banks swiss banks italian banks all those things blowing up economies were rated aaa by s. and p. they were but they were also rated aaa by moody's they were rated aaa by fitch those two are not being investigated as far as we know at the moment because it's only s. and p. that has downgraded u.s. government debt now this is the question people are going into gold because treasuries carry a downgrade a risk or at least they did until the department of justice sent a message to those who dare to downgrade it ok well so let's look at where this message is going matt taibbi a whistleblower claims that over the past two decades the agency has destroyed records of thousands of investigations by white washing the files of some of the nation's worst financial criminals the f.c.c. has kept an entire generation of federal investigators in the dark about past inquiries into insider trading fraud and market manipulation against companies like goldman sachs deutsche bank and a i.g. so what do you think about this story here that the f.c.c. is the one that was has deleted files that is

the 10 largest banks held 60% of total banking assets. by the end of 2010 they held 77% of total banking assets. simply put were there another economic calamity the banks would impose an even higher cost of the taxpayers. this is not capitalism in any sense of the word. the easiest way to prevent the need for future bailouts a simple requiring banks to hold an increased capital research cap. capital buffers require banks to fund themselves losing -- using their own money instead of other peoples money. the ranking member of the full committee senator shelby said one of the lessons of financial crises should be the importance of maintaining strong capital requirements especially for large global banks. i couldn't agree more. the least we could do is ask the financial sector to have a prudent amount of its own money to cover its own losses. we require as much of our community banks much less the sifi to our system and the same rule should apply to everyone and that is why we are having this hearing today in testifying on some of the greates

wall street seven tell you this idea too and new york's attorney general is leading the fight to hold banks toure's accountable for their high crimes so why is president obama stopping and trying to sweep wall streets this in deeds under the rug. you need to know this a new congressional budget office report brings bad news for president obama according to the report unemployment will likely be at or above eight point five percent through next year's elections reason cited for persistent unemployment is weakness in demand as in not enough people have enough money in their pockets to spend and stimulate the economy and republicans have done one heck of a job keeping it that way by making sure any programs put forward by democrats to help the unemployed and get people collecting paycheck. so. as resorting to desperate measures get money back in the pockets of working people to stimulate the economy is the payroll tax cut extension that republicans are less than enthused about supporting and here's another idea through helping homeowners that was just reported in the new york times today which

and their individuals at these banks and the c.e.o.'s of these banks and this is really the emergence of what some are now calling an aristocracy in the u.s. is the public now beginning to understand that they're living under the the the an heiress to craddock monarchical system again that they the whole revolutionary war for independence was basically now we've got a round trip back to feudalism i'd like to say yes but it's not clear to me that we really have cracked one percent barrier in terms of awareness of what's really going on here not only do we don't really want to recapture we have media capture all of this is very predictable the fact of what happens when you have high concentration moneyed interests they're allowed to own all sorts of things from politicians to cable news stations to newspapers so i think a lot of people are starting to in my want to find more and more people who are voting with their feet as it were trying to find ways to protect their assets pull the assets out of a system that they see is fundamentally y

already covers banks. we do not need a new law to do that. it does. as my neighbor pointed out on that table, the formula retell represents the broad categories which includes a range of uses, including banks. the only with the planning department can reach the conclusion of banks are not covered is to effectively cross out sales and service retail in the law, a broad category. that is what they have done. it is unfortunate. why has the not come before this commission before? the answer is simple. most of the things that would have been in that so-called exemption came to you on a conditional use for another reason. there's or footage was bigger or something else happened. it was pointed out that there may be others that did not even get on your radar. but the reason we have made such an issue of it on the visit there with this bank is that the planning department has determined that the square footage does not trigger cu. so we essentially have the bank with thousands of branches across the nation that is

the first is that this bank hold equity. banks hold assets. equity has to do with the right hand side of the balance sheet. the promise comes in two sets of forms. one of our contractual obligations and equity holders to have some promises made by the banks. they get whatever is left. if you make too many promises to debt holders, you get into a situation such as what we had in 2008 where the system is teetering on the brink of and balance the end is insolvent. with little equity, we have a blocks that are centralize. in the capitalistic system, we want the latter not the former. one of the important things in this debate is to distinguish private from social costs. imagine that the processing firm is located close to a highly populated residential area. the government says it must be moved. the owners of the plants could say it is costly, because we could use tax benefits and lose the insurance. you are providing in a highly populated area, if we move this iran in processing plant. you are taking away subsidies. the analogy is perfect. if we

as most of you know, banks have to make the bank every three days. that means they have to clear imbalance. it doesn't matter they are open on saturdays. they have to make the bank -- that is why banks are always open the day after thanksgiving. other days that make normal people take off because of problems in 1929, that was one of the financial laws instituted. there are a lot of laws banks come under and maybe even more should be imposed in the future to make sure things are handled the right way. i think it's a more essential service and, as was pointed out very well by many speakers, there are very few small banks that do not come out of the definition of formula retail. branch banking is essential for most banks to survive because although there is a lot of talk about people doing things of line, it is very important for many people to have the availability of a branch that is close to them and it avoids people having to drive long distances or spend more of their time to do important functions. branch banking had its origin here in san francis

the first notion is that banks hold equity. banks do not hold equity. banks hold assets. equity has to do with the right-hand-side of the balance sheet and in particular the promises banks make to those that are providing their funds. and the promise comes in two sorts of forms. one that is contractual obligationes that are made to debt providers. and then equity holders get whatever is left. so the problem, of course, if you make too many promises to debt holders, debt funders of the bank you get into a situation such as what we had in 2008 where the system is teetering on the brink of insolvency and in fact is insolvent. so with little equity we have losses that are essentially socialized with more equity we have losses that are privatized. in a capitalistic system we want the latter, not the former. so one of the important things in this debate is to distinguish private from social costs. let's go back to the uranium processing firm. imagine that the uranium processing firm is closely to -- is located close to a highly populated residential area and the government says

have a mortgage with that bank. nice couple took the evil bank manager to court. do you know what? they won! >> wow. >> reporter: the judge ordered the bank to pay the couple's legal fees. (speaking spanish). >> reporter: but they didn't receive any of that money. this couple showed up to the bank with a repo truck, a lawyer and a (beep) sheriff and foreclosed on them. they foreclosed on a (beep) bank. i know. it's the greatest thing that ever happened. this story was so great, it was addictive. tell it to me again. again, again, again, again. >> we just want to get on with our lives. >> reporter: you can't do that. >> it's been nice but we want to get back to our normal routine. >> reporter: jesus didn't say, well, that was a great story. now i'm just going to get on with my life. it's not up to you anymore. this story is getting out there. if they weren't going to cooperate, i knew who would. you know this is a movie, right? this is a movie. >> i'd like to think so. >> in a world where banks hold the money and reg

and up next on our team kaiser and co-host stacy herbert look at the absence of justice for banking crimes and talk about if and how ordinary people can make a difference. max kaiser stacy herbert you know a lot of people ask what is the root cause behind all these riots stacy herbert shows more the riots in the street i might add and the riots in the markets headline reads quantitative easing is good for the rich bad for the poor quantitative easing the bank of england's recession busting policy of buying up billions of pounds of bonds may have contributed to social unrest by exacerbating inequality according to one city economist because they missed diagnose the problem back in two thousand and eight they felt that there was a liquidity problem in the markets instead of an insolvency problem at the big banks max they misdiagnosed it to the public this is what they told the public because the evidence suggests that q.e. cash ends up overwhelmingly in profits thereby exacerbate an already extreme income inequality and the consequent social tensions that arise from it and he also points out

banks, u.s. banks by any measurement that's commonly accepted by account ants are extremely well capitalized and standards are much thicker than in late 2008. we had a very solid banking system now and it doesn't require any kind of congressional action for the banks to be bailed out in the unlikely event they did require a bailout. the federal reserve could bail them out. there's no chance of another big bank failure and our banks are soundly capitalized and by the way, the french banks are more soundly capitalized than you might think. france runs a fast and loose situation with the banks, but the government is super, super tight with the banks, and they won't let the banks fail over there either. and this situation, i think, is a bit overblown, but as the u.s. banks, they're fine. >> just so you know, ben, we did a segment on it. >> and quickly, if the bank stock tumbles, that's a lot of money that they lose, if it escalates beyond, there isn't much more to go for some of them. how big an issu

through the fact that large banks are community banks.tages big banks. dr. stiglitz talked about how they less cost than other only manufacturing but smaller banks. talk to me about the advantages that the a result of that if you stiglitz emphasized there was an implicit can hire that the way in which risk is assessed in the capital were seen a number world fail even though they met the capital risk-weighted assets because the even being counted in the system. and that congress and before the agencies telling in most of the loopholes come from transparency and a fixed weight system that once a set in it is almost a little bit like blackjack or on the part of the variable strategy on the part of the player and if you can i of the going's and wanted the issues the dodd-frank bill was passed and the depository institutions that have a government guarantee, fdic other words, the extent to which they should be allowed non-transparentit is not clear they would call them is peculiar that the government people's gambling but whether they are insu

banks in france. but since the economy is truly global, it's being felt here and we still have our own problems in a big way. starting today with the dow down 520, that's 4.5% of its total value, taking back all of yesterday's gains and then some. other indexes, the broader markets were also sharply lower, the nasdaq and the s&p 500 both down more than 4% of their value. we begin our coverage tonight with maria bartiromo surveying the damage from the new york stock exchange. >> reporter: a lot of the selling today was driven by rumors coming out of europe that france would be the next country to get its credit rating downgraded. that put its banks in jeopardy and more bad news for stocks here. >> the dow down 550 pounds. >> reporter: another plunge on walling street as fears from yes's fed announcement that interest rates will remain low, which means lower profit for the banks. >> the problem is the biggest banks are just too big to move quickly. >> a big part of the problem starts with bad debt from

bank, and bank of america.ntacted all of them, and each said that it farmed out its mortgage servicing work to other companies, and it was those mortgage servicing firms that hired docx. docx was owned by a company called l.p.s., a $2 billion firm that calls itself the nation's leading provider of mortgage processing services. l.p.s. told us that when it found out about the phony signatures in 2009, it shut docx down. the fbi and several states are investigating. there were a million foreclosures last year, and there will be another million this year. those lawsuits are forcing open those bundled mortgage-backed securities that wall street cooked up in the mid-2000s, and they're exposing a lack of ownership documents all across the country. >> sheila bair: it's astonishing to me that this had become as pervasive as a problem that it is. >> pelley: it got sloppy. >> bair: it got very sloppy >> pelley: until recently, sheila bair was one of the government's top banking regulators-- chairman of the federal deposit

headline reads quantitative easing is good for the rich bad for the poor or quantitative easing the bank of england's recession busting policy of buying a billions of pounds of bonds may have contributed to social unrest by exacerbating inequality according to one city economist because they missed diagnose the problem back in two thousand and eight they felt that there was a liquidity problem in the markets instead of an insolvency problem at the big banks max they misdiagnosed it to the public this is what they told the public because the evidence suggests that q.e. cash ends up overwhelmingly in profits thereby exacerbating already extreme income inequality and the consequent social tensions that arise from it and you also point out that real wages adjusted for inflation have fallen in both the u.s. and u.k. they've risen in germany which has not applied any quantitative easing that is core wrecked and it's incorrect to talk about this in terms of inflation because inflation implies that wages are going higher that there's a lot of demand and the prices are being pulled higher this is

the buffett investment in b-of-a helped other big banking stocks. citi rallied almost five percent; morgan stanley added almost three percent; wells fargo was up 1.5%. wells fargo's rally helps buffett since his berkshire hathaway is the largest single shareholder of wells fargo. the big drag on the dow industrials was insurance company travelers-- shares sank 3%. today's drop takes the stock to a new 52 week low. one analyst calculates travelers gets 11% of its insurance premiums from the northeast, which is bracing for hurricane irene this weekend. the energy sector was the weakest today. independent producer q-e-p led the sell-off, followed by halliburton, then marathon petroleum. each fell at least four percent. european stocks also saw selling. this is the exchange traded fund following germany's stock germany had been a picture of market. germany had been a picture of strength in europe, but concerns surfaced today that a ban on short selling in other european markets may expand to germany. however, the finance ministry said there is no genera

but not with non-banks. we need to learn our lesson and a lesson to take away is not that capital markets are not worth while and don't provide social benefit. the lesson we need to take away from all of this is what mistakes were made so we can correct them. it that is one of the things we do in the united states of america. when there is a problem, we shine and light on it and we move quickly to correct it. we need to do that. in terms of his first question on the tarp. this is something i heard a lot. let me be really clear on what we were doing. the purpose of the tarp bank capital program in october when we announced the program, and on a single day we put capital in nine big banks with over 50% of the deposits. and in the days and weeks after that, we recapitalize many, many banks. these were non-failing banks. most were healthy. the idea was rather than nationalizing banks as they failed and putting all kinds of restrictions on them, was to get ahead, inject confidence, prevent a collapse, recapitaliz

morgan and bank of america and all these other banks but you know the giant bankrupt organization a cap and i think this is so important because at the time when they led a.i.g. directly with this massive fraud number they and when hank paulson went to congress and extorted three quarters of a trillion dollars it was all that we got to keep his work it's open we can't afford them to go bankrupt we can't afford the counterparty risk we can't afford the systemic risk and barack obama just put his foam as most of the. and now two nephews lenora it doesn't matter barack obama but i'm not in forcing the law by not following the constitution it's going to blow up anyway well apparently a.i.g. is planning to file similar lawsuits against goldman sachs j.p. morgan and deutsche bank and of course after that will come the rating agencies because j.p. morgan goldman sachs and deutsche bank were selling products that were aaa rated by s. and p. but with all these things falling apart everybody losing their aaa america falling apart into a bucket of fraud and nothingness i want to bring up one final