good afternoon and welcome to prime interest i'm perry and boring here and washington d.c. gets a headline. so how much is a botched worth now a day ten million dollars if you're facebook and the new twist is the nasdaq exchange itself that's ponying up but the ten million dollars won't go to investors instead they go through the security and exchange commission which is the highest such penalty against an exchange this comes after last year's trading debut with that made up mark of a multi billionaire who left traders and investors in the lurch separately in nasdaq has agreed to pay investors two million dollars for the trading glitches that plagued the opening day. and switzerland what's known as the bashed in the bank secrecy has formally paved it to the u.s.

over allegations of abuse in swiss banks like u.b.s. has alerted americans into setting up accounts that would not necessarily be reported to uncle sam and the new a legal framework set up by the solicitor government will allow dozens of banks to settle with u.s. authorities a move that is expected to bring in billions to the treasury we're going to talk about the debt ceiling later today with winwood brooks a public notice and finally headline brown herbalife of back in the news with a new auditor. formally retired their account because of an unrelated insider trading charges against the auditor and its place and now is pricewaterhouse coopers but there's a catch as journalist francine mckenna points out and seems you see this close that it performs substantial consulting work for herbalife during periods that have to be read audited this code in paris independence something that is prohibited by as these rules well maybe the as these between you that ten million dollars from

nasdaq to start enforcing sarbanes oxley but we're holding our breath let's get to what's in. our prime interest. back in january house republicans struck a deal with senate democrats to temporarily suspend the debt ceiling and exchange of congress didn't pass a budget which the sit in the senate has not done in about four years the members of congress would have their pay with held under the no budget no pay act the debt ceiling debate was separated from the debate on spending cuts which house republicans have retained only said they would not vote on increasing the debt

ceiling without a match as congress continues to kick the can down the road on reigning and our ever growing trillion dollar debt the debt ceiling was reinstated on may nineteenth at sixteen point seven trillion dollars which we've already hit currently we're operating under extraordinary measure is it just to keep the government running joining me now as one would brooks of public notice to discuss thanks for having so nice to have you here great to be here so the debt ceiling was head on may nineteenth there hasn't been a lot of talk or discussions about this on capitol hill why is it there's a quiet issue right well you know capitol hill they like the way to the last budget and even though they did hit the debt ceiling in the middle of may they have until around october perhaps to use these extraordinary measures where they are borrowing against the retirement of federal workers and other things just to get by so you know nothing new here in washington you know even though they have time to plan they're really not. think that might change before they go home for the august

summer recess but up until this. point there's been very little talk on this issue which is unfortunate well i was that worried when they passed no budget no pay because they suspended the debt ceiling which didn't exist for several months did that concern you was this a concern and what was keeping keeping congress in the administration from just spending out of control during that time well you know it is concerning to me and the fact there could be unintended consequences we probably don't want washington to be in the habit of suspending the debt ceiling you know we were promised so no budget no pay that they would use that to pass a budget well they passed a budget in the house passed a budget the senate what they didn't tell us is they didn't pass a budget so that leaves us exactly where we were with no budget they bought more tom to have this debate good so in terms of your second part of the question i wasn't worried about the president spending more you know than the current law

allows him to spend you know i'm sure there is a little bit of leeway the administration have but for the most part you know if there's going to be money spent the constitution requires that to be authorized in the perpetrated by congress that's got and it was interesting that we had the senate and the house both passed a budget but nothing became law because then they had to come together and make one by jet that fits and then send it to the president to sign off that or he doesn't sign it then no he doesn't have the budget is one of the most confusing mechanisms in washington it's in the form of a resolution not a law but the congressional budget act that started this whole process requires that the house and the senate pass a budget on or before april fifteenth we haven't seen that happen in an incredibly long and was a budget important it's a blueprint we need a blueprint on how we spend it also sets the top level spending amounts on the appropriations committee and it does allow the tax measures and spending measures to be fast tracked for the senate where the filibuster doesn't necessarily apply

and you can pass legislation with a simple minority vote instead of a steep. majority vote and public notice launched the campaign bankrupting america and you guys published a video that by some humor in the debt ceiling debate and i wanted to play that for our viewers. that you see or hear. well that's your problem there can't you fix it we can make a decision and told her if you try to ignore me it's not going to look good. i'm going to move. how is it that you can compare the u.s. federal budget to it this every year american household well you know it's very challenging but what we try to do in this campaign is really break it down where the average american can understand what's going on and you know we have a debt ceiling and what's happened in years past administrations past both parties

is raise the debt limit and we've seen very little action to really have serious reforms that we need i mean right now the debts over one hundred percent the entire u.s. economy and most professors and scholars in economics will tell you that when that happens it can stranger ability to grow an economy and there is also a study by rinehart robot that you probably saw and then came after them this weekend and he they said when you know what's wrong and he's saying they're wrong in that having large amounts of debt does not construct an economy do you have any comments on the survey that well i mean all i can say is look what's happening right now in europe look at spain greece italy dead doesn't matter and to start with the premise to dead doesn't matter is is this a false promise and there was you know arrows some smarter errors that were pointed out in that study but the premise that reached that level of debt does affect economic growth us think that perma still stands now i want to go back to what

we're we're speaking about on comparing the u.s. by. to a household and there have been criticisms of this as well matt tavi from rolling stone wrote that the national debt is totally unlike a family budget for a good zillion reasons not the list of which being that families cannot raise money by or deflate the size of their budget you know laterally and their family members die instead of extending existing indefinitely and comparing your family budget to the sovereign debt of the united states is like comparing to kindergarteners tossing paper airplanes to the apollo eleven mission and i agree we have a spending problem by is it over are we oversimplifying here well i mean the things that come out of washington are complicated so when you use that analogy the federal budget to the average american household you know it's not going to be perfect but i think the core of that argument still stands i mean when you talk about households cannot spend their way into oblivion we have think that's true and the reason so many people put it in household terms is so the average american can

understand it i mean look we're talking about trillions of dollars in deficits as far as i can see in billions and it's hard to for the average american to really understand that so i think that's why so many people in washington use that in the analogy so the average person you know in middle america can understand how this impacts them but what came out of this argument why is the passage of no budget no pay saying that we will pay our. creditors before we. plan things like medicare and the v.a. so. anywhere where are you on that argument well you know we saw that argument come up in the last two weeks in the house. it did allow. people that hold our debt to get paid first in terms of it being a good starting point the debate you know that's where i think we are it's where the house republicans have started the debate is it perfect policy probably not but you know when you're talking about these budget issues they are complex when you're

talking about only spending what you take in that that requires very difficult decisions to be made but. you know do i think that's going to become policy probably not well now that we've hit the debt ceiling we're operating under extraordinary extraordinary measures can you explain what they are and how they were sure so you know we've seen this happen for years all types of ministrations of uses so it's nothing new but when the debt ceiling gets hit in statue they use several basically accounting gimmicks to allow us to in this case they're buying a couple of months tom and i would go borrow against a federal retirement and things like that with the attention of paying it back but it's just moving money around to give them a little bit more leverage till they they reach a conclusion on this debate of federal retirement is that social security no this is just the federal workers that put forth money into their their plans or similar for one case but this isn't so sure and we have our own social security well we have you know you have the trust on a lot of americans think that's

a lockbox with their name on it with their money and it's not i mean for so many years when social security ran surpluses washington spent that money so you bring up a good point that money's been spent and especially i see a transition right what do you think that selling ceiling debate is going to look like well you know we're going to see this unfold over the next few months it looks like both can be sticking their ground i hope that washington comes together on some big type of bargain you know is that going to happen i can't say but i can say these are major problems we're facing these in our country today and requires tough decisions we can address these now or we can address some later in the longer we wait the harder it is to address the fiscal imbalances we have in the united states of america but with all the other scandals that are just plaguing congress and the administration right now do you think that's going to make it less likely to come to you as a debt. i think it's too early to tell think it is distracting. you

know it does bring up the point of what's going on in the administration is it incompetence is it purposely targeting conservatives in terms of the i.r.s. scandal i don't know but it does kind of change the debate here and something that we wouldn't of course of foreseen a month ago is into the debate so it could change things absolutely what do you think is a bigger priority either addressing tax reform or the budget i think the budget i mean you know we see some of that right now in the house so they're talking about a three part bill that raise the debt ceiling which would raise the debt ceiling cut spending and have tax reform i think it's dangerous to have tax reform in this debate and look in the personal cliff debate in january we already raise taxes and we raise taxes significantly so yes we need a huge debate on that this time before thank you so much this is what brooks of public note i thank you. stay tuned because we take a hard about f.

warmer secretary treasury and fed chairman man larry summers you won't believe what he did when he was president of harvard and then prime interest producer bob inglis and i explored the lighter side of that straight madison avenue. clear image of the iraq story a. twenty day taxi trip through the country. the roads. clear evidence from north to south. the route of iraqi tragedy. after the war waiting for peace. talks e t. let me let me i want to know what all let me ask you

a question from. here on this morning is when we're out in the bay we have our knives out. but if you feel the slightest bad staying there again you're in a situation where the united states talk about your mail and me. please please please

. i. know when we talk about the revolving door we often think about it shuttling people between washington and wall street but today we're going to highlight another stop on the shuttle the ivory tower and the lucrative consulting fees available to those

in academia and who better to highlight this conflict of interest then mr larry summers. we are now seeing reports that he's the top pick to replace a federal reserve chairman bernanke so let's see where summers got his start he began his career at mit in the late seventy's where he first met ben bernanke the mario draghi and stanley fischer who he would eventually succeed as chief economist at the world bank it was there that he drew criticism for his views on toxic weights now i'm not talking about the actual are not talking about financial toxic assets which he later supported and actual toxic waste he approved a memo that said quote i think the economic logic behind dumping a load of toxic waste and the lowest wage country is impeccable the underpopulated countries in africa are vastly under polluted. later in the late one

nine hundred seventy s. while serving as deputy treasury secretary he worked closely with robert rubin and alan greenspan to overturn the glass steagall act and he also worked to ban proposed regulation of all privately traded derivatives he testified to congress that the parties to these kinds of contracts are largely sophisticated and financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty and solvency. summers would go on to become the president of harvard university which boasted the largest and down that fine of any american university the fund was loaded with these very derivatives that he supported but an employee of the fund management company as ira smacked fired off a warning letter to summers about the positions and challenge of the competence of the fund managers for her trouble she was fired but she was eventually proven correct when harvard lost an astonishing twenty seven percent of his and down meant

because of these a very derivative positions summers eventually resigned his post at harvard and two thousand and six after a speech he gave where he suggested women are biologically inferior to men in scientific reasoning but during his time at harvard he had begun supplementing his income through consulting and speaking engagements for financial institutions after he left in two thousand and eight he made one point seven million dollars from speaking engagements goldman sachs paid him a hundred thirty five thousand dollars for one speech and summers would eventually donate to charity the forty five thousand dollars paid by merrill lynch that was after the firm nearly collapsed by losing billions in the c.d.o. derivatives market. but his greatest act was to come in two thousand and nine when it seemed three hundred fifty billion dollars of tarp bailout funds might not get congressional approval so larry summers as chief economist advisor to president obama sent a pair of letters to congress he was critical of the way tarp had been handled and

pledged that bailout money would be used to aid homeowners and foreclosure further banks would be denied funding unless they agreed to increase lending above baseline levels but the foreclosure victims got little relief and the banks did not commit to lending in the end the three hundred fifty billion dollars remained approved. and that's the profile of mr larry summers who was a front runner and the race for fed chairman. and it's time for the daily deal with bob inglis and i hope your suit is comfortable there for

a while well thanks for joining us now let's talk about sovereign debt now and starkly the japanese have had one of the highest household savings rates in the world and the citizens patriotically buy government bonds at very high rates but with an aging population forced to spend it savings his survive the rate has plummeted over the past decade and in europe there are concerns about some countries becoming insolvent which raise concerns about the fate of the european union itself spanish italian portuguese greek and even french bonds have become unhinged at times since the financial crisis in higher yields mean higher interest payments a vicious cycle in the here even in the u.s. where bonds are thought to be relative. save there are concerns what happens when the largest marginal bond buyer that is the federal reserve stop buying treasury debt as a part of quantitative easing right so it seems the global sovereign bond markets might be entering a crisis era it's no surprise then that the new banking rules such as basil three

force banks to own more sovereign debt run better not withstanding and for the investing public bonds are promoted as a safe way to has portfolio and reduce volatility but they're not without their own risk when interest rates turn the corner and eventually they're going to rise vines that are paying out such low rates like wanted two percent are going to lose market value right and it kind of reminds us of one of those drug commercials where they list all the benefits and you know they go on and on at the same dough. well we thought it would be interesting to make one of these commercials and let's roll it . when you're searching for relative safety and investments where can you go the weight of portfolio under-performance can hurt in so many ways don't believe that moody's and s. in peace a sovereign debt can help sovereign debt is a tool that can treat many symptoms of portfolio imbalance tell your broker right

away if your net asset value deteriorates were if you have thoughts of liquidating your account sovereign debt is not approved for as in the ratings under triple b. minus and people reaching for yield should not use sovereign that may lead to portfolio downgrade cash haemorrhaging basis point leakage spreads blowing out seizure of assets and should not be taken at the commencement of a tightening cycle ask your broker and come back to sovereign debt. but we like to thank all the production staff who played a part in making this commercial where sovereign debt really is an issue that we need to talk about right and who's actually going to be buying this let's talk about how the federal reserve buys it first let's say that the treasury has an auction. and there are various banks called primary dealers they have to participate in these auctions according to their range with the federal reserve and the treasury department now the federal reserve doesn't buy them directly it's a maturing bond on his part for it on its portfolio let's mention the primary

dealers like me who are the crimea is how you become primary dealer and why why isn't everyone offered this unique position with the federal reserve chair of the primary dealers are banks and big brokers and what they do like i was saying is they have an arrangement with the federal reserve and the treasury they have to participate in all treasury auctions but they also engage with the fed the fed is buying eighty five billion dollars a month forty five billion dollars in treasuries forty dollars billion dollars in m.b.'s and these guys are primary dealers participate in these auctions with them now m.f. global was a primary dealer and it was kind of a big deal for the make gave them a lot of status and the interesting way this went down and what happened. they eventually went down but the way that they became a primary primary dealer is interesting they had all kinds of regulatory problems in two thousand and seven two thousand and eight they had a trader blow up part of the firms of not as big as junk or as i did but it was about one hundred forty million dollar trade in the wheat market i think and the sea f.t.c. was scrutinising about global and as part of the deal the federal reserve bank of

new york is the one who has to approve all primary dealer applications they said you need to clean up your act for a year and we'll see what happens and maybe you can become the primary dealers and guess who m.f. global hired to help them over that your long period i guess. probably very yes predatory financial group headed by gene ludwig you know the former the former officer of the contra was a common currency and he's the guy that's hired dozens and dozens of former high level regulators at his firm prom and tory and it's called the biggest shadow bank the biggest shadow regulatory firm in existence so back to the back to the m.f. global story i'm going to close this tight little boat here. tory came in that they reviewed m.f. global's risk controls and what happened after a year everything looked good in march two thousand and ten they signed off on cores and here's a firm and he starts putting on these trades now some people will say oh ok you

know he's the new guy at the firm prom and tory was a was advising them on their prior risk controls but really they were controlling and they were managing their risk and customer deposits on an excel spreadsheet and that's how they eventually lost control of customer firms in the final chaotic days so i know you have a lot of grey inside. there your experience in the finance service says i want to talk more about this tomorrow as well but we do have one announcement we want to make larry king is now the newest member of our team at r.t.e. and beginning and they're going to start airing larry king and now and politics with larry king on the r.c. american network at five o'clock right after prime and exactly right after us so in june larry king's existing show larry king now will be carried right here are to america and i think we have a promo that we can view here real quickly. i

would grab it as questions to people in positions of instead of speak on their behalf and that's why you can find my show larry king now right here on our t.v. question more. and it's i was waiting for that fourth. really looking forward to asking larry king's own question. there are student wars your attitude so if you want to weigh in on today's show you can follow us on facebook at facebook dot com crime an interest and you can follow me on twitter english. and my twitter handle is carry

on are you think. so it's been a day of retribution and redemption here on prime interest that's the see extracted a ten million dollar pound of flesh from the nasdaq where the president like that mary jo white may not have to go back to congress for more money because here we saw how sovereign governments are going hat in hand to investors to buy their ever so sovereign debt and uncle sam also twists it at you at bankers arms across the pond and up the outs the swiss might not be getting the pope but though it may be

carrying the pope but they're not already american tax dodgers anymore and how about the debt ceiling well we got a bit of plaster dust out of our i started staring up with lynwood gross of public notice we put larry summers on the notice with his hat gig speaking gigs that is thirty five one hundred thirty five thousand dollars is a nice payday from goldman if you can get it and larry summers dead after paying for tarp and thinking harvard's endowment thanks for watching and make sure you come back to tomorrow from everyone here at prime interest i'm terry and boring publicly. download the official ati application to yourself choose your language stream quality and enjoy your favorites from alzheimer's if you're away from your

television well it just doesn't matter about what your mobile device says you can watch on t.v. anytime anywhere. any fifty feet if it's fifty feet feet. deep.

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