well then the prime interest i'm parry and boring broadcast live out of washington d c let's get to today's a prime had winds. hail as one federal reserve and the f.d.i.c officials were hauled in front of congress to answer and guess what the president of the dallas into richmond fed beings were not too optimistic that too big to fail is a thing of the past and the f.d.a. see a vice chairman a thomas haunting as said regulators a must eliminate the subsidies to do it the big bang. ok we're going to hold our breath on that one and prime interest producer adjusting underhill it will demonstrate just how big the belled actually were later in the show. and more bad news for hedge fund titan steve biko when government lawyers are saying he turned

a blind eye to alleged criminal insider trading activity at his fund this was a similar claim against martha stewart just don't talk about john kors on you didn't seem to know that m.f. global was a legally binding customer funds to j.p. morgan and finally we've been reporting the clamp down by the feds on basically dealers but now the states are getting involved california new york and the virgin you have sent letters to certain crypto currency converters that's right and to shut their operations down and while it's easy to transfer big coins once you have them to change them and now of another currency is a bit more tricky and requires compliance with numerous laws we'll get to this the ramifications of the n.s.a. whistle blowing scandal on the u.s. dollar and other matters with joseph salerno in just a bit and here is what's in your prime interest.

right on the bank is one of the most threatening mechanisms to ensure banks are adequately financed traditionally we think of bank runs as depositors flocking to the banks to withdraw their funds at the same time pushing the bank into insolvency but as we saw in the most recent financial panic there was a different type of run on the bank in the so-called shadow banking sector earlier i spoke with joseph salerno he's the academic vice president of the lewdly divine mrs institute and professor of economics at pace university i first asked him to explain what happened in the repo market that had such a significant effect on the entire banking system. recently run what happened was

that short term short term people who loan the short term to the bank not the actual depositors but people who for example who bought the bank's commercial paper thirty day paper repos and so on what they did was that they saw the bank was unstable and they began to sell off the commercial paper that is or not renewed the loans as they came due so that the bank keeping in mind the bank always borrow short and lens long the bank was not able to finance its holdings of all all these long term assets like mortgages and mortgage backed securities and so on so it was very difficult for them to come up with money at that point it was a contagion effect and the depositors began to get worried and they began withdrawing their money. now the federal deposit insurance for the most part does not cover the shadow banking sector do money market funds have any forms of protection to mitigate ryans on the short term markets other than bailouts.

actually they do i mean before this crisis money market funds rarely if ever had a problem with a one or two that broke the bop which meant that the value of their shares which they maintain at one dollar per share went down below the. value of a dollar but what happened was that the larger fund that all of these money market funds would usually bail them out so the few times that it actually happened that they they lost some money let's say ten cents on the dollar i think in one case the the owner of the fund was able to make the depositors or rather the shareholders are coal hole so what protects them is the fact that money market funds do not have federal deposit insurance and because they do not positive are very careful about which funds they invest in so the money market funds make sure that they keep their

investments very secure they buy government treasury bills and they buy short term commercial paper from very high great corporations so it's competition itself and the fact that the plazas know or used to know they were not going to get bailed out that kept money market funds stable what do you think that of ryan and short term funding markets will be approximate cost to the next major financial panic and how widespread would you expect it to get before the fed with step in. i think you said something about the fed funds market was that was that the initial part of the question. this sort of the short term funding market do you think this will be approximate cause to the next major financial panic. what i see happening is once again we're beginning to see an asset bubble yes. today we the new it was reported that. prices of housing one up twelve and a half percent in one month in april throughout the throughout twenty six major

cities in the country and some and some cities like san francisco san diego and elsewhere the rise in prices were something like thirty percent over thirty percent so we're beginning to see a bubble in the housing market again which means that these prices may ultimately be unsustainable once these prices began to fall would begin to fall as well as of let's say stock prices which have been falling the then you're going to find that the bank's assets or falling in value would have a problem again so the rising interest rates i think in the long term market now because the mortgage rates are rising. that's a potential cause of of the crisis. and let's let's move on just to the federal reserve which kind of seems to be this the central focus here are you you said that it would be better for the fed to be under the control of congress rather than the federal reserve or and why is this. well the argument against what i said

was that well you know you can't have congress just so subject to short term political influences controlling the fed so we have to leave it to the experts quote unquote to control the fed but when you do that what you've done is you allowed a number a bunch of bureaucrats to have independence and to run the fed as they see fit and there is no oversight whatsoever ok obviously having the treasury oversee the congress and treasury oversee the fed is not a perfect solution i prefer a completely nationalized money gold standard but given that we don't have that system that we don't have a gold standard that banks can create money i'd rather see the fed be much more transparent because congress will look into the affairs of the fed will have to be much more careful in their activities i would choose elected politicians all over your over an elected appointed bureaucrats any day of the week and how would we get

to a world without the fat i mean the fed is the lender of last resort and part of the financial system how could we wind it down to a see a world without it. that's a very good question and the fed i mean there are many different plans out there about how to get rid of the fed but one is to put it on the on the treasury supervision but one thing you can do is forbid the fed from ever again buying anything in the open market when the fed buys government treasuries or mortgage backed securities it does so by simply in effect printing up the money creating it out of thin air and then writing a check on itself to. say the mortgage. or the or the the treasury bill but in that case the money then gets into circulation ok so and it's spent and it causes inflation so if you prevent the fed from buying anything ever again you've in effect defanged it ok you remove the power its power to create

money. and in that world you're right it would not be a lender of last resort it could not bail out failing financial institutions but then if you if you if you get rid of says lender of last resort and get rid of federal deposit insurance then the banks will be on their own they'll have to be very careful like money market funds are about where they invest and for how long a period of time they invest there would no longer be able to borrow short term or even to promise the positives to give them their money back at any time but then invest in thirty year mortgages so competition the answer question would force banks to be much more prudent much more responsible. well what about repealing legal tender allies and taxes on gold and silver and what if we disappear these laws what it does how wind down the fed without necessarily having to abolish it. that's also or you know an alternative what that would do is if you repealed all

sorts of excise sales and capital gains taxes on gold and silver and also on foreign currencies then banks who would be willing to create deposits or to lend and or to to allow you to have the posit in terms of. a more stable foreign currency it's like maybe the euro or the swiss franc also people begin to use gold and silver naturally and they will be banks that would go up that would take gold silver deposits ok so in other words without the legal tender laws and all of those taxes you would have competition and currency as we call it other currencies would be able to compete with the fed no so the fed would not be able then to inflate the money supply to great an extent because it would be fearful that people would begin to reject the dollar and begin to use these alternative currencies so overall you get much less inflation under that plan ok and why are you here i want to say come moment to talk about the n.s.a.

scandal with ad words and this will solve our movement that's starting to emerge. is it possible that whistleblowers could threaten confidence in the u.s. payment system now that it's possible that electronic payments are being tracked by the government. i guess in the said that it would it would give foreign groups i guess is the argument. an entree or a bigger opportunity to be able to hack into our system maybe but but i really don't don't see that practically happening i don't think the type of information that's no does get has made potentially give to you know to foreign governments and foreign me. that that's a realistic possibility and to touch on competing currencies the future of currencies seems to be going digital as crypto currency such as big coins are gaining popularity which are partially anonymous too and big points have been used

to donate fines to whistleblower protection organizations such as bradley manning's defense we have just about thirty seconds left but do you think it's possible that crypto currencies are helping find whistleblowers that are working towards damaging the stability of the u.s. dollar. i think big going is helping it in this area to what extent i'm not very sure i was just at a conference a porpoise conference in new hampshire and because being accepted and they were there were various panels talking about bitcoin so i think it's being used as a sacred no means of payment i wouldn't quite call it money yet because nobody really quotes prices or not many people do in the form of bitcoin but i don't think in any way the stabilizes. the u.s. defense capabilities or u.s. currency. and that was just of salerno academic vice president of the would like of on me says institute and professor of economics at pace university stay tuned

because the treasury claims as repaid nearly all of its bailout money plus prime minister to syria justin underhill as a round to challenge this. i would rather as questions for people and physicians will instead of speak on their behalf and that's why you can find my fil larry king now right here on our t.v. question more.

you know that you won't find it here if you're looking for relevant stories unique perspectives on top my sense.

in two thousand and eight x. goldman sachs c.e.o. hank paulson went before congress and he warned of an imminent collapse of the financial system economic armageddon he basically said if you have a bazooka in your pocket and people know about it you probably won't have to use it well congress did pass the seven hundred billion dollars tarp program and guess what hank paulson used most of it the problem the money went mainly to the big banks institutions that behaved recklessly and the world financial system into disarray what part paulson promised congress and the american people was something entirely different that the money would be used to help homeowners who were underwater on their mortgages well it's nearly five years later in the tarp money has been repaid nominally that is but that's not the whole story and maybe it's a little bit disingenuous for the treasury to quote spike the football so for more on this we turn to prime interest producer justin underhill justin what's the deal with all these bailouts very well recently the treasury launched a website that detailed in its interactive in

a detail the amount of money that's been spent on the bailouts as well as how much has been repaid and it's pretty fun to click around and see the different amounts that have been given out and how much has been returned and as we can see in one of their charts from. the crisis onwards this is tarp payments the treasury has actually recouped a fair amount. of it's money and there's only about twenty nine billion dollars that's left to go and not bad when you realize that between two thousand and eight and today almost four hundred more than four hundred billion dollars was dispersed between this time and the spending includes a i g and autos lending bank credit market spending and homeowner bailouts and aid and i want to highlight here is the amount of money that was spent on homeowner aid and keep in mind this is one of the key reasons that the tarp was approved by congress first we have the amount of money that was the treasury had set aside for banks bail out a lot about two hundred fifty billion dollars to be spent on banks and what they

actually disbursed was about two hundred forty five billion dollars close pretty close amount but on the other hand we have when we look at the amount that was spent on homeowner aid and housing programs such as which was the home affordable modification program fifty eight fifty billion dollars was initially set for that but only thirty billion dollars was actually set aside and then we when we go to what was actually dispersed you can see it was only eight billion dollars in other words only two percent of the money for the entire bailout program was spent on homeowners and in addition to this it's important to remember that the amount of money actually spent by the treasury on bailouts is dwarfed by the amount the government committed to spend so this was amount the tarp spending and this is the amount that was spent or committed by the government and that's a more than twelve trillion dollars according to the new york times and this gets calculated by the cost of the bailouts in this includes things like money market

funds and what they were using for the cash. market all the backstopping that they did and the treasury has indeed been repaid a lot of the money but we haven't seen it also solidified the status of too to big . fail with all these these payments and if you believe the bloomberg reports that get a subsidy of eighty three billion dollars a year because of lower borrowing costs and that's due to their status as too big to fail then there's a lot of costs for the taxpayer that haven't been accounted for there certainly are and let's talk about those subsidies i mean what we saw with the poor natural panic was the federal reserve stepped in and they back stopped everything we've had for years no mirrors or rates and guess what we have all these zombie banks that have just been postponing the problem and i could make the argument that this is actually cost people a lot of money so that we haven't really fully realize the cost of this problem i think that's absolutely correct and even neil barofsky mentioned he his calculation

there was twenty three billion dollars. twenty three trillion dollars ten trillion dollars more than even the new york times yes so the new york times they had calculated twelve but he calculated twenty three trillion and that's because of certain backstopping he basically included everything under the sun every single commitment the government made even if there was collateral backing that so it was a much broader measure of how much the government had actually committed to these things sort of thing and of course he was the special inspector general of tarp and he resigned in march of two thousand and eleven because he was so disgusted with the process and i think we have a quote we can pull it from him the treasury is biking the football and it detracts from the massive moral hazard created because it makes the government's backstop explicit and incentivizing the exact same types of behavior that led to the last crisis and will almost certainly cause the next pretty dire that's pretty dire but you know we've seen this happen time and time again and you know this behavior it's

even still going on now it's moral hazard as moral hazard but if so it's going on even with with the ham program something that i brought up before and actually. they extended the ham program by two years and this was originally supposed to help him. i'm a study was supposed to help three to four billion home excuse me three to four million homeowners and it only helped what three or four and hopefully that helps about a million ok but so way short of expectations this is something we've seen time and time again but as this is going on we've also seen the fact there's court cases now from x. think of america employees saying that there are there have been problems with the hand program and that they were intentionally misled people that were issuing they intentionally misled mortgage or owners and tried to get them to pay more money so it's certainly very discouraging on that front and just in thank you so much for sharing this with us thank you so much.

this time for the day we do a bobbing you look at me get hitched now ok well some people can today know all right section three of dhamma has been overturned by the supreme court of defense of marriage act right is a big win for gay rights activists certainly section two is still held mean that the states still have the choice to authorize same sex marriage is as of now there are twelve states and the district of columbia that permit same sex marriage so what about the economics of it why there is definitely a lot of money in this industry yes some have estimated that the the wedding industry is as much as seventy billion dollars and if you factor that into the actual. could be spent with. marriage that could be

a lot bigger if you're into cannes in aggregate demand spending is good for the economy so i think. many kids are happy to hear always want to make everything about money and finance and economics. well i think what's most interesting about this case is it's really a taxing case because now the states that recognize same sex marriage this means that the federal government has to recognize it for tax purposes which could be more than what's in the marriage industry well it looks like in certain states people are going to be paying more taxes but with the federal government people actually might end up paying fewer taxes so i think if people have the option of paying fewer taxes that's a good thing yes that's true but this also means they could add to our debt and our deficit because they'll be getting less tax receive people filing jointly. well i know that's a great idea yes it will happen is that political you know they're really viable i

don't think so i'm really not today now with the two year terms in the house unfortunately we're moving on. there's been another audit there they found additional misuse of taxpayer funds and i don't believe absolutely the i.r.s. has been under intense scrutiny after it was found that agents were targeting conservative groups that are applying for tax exempt status the audit of the arguer found one hundred million dollars in credit card purchases some are legitimate and some were quite questionable such as purchases or diet pills romance novels online pornography popcorn. popcorn machine i understand that's legitimate everything else is going to scratch my head i don't know how i. love one in order to break room there. but these are the only items of the government has acquired over the years of the g.s.a. is auctioning off several very interesting items the first one is the. breakwater

a white house for thirty one thousand dollars maybe they're trying to shine a light on government misuse. all the corruption maybe we can get john corazon zero maybe we can get the department of justice to actually focus on putting these two big people in jail for every novel i have i think they should be using the white house to find misuse funds first ok well government spending back to your point earlier well i'm all for that but let's back up they're selling this so how are they going to say this is going to go to the private sector no. unless another government agency acquires it ok for a government contractor maybe probably produce water looks like it's off fair game you can also bid on the columbia falls of radar site starting at one hundred five thousand dollars what would you use this for a bob if you were going to buy a well what's on my radar i'm looking at what's going to be happening in the near monetary future interest rates are always on my radar and i'm expecting them to rise now there already are rising but i think they're going to go up by

a substantial amount and this is going to force bernanke into a corner and we'll see how that plays out this is a former air force marines station and main it was military aircraft i think the best use of this radar would be to detect government agents who are spying on american citizens and targeting groups that are applying for tax exempt status to. give you this one i think they're forced to give that to the ira or you go and finally you can bid on a seventy four foot landing craft starting at ninety thousand dollars so here we go this is something that the because he's looking for an easy soft landing with his cue we've purchased and i don't know if he's going to get that but that's what he's hoping for i mean he has to wind down this eighty five billion dollars that's per month on purchasing program and how is he going to do that in a way that doesn't disrupt the markets that doesn't force short term interest rates . in a volatile fashion he's not going to do it he's leaving oh that's right but. maybe

he can buy the land for his retirement so it's good you can even buy a landing craft in the government it's news to me you would think that the government would at least strip it down and use the metal for their next shepherd next whatever project they're making that would be a good use of recycling you would think but with all government contractors and department of it's not going to happen what are you going to do. thanks for joining bob you can follow us on facebook at facebook dot com you can follow bob on twitter . and you can follow me on r t. bob thanks for coming over to. and it has been a disingenuous day here at prime entrust on our part of course just the stories

we've covered we found it unfortunate that certain fed officials are crying one up over dodd frank too big to fail failure is one their mandate inherently protects the status quo ante and the feds are going after steve cohen on the should of known theory of justice watch out stevie and remember the actually gotten mark on the obstruction of justice and we talked with dose of salerno to question that the viability of the and tired global banking system and just revealed just how the public got a bait and switch by the tarp. finally bob and i wondered what uncle sam is doing so not true good story house and the hire as i'm buying popcorn machines and a romance novel that's all we have today i'm perry i'm boring and come back tomorrow want to find out what's and your prime interest.

of edward snowden a whistle blowing hero to millions around the world once again calls him a very dangerous security liability and a threat whatever his state one thing appears to be clear just to punish his actions in the name of transparency and the need to have a public debate on the surveillance state in that regard as he succeeded. you know how sometimes you see a story and it seems so for lengthly you think you understand it and then you glimpse something else and you hear or see some other part of it and realize everything you thought you don't know i'm tom harpur welcome to the big picture.

download the official ati application to your cell phone choose your language stream quality and enjoy your favorites from our t.v. if you're away from your television well it just doesn't matter now with your mobile device you can watch on t.v. any time anyway.

coming up on arts and s a whistleblower edward snowden still remains in moscow where it's been hidden from the public eye the n.s.a. contend he used to claim that their surveillance expansion is justified more of the story coming up. supreme court has spoken the highest court in the u.s. give supporters of marriage equality two major weapons the sights and sounds of today's historic decision from here in washington coming up. the bradley manning trial continues today in the fate of the army whistleblower manning remains a mystery with growing concerns over the trial being closed to the public. they show.