about enron, we have lost sight of what a big deal enron was at the time. and also what a canary in the coal mine it was, because what happened after was the iraq war and then the financial crisis, which sort of erased our memory of it. >> no criminal really indictments and here's the problem, the government had such big receivables from these banks they didn't want to stir the pot and start criminal investigations of these very people. >> let's talk about whether we haven't learned any lessons, we have enron in 2002, 2003. what lesson aren't we learning? let's talk about that after the break. [ male announcer ] when a major hospital wanted to provide better employee benefits while balancing the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ] deserve the most rewards! awesome!!! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or

that is the story of enron corporation. enron received $3.7 billion in subsidies during the 1990s from many federal programs. that induced them to invest in all kinds of hairbrained foreign investment project, such as a power plant in india. enron would not have done all the risky foreign investing it did without all the foreign subsidies and all those foreign investment projects that enron took part in came crashing down and helped pull down the company. subsidies induce bad decision making by businesses and corporate welfare generates corruption in my view, federal business subsidies have always generated corruption and go all the way back to the first transcontinental railroad in the united states. that generated a huge subsidy scandal in the 1870s. more recently go to ronald reagan department of housing and urban development. it overflowed with corruption as the secretary sam pierce at the time handed out business subsidies to his friends and republican party donors. go the 1990s, i believe president clinton's commerce

this was hotly debated at the ada, rejected these rules until enron as arnie points out and then they changed the rules. all around the country, except for california. but so it's a good question. the whole question of when do you step out of your role of being a lawyer and a confidante, understanding secrets and knowing crime is happening and it will continue, can you just sit back or do you have to act? and if you sit back, do you become a criminal? it's a big question forrure profession. >> that's a good intro to laurel, because you have raised a question about the line between representing your client and the responsibilities you have to your client and laurel's point as she will i think explain, when you have an obligation to third parties, to the public. >> i'll cast the net a little wider, because i've been looking at the disciplinary action that was taken against lawyers as a result of their involvement in watergate in 1976, the national organization of bar council put out a report. they put together a committee in 1973 to track what was happening around the country in discipl

>> sure. >> i think that the reason there was such a debate within the aba and especially after enron that they did finally adopt these rules allowing lawyers to report out is because i think that the public looks at us, lawyers, as not just playing the advocate role. i think they look at us as having a public hat, and trying to take care of the public good. now, i come from a family of lawyers, small town in ohio. my dad was a lawyer. my grandfather was a lawyer. when something like this came up in a small town, i don't think they -- they work things out to the public good. not so sure they worried as much about client confidences as we do today, but the point is i think the public looks at lawyers, and they believe that lawyers are playing a role that is a public role and not just an i represent the client, to heck with all you, and i think that is our job too. i do think that there are points where we need to exercise our judgment and we need to force clients to do the right things so that crimes don't happen. especially economic crimes which is what a lot of what the aba was about

. >> when enron went under, the guys at enron were the biggest jerks on the planet. they hated everyone, they ran people over. when enron went belly up, i tried to buy the crooked e. i wanted to buy the sign and put it on my front lawn. >> what happened? >> someone bought it. >> put it on ebay. >> mitt romney made an allegations yesterday that was absolutely obscene. he said it was crony capitalism and obama's will profit from this. and he cannot prove it and he's wrong. why were you 47th in the country in job creation, and he ducked it. >> first of all, he inherited that from his predecessors. >> we inherited from bush, so there you go. >> so your point about dax cuts and the stimulus bill, part of the problem is whether or not i said before, they are not -- there's no certainty, there's no permanence. so a one time tax cut is not a growing strong economy make, that's been proven, and now romney's challenge is to say how he would make it different. and andrea and kim had a right as well. you cannot just run against somebody. you have to be for something. and what is

we remember enron when it went bankrupt and how those companies left their employees and their pensions. and the virtue of social security, the reason why i think it's so important, you mention how we should be acting now to resolve any longer-term issues for social security is we don't want to get to the point where you compare social security to enron or circuit city. and fortunately, we still have some funds that keep us, even if congress can't get its act together, keep social security system going smoothly for the next 20-some odd years. even after that, it would be paying out 75% of benefits. but i don't think anyone today is paying into social security to get 75% of what today's beneficiaries are getting. i hope what you all continue to do is give us the recommendations that you feel help us move towards something sooner than later. i think most people are getting to the point of agreeing that it's pretty simple math. as you mentioned, you can go to the benefits side. you can go to the revenue side and you can figure out a way to get yourself an actuarial balance for the next 75

when you think enron you also think the accounting firm anderson there was very much wow and up and that you don't hear about the accounting firms anymore really or the auditing firms so somewhat i think the accounting firms have got very very good neutral and playing switzerland. helping with these investigations they're probably working in the background talking to both congressional investigators law enforcement and other investigators but they've done a good job. everyone it's management that affects these frauds of the fact. that they're just there to sort of report what we have a smith tells them if they end up getting duped well. there's not much that they can do about that we didn't know the same thing that everybody says so as far as what management does say let's look at the example of jamie dimon and j.p. morgan we'll see jamie dimon on the hill next week this week they just talked about it with the regulators but he called this the london whale trade and we even heard regulators today say it's too soon preliminary to judge whether or not this would have violated the volc

i sort of think about enron that way. there was a lot of, you know, where were the lawyers? it wasn't that they had engaged, you know, in misconduct that we could name the way we can on watergate, but did they think about all these people who were going to lose their retirement funds and the $70 billion of lost wealth and, you know, that's what a lot of the writing about that event is were they asleep at the helm even though they didn't, you know, counsel their clients to break the law necessarily? >> i think that's a very good place for us to maybe go to one last question amongst ourselves. >> can i just comment on -- >> let me just say what i want to do, because we're running out of time, and i want to make sure we have time for audience participation, audience questions, so i'll let you give a twitter length answer. >> well, there is one part of the watergate trial that hasn't gotten much attention, and it just fits in very much like this, and this was a statement by james neil, who was the main prosecutor. mr. mardian's lawyer, david bress, who had been the u.s. attorney

we've had accounting scandals, enron, worldcom, et cetera. booms and busts, currency crises, bank failures. it's really just been an amazing 14 years. and i've had a ring-side seat for all of it. nevertheless, i did feel that the material that was thrown at me and other financial journalists in the years leading up to the crisis and the aftermath made all the previous crieses seem like child's play. so now i feel like i'm almost an archeologist at an historic site still digging, uncovering shocking and really overwhelming evidence of deeply unethical activity that flourished during the mortgage mania. simply put, the amount of lying and cheating that went on during the years leading up to the crisis is almost unimaginable. i'm not sure that we even know all of it yet. first of course we had leners who made loans to borrowers who could not repay them. the loans carried enormous fees and profits to the lenders who then sold them to wall street. then the executives did their part by putting toxic loans into mortgage securities that were sold to

is that no we'll help you but you have to change the nationality had mostly changed it to a french enron but then later they wanted to go to they went to france to actually shoot the picture. and the prince said well you want some of our stuff will help you but you've got to switch the the admiral to something else so the actually in the film it's a canadian hollywood filmmakers were just given access to classified information concerning the bin laden s.s. nation what do you think of well when i was interviewing the for the book the producers of the films they would always say oh no we didn't give any trade off the only way you can really tell is by seeing the notes the producers and the exchange of course by the stream the the military and the producers i haven't seen those notes and i think anybody seeing those notes i don't know if there's been a trade off or there was no trade off i don't have a problem that the government wants to just release information to people and there's no quid pro quo there's no deal i think that's fine but is it's the problem is when there's a deal made beh

morgan stock prices going the same way at enron zero same thing going to bank society generally in france one of the worst banks in the world that's stocks going to zero one of the worst managed banks in the world b.n.p. here in france insolvent stocks going to zero so this is continuing as we've been predicting for months the so-called bounce of two thousand now and two thousand and nine was really just a sugar high brought about by some cash that was injected in some algorithmic trading some high frequency trading again totally fraudulent there was no backing behind it economically now we're back to the primary trend banking collapse sovereign collapse currency collapse gold and silver skyrocketing prices the saying it britain look after the pennies the pounds look after themselves seems that some countries are really desperate this stage there's a report in the telegraph newspaper italy's even plan to sell its red mounted sheep at auction. well that's a great for those who are buying these assets for pennies on the dollar when i was in athens last time i talked to steve forbes another

social mobility up to the presidency for and from which there you can become the smartest guy in the enron room or the smartest guy in the goldman sachs room where the smartest guy in the next fraudulent scheme that is devised now we turn to the eurozone which we see melting down some elite guys came up with an idea to you know create a currency union and the question is whether they have failed or not or was this the plan either court to hear e.c.b. greeks swap file suit as euro threat and so this was on thursday before the election this is bloomberg news and they're suing the e.c.b. to find out to get information about the greek swap deals with goldman sachs a court will hear a lawsuit seeking disclosure of european central bank file. that may show how greece used derivatives to hide its borrowings helping to spark a crisis that threatens the region's currency union the e.c.b. in its defense is arguing that they should have discretion to decide what is in the public interest and releasing the papers could damage the e.c.b. counter parties hurt markets and undermine e.u. policy but what l

billion dollars in nominal losses and the company is insolvent and there's going to go the way of enron and zero ok so where are they going to go looking for paying off those losses so exactly where they go to pay off the losses the the u.s. government assumes the bank is a part of a bailout and then they're going to impose austerity measures and by the way probably before j.p. morgan goes bankrupt morgan stanley will go bankrupt just free traders out there and so of course they also nickel and dime and steal from their clients they stole from m.f. global clients they still from municipal counties across america they were caught big rigging here we see j.p. morgan charge students ten point two five percent on loans j.p. morgan chase charges merola tovar as much as ten point two five percent annual interest on student loans a rate as high as a credit card unlike the federal student loan program which lets the consumers borrow a fixed rates directly from the government these loans from at least thirty banks and other private lenders feature mostly variable rates that could be more than tw

phil gramm commodities futures modernization act which he did because his wife was on the board of enron and you know this is what ken lay want he want to be able to gamble in energy futures but the fact that they could merge a gambling bank and investment bank with a commercial bank that would have been prevented and what that means is that when this thing crashed when these guys brought down the world had they been separated we could have just said ok guys go bankrupt doesn't matter to us because you've got nobody's passbook savings but this is this is the problem with having people like spencer baucus as the chairman of this committee i mean he's you're exactly right when he said that this is second biggest donor i mean this is there are republicans in the house there are republicans out there there are conservatives out there that are actually concerned about the size of banks they say banks are too big spencer baucus is not one of them so this is a problem that republicans need to deal with because the realities are exactly what you said that famously ronald reagan in eighty two ste

the enron corporation debacle to me was just outright fraud. that is always illegal. so i don't think regulation's going to solve our problems. >> this is a change of topic. people are paying most of their taxes to the federal government rather than to state or local governments. do you think that's the right balance? should we shift in the long-term toward more taxes going to local governments rather than federal governments? >> you know, for a century now there's been this huge pressure of centralization in united states which i think is really problematic. if you look at total government spending in the united states oot it's 70% federal and 30% state and local which is rather astounding. it should be the other way around, in my view. the federal government should have some basic functions that we all agree with and we ought to leave a lot of stuff like infrastructure and education to the state and local governments. again, i believe in the laboratories of democracy. i think when state and local governments fund their own programs, have control over their own progr

the book when i when i look at the steroids scandal in baseball as a kind of microcosm connected to enron and wall street you know the steroids scandal baseball you know baseball is kind of perfect meritocracy in a certain sense the aging slugger if you can of the fastball he gets benched the young dominican kid who's nineteen years old throws a hundred miles an hour he's going to he's going to be able to start huge rewards for success ten million dollar contracts and punishment for failure you get benched and sent down to the minors and what we see when we look at the steroids scandal in baseball is that it is difficult to very difficult to design a system with huge rewards for performance that is it also a system with huge rewards for cheating the line between those two is a very fine one and so when we create a system like for instance the way we're changing our educational system where we're going to do merit pay for teachers when we create huge wall street bonuses where we change the tax code to create big reward rewards for performance income you're also creating more rewards for ch

take steps to elect a new prime minister a staunch opponent of good lining is a pakistani politician enron can he's a guest on julian assange to show here on our t.v. we talk to the whistleblower about america's war on terror and how the pakistani government betrayed its own people with some of been lost in the street by the nice and. deep wall oh i would treat you in the cia and i.s.i. about twenty years back i know suddenly comes my new liver and you do one of the other is a go through which is a i don't know most of the photos of people fighting the murder goes and then oh and i did not trust us and actually. kill someone on our own solo to do it so shoot for. you know never has it going to this ruling elite. force of benefits never had been treated as much as this kind of a show and that currently. when we have that done does this mean just number of people who have disappeared. on suspicion of the others they were biased on these people from biased and soil and over to the americans. all of this is mission. board some jurors. are going to. be a big moment. this is the bullshit we don'

was a column, about the bucket shop employment act protecting investors so soon after worldcom and enron? >> bucket shop is the name for the institution comment in the late 19th century. it disappeared. it is where you would have the glass of whiskey with the painting of the new girl and bet on the stock prices. you smoke a cigar then you lost everything. [laughter] it may be the boiler room employment act. >> that is different. that came with a telephone. when they got long-distance in the 1920's. the cheapest real-estate was the basement of the building, the boiler room and e make phone calls to investors and pretend they are calling from a glamorous wall street office. i have a hot new stock that will take off. that is the boiler room. it is abuses. both of the used less informed people who did not understand. they were regulated out. we have to be aware of that. fed is why this controversial idea. that it is in the act. it does have restrictions. it cannot be unman go to the family fortune then he loses the whole thing. it cannot have been added is no more than 2 percent of your inco

the amazing rise and scandalous fall of enron. bethny, good to have you.his company back when the news really first surfaced about the involvement in these various funds. what did you make of the board's action? do you think they're responding appropriately or just rolling over? >> well, i think people are surprised by how quickly they rolled over and the question is how you interpret that. and some of the people i've talked to have interpreted that as really a sign of desperation. >> it's easy to see the story as a larger than life ceo. it's also a financial story and one that i think has really large implications for our economy. >> when you talk about desperation, desperation for what? to sell some of these ads more efficiently? to get the stock up? >> desperation in financial terms. this is a company that has out spent its cash flow in 19 of the last 21 years. its plans this year are to spend some $9.6 billion. this is a company that needs money. so it needs its credibility. it's not just to make the stock price go up. >> then we had the report in the