i'm sam sacks in for tom hartman in washington d.c. and here's what's coming up tonight on the big picture. this year corporations will pay eight billion dollars to the government for defrauding taxpayers and guess how many of these corporate c.e.o.'s will go to jail for literally stealing billions of dollars here's a hint it's less than one also last week wall street trading firm knight capital lost four hundred million dollars in a matter of minutes how did this happen and why is the stability of the entire financial system in danger now because of greedy bankers but because of robots and

last night texas executed a mentally disabled man even though that's against the constitution how do they get away with it and why did the supreme court do nothing to stop it. and we begin tonight with a number eight billion that's how many dollars that corporations will have to pay the government this year in settlements for defrauding taxpayers as the new york times reports banks military contractors pharmaceutical companies they're all in track to pay the department of justice a record breaking eight billion dollars to settle fraud charges more than double the settlements they paid last year that includes pharmaceutical pharmaceutical giant glaxo smith kline which is dishing out three billion dollars alone to settle charges that it sold drugs for under prove uses failed to report safety data and

overcharged the government for drugs it also includes military contractor eighty k. launch systems which is agreed to pay nearly thirty seven million dollars to settle charges that it sold dangerous and defective equipment to the united states military. and it also includes the software company oracle which will pay nearly two hundred million dollars to settle charges that it overbilled the government or you and i the taxpayer for work it did over the last nine years plus it includes all the settlements paid this year by mortgage lenders who were committing blatant fraud as the housing market began imploding back in two thousand and seven so clearly corporations have been misbehaving but here's another number for you zero that's how many c.e.o.'s at the corporations i just mentioned will see even just one day just one day in jail for the blatant fraud and theft they've committed you see it's an unwritten law in america if you're rich and powerful enough and you

don't go to jail when you commit high crimes and here's another number for you seven thousand three hundred and eighty five that's how many average americans were arrested and many thrown in jail since last september for joining in on the occupy movement and most of those arrests are for petty victimless crimes associated with civil disobedience like marching in a non march zone or having a sleeping bag in a public park or drawing on the sidewalk with chalk in other words if you draw a peace slogan on the sidewalk well you're going to jail but if you defraud american taxpayers to the tune of hundreds of millions of dollars. nothing happens there's something clearly wrong with this picture now for more on this robber weissman joins me he is the president of public citizen robert welcome to show it to you so what kind of message is sent to corporate america when you have companies

sending defective equipment to the military you have companies defrauding the government of hundreds of millions of dollars you have companies. you know selling drugs to us for unintended purposes. and they're only slapped with a fine which is pretty meager compared to the profits they're making and not any threat of jail time whatsoever what kind of message does that send the message is the odds of you getting caught aren't that good and if you get caught it's just a cost of doing business go ahead it's as simple as that it's not just that the individual the c.e.o.'s aren't getting prosecuted by and large the companies aren't getting prosecuted either what we're seeing from the justice department is a refusal by and large to criminally prosecute companies and instead they enter into these agreements they're called deferred prosecution or non prosecution agreements with a company agrees to pay a fine promises they won't do bad in the future and they get off it all together and they actually go ahead and do bad again the gesture exhibit but in cycle starts over again well i mean the government counters that by saying look we're these are pretty hefty fines we're collecting a lot of money for the for the resources we're devoting for these civil claims

we're actually getting a lot of money back and it's really difficult to prosecute these sort of white collar crimes do you kind of buy that or. no well first of all the government takes too much credit because these big fines are coming primarily not from cases initiated by the government they're initiated by whistleblowers and private lawsuits where the government then picks up the claim that a whistleblower started three billion of eight billion dollars total as a penalty against clock so smith kline the pharmaceutical maker that was a case initiated by whistleblowers so yeah they get a great return but they're actually doing the hard work it is a little bit hard to go after the c.e.o. and the nature of the corporation is that defuses responsibility and it's hard to know who decided what they go out of their way to make sure it works that way inside the company so you need to do a couple things one is you need to say ok given that the company itself has to be held criminally liable to when you impose fines on them you have to look not just at the size of a number that seems regular you know huge to

a regular person you go look at the size relative to the profits they made in the risk they took so glaxo paid three million three billion dollars but they made forty billion dollars in sales in the same profit and last say yet we're going to go after the individuals the c.e.o. is responsible for what happened the top managers are responsible for what happened we're going to work hard to make the case against them not all the time but at least some of the time a three billion dollar fine for forty billion dollars in profit just almost as if that fine is just an investment to be able to do wrongdoing and try and collect bigger profits in the future but i'm wondering if there's something bigger going on here this is the largest this is the biggest settlements we've seen ever. and it just happens to coincide with a lot of economic distress in america and looking at past economies that have imploded what you see is the wealthy try and collect as much money as they can before the coming crash or whatever have these corporations are they kind of in that process where they're trying to suck up as much wealth as they can because they've completely lost faith in the american system and they're just going to move

off to some other country and you know they're transnational giants do they have any allegiance whatsoever for the last part no for sure they don't an increase. lieven say so on the first part i think you have to look industry by industry and it seems interesting things going on a lot of these cases now are against the pharmaceutical companies and the reason they're coming again is not because of the government it's because of these internal whistleblowers showing wrongdoing by the companies that wrongdoing has become an essential part of the business model of the pharmaceutical industry by contrast we don't see much by way of prosecution at all in the financial sector which imploded the whole economy but when you look down the line and we're seeing more and more in the recent weeks wrongdoing is an essential part of the business model of wall street yeah and it seems that what can the public citizen in the last thirty seconds we have left work in public citizen do to use this as an example and do things like overturn corporate personhood and other consumer more consumer protections well i mean start to answer the question we why do we not have tougher

penalties because ultimately goes back to the influence of these corporations over the political process dealing with that means we've got to overturn citizens united overturn the doctrine of corporate personhood overturn the idea that big money can buy our elections but we also have to do a lot more direct pressure against the prosecutors a make them do their job and let's get to work robert keep up the great work thanks oberweis but the truth is corporations are more than willing to spend eight billion dollars on fraud settlements to shield their c.e.o.'s from prison time and one reason why eight billion dollars is no big deal to them is because they're not paying their fair share in taxes anymore in fact america's ten most profitable corporations paid an average income tax rate of just nine percent last year well below the thirty five percent income tax rate corporations should be paying in america but almost never do. plain and simple giving tax breaks to corporations that pollute our skies offshore jobs denies health care and to fraud our government is not just crazy it's immoral but here's tom state. take

a look at the general electric corporation according to a study by the center for tax justice general electric current eighty one point two billion in profits over the last decade eighty one point two billion that's eighty one thousand million dollars in profits that's a heck of a lot of money but guess what the average tax rate paid by g.e. over the last decade was well first let's take a look at a hardworking high school teacher for comparison in wisconsin for example who makes fifty thousand bucks a year he or she would pay about twenty five percent income tax rate plus around twelve percent payroll taxes but general electric a corporation that's taken home eighty one point two billion dollars over the last ten years well it paid on average over those ten years a mind boggling only low tax rate of just two point three percent american teacher thirty seven can buy thirty seven percent combined tax rate on fifty

thousand bucks g.e. two point three percent and eighty one point two billion dollars something seem off to you not only that for four years during the last decade g.e. actually had a negative tax rate with our government writing them checks for billions of dollars unfortunately when corporations like gto pay their fair share in taxes and working people have to pick up the slack because ever since reagan here in america we tax working people to pay for tax cuts for the rich here's the bigger picture as corporations as corporate taxes go down. g e the bird gets shifted to working people i mean here you can see it in this graph right here this is payroll taxes and this is you know from the one nine hundred forty s. to the to today it's all purple stuff is payroll taxes and the blue line see how big it is was back here afterwards it was corporate taxes and corporate taxes if

they have just you know they've gone from twenty twenty five percent of our revenue and per payroll taxes were a very small portion of it the payroll taxes by the way are only paid by people who make up to one hundred six thousand eight hundred dollars a year payroll taxes have become a larger and larger and larger corporate taxes smaller and smaller and smaller so g.'s income return last year they paid no taxes by the way was nine hundred feet high the payroll taxes by the way are regressive they hit only lower income people are people making under one hundred six thousand eight hundred dollars after that the richest americans don't even pay payroll taxes and many you know we've got special tax gain for capitalists called the capital gains tax the capital gains tax maximum fifteen percent that's what mitt romney pays it's paris hilton pays the corporations of the very best tax dodgers the u.s. average for big companies over the last decade has been around twelve percent warren buffett one of the richest people in america broke it down like this.

interesting about the corporate rate is the corporate profits as a percentage of g.d.p. last year were the highest or just about the highest in the last fifty years they were ten and a fraction percent of g.d.p. that's higher than we've seen in fifty years the taxes as a person and corporate taxes apposite percentage of g.d.p. we're one point two percent one hundred eighty billion that's just about the lowest we've seen so our corporate tax rate last year affectively in terms of taxes paid by the united states was around twelve percent which is well below those existing in and most of the industrial. industrialized countries around the world so it is a myth that the american corporations are paying thirty five percent or anything like that you have to pay a twelve percent as he just said it's time to close some loopholes. after the break there used to be that the floor of the wall street stock exchange was filled with actual people stockbrokers yelling and screaming to make trades now the people are

still there but robots are doing most of the trade it why drones could be the next big thing on wall street coming out. just burns your eyes right right i mean it's like a derivative of actual paper it's a food product essentially. this is much stronger than anything it's made by a lot of. thousands of times was stronger than any kind of body of ever put you know. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else and you hear or see some other part of it and realize that everything is. welcome to the big picture.

now i'm learning this here. so last wednesday something really really strange happened to wall street trading firm knight capital just after the opening bell at nine thirty am the firm began making a flurry of errant trades buying and selling huge amounts of shares in major companies officials at the new york stock exchange when that something was wrong the enormous increase in trading right after the bell was unusual so they contacted folks at the securities and exchange commission to look into what was happening and then market regulators were called into action but by the time the regulators figured out the source of these massive nonsensical trades the damage had already been done in just

forty five minutes of trading that wednesday morning knight capital lost more than four hundred million dollars and had it not been for a cash loan a few days later the entire firm would have gone bankrupt destroyed by a forty five minute trading debacle so you would think some trader at the firm would lose his job over making these boneheaded trades right yeah except these bad trades weren't made by a person they were made by a machine sea knight capital is chalking up the massive trading loss to a software glitch that caused computers belonging to the firm to go rogue to spin off a multitude of bad trades that would have taken the entire firm down that day had regulators not shut down trading forty five and forty five minutes into the mess. thing about wall street nowadays is humans are no longer in control instead robots are in fact fifty five percent of all the trades made on the stock market

every single day are not made by people buying and selling shares they're made by a high tech robots that are programmed with special algorithms to buy and sell shares at the speed of microseconds it's called high frequency trading and we're talking tens and hundreds of thousands of trades being made by these robots every single second and these robots aren't looking for the big money trades they're just programmed to find the slightest increases in stock prices hoping to buy a stock in the mean and then immediately sell it for a profit of one one thousandth of a penny or less but doesn't sound like and

a half hour because of that crash a computer glitch also so is our stock market even reliable anymore now that robots are in control jerry adler joins me now he's a contributor to wired magazine whose latest piece raising bulls how wall street got addicted to light speed trading will appear in the september issue of the magazine out august twentieth carrie welcome thank you so when most people think of the stock market they think of human traders looking at economic indicators in quarterly profits and trying to determine the health of a company that they want to invest in is that the case anymore. well that certainly still goes on but as you said. done by computer algorithms which. pay no attention to the long term prospects of any

company and are simply looking at short very short term trends that they can exploit to make small profits. i mean the important thing here are these algorithms whoever makes the best algorithm or the most profitable algorithm but almost second those are most second to speed how is speed becomes such a critical factor when it comes to high frequency trading and how how are these high frequency trading firms trying to maximize their speed right now. well there's a there's a tremendous arms race to get data between the various trading centers around the world as quickly as possible new york to chicago new york to london london to tokyo . because. what what these algorithms are looking for a very small mispricing between you know something is selling for at one price in chicago and. a slightly different price in new york and if you can get there first

you can exploit it and make that money. and as a result literally billions of dollars are being spent to shave off milliseconds and microseconds even from the time it takes to get information about a price or or an order from one place to another. they're actually late yep and yeah and you talk about in your article this sort of arms race could and you're not even joking about that people are actually serious when they're telling you this about you know using drones to relay the signals faster and then even building their own particle accelerators have they can figure out ways to make it go through the through the through the earth to reach the other side or to make the trade. well the neutrinos are are are way down the road. but what they are doing they're laying

a new transatlantic cable between new york and london they didn't really need one for. carry ordinary telecommunications but they figured out that they can they can cut about one hundred eighty miles off the standard distance. by going through the grand banks off newfoundland it's much more expensive to do it that way but it would save five milliseconds on the time it takes to send an order. five milliseconds can be a lot of money. five milliseconds makes can mean the difference between making money and losing money. and but actually the problem is that that light travel school a fiber optic cable that only two hundred thousand kilometers a second and radio signals travel a three hundred thousand kilometers a second so if you could if if you could do it by michael waves through the atmosphere it would even be faster and. the people are doing this now between new

york and and chicago with a chain of microwave relays but you can't put a relay tower in the middle of the atlantic so someone said well why not why not have. a series of drone aircraft solar powered. relay stations hovering over the mid atlantic relaying. signals from new york to london and that would be even faster they're not building that yet either but certainly people aren't aren't laughing about it just a matter of time right and like we said fifty five percent of all trades are now due to these robots and i don't see that decreasing anytime soon if anything it's going to increase and what we've seen with the flash crash and perhaps knight capital we're not one hundred percent sure what exactly happened at night capital is that there is a danger in taking humans out of the equation and leave you know to robots are we playing with fire here. well that's that that's the really the big question

so far. the flash crash and knight capital and a couple of others that that happened in the last year or two have all been contained. and the markets went back to normal within a day or so the question is whether the next time this happens it can get out of hand and really blow up the entire financial system and no one really knows that i mean i've heard arguments on both sides of that question and i guess we'll have to wait and see period there thanks a lot for coming on. thank you for having me a financial transaction tax also known as a robin hood tax since it targets the wealthiest bankers bankers could go a long way to curbing high frequency trading robots here's tom steak not only does the robin hood tax raise much needed revenue it also discourages bad behavior such

as excessive financial speculation and high frequency trading one of the main proponents of the robin hood tax in france was an organization called friends of the earth europe which published a report on the banks which said european banks pension funds insurance companies are increasingly global are increasing global hunger and poverty by speculating on food prices in financing land grabs in poor countries food speculation with billions of euros flooding in and out of financial products causes price volatility is rapid and unpredictable price wings' at the most vulnerable hardest threatening the right to food and making it more difficult for farmers to maintain an income creating instability hunger and poverty and they were just talking about the european banks not even the american banks it's been proven that for example goldman sachs which opened up the market for speculation on everything from oil to food to gold. but that company played an integral role in the two thousand and

eight food shortages around the planet as frederick kaufman wrote in harper's magazine the result of wall street's venture into grain and feed in livestock has been a shock to the global food production and delivery system not only does the world's food supply have to contend with constricted supply and increased demand for real grain but investment bankers have engineered an artificial upward poll on the price of grain futures and the effects have been staggering two hundred fifty million people joined the ranks of the hungry in two thousand and eight bringing the total of the world's food in secure to a peak of one billion a number never seen before this is what the banks are doing with all that untaxed money speculating and creating instability around the planet but a robin hood tax would change all that and it would put an end to the high speed machines that account for most of the trades made on wall street machines that make

tens to hundreds of thousands of trades a sack and based solely on a computer formula those machines caused a flash crash of the market back in two thousand and ten leading to the dow jones falling one thousand points in just minutes without explanation the extremely risky and a robin hood tax would put an end to those as well so the question isn't should we put in place a robin hood tax in the banks years the question really is why the hell are we taking so long to put in place a robin hood tax it's time to put an end to fraud and theft on wall street it's time to make banks toure's pay their fair share again and it's time to bring stability to global markets we need a robin hood tax in america now.

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