good afternoon to welcome to prime interest i'm perry and boring here and washington d.c. let's get to our headline. demarco of fannie and freddie made headlines back in september of two thousand and eleven when he got the f h f a to sue a seventeen banks and broker. transgression that they were bilking the taxpayer well they recently settled with citi group but they've declined to tell a federal judge much less to taxpayers how much the settlement is worth or any other details for that matter bloomberg inquired as to why it was told that the f.a.a. f.a.a. might never disclose what's her well i guess we'll have to see if mel watt to bring some transparency to that agency when demarco leaves but we're really not holding our breath on that and the jobless rates in seventeen countries that use the euro rose to an all time high twelve point two percent but price inflation still remains

low guess what that green lights you have some more european central bank bond buying aka money printing but protesters in germany aren't having it at least not as they are the measures that's because up to three thousand members of the walk you movement descended on to the brink birds of financial district to disrupt business activity and according to an. occupy spokesman the aim of this blockade is to prevent normal operations at the e.c.b. we're forced to wonder if and when the will descend on wall street. and finally yesterday we disclose that jon bon jovi is selling discounted tickets to spanish concert goers because of their economy well today we learned that spanish beings having been have been aggressively buying the country's own gone and this is why you always have remained low despite turmoil and other european markets where you ask what's the big deal. well the fed does the same and when the bond buying stops

borrowing costs rise so you've got to stick around and see how this game going to end but for now let's get to what's in your prime interest. small small business is often have a difficult time navigating through the red tape in washington the financial crisis of two crisis of two thousand and eight was mostly attributed to the largest financial institutions and regulatory reform laws that were passed in response to this were riddled with car valves that benefit the very firms they were supposed to

rein in what we have now is a set of rules that restrict small businesses from growing these are small businesses that didn't contribute to the financial panic and who employ over sixty percent of new what private sector jobs. and response congress passed the jobs act to help small businesses gain access to capital and some other provisions here to discuss is john barr allow from the competitive enterprise and its thanks for joining thank you barry and great to have you great to be on so you are supporting the rand paul mark bill for credit unions a list the cap is currently at twelve point two five percent they want to lift that to twenty seven point five percent of total assets he has give us the overview of the bill his for his against a of are you for it well one of the things that you mentioned rand paul republican of kentucky and mark udall democrat of colorado in the senate it's also one of the only bill i would imagine maybe one of the only bills ever to have. republican of

california and is fellow california senator maxine waters are on it but everyone is seeing the credit as you said credit unions did and small businesses didn't contribute to the crisis yet since one thousand nine hundred ninety eight they have had this cap on business lending at the behest of the bankers lobby which the banks don't have and which credit union station no other restrictions for mortgages or auto loans which are you can't really say after the mortgage crisis is that really small business loans are any more in a hair at least dangerous it depends on the quality of loan and mortgages are so that even the obama's president obama's administrator of the credit of the national credit union ministration is for lifting that is for lifting the cap and it's got a lot of bipartisan support but of course the bankers lobby is fighting it tooth and nail because they don't want the competition well it is a bipartisan bill but also regional and local banks are in the financial panic suffered much more than the credit unions dead could have possibly because they had

these stricter tighter lending standards. i don't think so because debbie mots again who's president obama's head of the national credit union administration has said that small business lending did business lending and did not contribute significantly to. to a credit union implosions i mean there could be some bad business loans as there can be some bad mortgages but credit unions also have the advantages where they know who their members are they would only be making loans to their members so a military credit union would make credit unions to veterans businesses say a doctor's credit union may make a loan to a hospital or a medical device company and it would still regulators could still nothing else changes except that this arbitrary cap is lifted you know it doesn't change capital ratios or anything or the amount of loans they could make or the quality of loans just that they can make add had business loans to more of their mix which would actually help diversify their when they get in and according to mr motts would make

them safer and that's a good point because credit unions are member and they're not for profit meaning that they operate to start their members and not to maximize profits what are some of the advantages to credit unions lending of our banks and banks and i have nothing against banks in fact i'll argue on community banks in particular as you said that they're suffering from some of the red tape too but i think you know you should lift these arbitrary barriers for for everyone and i but i think credit unions that yes that they're specialized in what they are and what their members want the members of the members run they could and they would and they would have the knowledge like say a doctor's credit union. teachers credit union others you know to know like say of their educational businesses or medical businesses you know what would you evaluate that because you know it would be other teachers or other doctors evaluating the quality of these loans for the for the businesses so they can for there look into that in

a strange that they're lending to yes so we would be remiss if we didn't discuss their. special tax status credit unions receive the credit union task expenditure and if we're going to. grant the ability to lend on par with the banks should we tax them like a bank. i don't think you can hold the business entrepreneur hostage to capture form i mean it's a bit rich for the banks to to say you know to complain about unfair subsidies with all they've received from tarp and community banks are also constructed themselves as s. corporations which you know have some of the where they're only taxed once and the credit units case the members are fully tax and what they receive in in the interest. on their on their on their account on their accounts but and but there are other things like there are similar things in the tax code like partnerships and s. corporations i mean we do need overall tax reform but in the meantime that's largely irrelevant to you know who they make their loans to right now they could make all

of the mortgages and auto loans they want why not allow them to make more business loans why do you hold all their small business members hostage to when congress has time to time people on the tax reform well that's a good point you know the banks have received over a trillion dollars and in federal funds for tarp intervention and the bailouts so let's talk about small business lending xah let's move gears into the jobs act which was implemented just to increase the ability of small businesses to raise money in the capital markets he described some of the ways that this would occur well parts of it has been have been implemented in parts haven't and i would say the parts of the been implemented have been working one of the things is that it gives new companies small and midsize i.p.o.'s what they call emerging growth companies a five year exemption from some of the most honorable provisions of the sarbanes oxley accounting rules that president george w. bush side and dodd frank and other rules and that you're already seeing has really

has really helped some smaller firms including you know. intact for biotech. some of the most prominent the specifically utilized provision of the jobs act have been kayak the travel search company in five below the retailer and they've had successful i.p.o. as their investors have grown wealthy it's were excessive with the retail investors so they can grow wealthy with the companies at the start up or emerging growth stage rather than just hedge funds as in the case of facebook and so you had the facebook implosion which of course facebook was much too large for the jobs act but people blame the jobs out going on but i think that the jobs act is a cure the people can grow wealthy with the next facebook as they grew because i would listen to the go into the public sort of be accessible the public at a smaller stage just as companies in the eighty's like home depot and ben and jerry's where ben and jerry's didn't even use an investment bank they advertise for their stock in the back of their ice cream cartons well some of the critics of the jobs act are concerned that these companies are not going to have to report

financial conditions the way that public companies still try to reduce transparency and maybe increase the instances a fried do you have any concerns about that well nothing changes the fraud a lot i think fraud you need good swift punishment but lehman brothers was fully subject it was fully subject of this bank of america all of these firms that imploded and had problems and it didn't stop them it just made they sometimes called sarbanes oxley which again president bush certainly the great the regulator side the accountable employment act so you know i think these are you know just a few provisions it's the internal controls revision where you have to fully tast all of your auditing processes for a smaller company that can quadruple some of their auditing costs so i think i don't i don't think i don't think it's been shown that these provision has been the provisions have been a benefit to the investing public since they've been enacted and i don't think you know and i think you had some successful i.p.o.'s in the job that you really haven't had no i'm not ruling it out later any scandals as

a result of companies that have listed specifically under the jobs act now. we need to implement the rest of it right and getting the job agnes woman to use and it's really been a slow process the former chairwoman of the s.c.c. mary shapiro she didn't want to and harriet's. an anti investor legacy so she's kind of left it to you who's now taking over her role mary jo white it looks like she wants to move forward but when can we see implementation i think by delaying this she already has inherited an anti investor legacy because investors are shut out that you can buy you could buy a gas station for instance on e bay but you can't get that gas station wanted to sell to a group of people or investors you know they have to go through all this red tape so what a way it's simplifying what's already there of the crowdfunding that you can do with donations this would allow simply allow you to do that with the possibility of an end but invest of an investor return so i mean yes you're always taking a risk you're taking a risk when you put. a lot with a lot of with

a lot of things that live you're taking a risk when you buy a big company you have a big big bank but if this if there is disclosure if. you know simplify disclosure i think investors should be allowed to take that risk and that moves on to my next question have been credit investors that you see will require companies broker dealers that are selling stocks and of the jobs act to acquire proof of an uncredited at best are meaning that there is a sophisticated investor and they meet certain net worth and come standards but the f.c.c. has offered little guidance as to how to acquire this information and some companies do you think some companies will be second guessed by the f.c.c. and if you were a small company would you be hesitant to use these rules just because we're not sure of where they're going well there is a specific provision affecting a credit investors all the rest of the things that i.p.o.'s and crowd funding involve you don't ordinary investors in the investing public what it is is just simply allowing a credit investors and people who solicit them to advertise generally but the

investments would still only be. they lable to these occur to these accredited investors because it's hard for an entrepreneur to whisper around and say everyone one on one are you rich are you rich are you rich so you can. so it's also been that hedge funds and you've had you know peter peter schiff who has a hedge fund and others and they have an interest active even talking to the media they fear that they could be you know solicit they could be construed by the f.c.c. or a state regulator as an illegal offer so this sort of clarifies that rule and there's no reason the f.c.c. shouldn't have implemented by now in fact there are some who argue that they wanted that it went into effect automatically and that somebody should somebody should test it but really i mean again it doesn't suspend any you know anti-fraud laws and try and and truthful information should be made available to investors even if they lack the opportunity to to invest in this particular company thank you so much for the way you carry this down to allow the competitive enterprise institute. and stay

tuned because of next we're going to get the details of how general petraeus landed a gig i k k r they we're going to highlight how twitter is spotting it at what he bubbles say to. a clear image of iraq after inflation. twenty day taxi trip through the country. the roads full of danger. clear evidence from north to south. the root of iraqi tragedy. after the

war waiting for peace. taxi on our t.v. . you know sometimes you see a story and it's so poorly you think you understand it and then you glimpse something else you sure see some other part of it and realize that everything you. don't. charge is a big. little. you.

know private equity as a realm of investment that's largely flies under the radar but is one of the driving forces and our modern capital markets a leader in pioneer in this field is a giant firm of k.k. r. and co which boast a history of over four hundred billion dollars and leveraged buyouts and other private equity transactions founded by three bear stearns employees and the one nine hundred seventy s. they recently added a prestigious but controversial figure to their payroll as former cia chief and gen david petraeus he began his military education at west point graduating in one nine

hundred seventy four and had a distinguished academic career he would eventually earn a ph d. in one nine hundred eighty seven from prints. university woodrow wilson a school of public and international affairs was rapidly promoted it for service in the middle east from brigadier general and two thousand to the rank of general in two thousand and seven some have criticized for lack of a direct comeback record in relation to the many awards he received and his bronze star of the medal with the valor award was questioned by several former army officers according to business and cider but betrays did suffer a major injury in the early ninety's when he was shot in the chest during a y. fire exercise but he was reportedly released early after doing fifty push ups just a few days after the incident. in the middle of two thousand. for using discretionary funds for public works as part of nation building during

a visit by coalition provisional authority director paul bremer petraeus quipped money is ammunition but the liberal use of discretionary cash would become criticized it was revealed the new york federal reserve had shipped as much as forty billion dollars in cash and seize seventeen planes to middle east weighing some three hundred sixty three. but became commander of u.s. forces in afghanistan in june of two thousand and ten after his predecessor made disparaging remarks about obama to rolling stone shortly afterwards disclosed damaging afghan war military and betray us reformulated official policy regarding the use of force one of the most egregious violations of human rights on his watch occurred in march two thousand and eleven when air strikes ended with nine. boys this prompted what was characterized as a rare apology he stated the death should have never happened but october two

thousand and eleven but took the helm of the c.i. a and it was that time he was alleged to begin his affair with his biographer paula broadwell they communicated by e-mail when. they logged into the same e-mail account and posted messages to each other in the drafts folder however the ip addresses they both use eventually helped investigators make the connection. resigned in disgrace his prodigious rolodex attracted the attention of k.k. our founder henry kravitz the resourceful private activity equity guru called the day after he left the cia on his brand new private line the coveted power play is expected to pay off as speculated by robert wind of economic policy. journal dot com who wrote if you don't have a d.c. n site or you are not protected take

a are in the hiring approached just bought itself major protection and that's how we profiled david petraeus. it's time for the dailies obama yes and it's time for the viewers to speak their mind and get a response right healthy then up to me you know all right we have some viewer feedback that we took from facebook the first question is from hob right off he said john corazon it bankrupted and global and takes one point seven billion dollars to c f d c general counsel overseer gary gensler worked under corazon at goldman sachs so he recused himself of protecting and protecting itself in the case

he wants to know if he was a nice bit of scratching each other's backs instead of actually doing the job and get it right and not shout excites me well yes i would say he kind of got it right in a nutshell because although gary gensler recused himself and this is something we're talking about yesterday with john breaux co-founder of the commodity customer coalition gensler recused himself early on in the case the investors in the customers didn't know what they were supposed to do and gensler was head of the sea up to see all right and he worked under john corps zein a long long time ago but this office of inspector general in the c.r.t.c. found that there was no need for gensler to recuse himself there really weren't the conflicts of interest there as i said gensler was more interested in regulating the swaps market and he was trying to do a bunch of other things. at the time and this what now m.f. global it was just one point six billion dollars one point six what's a few hundred million among friends as compared to the swaps market which is

trillion and yes i mean the notional value of the swaps market at seven hundred trillion and it was a major coup for this you have to see to be able to reveal who they know to regulate this entire market at least the u.s. dollar based so it was sent a signal when when gary gensler recused himself it sent a signal to see you have to see was not interested. unfortunately and it was like i said a dual liquidation bankruptcy process now the securities and exchange commission asserted its authority to liquidate the broker unit which had all the customer funds in it under the securities investor protection corporation and that m.f. global only. only had four hundred securities accounts versus thirty eight thousand futures accounts so the whole thing is well it was a mess from the beginning a lot of people were damaged by this sad because there was really nobody to stand up so that's why the c.c.c.

was created which was great as you got to interview johnson c.c.c. yesterday. so we have another comment this one is also from facebook from bitcoin joe but he wants to know how inflation relates to big coin and he wants to specify that monetary supply inflation not price inflation and keep in mind because of the decentralized nature of mining means that people can't sell all the bitcoins mine per day bob you want to just this one sure and he makes a very important distinction here that we need to address first which is traditionally when we were talking about inflation it was monetary base inflation it was how much money are you actually print increasing the money supply not the money encreasing. the money supply exactly and now when we talk about inflation we're talking about price inflation so there are a fixed amount of bitcoins that can ever be mined it's twenty one million we have about eleven and a half million that are mind already and we know the pretty much the rate at which they're going to be mined now the critical thing about price inflation is it

benefits those who gets the new money first who are getting the new money who's getting the new money in bitcoins the miners. ok so these people are verifying transactions and as a part of that they get rewarded to not listen to what it means to what what's mine that coins and verify transactions you have to set up your computer you have an algorithm right you're running an algorithm and there are it's based on encrypt and it takes a lot of. hardware and software resources energy energy cost to run the computer to be able to do this now them have even said that it costs more to run the computer to mine the big coins than you can. in the energy cost on exactly and it doesn't stop people from trying to do this it depends on your hardware setup and whatever but back to the original point. can we see big price inflation and how is it going to be based i would say it's priced in already how many quins are going to be mined so it just depends on the market valuation of the existing coins and that's you

know you can always have hyperinflation because that will come as a crisis of confidence in the currency and we could happen with bitcoins but i think as far as normal price inflation it's probably pretty safe and it's going to be depreciated determined by the market now very exciting to watch them very well obviously talking here. but now we want to talk about this and some are speculating that we're in an equity bubble now paul paul hoxton from market watch he ran an algorithm on twitter that looks for the amount of tweets that has the word bubble and them and interesting anough it looks like he found its own bubble we have a graph of his results in december of last year he found one hundred sixty seven hundred sixty eight tweets it was pretty steady but this month's exploded has its own high and then we have a huge bubble as up to twenty nine six hundred thirty two thousand tweets ok what is the same people are tweeting the word bubble i don't know if there's a new song justin bieber called bubble but it could be due to a number of things but this is pretty interesting because it gets back to can you

mine you know twitter feeds to be able to trade for instance to look for me to invest in companies and this is something we've been talking about we we had the a.p. twitter you know that will actually put the hash tag bubble and twitter and so i came up and a lot of it had to do with the financial markets ok i think what you know we also do have skewed government data when it comes to tracking these types of things those are interesting to kind of see if social media yes i love. talking about social media if you want to weigh in on today's show or on the door you can follow us on facebook at facebook dot com prime interest you can also follow bob on twitter at english and you can follow me at perry and r t thanks for joining me today as usual that's all we have time for today.

it has been a day of questions and answers on prime interest we began by going bloomberg be will demand a lack of disclosure over a major city group settlements and how long we'll spend as banks going to need to buy bonds to hold down interest rates along with the fad for that matter and statistical release answer just how high unemployment in europe is something the blocky buyers aren't happy with much less the impending druggy printing bonanza and we asked john breaux wow about the case for credit unions and why the job yet to be implemented and we thank him for his satisfying response finally we questioned whether a twitter bubble or trends a real one and answered just a few of your questions thanks for watching come back next week from everyone at prime interest i'm sorry i'm boring i have a great weekend. we're

all over my language as well but i will only react to situations i have read the reports from the you know i will leave the state department to comment on your latter part. of the search area every car is on the job here.