good afternoon and welcome the prime interest i'm harry and boring here and the washington d.c. and here's the stories that we're keeping up with today. baser targeting bloomberg after new revelations emerge about reporters improper use of confidential data j.p. morgan itself is under fire for labs and risk controls last year has as bloomberg to provide confirmation of its controls allegations are swirling that the london whale story itself what the bloomberg broke last year may have been a result of an improper delivering of peter data and goldman is using the opportunity to turn the screws on bloomberg broker dealer operations will be discussing bloomberg gave a link today in a special segment and in a live interview with christopher chambers as you remember credit default swaps they were at the at the center of the a.r.g. goldman sachs bailout and pay off in two thousand and eight the the market for

these insurance contracts and corporations and government is undergoing a make over a new proposal by the international swaps and derivatives association would change the rules about when the contracts pay out and the government tries to bail out a bank by forcing losses on bond holders instead of tax payer and the insurance contracts on the bonds or the bank would pay out basically is an escalation of too big to fail so get out your popcorn as the players of the sixteen trillion dollar market do get out now let's get to what's in your prime interest.

we've heard quite a bit about bloomberg lately. the news and financial service company bloomberg caught in an embarrassing situation the financial data and news company have allowed journalists to see some information about terminal usage of a toast to anyone of bloomberg in their broker dealer make money off this information. so today we're going to break down what we've coined as bloomberg gate and explain what exactly is going on in bloomberg eight well this is the scandal much of bloomberg reporters use private data from the company's terminals to further their reporting it also involves the posting of thousands of bloomberg terminal messages online so what's a bloomberg terminal well as a computer system that allows users to access bloomberg data as includes real time

financial data newsfeeds and messages and also facilitates the placements of trades and terminals are used by more than three hundred thousand francs all professionals payments for leasing the system cost about twenty thousand dollars per year this is a multibillion dollar business for bloomberg it's believed that hundreds of bloomberg reporters have had access to terminal data and according to the editor in chief of bloomberg news reporters could see a user's log in history and when a log in was created and secondly they could see high level types of user functions on an aggregated basis but without the ability to look into specific security information the story broke after a bloomberg reporter in hong kong contacted goldman sachs to ask about the employment status of an executive and now the reporter mentioned that the executive . activity as a sign that he was no longer employed by goldman sachs goldman complained and the new york post reported on the story last friday but this story should have been

news years ago back in two thousand and eleven a bloomberg news anchor alluded to the monitoring of the u.b.s. rogue trader the anger was reprimanded and executives say that they would no longer allow journalists to access the client data moreover this week there was another security breach with more than ten thousand bluebird terminal messages it was linked online these are messages that were voluntarily sent by clients to bloomberg as for a news reporters access to the terminals are the privacy breach is illegal well according to fortune and several of the bloomberg terminals contracts state that the least knowledge is and understands the leaser made monitor it's only for operational reasons at least the general use of these services as where exactly what monitor and so we for operational purposes means it's not clear but one thing is for sure that this scandal has caused many wall street firms like j.p.

morgan to reconsider its options meanwhile china's central bank actually i see and the fed have all inquired about data confidentiality issues and that's when the breakdown of bloomberg a. very joining me now to discuss what we're calling the bloomberg a is christopher chambers he is a professional professor of critical media studies at georgetown university doing great thanks for joining me a pleasure so first let's just jump into the privacy implications of this work. fiber a data privacy issue is our question here well this is one of these perfect storm

kind of the things i mean you have the to the traditional classic sorts of things where you know you have data breaches i mean going back years such as you know with wellpoint and things like that then you have this other kind of ambit where it's big data mining people's personal information or facebook or google getting involved in this this is the third prong of this perfect storm and this is business to business imagine. well beyond that i mean imagine if you will i mean berkshire hathaway was downgraded today imagine if these guys you know what these terminals was were accessing information prior to the downgrade or all the machinations and issues going on afterward and then details of buffett's. plans for succession i mean you see the implications of this i mean they have basically an eye or a bug in any of these terminals are we seeing any clients speak out about this well you know i mean well there's citibank obviously bank of bank of england you know

which is a big deal j.p. morgan i mean that's going to have a ripple effect now you have treasury sitting there asking what is going on with this you know because people who write notes that are in a fairly protected by their their strength in numbers or you know this is this implicates law firms small c.p.a. firms that have at least some of the the depth of the money to get a terminal i mean that's a big deal that's a big feather in your cap well now it's being looked at as not only a security breach but money are you really you would want to spend that money on the potential security leak so you know it's filter on down here is what he calls yeah i mean and let's face it they do. the newsgathering part the journalism part with the terminals the terminals are the money me. engine that fund the journal and so you have that aspect too so they're all so they're kind of

a hybrid organization and you know when you have a hybrid sometimes you get the wrong mix of the genetics bad bad things happen but we obtained a copy from court a contract between the city of oceanside california and bloomberg and it says that bloomberg has the right to monitor customer usage celie for operational reasons i mean what kind of legal implications could be at i mean that contract certainly have some kind of loophole in here if they're going to be legal well i think so i mean you're seeing that in terms of consumers and social media now you know when facebook and google everything on to you and i it's our job to police them in other words i don't think that's going to fly in the business world and the operational purposes language i think when you can always bust it open with fraud or lack of best practices and i think you know law firms small c.p.a. firms use apologies small cities states are going to start looking at that as well as the federal government and i think they're going to try to bust these contracts

based on a breach of the language you know of them basically saying that operational purposes means we can look at it any way you want and you know there's never any any protection in a contract for your employees going off on a merry lark and delving into private business information of a customer so i want to play devil's advocate within the j.p. morgan case i mean they were looking at the london whale scheme where they lost three billion dollars i mean could it possibly be that it was a good thing that they caught as part of any bigger before it turned out to be a failure well you know there's always that question i mean you know the ends justify the means or something good came of this well yes something good came of it but when you look at the balance of this it's it's almost like what the administration and the. the phone records of the subpoena the phone records yes they were trying to protect against leaks that possibly could endanger americans

with in terms of yemen and terrorism but i mean come on i mean that's that's that's basically the kind of brittle shield they put up yes they found out about the london whale but think of all the other abuses that we might still find that are potentially i mean if it's going to scare citibank the bank of england ok morgan it's going to scare them and the treasury department there's something it's not a smoke and fire thing it's a real structural weakness that has to be addressed well that's the goldman sachs was interviewed on c b c earlier yesterday and i want to play you know his comments of that interview. how much concern is there a goldman sachs which is a big user of bloomberg services and terminals with the competition we don't have a major concern we talk to bloomberg about a month ago we had numerous conversations with dan doctoroff dan is completely immersed in the situation he understands the magnitude the problem and i think there really reacting in

a positive way in addressing the issues that we might have had now these don't sound like i was that feeling think of it as one of bloomberg biggest customers and you know there are talks that maybe something's going to get together and just start their own financial company is it possible that. i mean there's you know there are two sides to every story and one side triangle one side of the triangle is you know citibank all these people are actually going to try to do a lot of the stuff in-house they don't want to rely on a bloomberg or a read elsevier that owns lexis nexis successor etc so there is that aspect of it but i think the you know goldman sachs has been adept since they rule the world. basically soft peddling bad news and yeah there's soft pedal bad news very well and that you know i'm not going to say they're in bed with bloomberg. i mean they're not but i mean i think that they haven't they are now i don't think they're in bed with bloomberg i'm saying bloomberg had thirty percent share of the financial data

right it is going trying to take this while go they want to become even bigger because all they did so i mean if you commute you know look if if a year from now. they have sold bloomberg is no longer existed it is exhibit a of goldman sachs then we'll know what i mean but again city city is trying to create its own financial. database and. operation a lot of these bigger concerns are doing that i wouldn't be surprised if goldman sachs is thinking of it too but more in terms of. kind of an orange the links are over not arms legs are arm in arm kind of thing with with bloomberg so i mean i think they're they're kind of covering for mr doctoroff right now you know and while everybody else is mad because everybody else is mad i mean what he said i understand what goldman's point of view is but when you look at what the bank of england says when you look at what citi is that and j.p.

morgan you know and again j.p. morgan is a little jaded because of the way i think but thank you that was christopher chambers journalism professor at georgetown university. coming up next mark to market going to go toe to toe about apple taxes and the i.r.s. scandal and producer bob inglis and i will take on the fed officials who spoke today. they're ready to come here and not get paid for it. people from all over the world to help. what does it take to become a volunteer at russia's premium museum why did the son of the movie's director come here. from one of the cats do. behind the scenes at the helm of.

let me let me let me ask you a question from. here on this network is where we're having the debate we have our knives out. but if you give the scientists a bad thing there's again we're in a situation where being i don't agree to talk about the surveillance. science technology innovation all the list of elements from around russia we've got this huge earth covered.

holds over one hundred billion dollars in profits overseas and money that they are earned in other countries to bring this money back into the united states either

for investment purposes or to pay their shareholders apple will have to pay the i.r.s. up to thirty five percent in corporate income taxes and this is money that was already taxed in the foreign countries in which it was earned because apple shareholders are suing to get discouraged at the falling share price apple has promised to return one hundred billion dollars over three years to them instead of repatriating their foreign earned income apple is borrowing the money to take advantage of the fell reserves low interest rate policies just recently apple borrowed seventeen billion dollars on the corporate bond market would just cheaper than paying the corporate income tax. but can you blame them for doing this well i have with me mark. and mark calabria of the cato institute to give us the mark to market breakdown after all so is there anything illegal or immoral to what happened if there's nothing illegal to what apple is doing apple is taking advantage of the united states tax system i think united states tax system has a problem and needs to be changed because what apple does is basically it goes to

the lowest tax country can find join the british virgin islands which charges a very very low tax rate and keeps all its money there so it's not even paying the european tax rate or the chinese tax with other countries where it's going if we simply charge every country every company in america and appropriate rate it could be lower i mean if i were twenty five percent to repatriate funds in they'd come back in to be used to the economy they would have to go through these machinations and this illegal or immoral well it's not illegal and i don't think it is immoral either i mean we will agree the problem here is not necessarily companies or individuals when you respond to incentives it's least well i think if you have bad and people make bad decisions and so the problem is the tax code i would say in a broader level it's actually surprise you know up until this point. zero they haven't had since at least ten years first off since the ninety's and so it's also important that our tax code subsidizes debt increases it's actually fairly interesting if anything apple has money on the table in the past by not taking on

debt in the same way other companies which again it's not good behavior but i'm not blaming apple i'm really blame of the us tax laws and every corporation takes advantage of these and apple just as an example of why the tax code i think needs to be changed where one of the only countries that still operates on a worldwide tag system said is it time to to adopt the territorial tax system we already have the fact the corporations used to pay about eighty percent of the us tax so now they pay about so the us tax them used to be a time thirty years ago when corporations when the only a quarter of them didn't pay taxes today seventy percent plus of them don't pay. back their eight years. fair to say they have a corporate income tax rate they don't pay that's the number they're just as hard as an ass corporation and they pass it as tasha's right they pass us having the time is national it's not as corporation apple is a typical corporation a that all these companies are paying sure it is if you look at where they were thirty years ago the vast majority of us corporations pay taxes today the vast majority do not pay any taxes i mean that tax will get some less of the delay the

taxpayer dollars are a lot something like a couple of questions here and certainly will start with the fact that last year out paid fourteen billion taxes so it's not like they pay zero taxes they paid no effective overall corporate tax rate last year of twenty five percent so they paid taxes we can debate whether the level should be higher or we can level should be lower and of course that's a separate question from and should be territorial now is a general matter i'm not a fan of what i would call american legal imperialism i don't think we should try to impress our loss upon the rest of the world whether it's taxes or whether it's drug use or anything else if you're getting high in amsterdam i think that's your own business not the federal government's so so again i think that these laws should be applied within the united states now as an economist most economists across the board pretty much agree that the actual burden of taxes is not borne by the corporation but is passed on to the shareholders passed on to the employees passed on to buyers of the products and such so again keep in mind corp is a shell so somebody is going to be this for instance if you lower corporate tax rates won't actually increase share prices programs are going to go up is going to

go up so again i would rather prefer we get back to a level where the tax is actually focused on individuals rather than corporations because again corporations are passive in their relative way of raising taxes i think it's ridiculous to argue the corporations are a passthrough it's like the people that argue corporations are persons no persons or person compose operations are not persons things that are composed of people the government is composed of people. we don't exactly government the way we tax people look at the end of the day what apple has done it's perfectly legal and i by the way it can't be twenty five percent because twenty two thirds of their of their cash is held overseas it's not. if you calculated to behave so this is going overseas then it would mean that two thirds of thirty five or so that's gone you're talking about ten percent but in any case seventy percent of u.s. corporations pay zero taxes and i'd be fine with lowering tax rates for britain income taxes that's exactly what is paying those taxes going that is on middle class carol they're being so security sex of the gender the teacher there being

there is another question there's another question sense and compactness passed on to their customers so he went how did she really even have a corporate income tax not passed on to there's a lot of people argue every time you tax a company say you can't tax a company going to pass it on you don't you know get hundreds and hundreds of billions of dollars c.e.o.'s of the people running the company and that money could go from them there are trillions of dollars kept overseas that no corporations spend if you. own history with their properties you're also used to actually i would do that you know the why don't do that rather than tax work right where we were going to get to one more topic this would not be attacked the conversation if we didn't address what's going on the i.r.s. right now and i have a letter senator lugar is asking resignation the commissioner steven miller you know it said you know two years even see a response from the administration with only to comment on if they think that ministration and the president has responding to this appropriately well stephen miller of course wasn't around when this happened the person that was there was

a bush appointee if that happens if we just make it doesn't make a difference because neither one of them knew about it it was a witness and try to build up all what here's what steven miller did wrong ok all he did wrong is once he came into power and he learned what happened he should have informed congress about it that was a mistake and he's gone for that reason but let's not pretend that this was some you know obama conspiracy what happened were people in cincinnati were trying to get the politics out of these taxes which they should do what they should have done for left and right and not right alone that was their mistake they should have basically made more companies kick them out progress. as well as consider the conversation of mike and i worry that we get caught up in you know this bad person did this bad thing there's academic studies done looked at the systemic evidence for instance if you live in a district of remember the ways and means committee you are statistically less likely to get audited than somebody who doesn't that's a fact that statistical find you know in so again we have seen organizations administrations repeatedly over time use the i.r.s.

unfortunate mechanism in a political way so if i want to do it but there's still work there's no evidence it was done here the answer is it should not be don't we agree that everyone should be treated equally under the law so why problems eighteen us c. five a one c four the thing that creates five one c four does asians says are supposed to be used exclusively for social welfare building a school beautifying a park none of these lobbying political organizations left or right should be allowed to be tax exempt and i should note that the only one they forbid an attack that says to was a progressive or glass of wine what was your question do they never made a decision on somebody and they sat you're right and i agree that was what he had been going out of all this going on do you think it will act but i tag reform i mean i would hope it would because i would think a simpler tax code because again the i.r.s. employees and whether it's driven from the public i don't think we know one off to know what the white house or the treasury secretary to soon to know that now we do know that post citizens united max baucus for instance oversee the i.r.s. sent a letter to the i.r.s. demanding more scrutiny of these organizations so again should be surprised if this happened but i want to resize but i think we're going to hear and more about this

mark larry after kato and mark levine the host of them. thank you very. time for the day lead to a lot of joining me as prime interest producer bob inglis we're getting closer i can almost feel the bitcoins in my head so that will never happen. there. well we've had some very important economic data that came out today at the consumer price inflation and has actually printed out a negative point for monthly data but just to be clear the yearly debt is still one point one percent it's positive in the fed is well under its two percent threshold so they can throttle till till kingdom come apparently so this is technically do you feel you should were thinking well at least on the monthly level but again you

have to look at the yearly level and also the month to month figures they're pretty volatile so you'd have to look at an average i'm not too worried about bernanke being scared of deflation right now i don't think any of my bills went down but we know that the fed is closely looking at this data is that how they judge the q we saw in purchasing program and we're no fewer than five fed officials spoke today we're going to look at what each of them had to say and then we're going to label them either a hawk or a job and just to be clear of hawk or relative terms because it is our central bankers after all so bear with us. so i guess let's get started we only have time for maybe one or two here we're going to start with richard fisher and he has traveled in the lead circles for vice chairman of henry kissinger's consulting firm to bush family bankers brown brothers harriman and he was even once assistant treasury secretary under carter but since two thousand and five he's headed the dells and just before q.e. two was launched in two thousand and ten two thousand and ten he actually said quote in my darkest moments i have begun to wonder if the monetary accommodation we

have already engineered might be working in the wrong places so wrong places indeed pressure became a voting member two thousand and eleven he voted against some key language that year since then he has not been putting member of his speeches were closely monitored and today he delivered a very colorful speech titled enter fiscal policy oyo he said the current chairman ben bernanke he took the wheel at the fed just as we failed into a temptress that nearly capsized our economy and the fisher went on to praise. in the thread but now the ship of the fed is in more benign waters and is sailing forward i've advocated that we begin to reef in the sails and with that he railed against what he dubbed a rudderless fiscal policy concluding against congress i argue that the fed is at best pushing on a string and at worst building up kindling for a massive shipboard fire of eventual inflation so period. i appreciate when you can

recognize that the fed is pushing on a string by the end of the day it seems like you've capitulated to a fed policy looks like and i got to say on relative terms he's a hawk that's what the control room has judged. well i think we'll get to some more tomorrow and this was great talking with you about fed policy and will be back tomorrow. and it was a scandalous day here on prime interest out of the gate we broke down bloomberg gate we were shocked shocked to find a broken chinese wall angry bondholders took on bail happy governments looking ahead to financial crisis to point out mark to market took

a bite to apple tax cheat or shareholder you decide and it's curtains for the acting i.r.s. commissioner but he would eat is here to stay at least for a little while thanks for tuning in we'll be back tomorrow as we finish reading at the fed. and please follow us on facebook at facebook dot com slash prime interest from all of us that prime interest i'm terry and boring have a great name. educate .

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