today. good afternoon o. welcome to prime interest i'm harry employee and i'm bob english let's get to today's headline. last time jobs are we sounding like a broken record yes the unemployment rate ticked down this morning from a seven point six to a seven point four percent the number of payrolls or jobs added with one hundred sixty two thousand a bit short of expectations and as usual the largest contributing factors were part time and low quality jobs so basically bernanke you and co have complete freedom to do whatever they want come september and according to experts the september of buoyancy meeting is the big one because that's when our beloved chairman gets to take softball questions from such journalistic luminaries as john wilson route and then to the undependable that would be more bond buying into

a madness and are we witnessing a labor or. well why were was the scandal that involved interest rate fixing and now the three hundred trillion interest rate derivatives market is under scrutiny it's the f.c.c. is investigating over the lack of any substantive conclusion to silver market manipulation piece there's not an encouraging precedent for you and speaking of swaps is it lubber redux recorded telephone calls and e-mails show that traders of wall street banks instructed a firm to buy or sell as many interest rate swaps as necessary to move the benchmark rate by rigging the measure of the banks to the profit on separate derivatives trades that they had with their clients were waiting with bated breath on this one to the fed's response finally a former goldman sachs trader who was found liable for fraud noting this was not in any of the top exact now with the department of justice goes after mid-level employees so as not to jeopardize the too big to fail jail. we're not even going to

mention his name because if employing them. that matter they conveniently and never include the top dogs we talk about accounting fraud sequester fags and ever evolving door after c.f. and just today and here is what's in your prime interest. the role of so-called auditors is often overstated in our modern capitalistic markets and according to a crazy eddie's c.f.o. so i mentor the entire concept of an audit provides a false sense of security for

a big firm basically control the entire market that would be the lawyer or ensign young pricewaterhouse coopers and k p m g but they do much more than check in the ledgers of the fortune five hundred companies they represent they also consult with them and they hope result of regulatory disputes the conflict of interest well we leave that to you the viewer to decide and that would be after interview with friends who mckenna she is a forbes columnist and editor of the blog at the auditors and i first asked francine's about the so-called enron rule and here's what she said. i would say that the constraints about consulting for your audit client i call the enron arthur andersen and run rule our granderson was providing almost everything and ron and many people believe that that presented a conflict of interests and affected their objectivity and independence they couldn't provide the audit well is it was such

a small portion of what they were doing for their client and the money that they were bringing in and so lots of constraints were. placed on the audit firms after sarbanes oxley. in terms of the kinds of services they could provide to our to clients however that's not being enforced no not at all. are inching back up into providing almost everything and it's sort of a i ask for forgiveness rather than permission situation right now you know it's unfortunate i don't think we've seen a single prosecution or investigation even on the serbians oxley rule that went into effect over a decade ago but i'd like to move on to a specific company herbalife you've been reading a i'm sorry you've been writing about them and can you give us some of the details on what their problems have been with their auditor. sure herbalife is one of those companies that's always in and out of the news and i haven't focused too much on it previously because the complaints and concerns were more about their

business model whether it was or was another pyramid scheme whether it's multi-level marketing. process violated the f.d.a. rules or any other regulatory requirements and that wasn't isn't really my area of interest but then what happened was k p m g it's auditor had its partner the lead partner on the herbalife engagement in southern california it made it to inside trading on information that he obtained from herbalife and some of the other clients he was responsible or he was passing confidential information about herbalife and some of these other clients to a friend who was trading on that and they were caught k.p.n. g.-d. had to resign herbalife skechers and a few other engagements in southern california that this particular park was responsible or why because the nature of the violation and the fact that this was trading on inside information and he was the man he was the head partner. that it

really was difficult to a certain whether or not he had done his. job where the firm had done his job or whether he had used that position for his own advantage and therefore corrupted the financial information that herbalife was providing they resign it took about a month before herbalife was able to appoint a new auditors peter you see however time passes and herbalife has not been able to complete the re od it of three years worth of financial statements in other words keep him jihad to disavow to reject its opinions and three years worth of financial statements at this harken was of value and what exactly effect does this have on a public company when they have to re-evaluate were they have to re audit three years of financial statements what does that do to a company. when your auditors resigns and withdraw its opinions then you're basically a company without

a country you are not official you are deficient in your filing and therefore you are in a really bad state and in danger of being delisted if it goes on for too long what's also been the impact on herbalife is that they were planning on leveraging up i think they have not enough leverage too much cash they were going to borrow perhaps to repurchase shares they can't do that right now because they do not have certified financial statements all bets are off their financial statements for the last three years and the most current two quarters. are as far as the f.c.c. is concerned not official you know it's interesting there's a parallel here that we see in the financial industry in terms of too big to fail there's almost more consolidation now since the financial panic than we had before but we're also seeing that in the auto industry can you comment on the. well the arctic currents the poor largest ones in particular are not necessarily too big to

fail they need to be big in order to do audits the way they're designed right now especially for global multinationals they need to have the expertise they need to have the coverage globally however there are too few to fail now the words given the number of public companies given the number of audits that have to be done oh around the globe given the extent of work that's supposed to be done. if you went to less than three less than four firms it would be very difficult now for three firms to pick up the slack even if all of the people from that for the firm ended up going to the three firms that's what happened when arthur andersen failed most everybody from arthur andersen went to work for somebody else so clients. so what would happen if some of these are good for arms i guess they broke up in size would it be better for the industry the art of being industry if we had fewer major larger players and just a bunch of smaller ones. i don't necessarily think that's

a good idea and i don't think that consolidation of the smaller players into larger players is necessarily the solution the reason is because the way an audit is done now requires you to be really ready for prime time you have to have the depth of breadth of experience that you have to have the coverage and infrastructure to support the regulatory oversight that we have now posed and i think that the best focus that regulator should have is in redesigning the audit itself it's not serving investors needs investors aren't getting anything out of it we weren't warned we got no information about the kinds of fill your city saw during the crisis there was no advance warning that some of these banks were insolvent there was no advance warning that there were such serious problems and taxpayers ended up putting a bill. that was my interview with friends who mckenna all through three the auditors and columnist for forbes an american banker.

and a c f p b have been served that is the consumer financial protection bureau the agency created under dodd frank tasked with overseeing consumer protection laws ironically the c.f.p. architects are so winning through the revolving door and are alleged to be profiting from the protection laws they wrote the house oversight committee launched an investigation of former c.f.p. employees and says a letter to the agency stating senior c.f.p. employees including raj to take a gary reader a christmas spell amid charges bird have left the c.f.p. be an order to profit from the rules they helped create peavey's

a former deputy director of raj to take a is alleged to have started a cottage industry around the see if we knew what qualified mortgage rules to see if helped write the stricter standard on mortgage loans that some have criticized as too strict and would praise the millions out of the housing market altogether at a financial services hearing however detailed told lawmakers the c.f.p. b. was trying to keep people out of homes they can't afford. are also trying to put an end to mortgages that as a practical matter destined consumers to fail. and that they did according to taze estimates the new qualified mortgage rules cut one point five trillion dollars out of the market millions now don't meet the c.f.p. standards and are therefore being turned down for funding told the wall street journal it's just way too hard for good people to get good mortgages today just one month after these rules were implemented detail recognize the business opportunity

and left the c.f.e. returned to his roots in the private sector he started fenway summer l.l.c. advisory firm that focuses on wait for it helping borrowers who do not meet the new c f p b qualified mortgage standard not a bad move considering this is again a one point five trillion dollar industry he helped create that his firm is uniquely positioned to cater to even a federal lobbyist in d.c. are saying they've never seen the revolving door swings so fast to assisted today with his new endeavor as he called on his old buddies from the bureau the head of capital markets at fenway summer as chris to spell who was the export mortgage residential service or at the c.f.o. and before that he service the millions of dollars of loans for the government national mortgage association ginnie mae that would be the kissing cousin of fannie and freddie who are supposedly being wound down after receiving billions in taxpayer subsidies the general counsel of fenway summers as mitch hotspur the

former senior counsel in the office of regulation have to see if he is your go to to help navigate their regulatory burdens of the bureau and weigh some or even have the former c.f.o. chief of staff in gary reader as chief of staff you was responsible for staffing the bureau during its inception remember the see if it is just two years old it's a brand new agency out of the federal government but of the federal reserve and gary reader hope hire all the new employees who better to call when you need to make a call to the sea. f.a.v. than the guy who hired everyone fenway summers says there is no conflict of interest because they're not directly lobbying the c.f.e. and said they're advising businesses but why would they need to lobby the see if maybe when they help built it they already know the ins and outs of the bureau and see if p.v. claims a qualified mortgage will making process was transparent and public comments were considered the government watchdogs speculate the profits would be made the profits

that were to be made after the rule passed were also considered so congratulations fenway summer you have managed to create an entire industry by adding to the eighty thousand page federal revenue register then teaching us how to read it that's what economic growth has turned to in this country sort of creating an actual service that adds real value like engineering or public relations businesses are turning to the government to convolute the markets so someone else has to come back in and clean them up probably not the best use of resources. and coming up bob talks to mark levine about the sequester and the new new deal them bob dylan breaking the separatists are a mirror david about you guessed it the bankruptcy of the motor city itself sounds tempting right.

i would read it as questions to people because it seems that instead of speak there but that's why you can find my bill larry king now right here on our t.v. question more. the guantanamo bay detention facility has now been years old broken presidential promises congressional sabotage the never ending war on terror all forces and conspired together to keep this prison open but now a hunger strike threatens to tear it all down as this hunger strike near six months or two takes a closer look at the prison just can't be quote was. pretty

something that find it here if you're looking for a ballad and stories unique perspectives on top class tennis stars. since the implementation of the sequester over eight hundred thousand federal workers have been furloughed numerous government agencies have been shuttered and with a budget battle looming in the fall and rhetoric on the hill leading up there seems to be no end in sight for the massive budget cuts so joining me today to discuss

this is the always outspoken person mark levine host of the inside scoop marc thanks for stopping by good to be here is always so let's talk about this i mean the results of a recent gallup poll show that fifty fifty four percent of americans claim they didn't know enough about the sequester and could you say exactly what is going on with that what's up with the sequester deal basically the sequester is doing is it sacrificing our long term needs for short term gains republicans want to say they've cut the deficit so what are they cutting they're cutting fixing bridges they can collapse or cutting building airports or cutting building high speed trains in every. european capital london paris rome you go there you could take a train right from the airport to the heart of the business center not new york not los angeles we have twentieth century technology we need twenty first and that's the stuff that republicans want to cut so how are we going to get there how are we going to get to this twenty first century technology with all these looming budget cuts well we need to end the budget cuts we need a new new deal and absolutely we need

a new deal done so tell me about the new deal the new deal is this right now interest rates are the lowest they've been forever they're close to zero and the lowest they're going to be in a long time thanks to the federal reserve absolutely unemployment is still relatively high wages are low and dropping now is a great time to take american workers and put them to work do what we did in the one nine hundred thirty s. build those great bridges that still exist around washington d.c. and help lead us to the twenty first century much better now than later when the economy strong and it cost much more to hire those workers so that's that's an interesting point that you make about interest rates isn't the very fact that we're going to have to borrow so much money because of the infrastructure spending going to raise rates themselves the interest rates are cheap now and the federal reserve can keep them cheap as you know by printing money or by quantitative easing look europe has tried the alternative they've tried austerity they've tried exactly what the house republicans want to do and look at great britain it hasn't worked i think they've had a triple dip recession right now there's a time to spend the time to save now is the time to spend ok according to o.e.c.d.

statistics united states spends three point three percent of its g.d.p. on infrastructure investments and the european union is only three point one percent why is there this disparity between what we're doing and this gets back to the question of infrastructure spending why are we not doing it no which i believe is your opinion what should be done i think it should be done now remember europe is a lot physically smaller than the united states preclude western europe and the o.e.c.d. countries we have a lot to spend we have a lot of space to cover we have a lot of needs we have a growing population but we have to prepare for the future this idea that we're going to save money by not retrofitting bridges then when the bridge collapses it costs a lot more to. to fix it plus of course the lost of lives were really being penny wise pound foolish ok but we have an unemployment process we have an unemployment problem here a lot of workers are losing their jobs and we actually have four point eight million us workers who have access to classified information what if they lose their jobs i mean is this a security risk i don't think this is about a security risk but it is about employing more americans so question about it's a jobs program look president obama has been trying to do this since his first term

as republicans look at the republicans are saying this way the house republicans the gridlock that everybody hates in congress is caused entirely by the house republicans who have drawn the district lines to protect their districts even though the majority of americans voted for democrats back in the last election ok so let's take this over across the seas to china like what is the situation in china and are there any parallels with what's going on there because they spend a lot of money building up these potemkin villages that are basically you know bridges to nowhere but entire cities and i mean isn't the same thing going to happen here if we just start spending meant the money recklessly i'm not arguing that we spend money recklessly i'm not arguing that we create massive towns where no one lives right not argue that we build any buildings at all but fixing bridges building airports making our trains safer we've learned in spain that sometimes you need to safer train caesar to the video these are things that we need to do and that everyone agrees we need to do and the idea the republicans are going to save a bit of money now look the deficit has been cut under president obama from george bush's last year dramatically almost in half he's done

a terrific job we now need to spend the money to protect against unemployment and really to protect our infrastructure for the future well the problem is i mean the deficit ballooned when we had this financial panic of two thousand and eight right if we're going to go in back into that situation and a lot of people so that we might you know emerge into another financial panic are we going to see the same thing happen again are we just going to repeat history the financial panic was caused by wall street wall street gambling without regulation because of dodd frank you know these kinds of well the whole purpose of dodd frank and bills like that is to restrict wall street regulation now but i regulate wall street. you betcha i certainly would the republicans are against that but that's the thinking that can get us into a massive recession now a little more government spending on infrastructure and so your thoughts on the federal reserve is there just keeping interest rates artificially low and they really don't have a hand in any of this i mean what happens if they decide to bail out wall street again isn't this setting another president we should not bailed out wall street and the federal reserve is keeping our artificially low interest rates but that's ok

because in the inflation rate is artificially low if inflation starts kicking up to two three four percent i'll be against quantitative easing right now unemployment's water problem that inch inflation so that's why the federal service doing what they're doing mark levine thank you so much for joining me always a pleasure yes. joining me is a mirror from break in this lovely producer that. we're going i'm doing great to talk to troy again because this is your hometown i know you care about it so let's just dive right into it so detroit faces a long and arduous path towards its historic bankruptcy and for an update on this i

mean we're here with you now so what's been going on with the filing let's just start there right now obviously it was it did get the green light to go for a start you know bankruptcy proceedings the judge did just set a date august nineteenth is the key date keep in mind that's a date by which all motions challenges that need to be filed against detroit's eligibility for bankruptcy it's a question that will be addressed in court in october and it may not happen but if it does happen these things very you know these things can really drag out for europe and even in the late hotel. for now two thousand and nine a year so i know that the emergency manager wants to see this happen a lot quicker but when remains to be seen how long it's going to take and we've seen record highs in the stock market this week the s. and p. five hundred is above seventeen hundred many companies they're beating their earnings but large businesses are sitting on more than one trillion dollars one trillion dollars of excess cash now would you put the detroit on the list of good

investments ok i'm not an economist but i would say i just went to detroit recently and i really feel like it's coming back i mean you have to keep in mind this is a city that's already hit a low a major major low and i don't think it can get much lower than this i think it's just going to go up from here i mean the hundred dollar houses i mean they're literally just trying to get rid of inventory so how do we clear the market ok yes the one hundred dollar houses those do exist but on the flip side of that i was there and speaking to people downtown who were telling me that there's an apartment shortage that there are young people moving in and they have no place to live so it's very very ironic thing that there is a demand for apartments and loft and condos for the young people that are coming in the city that have a desire who who are these young people who are coming into the city i know we kind of talked about well if there was absolutely means there is huge companies that are taking root there is one quicken loans in particular which is run by dan gilbert just moved there into the city and he brought fifteen hundred employees with him and he's hiring two thousand more in the coming months so these people these are

people that you know are coming into the city now or were working in the city but just are seeing the difference in detroit and feel like now it's time that they can move there so they can work and live in the same place for one for hopefully we see that a lot takes the markets clear you recently interviewed a wayne county executive and we have a clip of yes the wayne county executive he oversees the city of detroit and here's what he had to say. some of these financial institutions only get pennies on the dollar. yeah it's a momentary hurt for them but they're going to go on they're not going to be bankrupt and they're going to move on. if you limit the pensions for these pension years they don't have the same resources as the financial institutions these just you know you're talking about sixty five seventy year old people you know that aren't going to have the same resources to be able to get back up and perhaps get another job right away or be able to recover right away so that's going to be all

right so what options do the pensioners have i think it's so it's a waiting game right now bother me that you've got to wait and see what assets are going to be sold off wait and see you know how much of their pensions are going to have to be compromised there's still you know everything is on the table for the emergency manager. perhaps could put a little stress on the economy a little stressed but a little stress to be good at sometimes because you know it forces people into a realization that certain changes have to be made and i think you you and i have talked about this on news and you know there has to be change and i think are you in the opinion that this is actually a good thing i do think that something needs to happen and i think it's unfortunate it's resulted in and something so grim but i'm afraid you've got to happen yet something has to happen we have to say goodbye if you want to weigh in at today's show me for the like us on facebook at facebook dot com slash prime interest you can follow amir a hero to mary david in you follow me at english p.-i thank you so much for joining me.

and it was a hodgepodge day on prime interest so forgive us for covering so much ground we talk to unemployment yes the usual so to six and the usual suspects there are mixed bag as always which means the bernanke can go all i want and decide whether to printer or not to print out. will and it's market making no longer command public attention or i was we reported beautifully along with the fastest growing revolving door in d.c. the ever theme between the c.f. p.v. and its red table reader we've got our eye on the big four auditors to laugh but not only for development and detroit car bob and a mirror as i hope for your is that in glaze over because there's a lot more to cover next week from everyone at prime interest i'm very i'm boring

you have a great weekend. here is mitt romney trying to figure out the name of that thing that we americans call a dollar. i'm sorry i'm just a guy who cares an awful lot of money you sir are a fool you know what that is my other terrorist cells in your neighborhood all want to give us a defeat terrorism the only liberal democrats. can secure building but it's. going to look for you to distract us from what you and i should care about because they're a profit driven industry that sells of sensationalistic garbage he calls it breaking

news i'm having martin and we're going to break this but. you know sometimes you see a story and it seems so for lengthly you think you understand it and then you glimpse something else you hear or see some other part of it and realize that everything you thought you knew you don't know i'm target market is a big issue. if you're. going to take three months for charges three. three. three. three.

video for your media project c.e.o. don carty dot com. coming up on our t.v. now that edward snowden has been given temporary asylum in russia what's next for him we'll give you the latest updates on the n.s.a. whistleblower and what's being said about him back here in the states. and one of the biggest conventions in the cyber world is underway in las vegas archie is on the ground at def con twenty thirteen or pork just ahead. and when you head up her drink tonight it's probably going to cost you a little bit more at the price of booze is on the rise we'll tell you what's behind the increase as we belly up to the bar later on in the show. hello it's friday august second by the.