could you take three. three. three. three. three blow video for your media project free media r t v dot com. welcome to the kaiser report i max kaiser hey you there in liver paul thanks so much for this max graffiti you can now see on your screen i asked people around the world to put max your feet up in your city liverpool thank you this is got to be five or six cities now around the world have huge macs portraiture phoebe yes ok now the lilliputians let's talk about them they looked upon fraud as

a greater crime than theft. for with care and vigilance one could protect your property from theft but where fraud is permitted. or hath no law to punish the honest dealer is all was undone and the name gets the advantage just look at america and or the u.k. and you will see the little peugeot ins at a point for the knaves do indeed have all the advantage doff the highest agree with me old me whisper stacy herbert well indeed i do believe there are many knaves they rule the world especially here in the u.k. and in the us and there is no nave more knave like then jamie diamond of j.p. morgan and. we don't have jamie things like gift that keeps on giving like herpes or aids or something he sees financial herpes wherever he goes people are infected with as is his banking virus well he's also i would say a little pew sion and

a big n.d. and so we've got them all rolled up into one mccain precious justice to hold j.p. morgan executives accountable as we know j.p. morgan's jamie diamond went to meet with eric holder in person on the twenty sixth of september and in response senator mccain sent this letter he said will you seek to hold any top officer director a key employees within j.p. morgan personally accountable for the wrongdoing mccain of arizona wrote in a letter today to attorney general eric holder mccain the ranking republican on the senate subcommittee that probed j.p. morgan's record trading loss last year criticised holder's september twenty sixth meeting with chief executive officer jamie diamond calling it highly unusual now the meeting was regarding the alleged eleven billion dollar fine that he's going to pay on behalf of j.p. morgan for mortgage fraud well kudos to john mckay i take back all those nasty

things i said about him for. warmongering and always talking about bombing iran and i would tweet often saying dear vietnam please take john mccain back and put him back into the prisoner of war camp because he seems to like that sort of thing but i take that all back now and he seems to be standing up to the bank stars and writing a letter to eric holder unfortunately eric holder like gary gensler of the c f t c or the f.c.c. or these other regulators are in the pocket of jamie diamond i'm afraid that will end up for naught but as a little said you know it was fraud that was the more the bigger danger to your economy because it drives out the good the good business person the person trying to do an honest living whereas if the knave is able to commit fraud after fraud after fraud after fraud after fraud after fraud and then go to the justice department for personal meeting board knows it could have been a bandar blair sort of situation was he threatening him who knows what happened

transpired in that meeting now john mccain said your personal meeting with the c.e.o. of the corporate target of a major criminal investigation at the request of the c.e.o. while negotiations on a global settlement agreement are pending is highly unusual and under the circumstances that meeting occurred gives rise to concern well i mean the crime in a general nature of business in america as william k. black would describe it former prosecutor who put a lot of bankers in jail and the savings and loan crisis this has become the day to day grist of the american economy and the c. and b. c. folks of course they are in denial they don't think jamie diamond has committed massive crimes and committed massive fraud or or lloyd blankfein over there goldman sachs but of course they have it's been documented they've paid plenty of fines for i mean had there not been laws changed after the savings and loan crisis decriminalizing the fraud that jamie dimon is involved with today he like the

bankers of that era would be. in jail remember one of the one of the fallouts from the s. and l. crisis was bankers change the law to make the crimes of the s. and l. era legal they decriminalized ponzi schemes and they decriminalized banking terrorism is now a perfectly acceptable way to make money in america now and diamond under those sort of laws would be sitting right next to bernie madoff but lo and behold eric holder and the whole washington establishment who takes money from the extortionist on wall street changed the law to make criminal criminal behavior well that was once worthy of a prison sentence and maybe ang now it's ok well first of all i have read ponce's he was not called an oz born in the world of financial twitterers. just once again i think we should also note for people exactly where we're getting this reference to little if you shien's which i would go over travels are those of the

swift seventeen twenty six those little fusions those. there seem to be quite wise . well now ok we're talking about a criminogenic environment where fraud and needs thrive so how does that happen how does that happen aside from just the at least circles how did the masses of the population except that only small time crooks the guys rioting here in the u.k. a few summers ago how do why is it that we all accept that they should be sent to prison for months on end whereas jamie diamond should be able to go down to the department of justice and meet with the attorney general of the united states and decide whether or not he should be. for anything or face any punishment well part of it is the media and the propaganda and that takes us to this headline the j.p. morgan apologists of c n b c so i'm going to show you this little clip and it's maria bartiromo of c.m. b.c. and she questions alex pareene of huffington post so should we talk about the

financial strength of keeping morgan i at this point to me even with all of these losses the company continues to churn out you know tens of billions of dollars in earnings and hundreds of billions of dollars in revenue how do you criticize that i won't i think a lot of their earnings and revenue we come from really should be doing to be there you have. three shared media like well it's a mentality of entitlement it's a plan it's a plantation mentality and it's funny how politics in america is breaking along racial lines here you have jamie diamond from the big house visiting eric holder down there in the field doing the field work and he's lecturing him about his place and eric holder needs to find his place on the plantation and barack obama needs to find his place on jamie diamond plantation and maria bartiromo is like one of those southern belles zero zero zero zero zero zero a month is burning oh what should i do to go back to the story about jamie dimon

and j.p. morgan and she had asked alex pareene what have they done wrong what they're making profits what crimes have they committed what have they done that's wrong so i'll name three she said name three of them well jefferson county alabama where two j.p. morgan bankers paid bribes to public officials in jefferson county alabama the public officials are now in jail j.p. morgan executives not in jail they paid a fine for the bogus credit default swaps attached to this. just number one number two energy market rigging in california and number three live or rigging fannie mae and freddie mac. the government backed agencies are now suing jamie diamond jane. p. morgan because of rigging global interest rates on the three hundred plus trillion dollar market that's just drink there's live or there's a g. there's a maid of all jamie dimon and j.p. morgan all had a hand in it there is a violation of middle and capital requirements they break twenty four hours a day seven days a week there's regulatory capture the list goes on and on and on he's got

a rap sheet longer than tony soprano but again he's white so therefore of today's america that means he's right well eric holder is very black and i think he is allowed to get away with crimes that i don't think it's a matter of any sort of race i think what that does when you've got a lecture to did me because it was getting out of his place so that ascent jamie dimon the big white father from wall street you know eric holder get your place because it was going on so it doesn't go at all and we have many ready for isn't this but if we're going to go if you started with a little fusions ok who put a little fusion in the teleprompter i don't know there was here we are now. there you have it max the teleprompter i write the words nobody doubts that. so the other points made here was that profits they wash away all sins well felix salmon in reuters says besides banks shouldn't be absolutely profitable

they're in to meter and in an efficient economy their profits should be quite easily competed away when bank profits are high that's a sign that the bank in question is extracting rents from the economy rather than helping it to grow so here we have it a situation where as you said on the top of the show the little pew sions thought that fraud was bad because it allows the knaves to flourish and here we have the prime example that profits are rising and the banking sector because the are allowed to scoop and take and steal and defraud and steal and take and defraud well i'm sticking with my plan. metaphor because the justify slavery in the south was this notion that is highly profitable it's profitable jamie dimon says with his fraud that it commits daily so therefore it's righteous and maria martha robo bollox to should not go below any face whatever name is she is proposing

a proponent of this idea of noblesse so believes essentially that jamie diamond is an aristocrat he knows what's best for america you know the best of the world just give the benefit of doubt he's above the law if you don't like it then get down there star pick and so and then finally on this felix salmon piece he also mentions that she wipes away all the fact that he was going down there to meet with eric holder was regarding the mortgage for the mortgage fraud has destroyed the mortgage market in america almost one hundred percent of all mortgages right now are backed by the u.s. government because there is no private sector so he says the country was seriously damaged by j.p. morgan's lies and misrepresentations about its mortgages much more than it would be damaged if the share price went down instead of up and the public has every reason to want the individuals running j.p. morgan to be held accountable when it gets into serious regulatory trouble over and over again right and remember that when the crisis in two thousand and eight and the banks profits were completely obliterated because they were over leveraged and made horrible bets then this notion that well there were making money the righteous

to restore this righteousness we're going to give them a huge multi-trillion dollar bail out to restore this thing called market fundamentalism the ideology of profits over people the ideology of profits over humanity which is exactly the same thinking that motivates people to strap on suicide bombs and go into cafes and blow themselves up here jamie diamond strapping on debt and he's a suicide banker and maria bartiromo is justifying market fundamentalism and market terrorism thanks maria great job ok states there were thanks so much for being on the carson report thank you states over the second have a whole lot more. crosstalk

rules in effect that means you can jump in anytime you want. the interview.

was your language. as the the consensus. of the opinions that you think are a couple of. the stories that implicate. me access to.

welcome back to the kaiser report imax keyser time now to turn to mark armstrong a public banking dot org mark welcome to the kaiser report max good to be here all right mark armstrong let's talk first about the banking system as we currently know it first the f.d.a. i see it protects our deposits right it is insurance for protecting our deposits but the insurance fund is only about twenty six twenty seven billion dollars deposits are way over a trillion dollars so in light of the derivatives bubble which goes up to about ten ten plus trillion just for at risk just for b. of a and chase there's there could be a real problem in our list we've got to do room is in a second but let's just revisit those numbers for a second you're saying there's

a roughly a trillion on deposit and the f.d.i.c fund has how much of that. twenty seven billion ok when we look at situations like what we saw recently in cyprus where they had a bail in here you have a situation where deposits from banks from people money at the bank was basically confiscated by the government right and so when you describe a situation where the f.t. i see has a minuscule amount of funds available in case of a some kind of meltdown in the financial system which is almost one hundred percent guaranteed to happen in the relatively soon basis saying therefore the u.s. would be a prime candidate for a bail in type situation right because according to dodge frank we're not allowed to have taxpayers bail out the banks so when they go bankrupt what are they going to do they're not treated with the same rules that a business or a business has were when a bank goes bankrupt assets are dispersed they get to seize deposits and turn depositors' into shareholders and then and then continue business ok so now

the big point here which you cover over there at public banking or go along with alan brown is a big big fan of our. friend i should say of our show does a deposit or own his or her deposit no they don't so explain that exactly if i give the money to a just b. c. or citibank or some big bank i put my money in the bank don't i own that money no you become a creditor the bank the money is owned by the bank and they treat that as liability they owe that money back to you as it's always been the case yes and is there anyone out there trying to reform this other than you because you have the obvious conflict of interest if if things go bad the bank simply says well these are our deposits to begin with and you've got to get line and you've got to get in line behind a massive number of creditors right well i think two thousand and eight was a big wake up call for the general public in america and elsewhere and people are realizing that the banking system has all sorts of fraud been baked into it and

we've been told one thing but the reality is another so there is fraud baked into the system it seems as though the fraud recipe is being shared amongst the various banks and institutions and you have a plague of fraud to me i'm curious what your comment is here back in the eighty's yeah the savings and loan crisis and what happened was that banks were extending certificates of deposits to folks knowing that they couldn't possibly repay those certificates of deposit because knowing that when they were unable the federal government would have to come in and make good on that claim so they were gaming the system in the wake of that scandal instead of the government or somebody irregular coming in and imposing regulations that would prevent that from happening it seems as though the banking lobbyist in america figured out exactly how to lobby to change the law and to create new laws so when they did the exact same thing

again they would not go to jail as over a thousand dead last time is that an unfair characterization that's absolutely fair and and the thing what's happened is that eve. in regular law like bankruptcy law is they're treated special so so when they want a bank goes bankrupt they get to seize depositors funds and turn that into capital and no other business has the right to do that but banks do all right let's talk about this seven hundred trillion in derivatives outstanding in the event of bankruptcy proceeding who has priority the depositor or the derivatives wielder i guess we've already kind of ended the derivative claimants yes and the seven hundred trillion you mentioned that there are a trillion in deposits backed by minuscule amounts of insurance at the f.d.i.c seven hundred trillion in derivatives of course is against a global economy with only approximately sixty trillion in g.d.p. so those is it unfair to say that what hank paulson goes to congress and says give us the. trillion dollars for tarp that he's being extortionate and he's wielding

the weapon will collapse the system using derivatives unless you give us our cash is that an unfair characterization no not at all let's talk about what your group does how would a public bank and of course i'm talking with mark armstrong of public banking dower dot org how would a public bank address the problem with this model so the premise behind the public banking institute of which i'm a part and one brown founded along with a dozen or so other people. is that all of public finance has been co-opted by private financiers so so there's no true public finance in the us anymore in virtually all forty nine of the fifty states public dollars tax receipts fees are deposited into private banks and that begins a set of dependencies so that public officials are wholly dependent upon the private financing world and public banking is all about putting those deposits and it's over a trillion dollars of the pause it's into public banks government owned banks which

are then used to the capacity to create credit to fund bridges to fund schools to fund things that can be paid back and that we need. it seems that the banking industry is remarkably simple when i was working on wall street there is the old three six three rule which is you pay out three percent and you blended six percent in on the golf course by three but there's an amazingly simple simplicity to this. model of banking that you can say it's almost a utility that it is that the do you kill the industry make sure people get power to to power up the the economy to power their homes has been regulated for years because you don't want private enterprises gouging the price of energy because it's completely malevolent to the entire economy banking similarly it's a very simple business. it's a utility and yet that none of those utility banks exist anymore they've all been

purchased by these super infrastructure mega banks it's all been privatized they are leverage fifty to sixty to one so what you're saying on the surface to those who forget the history of banking will say wow that sounds like you're turning your back on free markets are turning your back on capitalism you're returning to some kind of government interference but that's completely false you're just returning banks to work from once they came it's a simple business doing a simple activity it should be simply organized we go look at water we look at electricity transportation mail all those are utilities and the creation of money is definitely utility of all those utilities that's probably the most important and we look at each one of those markets as a as a place where you want to regulate industry and you also want to provide a public service so you have water coming out of the tap you have looked at electricity coming over the wires you have mail delivery service which we used to do it's being privatized here as well as in the states and so when you look at

public finance it's been completely privatized were where public finance officials need to go to the private market to obtain relatively low cost funds but you know even you know there in california there have been capital appreciation bonds being sold or last seven years nine billion dollars of principles has been financed and the cost on that's going to be twenty seven billion in interest so we're being gouged in the pub. finance world and public banking is just an alternative to the finest set ourselves without going to the private markets what i don't understand about americans if i can use the term you know broadly in this sense but they seem to like and understand how wal-mart uses its size to pressure suppliers to get cheap stuff but they don't seem to get that the size of the government can be used to pressure suppliers to deliver cheap banking cheap healthcare cheap

transportation in other words the biggest beneficiary of having the government act as a. you know the. just negotiate good practices in a walmart like fashion are the people the people would benefit from the right and if they're the was the first one to step up and say no no we don't want prices we want to pay through the nose we want to go if you want to be raped why is that you know the whole notion behind banking is that it's really it is a simple business as you're saying and what gives the bankers the right to to extend credit is the banking license which is this issued by the state government typically and yet state governments disenfranchise themselves from having that only that same license that was ceded the table to access low cost funds which is which is what is needed in order to better finance schools or bridges whatever the bay bridge just reopened it's a beautiful bridge i just went on it for the first time two days ago but it is it cost six point four billion dollars in materials and services it's another six

billion dollars in interest charges but we held labor under the microscope while it was being built we never looked at the financing for it and yet it doubles the cost this is again as we touched upon as we do on this show often is that g.d.p. is calculated by taking into account all of the misson vestments that are made by the investment community and the interest cost that they pile on. all of these projects however one looks at inflation numbers and why that should be adjusted to labor then of course everything is deflating in value so if you're working for a living it's always about deflation and ben bernanke keep interest rates low to help you but if you're a banker g.d.p. is great and i need to pay myself a normal bonus right now we have a couple minutes left you touched on this briefly i want to get into a little bit more. give us a sense of how the public bank would look like for example how would it reduce debt

servicing costs if you're getting into this now and i want to probe a little bit deeper because the interest cost in this economy is the killer it's a it's ratcheting it up in ways that if interest rates were ever to resume a normal rate of five percent which is a post-war normal rate of a ten year bond would be five percent not half a percent so if we ever return to a normalized interest rate curve then interest cost would go up five hundred percent or more and no one seems to be protecting the public against this they're just adding more and more of that to fill the pockets of goldman j.p. morgan h.s.b.c. and barclays so talk a little bit about things or so just to use that example bank of north dakota is a public bank it's the only public bank in the united states and it does financing for infrastructure so it financed a water pipeline in the western part of north dakota put in fifty million dollars to fund that and let's just think about the mechanics of that what's happening is the rate of the water payers are paying for the interest on that it doesn't really

matter what the interest is because whatever interest they pay goes back to the bank which is owned by the people and then that that money is recognized as profits and return to the general budget to lower taxes or to provide increase ervice is so so you end up with this closed circuit so it doesn't matter what the what the interest rate is frankly in a close circle like that because the people may pay the interest but they're going to receive it back in terms of profits so that's the no that's the. that's the value proposition me on a public bank is is that it returns the interest to the same economy in which it was paid during the financial crisis the north dakota bank what happened their return on equity was twenty five percent year to two thousand and eight so they didn't go down they thrived they thrived and their return on assets was approaching two percent so they did they did great so yeah it's interesting the public banks is there countercyclical countercyclical so some of our material comes out of latin america and there are a lot of public banks in south america and they and they've got done studies and

one of the most recent studies showed that all their banks actually grew during the recession same with bank of north dakota so they're actually doing what you'd expect in any healthy balanced economy or ecology is that when one area goes down another area makes up to exactly what we have now is that when all these banks are trading in the exact same thing at the exact same time with the exact same leverage when it starts to blow up they all blow up and then they have a systemic failure but public banks are really a hedge against that all right fantastic mark on strong public banking dot org route tom thanks so much for being on the kaiser report thank you and that's all the time we have for this edition of the kaiser report with me back to kaiser and stacy herbert i want to thank my guest mark armstrong of public banking dot org if you'd like to get in touch tweet us at kaiser report until next time i started saying by.

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