good afternoon and welcome to prime interest i'm perry and washington d c and here's the prime headlines that we're tracking today. stanley fischer how the left the bank of israel he might be heading to the federal reserve but guess who will be taking his place at the b.o.i. . morgan exaggerated that would be to take up frank old second term at the helm of the shekel after spending three with the too big to fail over involving door the trilateral commission member and holder of the rockefeller rockefeller and outage at the university of chicago some big shoes to fill but don't worry it has advised

chairman of a i.g. he was able to secure one hundred eighty three billion dollars from the federal reserve and treasury and now he can simply just have money himself. and we're sad to see another big coin flop but melbourne has had to hold conversion a bit coins it's dollars because of the ongoing investigation by the department of homeland security it seems that there's a major player hayden on the cryptocurrency front however there has yet to been an allegation of fraud and speaking of fraud we'll be talking to convicted both kooker and sam am tara of crazy eddie fame and just a bit. too finely details of a secret the federal reserve meeting have been released seems your favorite thing we're not naming names met on may twenty second to avoid a stricter a capital requirements and speaking of the fed despite the latest hilson link markets are tapering themselves down down down like

a ring of fire and here is what's in your interest. remember crazy eddie now that was a new york appliance real retailer that engaged in massive accounting fraud both before and after it became a public company and in case you're in a stall jake here's a clip from one of their famously crazy commercials. crazy any day you'll save money like never before during crazy these crazy any day you say oh well the guaranteed lowest price not anything and everything in a moment of pain but shop around to get the lowest price you can find then got

a crazy idea to help you dumb. now the chief financial officer of crazy eddie had masterfully cooked the books and eventually the scheme unraveled and he was sent to sentenced to prison for eight years now after serving two he went to work for the other side of the fence no pun intended he consulted for the f.b.i. and department of justice and now here to discuss this is sam and tar. i say i am i just one correction my cousin eddie went to jail for eight years i was one of those criminals i was one of those criminals that didn't pay for my times i got a six months of house arrest and to suffer had to suffer with my ex wife and kids but you're not afraid to call yourself a criminal are you i mean that's going to. it's wired into me from birth i started that crazy things when i was fourteen years old my family put me through college to help them commit more sophisticated crimes in the future and actually go ahead i actually majored in accounting said to commit family can commit more sophisticated

financial for what's all this was a few decades ago and let me ask you is it easier or more difficult today to commit financial crimes oh it's getting easier i mean i wish our criminal today than back in the eighty's i could have even avoided house arrest. and you talk about audits not being audited what are the rules of the auditors in the current criminal process how do they slip things by these guys who call themselves auditors. the term or it is really a false misleading term in substance or it's a limited compliance reviews that are meant to catch inadvertent or unintentional material errors in financial and financial results they're not meant to catch intentional financial errors that result from fraud also what it's by the nature of limited to testing what it is cannot be in every single location at a company every time during the year so by the virtue by their very nature what

it's a limited in their scope they're not very invasive and they're just not designed to catch fraud says person like me would have no problem running circles around any big four firms they as i did twenty years ago well let me ask you about running circles around maybe regulators if we can't count on auditors what about the regulators what are they doing process the. album is that the regulators are grossly under resourced and grossly underfunded we have four thousand people at the f.c.c. table we have thirty five thousand cops in new york city fighting blue collar crime will collar crime that's a greater priority than like collar crime even though white collar crime causes more harm on society well let me ask you about the i.c.c. you say they're understaffed underfunded perhaps they go to congress every year they ask for more money but we don't really see much of an improvement in the results is really the answer of giving them more money just throwing more money at this problem. well you know money has to be followed by accountability and good

management is those two separate issues but the fact of the matter is the c.c. is grossly under resourced and i would support much more funding for the s.c.c. than the current levels and many many more people working for the f.c.c. than we have now if we could put fifty thousand extra troops in that afghanistan a few years ago why can't we declare war on white collar crime and and increase our government's ability to prosecute investigate white collar crime especially financial fraud well let's talk about the jobs you know that was something that was passed by congress over years ago and it's supposed to help companies gain access to the cup capital markets especially smaller companies is this a good thing or a bad thing i love our criminal i'd love the job zack it's fraud made easy any time you want to peel away at internal anyway you want anytime you want to eliminate checks and balances any time you want to eliminate certain regulations any time you

want to eliminate certain levels of oversight. certain layers of compliance it's going to make crime easier so yes what will the jobs act make capital formation easier yes but also make the criminals job easier because when the door was open criminals walk through it so if you want to make capital formation easier and say that you want to provide more jobs fine criminals will take advantage of millions of investors where thousands of investors and take their money and run well it seems that criminals always have a way to get in the door but the jobs act is supposed to be something that is helping private companies raise money from accredited investors and these are supposed to be sophisticated investors who have net worth of a million dollars or more who make two hundred thousand dollars or more why shouldn't these people be able to invest in companies that advertise no pursuant to the jobs act as it would be ok good question as a crook i had no more difficulty scamming credit to invest. than i did the retail investors the institutional investors would know much but not much smarter than the

retail investors buying through their stockbroker so the fact that if the purpose is to say you know these people can afford to be scammed fine then we'll have it that way but these people are no money no smaller than anybody else just because they have more money or have a better net worth for me as a criminal scamming rich people was it just as easy as scamming poor people well let's talk about any specific companies on your radar right now that you think are engaged in fraud or can you give any specific examples of how companies have engaged in fraud in the recent past. let's take time to me ok h.p. had purchased a company called autonomy which was located in the united kingdom that was around two thousand and eleven years before that companies like raining down a little and independent research firm had and short sellers had raised issues about what tommy's accounting h.p. is nor did they paid about eleven billion dollars for this company and then

a year later h.p. writes down that eleven billion dollars investment by approximately nine billion dollars of which five billion dollars was related to accounting improprieties. we're with the or it is for autonomy. sort it is i think with a lot we were h.p.'s what it there's ernst and young h.p. even hired a company another water to k p m g another big four accounting firm to do was to do an evaluation of what would help in its purchase of of what time to be these are three of the four big four accounting firms and all of them were asleep by the wheel they had access to management they had access to documents and none of them poor the accounting improprieties that were that were publicized by short sells years earlier or or by great down the linux so the problem that we have here is why are accounting firms asleep at the wheel well that's a great question and i wish we could answer that with respect to companies such as

a global but let me get to a quote about short sellers this is you in an interview short sellers uncover more fraud than the auditors that have access to the books and records is that something you stand by and how does that work because short sellers have an economic incentive to find for the problem that we have here today is that especially among the big four firms are they getting too cozy with their what it clients and as a criminal i can tell you steal more with a smile than you can with a gun you can't get people to believe ely's if you're a prick excuse the language on the air you get people to believe you lies when you become friendly to them and you give them business and you develop interpersonal relationship with them so it was happening today is that the what it's what it is the too close to their clients and it's making it easy for criminals like i was to scam to run a circle ok so what is the solution though i mean how can we fix this terrible situation in which the auditors are too close to their clients. well first of all we have to toughen the sawbones oxley independence requirements for what it says

right now there's a certain amount of limited consulting work that what it is can do for their clients it should be abolished it should be only pure for their clients and that's it no tax work no no limited consulting work period number two is we should have mandatory what it to rotation the reason that i say that is because as a criminal i hated uncertainty you know it takes me a while to develop who i can take advantage of who i can take advantage of what a person's weaknesses where a person strengths so if you have mandatory what rotation i got to really learn how to scam over and over again which makes my job as a criminal more more difficult so one of the proposals out there is to every few years that that firm should switch or does so for a set of eyes gets a look at the books and records well i would say that sarbanes oxley is something that certainly increased regulatory burdens on a lot of firms unfortunately there is yet to be

a single prosecution under it so can we really expect any of these changes if they are in fact implemented to finally be enforced we have two problems number one is that the order it's a limit to the nature and have to be beefed up number two is even if they have even if they have beefed up you have enough a general problem of the competency in the accounting profession you seek counsel to what the county beings they count toward to. to get documentation they talk about accounting rules but one of the things that they don't learn in school is the behavioral elements of fraud how people take advantage of them how people distract them from what they're doing how people manipulate behavior so that the order to don't ask the right questions don't look in the right places we don't teach the psychological elements of fraud to the accounting profession and i don't we should i appreciate that sam thank you so much for joining us that is sam and tara blogger for white collar fraud dot com. now stay tuned. because.

stay tuned because period is going to tear into the very fabric of our current small business regulatory environment with guest owens who is national on bud's men under president george w. bush then period and i do all over snowden's extradition and the prospects for j.p. morgan crude a diamond. when

it comes to a federal regulation that small business is the bear the brunt of the byrd who want to average pay a thirty six percent more. per employee then larger firms regulation should set the

stage for competition but we are seeing the federal register grow larger and larger are driving out small businesses who provide sixty seven percent of new private sector jobs and addition the obama administration has one hundred sixty seven economically significant rules or rules that have an economic impact of a least one hundred million dollars in the keough is this possibly too big to implement our next guest is nick owens he is the former national meant for george w. bush and the current c.e.o. of magnolia strategy partners thanks for joining me q it's a pleasure absolutely now according to the small business administration regulatory cost for small business is thirty six percent higher for larger firms does the government do an adequate job of recognizing this issue and offering support to small businesses is well to hear politicians talk about small business we know what's the economic engine leaving the country but at the same time what we do we look at the regulatory environment and i believe we have folks throughout the

government who support small business believe that small business is the economic engine but perhaps when you take a look at the regulation the bureaucracy gets involved and we have folks on the hill probably gate regulations or move it to the agencies for regulation and public policy sometimes doesn't meet its goal and that is a concern so i would say you know we're sitting here with a cup. and small business entrepreneurs do not wake up in the morning to read the federal register they're focused on getting their kids to school open the garage whatever it may be but it certainly is a concern in today's economic environment and according to the competitive enterprise institute they've estimated that right that's right cause it in last year in two thousand and twelve estimate about twelve percent of g.d.p. and why is the compliance cost a trillion dollars absolutely and if you look at small businesses we usually see about five hundred employees or below are legally technically small businesses that represents ten thousand five hundred per employee per year for. compliance cost of regulations that cost them that money where they could better spend that to

implement new products grow their economy in their local community and help their employees innovate innovate in today's economy but in saying that they have to spend it on compliance cost and often it costs more because they can't employ teams of accountants super lobbyist consultants to represent their issues so the burden is on the small business and where is the fine line between having a healthy regulatory environment that protects personal property and being excessive well i think without a doubt we all want to drink clean water we all want to breathe clean air but the difference is the approach we're too partisan in d.c. i often say that we're an island surrounded around reality and i believe it was that was shrug that reflected the point of you know we can evade reality but at some point we can't evade the consequences of reality and we must focus on ensuring that we're protecting the environment we're protecting consumers but the issue is the approach and the right approach were effective and not excessive and there's two huge bills that were passed in the law we have obama as affordable care act the

health care bill and dodd frank the financial reform bill they have yet to be fully implemented you know what is the future of the regulatory environment pending the implementation of these two very large one of the nation's very active illness issues in f.i.b. the national federation of business and their number one cause for a lot of their members three hundred thousand small business or of course regulations taxations been health care cost so reflecting that small businesses want to provide health care but we have to reform the reform of the so called reform to make sure that health care cost is at a level that they can employ it that they can employ it or have it for their employees but at the same time deploy health care where it's also equal for self employed as well as smaller businesses that can develop pools with other folks across state lines so a lot of detailed regulatory issue there dodd frank you're going to have financial institutions do not want to grow to a certain level because they're concerned about the regulatory impact also you have to see if they've issued reports. payday lending or we're going to start cutting

off consumers access to financial products they may need so we have to be very cautious with the approach to these regulations as it relates to consumer protection or economy and health care do you think of all mentation these two bills are a slower economy even further definitely and certainly that's a concern and that's a concern i think for many members on both sides of the hill again regulations and the enforcement regulation should not be a partisan issue it certainly should be one where it's focused on protecting protecting and being effective and not not been excessive and now you were president obama and then you watch well excuse me that's right terrible mistake and i know that right now it's the words. new assistant companies that had regulatory problems of the federal government one one thing we follow here is that who are under scrutiny right now by the government now and god as we stated earlier had to hold convert ability a bit coins the u.s. dollars you what do you see is the biggest regulatory threat to big coins and

and how it should be a coin to mitigate their risk in the regulatory world one i would say is uninformed regulators perhaps who would stifle innovation as it relates to bitcoin and other aspects of virtual currency so that is an area where without a question there is additional scrutiny be it on the hill as well as the discussions from commissioners and see if you see but it's transparency and it's a comfort upon the industry for these innovators for these investors in the world a big point to be transparent and to be provide the facts to folks on capitol hill to the regulators i think if you're open and honest and forthright and you discuss exactly what the product is and what it isn't rather the exchange you can be effective and there are times when big business says her fur regulation because it drives out their smaller competitors and they can afford the cost of their competitors larger players might not be able to sort of and as a consultant for small businesses how do you go against these larger corporations like goldman and g.e. and monsanto who have these huge being efforts and how have you and interacted with them small business. can often be big business be it also when contractors contract

vehicles processes which they can explore they can focus on contracting opportunities as well as gaining market share there are often nimble they're quick and they can actually deliver a product more cost effective and frankly for many vendors big business doesn't sort of pay on time so small business has an opportunity to grow in that area and the jobs act passed over a year ago it was intended to encourage funding for small businesses however the f.c.c. has really jagat feet on implementing this you know what do you think has caused the drag on implementation here and well sometimes you have to drag out regulations a good thing to get it right or improve on what's happened course there was a new chairman there she's assured leadership in both the house and the senate that it is a priority this is administrative and very investor protection focused very consumer centric the concern about should we be jelling certain people so i think they want to get their process correct they've committed that to many of the folks in the house the house financial services committee in the senate banking committee so i

think we have to stay tuned soon i believe they will be further discussing it and will marry sapir she say that she didn't want to be tagged as anti investor as her legacy legacy and do you think. she should have been held accountable for and for not wanting to implement the jobs act without my judgment to have and i certainly want to defer to those who are working on this and i understand they're working hard on it they certainly could do that to the hill but i certainly would pass judgment on the church well thank you so much this is nicholas allen's he is the c.e.o. of magnolia strategy partners thank you. and

it's time for the daily deal with bob great to see you back in the hot seat there was our top story of the day well where you were in the world snowden i know it's like that old game i used to play as a kid on the computer we're in the world is carmen sandiego where is well it looks like he's trying to get to ecuador he booked this seat seventeen a from moscow to cuba he didn't show reporters set up this twitter account i called snowden see their first tweet was i'm. here here's the the account they set up but he formally requested asylum there and the foreign minister ricardo patino he seemed to be in favor of it and he also brought up the fact that the u.s. did not extradite several ecuadorian bankers that were charged in ecuador right so it seems like there's not much quid going on for the pro quo it doesn't seem fair that their guys should be able to get away and you know it's it's a little bit jumbled as well to me why are we spending all this time on snowed in when we have you know other crimes such as well financial crime. libel rigging for

instance right exactly like everyone counting for us like i was talking about with them and there's a lot of state that could be prosecuted here in the u.s. and unfortunately a lot of people get away with it so what's your solution. i mean they're here's the way we could go about it i would say too big to jail i don't think so i think we have to lay down the law unfortunately i am tory's points out is that jail time is not a deterrent so we need effective controls within the system as well as well also you know the i mean the question is do we want financial are financial crimes considered crimes that you have brought up to me well there are some interesting takes on that because some people say that a financial crime should not be jailable meaning that if you have been physically injured somebody you know they can go to jail but that brings out absolutely ridiculous ok you know maybe we can derive some sort of satisfaction that bernie made off sitting in prison or somebody else i don't know who. could go to prison john corazon well the people involved with

a life or scandal i mean how many people were affected by a bad bill i bore is tied to market raise all over the spectrum trillions and trillions of dollars but i would charge you know this is all about interest rate rigging who are the biggest manipulators of interest rates by mandate central banks so why can't we get why can't we you know accuse these guys of the same crimes that they're going to dictate about authority to them whether they don't yet have the delegated authority of the central banks i'm saying that what we're seeing right life of bankers to come together and raise the why of our rate that basically affects everybody who ok we're going to we're talking maybe about five basis points when the federal reserve has kept you know it came down from four four four points i mean that's four hundred basis points if you want to look at the larger crime in all this i think we have to go back to the federal reserve and sort of bring it all back to the federal reserve but you know that's what i do here i mean there's obviously a little bit of a revolving door here and bit of cronyism with the primary dealers as for example j.p. morgan sure london well episode billion dollar and we have the j.p.

morgan guy who is going to the bank of israel now and maybe the bank of israel guy stanley fischer is coming to the u.s. it's a big circular. absolutely that's possible why are we looking after jamie diamond when his bank received twelve billion dollars bailout in two thousand and eight and then he lost six billion dollars last year would you like to say i think we instead of putting our efforts on edward snowden and who has questioned the prism program. we can look at the jamie dimon all right thank you control room somebody's going to. great well thank you guys for tuning and today if you want to follow us on facebook you can now facebook dot com prime interest we're going to continue this conversation on twitter you can follow baba english p.r.i. and i am at perry and r t thanks so much for joining.

it was a surprisingly normal day on prime interest banks are watching the fed and j.p. morgan slash a.i.g. exact is taking the helm of a central bank uncle sam pacemaker well that's nothing new there according to sam and tar fraud is getting easier and according to make zero wins owning a business is getting harder and edward snowden is missing and jamie dimon is still chairman of the board welcome to the new normal thanks for watching make sure you come back tomorrow from everyone at prime interest i'm hereon boring have a great night.

i would rather as questions for people in positions of power 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. well known. over my language and all but i will only react to situations i have read the reports and like the police you know i will leave them to state clearly

a comment on your latter point to say it is secure yet they call as i was talking. no more weasel words. when you know they had a direct question prepared for a change when you punch be ready for a bad print of a speech and fill it out down to fit into question.

breaking news this hour here on r.t. taliban fighters launch a heavy. presidential palace just a week off till the country's security forces took control over the area and the u.s. announced peace talks with the taliban. says the no. zero point. one edward snowden goes underground and under the radar of the international press corps on a one way trip to cuba. and washington is breathing fire at china and russia for the refusal of both countries to solve the whistleblowers head on a silver.