decline in house prices and a nation where you don't nationwide basis so what i think is more likely is that house prices will slow maybe stabilize might slow construction spending a bit i don't think it's going to drive the economy too far from its full employment though so. call as the bit skeptical but we'll get into the nuts and bolts of the housing market including fannie and freddie with john pryor of politico in just a bit and exhibit two of the burning of fact are investments and balanced bonds which can allocate between both stocks and bonds they had record levels last month previous such records include one thousand nine hundred four and two thousand and four both in the middle of helping both market but also seeing bond offerings that limit protections for the bond buyers so called the covenant light offerings is it time to jump on board the new things your name will see finally watch out c.e.o.'s because the security and exchange commission has a new a software that detects financial reporting fraud the new accounting quality model

was recently deployed as spearheaded by as you see chairwoman mary jo white and the cohen foresman chief george kanellos and arrest me who are both from deborah boys and clinton at the white shoe box firm that defends companies accused of accounting fraud among other things and here is what's in your prime interest. now fannie mae and freddie mac. were taken into conservatorship and two thousand and eight when they received over one hundred seventeen billion dollars. in taxpayer bailouts now there's been

a lot of headlines about fannie and freddie's record profits last quarter further the mortgage giants will pay the u.s. treasury fifty nine billion dollars in dividends which will put off the debt ceiling debate in congress now some have reported that fannie and freddie's profits words everand by a recovering housing market but according to fat fannie ten q. her net income was primarily driven by record re crediting tax deferred assets to further discuss this i have with me john pryor of politico thanks for having me thanks for joining us so let's talk about this fifty nine billion dollars that fannie and freddie are going to pay to the treasury fifty billion of that is accountable due to deferred tax assets what does this mean what are they and how do they generate so much money right so back in two thousand and eight when these two companies are being taken over by the government they decided to pull in a county maneuver to push out some of the losses they were building up their

balance sheets but that the same time they pushed out the taxpayer if it's that they would take on those losses until at some point whenever they're counting gurus decided they would be profitable enough in the future to cover those losses then they could recognize those benefits in the form of the fifty billion dollars you saw in the last quarter the problem is with fannie and freddie it's hard to know what the future looks like for them because that's entirely up to congress so it's very difficult to sort of to lay out how profitable they will be if you don't know if they'll be even be around so in this last quarter they finally decided that with the housing market recovering and as you mentioned the the monetary policy is helping them out a little bit with their profits they decided that indeed those new orleans would cover those losses if they set aside not just going forward but also in the in a look back review as well as part of the accounting rules there but they did decide that their company was finally healthy enough to realize the loss they took the pain. if it and as the bailout agreement show they will send that trade to us

taxpayers taking these assets off their balance sheet now they're going back on right so is this going to put the company at any disadvantage could this pose as how in the future right well under the bailout agreements that were amended last year and went into effect this year they're required to hold a three billion dollars capital buffer on top of all the profits that they're supposed to sweep to the treasury so all that stuff they are sweeping the treasury is it accounts for three billion dollars capital buffer that they have so they have some cushion there now is that enough going forward we don't really know that sort of the lessons that we learned is that things can go down and they can go down in a hurry especially these days with fannie and freddie and the f.h.a. the f.h.a. finance seen just about every mortgage in this country so of course they have to keep. some capital. but you but you touched on this is the second to go are fannie

and freddie built on sound footing or is this due to easy money policy where it's two things that fannie and freddie are really benefiting from it's the rising home values that help their profits out on their investment portfolios be the n.b.s. that they hold the mortgage bonds that we hold in the financing that they're doing but the really big thing again like you mentioned is ben bernanke in the federal reserve keeping interest rates down allowing more homeowners to refinance that is the bulk of their business right now for fannie and freddie and a lot of the profits that are being steered through them to us right now is because of the the easing programs from the fed keeping those interest rates down so you ask if they're on sound footing they're really benefiting a lot from bernanke is up to so when are if the fed starts tightening and it's going to significantly decrease their profits that's something that i'm sure they had to take into account when they were deciding to release that fifty billion

dollars to the treasury. you had to really look out across a whole lot of factors there and some early fed meeting showed that they might be easy you know a little bit this summer and later in the sober there's talk of tapering off a little bit i'm sure those accountants took into effect that policy choice because it has such a big impact on their profits and i think the government has taken to a lot of. circumstances as to the future policies afghanistan friday for now the terms of the bailouts stated that increase profits will trigger higher dividends so how much of the fifty nine billion dollars is due to higher dividend payments are how much of it how much will they have paid if they don't see a profit so the the fifty nine billion dollars fifty point nine of it just about is from the deferred tax assets they set aside the accounting gimmick that they pulled

on top of that was the actual profits of the company made was around nine billion dollars as one of the it was the most profitable quarter in the company's history so it's a little bit of both the real housing recovery is really helping them and it's really helped them push a lot of a lot of that money to us the taxpayer so of all the money they're paying fifty nine billion only nine of it is actual profits and fifty of it is due to this accounting tool they used was this intended to make headlines so are we starting to see the possibility of freddie going back to the private sector again but not really in the cards policy wise at the moment a lot of hedge funds and a lot of private equity people are buying up fannie and freddie shares right now thinking early telling people that they think that that could be in the cards that if. dividend payments to fannie and freddie are paying the treasury if that ever overcomes the amount that they were sent to prop them up then maybe the becomes an

option for the government to actually spin them off recapitalize fannie and freddie for the housing finance system in the future without fannie and freddie are required to cut their investment portfolios by fifteen percent per year now if the companies do go private again could this hurt the company well those that wind down is more in their investment portfolio it's the private mortgage bonds the whole so mortgages that they've built up in their portfolios to help finance the entire mortgage market leading up to the crisis. so they could they still can buy and package mortgages into bonds and sell them to the private market i think that part of the bailout procedure. stipulations is more to just keep them centered on what they are supposed to do which is finance home loans for people. not so much get into the wall street game of buying and selling private mortgage bonds and trying to trade on that market ok now these are men says they also are big coincided with

the debt ceiling debate that we're going to see is kind of putting that debate off in congress for a couple of weeks. do you think that this was a determining factor so maybe this is a conspiracy or fannie and freddie it's that they're so strange companies they're supposed to be private but they're completely controlled by the government so you can certainly use a point out and say you know yes there are politics involved there but both fannie and freddie c.e.o.'s and treasury officials have told us this is one hundred percent call for fannie and freddie people to make that they had no say no political story in this at all that's what they've said publicly what goes on behind the scenes though with fannie and freddie is always you know it's always a subject interesting conversation you know what do you think that the federal government has influence over fannie and freddie as their majority shareholder that's the question that's really the question that got us into this position in

the first place does the government have too much of a sway on what fannie and freddie does. they can't really be tools for policy that didn't work out in the past and i think a lot of concerns right now as we go forward as they become. companies to either spin off into the private market or to wind down and for something to be put into their place the question becomes is it healthy to have this much influence over the mortgage and housing markets it certainly got into trouble before in a lot of. really effort to figure out a way to not repeat that again but also the question into a bill that was introduced in the senate to jumpstart the reform act which. prohibit the administration from selling their shares without congress' approval so we're seeing congress saying they can't get it there unless congress approves it i said is that kind of agree with what you just said of having influence and right it's something that it's enough to spur that bill and the fear is enough for

senator corker and strange team of senators there before one of the members was born. and there's news recently that there's movement in the senate and the house we're keeping track of an effort to reform them to wind them down and replace them with something you don't want the administration convoluting the situation there by having to deal with private companies what they are afraid of is that we somehow relinquish our complete control of fannie and freddie and if you start to wind them off toward private investors that might complicate the issue an already complicated task. so congress is always struggling with power between anywhere they sure haven't you know. such a huge amount of debt. so thank you very much. for having me. and stay tuned because up next prime interest producer bob inglis interviewed

security expert. on the importance of neutrality then bob and i are going to do all over the recent shutdown of another crypto currency exchange money laundering even a crime stick around. engulfing the neighborhood syria's civil war to spread across the border into. levanon hezbollah defiantly promises victory over sod's enemies indeed it would appear hezbollah interests intend to steadfastly stand by their ally in damascus the taking of sides is all but complete and the stakes for the entire middle east couldn't be higher. the news sigrid laboratory to mccurry was able to build a new most sophisticated robot which fortunately doesn't give a darn about anything tim's mission to teach music creation why it should care

about humans and world events this is why you should care watch only on the dog call. they played in a family jazz band together. play hijacked a plane together. most of them from music to tara. twenty five years old our questions still remain. as bad hijack. you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize that everything you thought you knew you don't know i'm tom harpur welcome to the big picture.

of the mission free accreditation free transport charges free. range month free risk free. to tide free. download free broadcast quality video for your media projects a free media dog hearty dot com. at the big one conference in san jose california preventers producer bob inglis sat down with technology entrepreneur andreas and wise and bob asked him how his

background and banking technology and security and fluency is the way he sees bitcoins and fitting into our modern pavement payment system and here is their conversation i think it's very easy when like all of us we've grown up with a culture of money that has certain characteristics and this culture of money is thousands of years old we understand money to work in a certain way but a lot of the things that we assume are fundamental to money really aren't there fundamental to this particular type of money that we have so our use of money reflects some of the constraints of the underlying currency once you truly understand because you realize that some of those constraints go away and when they go away it opens the door to incredible new innovation completely new ways of thinking about transactions thinking about interactions between people thinking about value trust reputation what is a currency etc and that really led me to to grasp not only the bitcoin is special

but that it will literally change the world just like the last five appear phonies now at the previous appear finney's i was too young and so when i was asked telling people this will change the world about the internet or modems or computers no one people don't believe you they still don't believe me what i say about about it but i know i'm right and it will change the world and in ways we can't even begin to imagine that well you talked about trust between people and with bitcoins a lot of times we're talking about the. small transactions but there's really no upper limit on the type or the size of transactions that can be had with this new currency would you like to tell us what is are there any physical limits on how how much could be transferred between say banks and organizations could be used for international transfers well that's really interesting because it goes back to the aside dia that there are some fundamental constraints in our previous monetary and payment systems and what you have is you have four small payments you have

a complete payment network just for small payments and then for very very large payments you have networks like swift for example that handle interbank fund transfer. but essentially for each type of payment you have a completely separate network vertically integrated network now this is very similar to the pre internet age when you had one network just for phone one network just for video and t.v. channels want to work for information and sending pages through facts etc etc and then the internet brought them all together what what's really incredible about bitcoin is that it's the same system all the way from not just micro transactions but what you could call femto transactions nano transactions millionth of a penny all the way up to billions possibly trillions of dollars or femto to get a transactions is all encompassing by a single network and there's no difference as far as the network is concerned in how much you're transferred and that's completely revolutionary in this kind of

like the internet itself i think there was an article that really changed my life called rise of the stupid network and it is it described the internet as a barbell where you had weights on each side that were doing the computing power and then the middle was dumb it really doesn't matter what information is is going back and forth do you see that as a parallel to the coins absolutely because when is the c.p.i. p. of payment systems or of currencies you really have to understand the bitcoin is not a currency or it rather it's not just the currency it's an apple. programming interface it's a protocol and the current c. and just like t.c.p. ip what it allows is applications that can be built on top of it is a foundational network in itself is neutral and neutral doesn't mean a lack of principles neutrality is itself a principle and in fact is the most powerful principle of bitcoin because it's neutral both to senders and recipients their size doesn't matter i could do a transaction just like wells fargo could do

a transaction. that neutrality plus the neutrality to the amounts really makes this network completely neutral to payment systems and gives it all its power well we've seen a rise in the us with various internet regulation bills that have tried to create a multi-tiered internet kind of take out the stupid the stupid part in the middle and make it more of a centralized processing system is it possible that this will ever happen to bitcoins well it's not being very successful on the internet ether because at the end of the day distributed systems window with centralized systems centralized systems don't scale distributed regulation works better than centralized regulation and i will not withstanding that though but the central central governments are still trying times regulate as much as they can it's possible that they'll actually they will get some of this regulation through will and fact that's why neutrality is the cherished principle both on the internet and the internet can be the greatest liberator of humanity and you know they're ringing the bell of freedom

lifting humanity or it could be the most horrible dystopian totalitarian nightmare bitcoin could conceivably go either way it could get co-opted. it could get co-opted and they could be used for nefarious purposes that could people could attempt to centralize it however both networks both the internet and point are resistant to that because they offer more value when they're spread out well let's get into the regulatory aspects in the banking system sector we have what are known as know your customer laws which deal with money laundering and we've seen recently get into a bit of trouble would you like to tell us a little bit about how some of these smaller up starts are facing these huge regulatory headwinds. really the issue here is a matter of maturity and size the regulations are designed to reflect the underlying reality of our monetary and currency system and in our existing monitoring currency system. is designed to be essentially biased or skewed towards

big players you can't connect to the visa network as a back end processor unless you're big and trusted and properly vetted you can't connect to the federal reserve and access its resources unless you're big and so the regulations of the zine to only work for big organisations breaks that down a bit which means that some of the early entrance in the big court environment have been smaller organizations now that's great i mean we want it to spur financial innovation at a smaller level but there's a cost there too but there's a cost there and when you go head into regulations that would design for big companies you look just knowing what the regulations are is a multi-billion dollar per here exercise so there's federal regulations a whole bunch of them federal regulators a whole bunch of them state local global regulations interbank regulations and of course every other country it would be easy if you could start in one state and then gradually learn and expand to the nation and then learn and expand to the

world but the moment you start on bitcoin you're global from day one we had a chance to talk earlier and our audience is probably familiar with graeme which bliley but in a different different context than you had brought up and just by way of brown background we had glass steagall institute of the one nine hundred thirty s. which said a wall between investment banking and retail banking and now was in effect until one thousand nine hundred nine could we have it back please it was working a lot of a lot of people want it back but there is another aspect of this that directly influences bitcoins and what is so great wiley actually established regulatory requirements for the protection of personally identifiable financial information essentially the social security number the account number the address the routing number the information that identifies your account has to be protected from disclosure and so it mandates in christian it mandates that calyx process controls a whole framework of security mechanisms to ensure that banks don't lose your information then you don't end up being victimized here's the problem this runs

head on into the k y c the know your customer regulations because to know your customer you have to collect information on them and then gradually slightly says you can't lose that information or disclose it. that's where the cost of it's ramping up so if you're a small business trying to do exchanges or banks you're going to come right into this conundrum and have to spend a lot of money just figuring out how to do it right. that was andreas anson noble as technology entrepreneur and internet security expert. and joining me now is bob inglis great to be here again and i hope everybody caught miniature spider-man just passing through the background of that last interview about twenty one minutes into the show i thought i always make and i just it's so

big day for the u.s. treasury because they use their powers under section three eleven of the usa patriot act today for the first time the liberty reserve a digital currency exchange similar to that coin similar to big point but not coins and if. they have been named a financial institution of primary money laundering concern for an alleged six billion dollar money laundering scheme yes i have to ask one question should money laundering even be a crime i mean when i was growing up when we were growing up it was at least until nine hundred eighty six and that's when the anti money laundering control act was passed and all of the sudden just trying to conceal the source of passing money from one person to the other whether or not you're actually committing another crime became a crime itself is clearly illegal to hide money from the government well it's yes it is clearly illegal because we have these laws in the book i'm asking should there be these laws not that i'm pro money laundering but i'm more anti money

laundering nuanced anti anti money laundering tax avoidance yes you can avoid taxes and whatever but that's not really the point but it gets into you know on a relative basis what are these guys doing that h.s.b.c. and what cobia didn't do a little bit bigger i think we have a. graph that we can pull up that shows the relative size of what's going on here and we have h.s.b.c. six hundred eighty billion dollars what cobia three hundred seventy eight billion dollars in liberty reserve six billion dollars so maybe they were committing crimes but we haven't really seen anything else going on here right well liberty reserve is being charged with one of the largest online money laundering crimes in history six billion dollars. and they can be very different from what you just b.c. and look over have done in the past it looks it looks like i'll tell you what happened with what koby there was these mexican drug cartels and they were using

these cash transfer stations to basically sun money all over the world but mainly in the u.s. and it took a whistleblower in the u.k. who was fired for bringing it to the a touch of the authorities and were not for him the story would never have come out so a lot of people aren't even familiar with the cobia aspect because it happened in the midst of the financial panic in two thousand and eight but it was just about as big as anything we've seen in the modern era here going back to h.s.b.c. them so well there have been several rests the founder of the company. says tonight vladimir cads was arrested in brooklyn and there was up to two co-founders were found in spain they've been detained there's a few more closer each other being detained they are there on the actual dieted these are serious punishments i mean what having a just. basically nine million in cash or the cobia president six point six million in the stock options in cash to the h.s.b.c. c.e.o. good good go and. thanks.

so it's been a record breaking day here on prime interest and the amount of money pouring into the fed subsidized markets that is and in the amount of hole loosen made of money paid back to taxpayers from mrs fannie mae so her tax gimmicks and not to sound like a broken record but looks like they're here to stay just not there liberty reserve editor well that's all i have thanks for watching and come back tomorrow and you can follow me and primaries on facebook at facebook dot com prime interest and from everyone our prime interest i'm parian boring have a great. world

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. the secrets of the campus britain's prime minister enjoys a tour of the u.k.'s main base in afghanistan up to ninety suspected militants are held there they are charged. over the lawyer that this boy this is being is the quote the that was completely off the radar and have full comparisons with guantanamo bay we've got all the latest on that story boy coming right up. this comes as u.k. academics map out cia rendition flights shedding light on america's secret overseas prisons. washington blasts russia for its anti-aircraft missile supplies to syria backs the end of the e.u. arms ban to pave the way for direct aid to rebel forces.