the role of so-called auditors is oft overstated in our modern capitalistic markets and according to a crazy man tar the entire concept of an audit provides a false sense of security for a big firm to control the entire market that would be the lawyer or insane young pricewaterhouse coopers and. but they do much more than checking the ledgers of the fortune five hundred companies they represent they also consult with them and they hope result of regulatory disputes a conflict of interest well we'll 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 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 brand or sin was providing almost everything and ron and many people believe that presented a conflict of interest 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 so lots of constraints were placed on the audit firms after sarbanes oxley. in terms of the kinds of services they could provide to audit clients however that's not being enforced no another there are. inching back up into providing almost everything and it's sort of a ask for forgiveness rather than permission to ation right now yeah it's unfortunate i don't think we've seen a single prosecution or investigation even on the sarbanes oxley. role that went

into effect over a decade ago but i'd like to move on to a specific company herbalife you've been reading up 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 it urban life 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 the 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 is 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 for 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. genie 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 whether 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 really odd it of three years worth of financial stake. in other

words keep you have jihad to disavow to reject its opinions and three years worth of financial statements that this was of value and what exactly effect does this have on a public company when they have to reevaluate were they have to riyadh it three years of financial statements what is a do to a company. when your honor resigns and withdraws 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 stars as you see 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 audit firms the four 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 know the words given the number of public companies given the number of audits that have to be done in 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 fourth firm. ended

up going to 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 i guess they broke up in size would it be better for the industry the auditing 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 post enron i think that's the best focus that regulators 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 bill your speech 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 author of re the auditors and columnist for forbes an american banker. and the c f p b has 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 winging 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 since a letter to the agency stating senior c.f.p. employees including raj to take a gary reader christmas. 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 is alleged to have started a cottage industry around the see if qualified mortgage rules to see if helped write the stricter standard on mortgage loans that some have criticized as too strict and would price the millions out of the housing market altogether at a financial services hearing however to take twelve lawmakers to see if 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

today's estimates the new qualified workers 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 it's 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. we 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 we're good standard not a bad move. one point five trillion dollar industry he helped create but 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 buddy from the bureau that of capital

markets that fenway summer is chris to spell who was the export mortgage residential service or at the c.f.p. and before that he serviced 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 winding down after receiving billions in taxpayer subsidies the general counsel of fenway summers as mitch hodge berg the former senior counsel in the office of regulation at the c.f.p. he is your go to to help navigate their regulatory burdens of the bureau fenway some or even have the former c.f.o. the chief of staff to gary reader as chief of staff he was responsible for staffing the bureau during its inception remember the c.s.v. is just two years old it's a brand new agency now of the federal government but of the federal reserve and carry reader hopes higher all the new employees who better to call when you need to

make a call to the c.f.o. of even the guy who hired everyone fenway summers says there is no conflict of interest because they're not directly lobbying the c.f.e. is that they're advising businesses but why would they need to lobby the c.f.a. the way they helped built it they already know the ins and outs of the bureau c f t v claims the qualified mortgage rule making process was transparent and public comments were considered the government watchdog 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 reserve register then teaching us how to read it thus what economic growth. turned to in this country sort of creating an actual service that adds real value 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 a 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 writes.

i would rather i asked questions to people in positions of power instead of speaking on their behalf and that's why you can find my show larry king now right here on r.t. question more. from one show's reverberates through the centuries when vengeance cold so blood women don't have imagined hanging on this member to him for eight years to. get out wave law and face in the caucasus. vendettas was handed down from generation generation to. killed my son with impunity like to kill them with impunity it was a question of honor and once more to libby's be reconciled today. and

i would think. for. instance. since the implementation of the sequester over eight hundred thousand federal workers have been furloughed numerous government agencies have been shuttered and

with the 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 as always yeah 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 it what's up with this questor deal basically 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 they're cutting bill. 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 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 and 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 physical. pichler 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 loss of lives that 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 u.s. 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 still 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 there 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

pay for a train we sees it through 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 if we're going to go back into that situation and a lot of people say that we might you know emergency another financial panic or we could. see the same thing happened 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 more you betcha i certainly would the republicans are against that but that's the thing 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 they're 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 bail 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 interest then 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 know what's been going on with every file and let's just start there right now obviously it was it did get the green light to go forward and now it's about to start you know bankruptcy proceedings the judge did just set a date august nineteenth is the key date to keep in mind at the 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 still but if it does happen so these things hearing you know these things can really dry go for your i can't even in california two thousand and nine year so i know that the emergency manager wants to see this happen all the dock worker 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 bringing in their

earnings but large businesses are sitting on more than one trillion dollars one trillion dollars of excess cash you know 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 a 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 lofts 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 a new jersey means or is huge companies that are taking everything 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 right 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. more gets clearer. only 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 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 stress 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 and something so grim friend of hers but i'm afraid i've got to happen yes something has to happen we have to say goodbye if you want to weigh in at today's show make sure to 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. today 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 in one decide whether to printer or not to print will and does market making the longer command public attention or i was we reported beautifully along with the fastest selling revolving door in d.c. the ever seen between the c.f. p.v. and its bread table readers we've got our eye on the big four auditors to last but

not least the developments and detroit car bob and near as i hope for your is that it glaze over because there's a lot more to cover next week from everyone at prime interest i'm perry and boring you have a great weekend. it

will. put it on your arm an ally should be making news all the face time period mona. lisa. a pleasure to have you with us here on t.v. today i roll researchers.

choose your language killing the killer though if they're going to kill someone. choose to use the consensus to. choose the opinions that invigorating to. choose the stories that impact the lives choose be access to your office. that judge has a sense on sunday. that killed in the streets. that women are kidnapped and converted to islam by phones will there be another layer of mussels from the cup to christians of egypt to the cross to muslim its future victims. the way of the cross.

old. gold. and over the street. as you. wish. all things mom islam good. luck. just see the money and i'm a. little my mind i'm

a little. i would rather i asked questions to people in positions of power instead of speaking on their behalf and that's why you can find my show larry king now right here on r.t. . more. in

the u.k. amid new revelations naming three telecom giants who allowed. to look through private data of millions of clients. and in the us. under the carpet whistleblower edward snowden dominates the headlines. in america. to stay away from the middle east in light of a major terror threat. saying washington's policies in the region continue to fuel resentment. international news anchor.