good afternoon to welcome the prime interest i'm perry and boring here in washington d.c. here's the stories that we're tracking today. rolling stones that t.v. weighed in on brown vitter a tough new banking bill that was introduced last week he had some harsh words regarding a report that was issued by standard and poor's which is one of the girls critics tavi wrote the paper essentially hands about forcing banks to retain more capital could lead to world of financial collapse the onset of a new ice age mahmoud's roaming the premises. however as of yesterday's close climate change futures were not yet pricing in this chilling bods ability. this morning president of the european central bank mario draghi cut the main refinancing rates with a startling bow a half

a percent and he has an open mind on the issue of bangs charging depositors for the privilege of holding their money and what you don't go around with helicopter money it was actually the fact is i believe he made no comments on cyber it's. been surprise surprise according to american banker at the pay a bank its c.e.o. is rose eleven percent in two thousand and twelve but it's not just top bankers who are cashing in big dog trader and male dancer and his he's been known to have a quid pro quo lation ships would broker it's accepting off good compensations in the form of lavish drug parties abdomens gloves his dirty deals believe it or not have gotten filthy u.s. attorneys ours respecting that dan zeiger and his broker buddies tried to rig up the libel war we'll talk more about the fine line between bankers and gangsters in today's daily duel let's get to what's in your mind. just.

clear hearing a lot in the news about too big to fail too big to jail and even too big to exist ontological issues aside suffice to say many people are frustrated with the institutions that received taxpayer bailouts and in the same year a paid out excessive executive bonuses it's been a hard pill for some families to swallow to have their homes wrongfully foreclosed on by one of these too big to fail financial institutions then receive pennies on the dollar settlements that the financial regulators were supposed to be overseeing

as we saw in the independent foreclosure review and the startling testimony united states attorney general eric holder stated that some financial institutions might be too big to jail and that the justice department has had difficulty in prosecuting some institutions because it would pose a threat to the economy for more on too big to fail we turn to prime interest producer justin underhill. this july will mark three years since dodd frank was signed into law a bill designed to end the massive bailout of banks. must. fail but we're going to end too big to fail this is intended to put an end to the idea that some firms are too big to fail how did we get here today's mega banks grew out of repeated series of mergers and acquisitions over the past two decades exacerbated by the crash of two thousand eight. hundred to law in two thousand and ten. so where we are now nearly three years later the six largest u.s.

financial institutions issue more than two thirds of all credit cards and over half of all mortgages today they have equal to almost two thirds of u.s. g.d.p. that's double the size from a decade ago and now that's created a problem that's almost too big to fail senator elizabeth warren recently confronted federal reserve chairman ben bernanke we've now understood this problem for nearly five years so when are we going to get rid of too big to fail. well some of the you know as we've been discussing you know some of these rules take time to develop three approaches being developed are breaking up the banks increasing capital requirements and defining a liquidation process but in each approach there's a devil in the details devil number one defining the threshold for too big i think it's very difficult for congress or even regulators to say you know your optimal size is one point five trillion or you should be more than x. percent of g.d.p.

or it's arbitrary it's probably going to be a game of bull but according to bremen a senior member of the financial services committee all legislation faces the same challenge every law has to be administered and if the speed limit on the freeway is sixty five and there are cars going seventy that's not a rejection of the idea of having the speed limit devil number two defining minimum capital requirements to protect against over leveraging and counter party risk senator sherrod brown and david vitter have introduced legislation to increase bank capital requirements but even these measures may fall short of what's needed to avoid a bailout fifteen percent for these big banks is enough the fifteen percent capital protects them and protects the public however representative brad sherman thinks that even this amount may not be sufficient finally in the event of a failure an orderly liquidation process is designed to go into effect overseen by the f.b.i. see in such an event shareholders would take losses yet defining the trigger for

this process is devil number three so when looking at determining whether a bank is solvent is there a quantifiable and consistent way to do that even. unbiased typical yes it is useful simple leverage ratio as a primary measure of capital strength but these approaches that address too big to fail may be ignoring another problem of too interconnected to fail harvard law professor how scott sees contagion as the major issue here i think our french made it worse because it's. taken away the power of the system to deal with contention and put in place what i call a wing and a pearl which is capital liquidity and resolution which could stop. the approaches of breaking up the banks increasing capital requirements and planning for liquidation have the ability to also address contagion but that will require even more details with more devils in washington just. great work things just too big to fail as an issue that is gaining momentum on capitol

hill dodd frank continues to be implemented as we approach this three year anniversary and we're seeing signs that this bill has holes and gaps and to say that the rule making process has been talent would be an understatement not only do we not have consensus on what caused the financial crisis much less how to prevent the next but there isn't even clarity as to what exactly constitutes too big to fail under section one twenty one of dodd frank regulators can impose restrictions on larger companies at the board considers them to pose a grave threat to the economy but as we saw and house financial services hearing this is that best fuzzy target representative sean duffy question scott alvarez the general counsel of the fed as to what the much of it is for a grave threat and you might be surprised at his response. some of the metrics you're moving metrics we do not have a match or and so you know when you see you're not right and it may depend on many

. of you when you see it you will know what a grave threat is you can't tell me today what degree of growth is because there's no metric for your own use you're known. for. some clarity and too big to fail and the differing i spoke with two actors the dean the former legislative council it's representative barney frank and he's now the current host of the inside scoop as well as mark calabria who's the director of financial regulation studies at the cato institute. i want to force this out. because i think that some of the fundamental assumptions are do you think too big to fail is an economic issue or you think it's a political issue and quite frankly i don't think getting one company is so big and of course it's also important to mind the option is not necessarily fail we all probably flown on a bankrupt airline there are ways to take these things in bankruptcy continue to keep them going turn debt holders in the creditor to debt holders in equity holders and keep these institutions going rather than you know the false choice of bail out or liquidate so my point is that i think too big to fail is fundamentally the

perception by the market place on whether you will be assisted by the government so it's a question of whether government officials will step in and protect primarily creditors if that is the case and those institutions are able to borrow at a lower rate they're able to grow and push their competitors out of the marketplace because in the financial services world cost of everything that's how you dominate the market so even a difference of twenty basis points can really change competitive landscape in the marketplace so again you know there is no arm clyde way of proving whether to big to fail is there you know i think looking at the marketplace it suggests to me that market just do believe these institutions are too big to fail to see what would happen in two thousand and eight because that's obviously what comes from the lehman brothers collapses and suddenly banks won't lend to each other they all have these toxic things called credit derivative swaps and no one seems to know how to value them we know the ratings agencies say they're aaa we also know they're involved with a lot of slicing and dicing of subprime mortgages everyone says worthless so no one knows which banks they're afraid to lend to a bank to a bank and they don't get money back and a whole credit market seizes up

a week and another question that we need to answer is really over. at the same. services hearing richard belzer masti i see acting in general cats all he had to say this. to resolve. title one that it provides for a living will so we can try to address. we can be resolved in bankruptcy if they cannot be we have the title to so there is a law that. to big to fail is over that's the i.c. has said it's over as the implicit guarantee really over august will start where there was law on the books for twenty years that so the taxpayer did not stand behind freddie and fannie that didn't quite work out that way either so let's start with two issues one is this sort of dance around taxpayer money or not and so yes title two sets a path where the rest of the industry can bail out institutions creditors now yes that's slightly better than having the taxpayer but i'm fundamentally offended by thinking that prudently run institutions should have to pay for the mistakes of

imprudent institutions and of course if you look at the marketplace again we have there's no ironclad way to say fail is there or not but if you look at the funding cost it's pretty clear to me that the largest institutions have some level funding advantage over other institutions which is how you would really determine to be fields that are not i do want to mention something as well that if you look at funding cost create two thousand and eight those institutions did not have that advantage too big to fail came out of the bailouts and i think the problem with lehman was not that we let lehman fail was that we it look like anything goes in the lesson from lehman is that if you don't have the treasury secretary on your rolodex you're in trouble it's not that one institution should get in trouble because it's keep him on barclays bought all of lehman's north american operations in a week or more bought the rest of their world operations within two weeks or in a couple of small things in there but it was really an ad hoc you still don't know the rules of the game who's going to be out who doesn't know of course you can shrink away from that but i actually think if you look in the if you go back you know two thousand and eight you know many of the marketplace did not shut down i disagree with the argument that everything shut down it shut down the anybody who

looked like they were in trouble those that were well capitalized for instance insured deposits increased. people put money under their pillow talk about that because of the increase because the photo deposit insurance corporation be increased because this is the tradition that we've had since the one nine hundred thirty s. which does exactly what you seem to complain about and it has institution that. mitigated it in two thousand and eight you know it's a western type intervention right because those those entities were not covered. by the f.b.i. see that's exactly what that's what dodd frank attempt to do and that's what you complain about what most americans think the f.d.i.c is work pretty well we have not had a run on the government the f.d.i.c has entirely been paid for by banks and it actually works pretty well they close a bank on a friday night they open up monday morning and if you have a deposit of more than fifty thousand dollars you don't lose anything that made that paradigm i think is something that we need for brokerage firm usually i would say i think the fundamental difference here is i think failure's good because i think you're weeds out the rotten corrupt incompetent and i think the attitude that

or the standard in our banking system should be that nobody fails is the wrong attitude that's i don't know i say that doesn't do the i.c.r.c. killed by people around you when you do fail the big studio and i say doesn't this rises and make arrests how can we let and cities and that's as large as too big to fail fail if it's going to you know it's not to let it fail we can reorganize it like you would do when they are the orderly liquidation process as you know you don't have in order to condition process that's exactly what happened with the bank that's what i pray designed to do it didn't examine what you know i don't think it'll be ever used because we had an orderly liquidation system for fannie and freddie we didn't use it i spent tens of hours working on writing on capitol hill congressman frank worked with us on it we had a system in place in the summer of two thousand and eight that would have resolved to about a dime of loss of the taxpayer did we choose to use it no you're not. we'll hear more from mark and mark or i say mark to mark on the better bill after the break also coming up next the arts. and i will get to the deal will explore the fine line

between bankers and gangster stay with us.

a deadly blizzard taking aim for the northeast it's expected to hit stunning in a few hours from new york to maine we have team coverage of the storm. but what we're watching is the very heavy snow moving into boston proper earlier today it was very sticky you can see it start to become much more powdery down the line there's still a lot of snow out here a good place for snowball fight. jason it is been a pretty incredible day there and even record snowfall throughout much of a month bilbies along three driving lessons to the emergency vehicles.

senator sherrod brown and david vitter recently introduced a bill that would impose higher capital quire manse on the largest of things i asked mark levine if he believes this bill would mitigate systemic risk. absolutely absolutely frankly this is what doug frank attempted to do it was going in that direction and then a certain set of scott brown of massachusetts in that brief interim between kennedy and elizabeth warren insisted on exempting all kinds of insurance companies and trust of small banks and basically drilled holes into the vault and regularities nine thousand pages i knew we still needed this is actually one thing i like about branded as a symbol it's as a person if you're a small bank fifty percent if you're a large big capital requirement that's a very clear and precise rule it's the kind of thing that i wish frankly dodd frank had been allowed to keep before scott brown ruined it i was jerry brown by the way . and i would disagree on whether i think scott brown is to blame i think for it

start i was a lot of problems and i think it's a real testament to brown vigor that pronger actually repeals one of the most offensive provisions of dodd frank which is to extend the safety net to clearing houses brown for rightly in my opinion strikes language now i'm going to there's a little capital banking system it's too complex you know the throws the basel process out the window which needs to be the u.s. should go its own way that is a disaster process so higher and simpler capital i mean it was ridiculous to thing that basel as you think this well i mean so unless demand for sovereign that oh absolutely but you know the fact is you know all you need to know about basel two is a capital system that tells you that greek debt is zero risk is a capital system bound to fail right you know we had to walk away from that of course and told you that fannie mae was very low risk too so again. to me a joke and it's a good thing the bronner walks away from that and it's a good thing that they're actually counting real capital like equity before the crisis we were allowed banks were allowed to deferred tax losses that were no way

capital using risk weighted assets and that this is where i think there's a mixed bag because you know they set a floor and then they allow some risk weighting i think the risk weights are always inherently political it's not by accident that got zero risk way that's that large regulatory burden i actually would say to me the tradeoff should be more capital but simpler capital because if you look during the crisis and what market participants care about they did not care about what your tier one universe where the capital was they would care about how much common equity do you have that's what the market cares about that's participants care about that's what the public cares about so that's what we should be measuring not these arbitrary things that the regulators and the banks come up with themselves because this is not the basel process is not transparent it's not even like you know a treaty with the senate ratifies it it's these bank regulators you know like in switzerland sit around with the big banks and they decide what's going to what's going to work i think it's a flawed process and i think it is that basel two to me was one of the top five contributors the financial crisis and the note of agreement because i agree that basel is flawed i like very clear standards i like in the law i like it baking

eight percent fifteen percent that's about as clear as you can get and listen to take a liberal like sure brown a conservative like vitter together on a bill that tells you this is a bill that has wide support it should pass something i think it says and we have people across the aisle it is a wake up call to that. so this was mark levine and mark calabria thank you very much for joining me thanks for coming. and it's time for the daily do a lot joining me. great to be here for the dual thanks. so banker or gangster if you are not disgusted and nuff about all the issues that

are surrounding too big to fail i know it's frustrating but i have the cake topper for you and as i mentioned earlier the american banker reported that the c.e.o. median pay among bankers increase levon percent in two thousand and twelve some of these bankers walk a fine line between crooked and legitimate and that the same time we have our favorite hip hop artists who get a bad rap for making their fortunes catering to these underground economies so what we're going to do we're going to play a little game we're going to juxtapose our favorite financer isn't hip hop artist and then we're going to let the control room decide if we've got ourselves a banker or a gangster all right you ready i'm ready thank you all right let's go so first we have dr dre while we're still waiting for this rapper his next album detox we haven't forgotten about dres a drunk driving charge in one thousand nine hundred four or the time he broke a guy's jaw outside his girlfriend's aus and went to jail for ninety days the

doctor has come a long ways and n.w.a. and is clearly a savvy entrepreneur that understands his audience he's now the c.e.o. of beats electronics you act in one hundred ten million pretax dollars last year he was on the forbes list number one by selling beats by dre headphones. we have ourselves a banker ok you said you said dr drew has been to jail because this is going to make things that. this is going to make things very easy bankers by definition do not go to jail so we're going to set aside here for the sake of this suspend disbelief i think dr drew is a pure businessman he should is getting stronger credentials a long time ago and i'm going to have to go with banker i'm going to say gangster. he was numb. i think i think about i would make him. what do you say control around there. all right so you get that one

moving along we'd be remiss if we didn't include the leader of america's most famous bank that's right the figurehead and jamie dimon of j.p. morgan chase is in our crosshairs now he was certainly never a hero of the public but he skated through the financial crisis relatively unscathed in fact he picked up bear stearns and washington mutual on the cheap but the fickle press and politicians would turn against him as mortgage servicing problems and a large london trader who in his fortress balance sheet so your thoughts and jamie he is definitely a gangster ok. and the reason why well he came he came to capitol hill he warns presidential he's obviously you know bending their revolving door you know made his rounds on the hill i think. the way he just has washington that it's. ok i'm going to have to agree with you here because he made his way through the old chicago route i think through chase bank and everything he does is

a little bit shady but he's like i said he's been able to come across as reputable until recently he's had a host of problems and i think people are finally catching on to his gangster side so i'm going to get. there ok. all right next we have diddy combs he is the c.e.o. and founder of bad boy the worldwide entertainment group and c.n.n. and time magazine named him one of the most business men in the world he made about forty five million dollars last year he also has a venture with vodka has made him a net worth of five hundred eighty million dollars. would it be on our list without a few arrests in one thousand nine hundred ninety five he was chillin with his girlfriend j. lo they forgot about that he was arrested for weapons violations and then again in

two thousand and one he was arrested for driving on a suspended license he was driving a scooter ensoul i don't know how if you've ever been to south beach but scooter violations are taking very seriously there seriously this guy has been a businessman from day one and yes he's had. for him but i think at the end of the day he's one of the most fabulously wealthy persons and i'm going to say he's a banker i want to say gangster he has weapons violations he drove a scooter on south beach. i say i say ok. i got this one moving on lloyd blankfein head of goldman sachs the so-called vampire squid say what you want to about him but he has the midas touch when it comes to keeping us from afloat he got the fed to convert what was an investment banking broker into a bank holding company in two thousand and eight and voila instant access to the quiddity for goldman around the same time he got warren buffett to pony up five

billion dollars right before his old goldman buddy hank paulson convince congress to ram through the seven hundred billion dollar tarp boondoggle lloyd blankfein your thoughts. banker he's got a lot of money ok i would say anybody at the too big to fail level is going to be doing bankers work except he said he was doing god's work and i just think there's too much of a juxtaposition there or i'm going to say he is a gangster i write. anything. or pretty much i have a nerd. ok all right next up we have snoop dog article. i don't even know what he is anymore he's been in jail several times for drug dealing and ninety three he was charged with access to a murder or excess or into a murder excuse me six he was banned from the u.k.

we're giving him this huge bite at the airport he's now renamed itself the stupid lie and you've sold over thirty million albums a room where you are going to say gangster for love thanks for a life you i received he's a gangster. eggs are alright and that's bankers and gangsters things about you. it's been a day of contrasts here a prime interest mario draghi over at the e.c.b. said you not like give us counterpart when it comes to dropping money from

helicopters more bank capital equals a new ice age that was the absurd picture matt painted after reading a more absurd as and. then the two marx made their mark debating dodd framed in an interview that we were to market at par and too big to fail or is you big to nail hopefully we nailed that one and finally we put the head vampire squid again the newly christened a lion and judge them on their street wall street and otherwise thanks for watching and make sure you come back tomorrow and be sure to follow us on facebook at facebook dot com slash prime entrance from everyone here at prime and i'm perry and boring have a great night. well

. science technology innovation all the latest developments from around russia we've got the future of covered. mission of three cretaceous priests in store charges free arrangements three risk free stew types free. download free broadcast quality video for your media projects and free media oh god our t.v. dot com. here is mitt romney trying to figure out the name of that thing that we americans call. a dollar. i'm sorry i'm just a guy who cares an awful lot about you sorry art school you know what it is my

theory sounds like no one was saying the feature is not the only ball and the christian. can screw it up but it's the. you know the folks are going to distract us from what you and i should care about because they're profit driven industry that sells a sensationalistic garbage he calls it breaking news i'm out here martin and we're going to break that. plane. but meanwhile i dream of becoming a famous ballerina. still with a crown mission to think to say. oh it's just right now i really want to dance that

kind of trying and that. i laugh that i check. i've dreamed of being a prima ballerina since i was a child that i'd like to dance along parts of course but i have no problem dancing in the court about day i don't want other ballerinas to be jealous of me to the point of putting glass in my shoes they did that once to a dancer i want everything to be smoke. free.