got a waiver of that ironically it was called the bear stearns waiver bear stearns lehman merrill morgan and goldman the only ones somehow exempted from that law stop and think about what that means here's a lot applies to everybody except you five guys who happen to be the single biggest donors to congress and that by the way that waiver was granted by the security and exchange commission the bezel rules for depository reserves how much they have to hold what's fascinating about those is that they've been whittled away over time so the amount in reserve has come down fairly substantially which allows their leverage to go up so anything that gets in the way of profit regardless of risk there is a lobbying effort to try and reduce that it was very successful with the f.c.c. it's been somewhat successful with the federal reserve and the f.b.i. see and that's why there's so little capital in all these banks both in the u.s. and europe in fact the underlying cause of the entire global headache that we're still dealing with is. too little capital too much leverage all right. though the law is

isn't that also the case these off balance sheet entities are hiding huge debt first of all what lehmanbrothers did with one thought that's just fraud as this let's not mince words is not pussyfoot around with this they're a bunch of criminals some of those some should go to jail and unfortunately most of our prosecutorial staff are too busy chasing other nonsense but there's just no doubt in my mind that it folds and his c.f.o. should be wearing striped suits with numbers that is criminal you cannot hide one hundred billion dollars or fifty billion dollars at a time in spending and then put it back at the end of the quarter i don't know where the f.c.c. is i don't know where the u.s. attorney general is this it's laughable that's number one number two if you look at them the movement that's starting to pick up a little speed in the united states people have been moving their money away from the big banks to the small local community banks and what we found is that these small community banks they're much more solid they weren't involved with the riveted as they were involved with subpr

(laughter) politician jon corzine saw lehman brothers as a cautionary tale. financial firm honcho jon corzine saw it as a dare. (laughter) 30-1? pussies. (laughter) you know, no, it's not his fau fault. corzine just couldn't resist the sweet nectar of the private sector. (laughter) but i'm wondering, what did politician john corzine say about c.e.o.s who try and circumvent regulation again? >> there would have been pushback, but that's when strong regulation has to be in place. >> jon: and what did m.f. global head john corzine do vis-a-vis being regulated? well, when the financial regulatory agent told him he needed more capital to lower his leverage he went over their head and lobbied the s.e.c. to make the regulators go away. which apparently on wall street is an option. like when a cop asks you or know step out of our vehicle and we call the police commissioner and go "hey, get this jackass off my behind! i got places to go, that's why i was speeding!" (laughter) now, in case all of this is making you depressed, giving you the sense that wall street is a

the trustee involved in this is the same trustee the same lawyers that managed the bankruptcy of lehman brothers they themselves received one hundred sixty million dollars for handling the bankruptcy of lehman creditors got nothing so this capital management firm says if this bankruptcy is managed the same way as lehman's it will be the end of the united states as a viable jurisdiction for commodity trading congress should use whatever power it has to prevent this from happening so i'm going to cut right now to the next headline because he's pleading with the congress to help him out how members of congress get rich through honest graft so apparently insider trading is legal for congress and a new study out shows that how much congress. people have benefited including like john boehner reportedly invested in several health care stocks shortly before killing the public option and last year's legislation nancy pelosi has participated in eight i.p.o.'s including some involving companies that had business before her house giving a senator or congress person pretty i.p.o. shares in a company

comparisons are drawn to lehman brothers' fall in 2008.panies alone have a combined $2 billion loss. deutsche bank and jpmorgan. jpmorgan told reuters that their loss is only a small fraction of that number. that's one reason it may not have the effect that lehman did. they had several times more assets also when it went bankrupt than mf global but this is certainly the sharpest side yet that the threat of contagion from europe is very real, very powerful. >>> felicia taylor there. you're watching "world business today." as clouds gather once again over the economies of europe, they're bracing themselves for a bruising. we'll have that story next. if you've just signed up for medicare or will soon, there's no time like the present to consider all your health insurance options. does medicare alone meet your needs? would additional coverage be better for you? well, now is a good time to take a look at an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. get started by calling for your free information ki

tom lehman. now that putt for the win. blake, 8-under. wins by two strokes. and tom lehman wins the schwab cup and a million dollar annuity for his efforts, up at 6:00. stanford moves to number two in the coaches poll. >> still to come, new miss world was crowned tonight, and the big one wasn't a big surprise forçÑh >> alan: coming up in a half hour at 6:00, we have the latest on the pipeline break in san mateo county and what pg&e crews are doing to clean its up. angry americans. the growing dissatisfaction with the u.s. government and how it will affect the next election. join us at 6:00. >> before we go, there's a new miss world. >> alan: that's miss venezuela. she beat out miss philippines and miss puerto rico to take the crown in london. venezuela hat a bounty of beautiful women there because the crowning marks the south american nation's sixth miss world title. more than any other country. drink the water there. >> thank you so much for joining us at 7:00 for abc-7 news at 578. >> alan: thank you for joining captioned by closed captioning services inc.

that must -- on the other hand it's different, because when we had the lehman disaster, we didn't have the policies in place to save the stress. >> a quick flash of the markets. markets all over the world are down, down quite substantially. asiaa followed suit and european markets are following suit. they are simply worried about the debt crisis in the euro zone and many are saying it's on the press pus -- precipice. or it could be the periphery is on the precipice all eyes on spain. >> you're on the periphery now. >> i am. >> let's take a look at the impact of the euro zone crisis in feign. -- in spain. heavily among the young and indebted. not a great platform on which to run a platform. the conservative opposition, popular party which is tipped to win is promising a program of shock therapy. more from madrid. all the opinion polls ro predicting the next prime minister. quiet, cautious, uncharismatic but seen as the safest pair of hands for a country deep in economic crisis. the popular party's been platforming an broad platform of change. they insist the social government has been m

the truth is while we're still suffering the after affects of lehman crisis, the rescue happened. the rescue worked. financial markets were restored. i think the nightmare scenario we're looking at in europe, what happens if there is a disorderly collapse of the euro, euro currency. the really scary thing is, that was a currency designed kind of like a roach motel. you can go in but never a system designed for countries to go out. that was on purpose. the architects of the euro wanted it to be the first step towards closer political union. so they didn't create an escape clause. there's no way to get divorced. yet right now, the members of the strong countries that stephen referred to, france and especially germany, they have to decide now, are they willing to pay up. >> they might be interested in a divorce. let's bring this into perspective. i still hear it after all the reporting all of us have done on this, i still hear people say how is greece, the 32nd largest economy in the world and not been central to these kind of affairs in over 2,000 years, how is it that important and

>>en 0 lehman brothers, we just fold our tent and go away? >> you wind up with the direct impact, what you can see. the issue is the secondary and tertiary impacts that you can't see and if you lose confidence, i think what is starting to happen in greece and perhaps in italy. the confidence there, you basically have an issue and markets will finish you. all right. good seeing you, thanks for coming out. >> good to be with you. >> neil: when we come back, forget graffiti and smashed atm to new assaults on banks that could be far, far worse. and the head of the international monetary fund pleading for more cash. to the u.s. congresswoman who says not another dime. what mar smartphone's most powerful trading app ? total access - to everything. from idea to research to trade. including financials, indicators and real-time streaming quotes. whether you check your investments every day or every minute, our app can take them from thought to trade. at scottrade, seven-dollar trades are just the start. try our powerful mobile app. it's another reason

lehman brothers or closing down a bank. it is a country that remains there and a factor in all kinds of economic decisions in europe. and here in the u.s.. >> other count reese went through default and came back and survived. the problem with greece i think, that you have twen percent of the population that is working for the state. the state has been in the center of the political life literally for centuries . chuck is right it will not happen in 36 hours or happen in two years. we are looking at a problem that is not solvable it is not going to be fixed. the question is how do you prevent it from spreading to italy and spain and elsewhere. italy with a debt of two trillion. and the question is, can you wall it off and how as policy makers do you do it? >> what is president obama's goal. i have been to a lot of g-20 summits and not a lot happens there and a lot of the communicatication and talking about the next summit. but as far as big deals they don't come together in two days. what do you think of their expectation .

institution's barry bosworth says investors shouldn't face the same kind of risk they did after the lehman bankruptcy sparked a run on some money market funds. >> i think both the money market funds and the regulators are very aware of those sorts of risks. and i think they are very busy trying to make sure they don't have excessive exposure to europe. i cannot believe that our regulators are that bad, given such a recent experience with these kinds of problems. >> reporter: the dodd-frank financial reform law gives the u.s. treasury new tools to manage the pain if trouble in europe brings down a big u.s. bank. but tracking risks caused by derivatives and other complicated financial products remains a challenge. >> we still do not have a complete netting of derivative exposures, the plusses and the minuses on different sides of the bet. the united states has tried to move some of these on to organized exchanges. we have not been successful completely, and other countries have done less than we have. so, there are still a lot of unknown exposures out there. >> reporter: a european union eco

lehman collapsed in 2008. days after that, bank stepped in and tried to get liquidity going as well. this time, though, it's not here in the u.s. the problem is europe. and now there's a lot of talk that if there is not a recession in europe, they are headed to one. they could be headed to a shock and that's why we see these steps being free to cash. >> alison kosik, thanks. let's go to he had lavandera. in syracuse, the legendary head coach joe boeheim very critical of those not supporting bernie fine. >> reporter: initially in the first weekend after the accusations were made public, jim boeheim said that they were liars and wanting money. after the phone taped conversations had emerged, he struck a much different tone. he was pressed to extensively as to why -- what caused that change and he said, look, his initial reaction and protection of bernie fine was driven by a friendship of almost 50 years and a great deal of loyalty. that's what he said was driving it early on and clearly things have changed now.

to say that it is -- that -- to suggest that the financial crisis of 2008 was -- was lehman brothersault, as if lehman brothers invented $600 trillion worth of uncollateralrized credit default swaps. let me finish my point though. it's the same as saying that it's greece's fault that a bunch of western bankers and financial engineers, got together and rewrote the laws in america, rewrote the laws in western europe, created and distributed risk all over the earth, rob cox, when it doesn't work. it's rob cox's fault in greece. you built a global system that was designed to be very fragile and very profitable for the major banks. >> isn't,isn't that different than saying we're bramg greece, greece has it but like blaming the guy, possibly a mexican immigrant who was sold a bill of goods. look, you get this note, only costs you 3% to get your house down. we can make up, don't worry about it, sign here, sign here. all of a sudden the guy is finding he's got a mortgage payments that balloons. >> can't pay it. >> is it his fault we've created a structure that allows that, of course not. gre

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easing the funding crisis for european banks and averting a lehman-like situation. china also eased monetary policy. that's been very helpful. so, they're trying to contain the damage. it's a first step toward a larger package. >> ron, should americans consider this a loan or a bailout? >> neither. they should consider this a necessary action that keeps the global financial system from imploding the way it was possibly going to do in 2008-2009. it's not the confined of money you would consider a loan. this is highly technical stuff central banks do but they're flooding the world economy with money and they should view it as good news. >> it's a super surge for a wednesday, that's for sure. ron, thank you, sir, appreciate it. >>> herman cain is calling it a character assassination. his candidacy reeling from the latest allegations revealed by ginger white, that the two maintain an on and off affair for some 13 years. cain talked about sacrifices as he kicked off a bus tour in ohio today but what may be sacrificed is his presidential campaign. ginger white gave more d

lehman brothers was 5 to 1. bear stearns was 30 to 1. those are numbers that absolutely reflect the mind set of 2007, 2006, 20208, not the mind set of 2011. you really do have to wonder what was corzine thinking to create that much debt, that much leverage in an environment that is pretty risk-averse now. >> suarez: but before everything started to unravel in the last decade, there were people on wall street making very big fortunes with bets just like that one. weren't there? >> well, sure they were. there were also fortunes that were being lost the same way. think about long-term capital management a decade ago. so, yes, i mean, the whole point of the exercise is the more risk you take, the more reward you can gain. but by the opposite is if the risk turns out to be wrong, you can lose everything. that appears to be what happened in this case. >> suarez: joe notice suero of the "new york times," thanks for joining us, joe. >> thanks for having me, ray. >> woodruff: now, two takes on the struggle to find common ground on tough budget is

when i first read that transcript more than four years ago now and a full year and a half before lehman brothers collapsed, i was, frankly, perplexed. in fact, i could not place the conversation with any coherent framework because if what i was reading was right, in late 1976 the president was admitting that the u.s. banking system economy and the economies of its european allies was so fragile and so overextended that even a 15% increase in the price of oil could cause panic and bring down the banks and threaten stability of countries in central -- southern europe. so you can ask what did all this have to do with u.s. oil diplomacy with rapp and available what? -- iran and saudi arabia? that was the summit of my research -- subject of my research, after all. i had never heard of a banking scare in 1976 before and certainly had not expected to find one. there's no reference to the episode in the memoirs of former administration officials that i'm aware of. and histories from that period, apparently, make no reference to it, again that i'm aware of. so to try and put the context of the t