11, and by march 14 bear stearns had no liquidity.imilarly with lehman, which you mentioned, the run began on september 9, thousand 8, and again it began on the repo side of the book, and by september 12, that friday, the lehman brothers brokerage unit was out of liquidity. so a part of what you see happening here relates to the funding, and relates to funding assets that are not liquid. so what you see happening is the run starts abruptly, and it is a vicious in its downward spiral on these firms. so consequently, when we saw what was happening early in the week on october 24, on octobe october 26, i called my counterparts at the commission and one of my colleagues called counterparts at the ctc and said, given what we've seen in other recent experience, we think that we ought to be, we ought to be picking up the pace with respect to our crisis management, with respect to mf global. so with respect to the earlier questions about communication among the governmental entities, including the fed, there was i think good communication tha

nomi left a lucrative career at goldman sachs and bear stearns to pen three whistle blower box books, it takes a pillage, and fraud and deception from wall street to washington. her novel, the trail is thriller set in the corruption world and she's a frequent commentator for all kinds of media, pbs, and others. matt is a contributor for rolling stone. he writes about politics and finance. in one article he famously described goldman sachs as the great vampire squad rapt about the face of humanity relentlessly jamming its blood funnel on anything that smells like money. [applause] >> he's authored five books, many of which we have here. including the "new york times" bestseller, great derangement and gift topia and he's recently became a contributor for current tv's countdown with keith olbermann. rich benjamin down at the end is the author -- yea. [applause] >> is the everyone searching an improbable journey of the height of white america which was the winner of 2009 editors choice award from book list and the american library association. rich regularly appears all over the media inc

there was a run and bear stearns and they run on lehman and the entire financial system in that weekafter the lehman collapse. now has happened again. is completely unregulated shadow bank. no one in congress knows much about it. it creates a remarkable instability, but we ought to pay attention to that. not to be some limitation on how many times a given asset made collateral and collateral again and collateral again or their heirs should be some required hair cut when there's a limitation on how much can be borrowed. is there some reason there should be some limitation or does this just go along the way over the last two four years? you want to answer question, mr duffy? >> avalanche run behalf of myself. i think you are correct. there needs to be some reining in of this type of activity. one thing jon corzine kept saying was he was bringing leverage ratios down from 37 to 3 but failed to say that the debt was 1 billion to six billion. i do believe and this is me speaking personally that the leverage ratios need to be adjusted. >> okay. >> all of you are equally qualified to speak

health down but which hasn't brought one case against executives at lehman brothers, merrill lynch, bear stearns or a.i.g. still three years after the meltdown fraud charges against the c.e.o.s of both fanny and freddie were as big as it gets. >> schieffer: in sioux city, iowa, last night, the republican presidential candidates held their last debate before the iowa caucuses not many sparks at this one but when front-runner newt gingrich trying to correct michele bachmann at one point she sort of gave him what-for. >> i think it's outrageous that you can't to say over and over through the debate that i don't have my facts right when as a matter of fact i do. i'm a serious candidate for president of the united states and my facts are accurate. >> schieffer: a lot of people in politics were talking about this today and our political director jon dickerson was at the debate last night. john, at lot of attention to that comeback. but do you think it will make much difference if the long run here? >> reporter: well, michele bachmann was responding not just to the charge he had her facts wrong but to

they were shuffling around massive quantities of counterfeit money or in the lehman brothers or bear stearns or ai gee it's all counterfeit money thing is just a virtual counterfeit company so no money manager in the world can't understand that business model because it's the same business model as their career. business model they've got itself took up baldwins calls with twitter posts featuring the phrase hash tag let alec play so this looks like it's going to be good for their i.p.o. it might now be revalued a little bit higher but i want to move on to another recent i.p.o. in the tech space and this group on groupon allegedly hacked merchants e-mail to alter contract so a federal class action lawsuit in the united states alleges groupon altered one of its merchants contracts by gaining unauthorized access to the merchants stored e-mail the suit filed by household construction and repair website bid my crib claims groupon slee change the contract to extend the terms of a deal bid my crib had offered write well this was a major scandal because in the offering document for the reason i.p.o.

of the markets that we've seen thus far this goes far beyond what happened when and brothers of bear stearns. you now apparently have a futures merchant who got in trouble with their own proprietary bets and instead of facing the fact that they were underwater and insolvent decided to dip into customer funds as a way to try to cover them in the hopes that they come back now anyone who's traded for a length of time as probably made this mistake where you get stuck in a pad position and you add to it because you're sure it's going to turn in everything's going to be ok well anyone who's done that for any significant length of time knows what happens you go pro it appears that that's exactly what happened here with an m.f. global seems to have gone even further and said you know we'll just kind of rate the piggy bank over here that isn't ours and keep the game going for a while that's that's acutely troubling thing because if you have any kind of money on deposit with appropriate you have to wonder whether or not this is happening somewhere else right now my understanding is that the p. morgan

assets if you took the intermediate sector and just mark them to market and the mortgages that got bear stearns out says if you mark this stuff to market you know we don't know for sure if they're nontransparent for there's a good chance that the losses would be greater than sixty billion dollars which would wipe out their capital. so let me break this down a little bit more for you because you are correct restorer eighty five that the fed can print as much money as it likes as we know but is jim rickards points out the fed can only expand its balance sheet by so much before it loses control of monetary policy and its ability to keep a lid on inflation now as of december first the fed's balance sheet was it two point eight trillion dollars now when record says that it is insolvent he's basically applying the type of metrics that you would when assessing the health of a private bank by saying that if the fed was forced to write down the value of its assets according to what they're actually worth that the losses on those holdings would more than wipe out the roughly sixty billion dollars in capi

money market funds and investment banks that we've seen take a toll and bring down banks like bear stearns and lehman brothers now why is a bank run a problem so the big question right because banks by their very nature never have the money on deposit to meet all of their outstanding claims and liabilities that's how fractional reserve lending works you lend out more money than you have so if everyone comes to get their money at once or even a small fraction of people come to get their money all it was the banks suddenly becomes functionally insolvent very quickly and that is why a bank run is so detrimental. still out here on capital count do not go away in the market for a house if so we have the deal for you ok so maybe the white house isn't for sale but will tell you why you could be interested if it was and first your closing market numbers. into only a military making it seems to do the work to bring justice or accountability. i have every right to know what my government should do if you want to know why i pay taxes. well i would characterize obama as a charismatic version of americ

if you took the intermediate sector and just mark them to market and the mortgages they've got bear stearns out says if you mark this stuff to marc. you know we don't know for sure if they're nontransparent but there's a good chance that the losses would be greater than sixty billion dollars which would wipe out their capital now they're not going to say that they're not going to put on the balance sheet but that if you march at the market i think that's the result you would get really interesting now you say that this latest dollars swap announcement is not a big deal in and of itself it is more of a continuation in the perception but what exactly does this do to the dollar in the short term doesn't it put pressure on the dollar isn't it bearish on the dollar well it's sort of a conundrum is very good question are because what the fed the treasury want is a cheap dollar that's the the key to the currency wars who've been trying to cheapen our currency against all the other currencies and yet as much as we want to strong euro the euro still gets in distress so here this is sort of a pretty

this is one of the things that we saw in two thousand and seven and two thousand and eight when bear stearns went down it was bad enough but then lehmann confirm that there wasn't just one cockroach and you saw this you know what's at risk or what's really going on is everyone saying i'm not loaning any money we're dealing on a cherished basis or not at all and that's when you see all the risky assets anything that has leverage abetted in it just collapses in christ and one of the cusp of it happening again the problem at this point is that the european banks are libert up turbot they have very little capital i mean their positions in a lot of what they are carrying in a lever position is sovereign debt so the risk is extremely high if for example italy or greece actually defaults greece may be small enough to do its disruption but does it destroy things if italy blows up or some other country it's an entirely different thing right and just going back into what you were saying about the leveraging like we saw in two thousand and eight do you think that we're seeing that going to be now more

right, people these days do not look further than 2008 the united states with lehman brothers and bear stearnsnd now look at bang of america, problems in their stock people know from what they have heard they cannot believe it. and history is telling them. so there is not a lot of turn around and confidence. what has to happen on the front as you said, people have to realize the governments will come to the rescue the equivalent of the fdic in europe will come and make sure people do not lose a dime. >>neil: but that means that too-big-to-fail doesn't mean you still can't be too-big-to-fail? i cannot envision you and i have done this before, that if we had a redo of what happened in 2008, even though dodd-frank says we would not rescue another money centered bank, if bank of america or citigroup or wells fargo were in trouble we would not try to rescue them because so much is on the line, right? >>guest: there is a lot on the line and that is why i have a problem with the too-big-to-fail resolution because i'm with you, they are going to come to the rescue because the other choice is just too

customer money -- even when bear stearns implodeed and lehman brothers implodeed, customer money is segregatedanything but to give back to brokerage customers. they were a brokerage firm and handling orders for the customers and pro priortary trading shop. that is where jon corzine was taking the risk and got in trouble. the customer money was used for the operational stuff. when you pay off the customer, the customer gets to keep it. it's not like a bernie madoff scam where it's ill-gotten gains. it's real money given. those people are owed that money, the bankruptcy trustee cannot claw it back. it's likely that that money is gone for good. how much money is gone for good? we don't know an exact figure. the bankruptcies trust $1.2 million. i think the trustee will have a more accurate estimate in the next couple of days. i believe they are testifying. >> neil: what about corzine? will he say anything? >> he is clearly given testimony. he will go there and read a statement. but does he say anything when he is under oath, being questioned by the guys? you know, harvey pitt told our people, form

apparently was at play here was the kind of level that existed obtained during the lehman years and bear-stearnshere they are leveraged 40 to 1 on money. he says they in fact reduced the leverage that they had in play. we'll find out more about that when he is actually called to the witness table in a few minutes. but there was a big bet on european debt and what gets these guys in trouble time and again, katty, is the idea that they know better than the market. and mr. corzine presumably because he had been a u.s. senator, a governor of a major american state, felt that he had some insight into the ability of these european sovereign debt issuers to make good on debts that others didn't have. i think maybe maybe his background as a master trader from his days at goldman sachs that led him to extend mf global the way he did. >> thank you for joining us on this segment, we appreciate it. i want to pivot back to the other high profile testimony happening today, eric holder who will talk about operation fast and furious which is a gun running operation happening on the u.s./mexico border. we have n

in the elites is they're working for somebody, and they say, don't worry, your job is secure at bear stearnsthey hear their elected official saying, oh, don't worry, we're going to vote this way and then they change the vote. how important is transparency to really show people that you're sincere and build that trust? >> one of the things that is critical to trust is communication. trust is about a relationship. cuff a good relationship without communication, right? and you talk transparency. i trust someone. i offer my trust to someone who's going to tell me the bad news that i'm going to hear, right? which is transparency. is going to tell me the full story. you talked about the finance crisis. many of these firms, as they were declining, their ceos and cfos were looking at how wonderful the balance sheet looked, not transparent. that's what we call deception. >> but it's the same with politics. you've got politician who is say, you know what, as the baby boomers age, taxes will have to go up. because they feel almost professionally obliged to lie, because they think they're not going to g

institutions involved in the housing, in the mortgage markets, including ones that went under-- bear stearns, lehman brothers-- to varying degrees, many other institutions that were helped by the government. what is your sense of why the s.e.c. chose to go after fannie and freddie first or rather than the other private sector institutions? >> i suspect part of what may be behind this is in fact the government controls fannie and freddie now. their regulator runs and operates them. so when the s.e.c. reachans agreement with the company, it's like the government negotiating with itself on these particular cases. and it might have made it easier to do some of these filings from that perspective. on the other hand, it does raise the question of when you had similar situations at the private sector, large institutions, the dib banks that required the bailouts and all, just as fannie and freddie did, why hasn't the s.e.c. brought the same type of cases at those. for example, we know that those executives were telling investors things were okay at the same time that we now know the fed was lending

i want to make a point, we are coming out of an absolute and into catastrophe where bear stearns andbrothers went down and the terrible bailout that was necessary and to rescue huge banks. we are a little sensitive about what it means when a bank goes down, but we need remember a it is not the government's job to prevent businesses from sailing. businessmen will make very bad decisions, as i am sure jon corzine will tell you he did in certain instances. a healthy market economy means we will see banks and fed funds and retailers and pizza parlors failed. that is part of the creative destruction of a capitalist system. we have an interest in making sure people who lose their jobs have the training to get jobs elsewhere, the economy is moving so they can find jobs. we should not believe every time a business goes down, that indicates a faulty system. host: 1:00 today the house financial services subcommittee has been hearing on mf global and its investigation. that's on c-span3 and c- span.org. what is the top question you have for jon corzine? guest: i want to ask him what he knows ab

. >> at the same time, if you were in the shoes of a new york fed and you have been through bear stearns leverage of 30 to one, if you'd been through layman and arguably the leverage here if your firm 40 to one, i guess i am asking, do you think you have special treatment because of your connection in terms of this decision, to get this visit nation to mf global given some of the concerns out in the financial press about the dictation? >> congressmen, i don't believe we got special treatment. we never asked for special treatment. >> let me ask you about cftc. as you know mr. gives there has recused himself because of your past relationship. do you believe mf global specifically in the segregation of customer funds, to think those properly overseen by the cftc and you believe your firm might have been given special treatment because of your connection to mr. kinsler who is now recused himself. >> i do not believe we were given special treatment. i need to understand as i've communicated to the committee that when we know what the issues that cause this element, then i think you can make b

lehman brothers, gene kane at bear stearns, et cetera. can you tell which is a little bit about, both of you about what your impression of what ken lay was thinking and how he was doing this at this time. >> i worked closely with both ken lay and jeff skilling, and ken was kind of the father figure of the company. everyone loved them. he was very well respected. he had a tremendous civic identity. he was very philanthropic. and from a distance, jeff was the traitor mentality. but as you got to know both of them, people tend to like geoff moore and ken lester q. is very concerned with how things look. there were rumors that he at one point had been out for a cabinet position in the white house. he was very politically connected. and at one point he tried to get the government to step in and bail out the company. >> he was just 10 years too early. [laughter] >> on a lot of things. >> ten years early and alone. it helps when have the entire wall street coming and saying i don't think the bush ministration could have saved them, but number tw

wall street that resulted in all of the for example and america having to bail out the likes of bear stearns and bank of america and a whole bunch of others. and they said, look, a mortgage document can be very complicated and we just want to have a bureau that will try to make these things simpler, a bureau that will say what the interest rate is going to be and the terms, so we can have transparency. the real free marketters around here wouldn't be against more information and better information going to the consumer. adam smith, the one who wrote -- oh, my goodness, but the one in which he describes the invince i believe -- invisible hand, he said in that book that consumer information is key to a good market operating. i don't know why people wouldn't want a good market to operate. republicans in the senate, can't blame the house members this time, like to claim that the new consumer financial protection agency would be reformed before it gets a new director and said they won't allow to have a director until they change it. we had a vote and they are trying to wreck it before it gets up

essentially a combination of the election cycle in 2007-2008, and then the financial crisis really with bear stearns, just sparked my interest in these ideas in economics. i was very inspired by the ron paul campaign in dillinger he was talking about, how many people talk about monetary policy in a political setting other than him. nobody. now it is it the fact that it happened. the fact that you had this lone voice talking about the role of money and monetary policy in the economy followed by the crash and this sudden, when we had been bernanke pure for the first time in 90 years to give a press conference and that struck me as there's a story here that isn't being told as a media person, as a creative person, i think i have the tools to to live in a different way and so that is why i reached out to russ. c-span: musette econ talk is the leading you got to know that he existed. what is econ talk? >> guest: is a weekly podcast where interview economists, authors, the woman who cut my wife's hair, the guy who sold me my car or nobel prize winners. it's an hour-long conversation on economic issues of

fascinating historical all kinds and and at nomi prins left the lucrative career at goldman sachs and bear stearns it to great three nonfiction books exposing fraud and deception from wall street to washington. her first novel, a betrayal is a thriller set in the corrupt banking world. also of senior fellow at dmos and a commentator on pbs, fox, msnbc.com is cnbc, cnn and other media outlets. match is a contributing editor "rolling stone" and writes about politics and finance. in one article the famously described goldman sachs as a great vampire squid wrapped around the face of humanity relentlessly jimmy its blood funnel into anything that smells like monday. [laughter] [applause] he has authored five books many of which we have here including "the new york times" best seller in recently became a contributor for the countdown with keith overmanned. rich is the end -- author end -- author -- . [applause] which was the winner of good 2009 editor's choice award for herb book list with the american library association. he regularly appears including npr, msnbc.com c-span's, "usa today" and is a cont