again after new revelations emerge about reporters improper use of confidential data j.p. morgan itself is under fire for laughs 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 the leader 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 how do you remember credit default swaps they were at the at the center of the a.r.g. goldman sachs bailout and payoff 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. certainly. the news and financial service company bloomberg

caught in the embarrassing situation the financial data company had a lot of journalists to see some information about terminal usage of the post is it any would have 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 used 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 the 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 as believe 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 logon 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 now the reporter mentioned that the executives the lack of reason terminal 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 the u.b.s. rogue trader the was reprimanded and executives say that they would no longer allow journal. 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 news reporters access to the terminals are the privacy breach is a legal 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 for 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 that the i.c. and the fed have all inquired about data confidentiality issues and that's when the break down 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 kind of cyber data privacy issues you know 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 the other kind of ambit where it's big data mining people's personal information on 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 you know and the details of buffett's. plans for succession i mean do 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. which is a big deal j.p. morgan i mean this and 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 right now that are necessarily protected by their

their strength in number 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 and now here's what it was yeah i mean and let's face it they do. the newsgathering part the journalism part with the terminals the terminals are the moneymaking. engine that fund the journalism so you have that aspect too so they're also they're kind of a hybrid organization and you know when you have a hybrid sometimes you get the wrong mix of the genetics biggest bad bad things happen but we obtained a copy from court a contract between the city of california and bloomberg and it says that bloomberg has the right to monitor customer use. for operational reasons i mean what kind of

legal implications could be at i mean that contract and 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 game 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. the 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. hacking of the phone records of the subpoena of 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 if it's going to scare citibank the bank of england. ok j.p.

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 c n b c earlier yesterday and i want to play you know his comments of that interview. how much concern is there of goldman sachs which is a big user of bloomberg share which isn't 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 problems and i think they're really reacting in a positive way and 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 they're burying them well i mean there's you know there are two sides to every story and you know one triangle

one side of the triangle is yeah 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 reed 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 man tires and yeah there's self total bad news very well and that you know i'm not going to say they're in bed with bloomberg and they're not but i mean i think that they haven't they now i don't think they're in bed with bloomberg i'm saying bloomberg has a thirty percent share of the financial data right it is going trying to take that this while go they want to become even bigger than it already did so i mean if you can you you know look if if a year from now. they have sold bloomberg is no longer exists that is. goldman sachs then. no but 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 arm's length 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 all of them professor at georgetown university. coming up next mark to market going to go toe to tell 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 so. what does it take to become a volunteer at russia's premium museum why do the son of the movie's director come here. from one of the cats do. behind the scenes of the. choose your language. call it kill it oh and if they sell some of that. shields that the concerns get a. chance to opinions that invigorating took. choose the stories that

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i. hold over one hundred billion dollars in profits overseas and money that they are and 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 saying to get discouraged at the following share price apple has promised to return one hundred billion dollars over three years to them instead of repatriating therefore to earn 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 which is 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 they had 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 joy in 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 selling 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 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 really first off since the ninety's and so it's also important that our tax code subsidizes debt increases there was actually a fairly interesting thing that 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 blaming the u.s. tax laws and every corporation takes advantage of these and apple just is 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 tax system said is it time to doff the territorial tax system we already have the fact that corporations used to pay about eighty percent of the u.s. tax so now they pay about nine or so the u.s. taxes used to be a time thirty years ago and corporations when the only

a quarter of them didn't pay taxes today seventy percent plus of them don't pay that's a very old factory 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 tash if not right they pass us having the time is rational is not of this corporation apple is a typical or a shave 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 bill gets unless it was really the tax because there always are a lot something like a couple of questions here and certainly will start with the fact that last year apple 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 now 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. 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 persons compose operations are not persons things 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. i want to believe she calculated behave myself this is going overseas and then it would mean that two thirds of thirty five percent is 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 i want to paying those taxes you know and i guess i'm middle class eric holder and being so security deal being so sex is the gender of the teacher there being there is another question there's another question sense and contact was passed on to their customers he may not have it should we even have a corporate income tax not that's one of there's a lot of people argue every time you tax a company say you can't tax a company you're 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 corporation spends if you. only do what it would their properties you're also used to actually

i would do that for you why don't do that rather than tax work right when we when we have to get to one more topic this would not be attacked the congregation and 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 something to comment on if they think that ministration and the president has responding to this appropriately even though 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 they 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 look there's 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's statistical finding 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 we thought we could do it by this route still but there's no evidence that was done here in the answers it should not be don't we agree that everyone should be treated equally under the law so why policy eighteen us c. five a one c four the thing that creates five one c four it is 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 in the tax that says to was a progressive or glass of wine what was my 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 that's 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 oversight of 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 happens 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. thanks wayne thank you for and. time for the daily joining me as prime interest producer bob inglis we're getting

closer i can almost feel that because in my head that will never happen. though. 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 or monthly data 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 tool 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 had a 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.e. braun purchasing program and we're no fewer than five fed officials i spoke to today are going to look at what each of them had to say and they were going to label them either a hawk or a job and just to be clear of hawk or relative terms because these are 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 come a day should 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 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 they look like and i got to say one relative terms he's a hawk that's what i can for from has judged. very 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 out of apple tax cheat or shareholder you decide and it's curtains for the acting i.r.s. commissioner but he would he is here to stay at least for a little while thanks for tuning in will 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 night. modern

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