeply the banks or do you blame the regulators then if the f.t.c. is accused i would based broker p.f.g. best of misusing over two hundred million dollars in customer funds and the whereabouts of that money are currently unknown so after the end of global fallout which the industry swore it couldn't happen again are we feeling a little deja vu and what does all of that teach us about the way justice is done here in america joining me to discuss this is anthony randolph director of economic research for the reason foundation and richard ask out senior fellow for campaign for america's future and host of the breakdown on we act radio in washington d.c.

gentlemen thank you both for joining me tonight and before we get into the specifics of some of these scandals some of these stories go back to that poll that i just talked about of that survey amongst five hundred executives that think that you know what you need a little unethical behavior if you want to succeed richard i want to start with you since you know you have some personal experience in the industry as well are you surprised at all. i'm just surprised that the numbers are so low i would say that a lot more than one in four people on wall street executives on wall street think it's ok to break the law to advance your business and they need to break the law to to advance your business and i think that's a very commonly held belief and i would say that three out of four executives didn't want to admit it i was kind of thinking the same thing i have to say but so thinking about that then if we look at this the library debacle what barclays is saying is that hey everybody else was doing it and that's part of their defense and

that if you think about it the fact that while the banks have to set these rates together that and then must everyone else have been doing and taking part two it's actually if you look at all the financial rules of the financial complexes out there it's not possible to enforce all of these rules a lot of these get really into the new ship things that are done day to day and a lot of money can be made by saying well you know what the law says not to do this so most people are going to be doing it we can and we can make a little bit of money if you're basically arbitrage against the law and that's so agree that number is way too low there's a lot of people the financial industry that because there are so many of the so many complex in the weeds laws and they're not and not enough regulators and not the capacity for regulators to to really be able to force all those the yeah you're going to get situations where barclays is like everybody's manipulating this why aren't we participating in this and getting a getting a small cut but should that tell you that maybe when it comes to you know if the

banks then become an interested party in setting these types of raids should they not be the ones just setting them however they feel like doing it. well you know here's where i would jump in and say first of all i love the phrase arbitraging against the law. i just feel it if this weren't on television. but i will say that you know this is certainly not a case of regulations being too complicated nothing could be simpler than the liar bore rule that says have your analysts not your traders but your analysts look at the data and tell us what it would cost you to borrow and instead of course the traders were looking at it not the analysts and and rigging the numbers so this is not an example of a rule that's too complicated to figure out and follow it's very simply a rule that they broke because they were trusted to police themselves and they knew that was an opportunity to live and i would agree with the case of live war if we're talking about that poll and looking at in general the way the financial industry looks at rules it gets it gets hyper complicated but yes when it comes to

live or if there is a role for regulators at its core it needs to be to prevent fraud and dishonesty and the case of the library scandal is pure and simple fraud nothing else. so what happens then if the new york fed really did know a whole lot about it because right now these reports seem very preliminary to something that they were alerted to in two thousand and seven that they didn't take it seriously enough but i mean that's part of the investigation right if that's what it's supposed to find out what does that say that obama in these alleged geithner go and the new york fed needs to kick dudley out immediately there's no excuse what do you say richard i agree and i agree on both counts and i would also add that not only did they know about it in two thousand and seven according to reports but they then went on to give eight hundred and eighteen or eight hundred ninety eight billion dollars in emergency loans to barclays between two thousand and eight and two thousand and ten knowing that they were rigging these numbers and

probably that a whole lot of other people were too so we need a house cleaning at the fed from top to bottom and yes geithner's got to go and probably older too ok but so you're saying i mean i find this interesting they're saying we should have a housecleaning at the fed right that geithner should go to what about just some house cleaning at the banks to mean can we also to just just look at this and compare the way that british authorities are handling the barclays debacle we've already had a c.e.o. go a chairman go the c.e.o. of barclays have to step down if you look at some you know some interviews or some accounts that have been written like in the new york times they were just shocked by this bob diamond couldn't believe it because that's not how these things work here right usually you kind of you ride it out maybe you have to pay if you pedal things you lose a bonus or two and so what should we learn from the way of the british are handling this whole thing the lesson to learn is not the lesson to learn just from this is to learn from the whole financial crisis whoa what did we do with the bailout we took seven hundred billion dollars or we took part of that we gave a whole bunch of money to banks with no stipulations on removing people that were involved in problematic trades or involved in not being wise and preen banks to the

point where according to the view of public policy makers they need to be bailed out you know i argue we should have been billing them out in the first place but if we're going to bail them out at the very least to say these guys who cause. your financial institution to essentially failed we're just keeping you from failing you need to go in this case of libel or in discovering of anything that is defrauding of customers if you know about it if you are overseeing a financial institution that is involved in corruption at that magnitude you should you should have to go no questions asked and if i want to talk about the magnitude i haven't had any more. i couldn't agree more look he you take somebody like jamie dimon who people still insist you know in washington when you hear the president say he's the smartest of the bankers his bank has committed so many crimes so much fraud so much bribery for so long that he's either crooked or incompetent either way he should get to keep his job anybody that can't run a bank so that it can't succeed unless he gets massive bailout money and massive

rescue money from the fed and still does so poorly in the stock market as the big banks are doing relative to other kinds of investments they should all go and these banks should be. you know wound down and they don't know what they're doing and the whole lot of them should be fired but the challenge is though you have to prove this incompetence and this is this is where the biggest problem is there's a difference between making a bad trade that's not illegal which a p.m.c. did in making a bad trade wasn't illegal their shareholders didn't like it there's a difference between that and libel or so a lot of the things that we complain about goldman sachs doing if you can't if these things can't be proved you can't throw them out and in this case we have a situation where there's evidence is there is no evidence and you use evidence and you bring a quick end and it was a huge i want to move on to this to the next can of the we have to just so we don't let it you know get passed by because it just came out but just in terms of lab or to mean this is think of all the many trillions of dollars that people could have

been saving or making depending on you know if you're borrowing or are holding your money and the bank british authorities say it's like five hundred trillion dollars here that we're just talking about in general that have been manipulated by the whole system but it's not going to p.s.g. best two hundred million dollars in custom. they're missing right there just unaccounted for at the current moment kind of like m.f. global maybe kind of not because this has been going on for years they think maybe since two thousand and ten when they were checking the bank's accounts they were telling them that they had two hundred million dollars in there but there was only really ten million so one hundred ninety million were unaccounted for and so i mean you know what do you think of that says for this kind of industry to some people are saying that maybe there needs to be insurance for futures traders now. well it would be very hard as the way things are now to you know i used to write that kind of insurance would be very hard to issue that insurance because it would be prohibitively expensive because they were in such a risky profession look this you know this is again this is lying this is this is

manipulation of funds and in terms of j.p. morgan chase there's now an f.c.c. investigation it may not be illegal to make a bad trade but it's illegal to lie to your investors about the kind of trade you made how much is involved so you know again i think what we're seeing over and over and by the way one of the reasons it's hard to to to come up with the evidence to prove crimes even though there's massive evidence that crimes have been committed and it's in all these i.c.c. settlements but one of the reasons why it's still difficult is that we're still relying on the banks to police themselves so naturally they're not handing over the incriminating evidence and it's time for that to stop i mean i don't think that the answer is necessarily to increase the amount of laws that are in place to force banks to do more things we have regulatory incompetence m.f. global happen now we have just almost the exact same thing happening with basically fraud that was not detected in this kind of thing should have been detected immediately once m.f. global comes to light and the regulators now jump into action it is not possible

for regulators to keep track of all the laws we're trying to put in place and to stop all of this much more if if the investors had less confidence in the regulators which we're seeing now in the futures markets it creates a higher incentive for investors or in the case of banks equity holders to play a much more active role in policing the institutions where it is their money as opposed to depending on somebody else who is not really good at being able to do that to protect you like yes let's maybe we should create the laws that actually make it easy to police jail right and that aren't can't be subject to a million loopholes and work around the you know it's fine i just want to do one more topic and before we before we move on which is that swiss bank accounts of course are in the news because the obama. ministration is attacking mitt romney for a swiss bank accounts and we have a lot of politicians coming out on this here is dick durbin on face the nation for this weekend when it comes to his swiss bank account there is just no way to explain it either get a swiss bank account to conceal what you're doing or you believe the swiss franc

a stronger than the american dollar. are it's i was first i want to bring this up for you here anthony too because matt welch from reason i wrote wrote something about this in the sense that well there are military veterans you know there are dual national citizens there are people that are being kicked out of their existing swiss accounts if they have even though they might live in geneva they might work for some kind of an ngo and so how do you properly handle something like that i mean do you necessarily have something to hide if you have a swiss bank account i have time for each of you to give you know one answer absolute there's no reason to stop people from having swiss banks accounts with one hand you could have very legitimate reasons for doing it if you live there another legitimate reason is maybe you want to hedge against the dollar this is not a patriotic issue where you have to keep all of your investments denominated in dollars on the show you've talked a lot about the strength of the swiss franc why not put some money in a swiss bank account and hold it there alternately this is no one's business really this comes down to no good reason to try and extract as many dollars as possible

from every single person to the point where we now have to say you know we're going to be pulling money from overseas this is this comes down to the fact that we have a really complicated tax code it needs to be much simpler if we didn't have that there would be no reason to create this witch hunt against people who swiss bank accounts richard your last word is that nobody's business look you know it becomes your business when you run for president and whether we're talking about p.f.g. best or mitt romney what the real issue here is transparency versus secrecy it's not that mitt had a swiss bank account it's that or you reportedly had thirty or forty different accounts around the world moving money and shifting hiding and now look that would be his business if we knew we had law and for. meant they could look into that make sure no laws were being broken and if you were running for president the problem is not that you know laws are too complicated or whatever it promises too much secrecy too much self policing as opposed to you know getting the facts out on the table and of all people the libertarian should agree with me on this because

a genuine market is supposed to function on transparency and information that shared by all parties instead we have secrecy lying and cheating and that's what needs to change about transparency but let's vote for obama on his issues not romney's trivialities transparency are you guys that's all the time we have but i want to thank both of you for joining us tonight. ok guys it's time for our first break of the evening but when we come back and as a chief keith alexander is warning congress that cyber threats will cost as a dearly unless the agency is given new powers and they swear those powers all of the abuse but she really believes that the asking tony shaffer after the break. there hasn't been anything yet. it is to get

the maximum with. the source material he journalism. we want to visit. something.

well fear mongering was his mission and i think the n.s.a. director keith general keith alexander succeeded yesterday speaking of the american enterprise institute alexander warned the threat of cyber attacks is growing and the probability for crisis is quote mounting and he also broke down some numbers he

said that the loss of information and intellectual property through cyber crimes is the greatest transfer of wealth in history that includes about two hundred fifty billion dollars lost by u.s. companies per year through intellectual property theft another hundred fourteen billion loss due to cyber crime and with the cost of downtime after an attack here out of the number out to about three hundred eighty eight billion dollars he also called on congress to hurry up passed cyber security legislation and claim that the n.s.a. is not talking about giving our personal e-mails to the government but considering all the reports lately from wireless carriers internet companies like google and twitter of just how often the government the government asks them to hand over user information why should we believe him joining me to discuss this is retired lieutenant colonel anthony shaffer senior national security advisor with the task force on national and homeland security and author of the book operation dark heart tony thanks for joining us tonight thanks for having me so ok just be realistic with me right because this is cyber warfare cyber security these are things that

we're hearing about all the time now we know that a lot of money is being thrown at it and i don't think there's anybody out there that would say that it's clearly not a threat you'd be naive to say something like that but does it need to be drummed up as much as as keith alexander is saying is there could be a crisis mounting a crisis has come and gone were the middle of his words would have had a lot more weight and frankly the subtlety ten years ago. we were doing this sort of saying we're looking at this what it's like so are the chinese ten years ago the loss of wealth real absolutely the need for detailed information for war he's asking for no it's i'm saying if there's potential for abuse there will be abuse so as we talked about earlier and also this for the audience look. what he's asking for socially is for the equivalent of a traffic cop instead of directing traffic and trying to control traffic he wants to look in your freakin glove box every time you drive by chance when you lie there when you know that he won't be reading your e-mail no they're already about it there already or there's more to come on down the road i think there's more

legislation out there and secret implementations of legislation we know about so that's something that in terms of exposing what they've been growing you're going to do more reading because let's not forget that the n.s.a. gave us that complete b.s. answer yes when asked by members of congress how many americans communications have you actually looked at and they said we can't tell you because it would violate their privacy to tell it's insane exactly so they're have this big utah facility now it's sweeping up everything i don't care what they say it's getting everything now you cannot tell me with a straight face that you're not seeing u.s. citizen information this person from ation if you're getting everything so it all it is all about at this point time their own self-restraint which frankly from what i've heard on the inside being being used more importantly there are provisions of the patriot act which have been implemented in secret that is say that you or i as a citizen do not know what necessarily we're doing to break the law because they've made the actual violation secret which is against the constitution it's ludicrous and it is likely we have i mean senator ron wyden has been one of the people that really has been pushing for at least some to harry losing the kind of the what he

said yes i wish that they had been paying a little more attention to it but so let's talk about some of the things he didn't specifically use one of the pieces of cybersecurity legislation that are out there and call for he just said congress needs to act there's sysco which already passed the house hasn't gone in the senate yet the senate is working on a couple of versions of its own all of them saying seem to ferry us in their own ways i mean what's what's your take on these and i've talked to staff from both this and frankly d.o.d. is asking for things it doesn't need i think that's part of the problem up front has all the guidance requirements capabilities to do what's necessary to protect the government and our infrastructure now they just choose not to do that they're looking for additional verbiage in the thought. which they really frankly don't need but they want us out thirty's over you know over private companies and they want to say you have to now share all this data with us absolutely and again i believe if there's potential for abuse there will be abuse and list look at the record of not only this administration but the bush white house as well neither

administration was good in any aspect of giving congress the right full in for access to the information they need to oversee do you d.n.d. h.s. so you tell me why there's got to be a bigger reason why they don't want to share this information and frankly both campaigns to step away from the government for a second both campaigns are using data mining as a key method of trying to understand demographics and how to address their messaging if they're doing it for campaigns you've got to know the government doing it the same way just within the government's considered classified information so we've got to be a lot more worried about why the government wants information and what's going to do with it and i do not buy for a minute but based on the fact i have briefed general alexander in previous operations that he is telling the truth regarding the protection of u.s. privacy your source of privacy are there any any things that he is suggesting that should be able to be implemented that are good ideas for example a saying of the government should switch over to to cloud computing you know because then you can be a little more a little more lucid and everything that is cloud computing such a good idea because then we just saw that we had this major you know power outage

right here in washington d.c. of the other week amazon's cloud computing system totally cracked and all these businesses found themselves vulnerable and realized that they hadn't put enough backstops that this task force i work on looks at this very issue as well as e.m.p. electromagnetic pulse e.m.p. issues look let's let's be honest here if the power grid goes down everything goes down and if you've got everything on a cloud somewhere you will never see especially if it's known for weeks so this is not the the the single answer the single solution if it's all we've got to look at a comprehensive strategy of how to address all these issues this onward rush to say this is the solution is not well thought and i think it's a desperate measure for the duty to both justify its budget and all of it should be expanded in this area i. i don't believe for a minute they're doing it the right way the way they're trying to do it right now one of the things which i thought was interesting so the guardian did an interview with john arquilla he got a sense out of nowhere. fast or and so he was giving some advice and saying basically there's one hundred of these master hackers out there in the world and

what the government should really be doing is instead of trying to fight them you want to be recording that but they are going to have to maybe change your standards a little bit right these guys might not know initially pass the kind of test that you need everyone to go through to get security clearance or maybe they look a little different what's your take well back in the days when i was actually doing this ten years ago i actually had a ponytail believe it or not and i was allowed it was allowed by the fact i was running a unit which did what joe what john is talking about here i've talked john's been briefed of my former operations that's one of the reasons i think he stated this we need to be a lot more creative in bringing in the best and brightest you don't always have to recruit from the outside it's always good to have i've been in briefings where they bring in outsiders and teach you stuff i used to run a course to teach our people how to do telecommunications targeting believe me it's important but you can grow your own it's a combination of both you need to seek individuals who have the specific very unique talents and oh by the way if they want to drink cola and run around with what's essentially flip flops in a and a speed shirt so what the people in the military in general are not used to this

level of kind of i would say radical difference to authority and it's one of those things that i think we need to accept these guys are bad they're just different and this is the culture which they come out of we've got to accept that and try to go and stand again and i'm speaking from experience i read one of the first duty units which actually did this sort of thing all right so chill out guys as i'm sure well it is their identity thank you and joining us tonight you. guys it's time for another quick break but when we come back from the talk about how money influences politics from governor's mansions to the pentagon to find out how cash rolled everything around me and you after the.