of lehman brothers. and said in the memo and this executive matthew lee was in charge he was executive in charge of lehman brothers global balance sheet so he was a very relevant high level person and he said in the memo. i feel that it is like ethical and legal obligation to bring to your attention the fact that there are billions of dollars of unjustified assets on lehmann brothers balance sheet now that seems to me a pretty clear indication that there's something inadequate with your financial controls. and and there's similarly equally explicit evidence about. many other examples including the executives of goldman sachs lying to customers. about the nature of the securities that they were being sold right and i thank you for getting some of those that concrete examples i do think that's helpful. and you got lots more helpful information from my charles ferguson interview after the break also still ahead wall street bankers may know the beta of a stock or portfolio but it seems they're also saying yo

safer today than at the time of the lehman brothers crisis? i would say not quite yet. >> christine lagarde said banks should be financing the economy and helping to stabilize it. she criticized banks that failed to reform following the lehman brothers collapse in to douse any. the imf had praised efforts to deal with the euro crisis but said the work is far from over. >> from the imf perspective, we believe that more needs to be done in order to really complete the architectural job of the eurozone. and monetary union, a banking union, followed by a fiscal union. >> christine lagarde warned that the imf believes the world economy will continue to weekend, it would cut its growth forecast in its upcoming global outlook. >> in the market here in europe ended the week on a sour note. investors are concerned about a slowdown in the united states after it posted weaker than

of bank brought in only two weeks before authorizing this transfer to lehman brothers and he called it an accidental transfer oh wow it sounds like the j.p. morgan situation where that two billion dollars was accidentally taken out of the m.f. global accounts hoops yes so again you know in the headline of build the biggest magazine in germany read germany's dumbest bank k f w again the bimbo route to the bimbo disguise you know i got this until i got this idea of maybe get americans to save more by creating the k.f.c. bank so they think it's going talking fried chicken and they go in there to gorge themselves on fried chicken or mashed potatoes you charge them five or ten percent put into a savings bank and so you know as i said willie sutton said he never robbed a bank when a woman screamed her baby cried so at least he had some integrity he there was a limit to who he wouldn't kill he wouldn't mean he wouldn't hurt a woman he wouldn't. heard of little baby but these bank robbers of today max they have no scruples like this they don't care they'll pull out a tommy gun to trading their

lehman was important in that context buzz lehman was just the leading edge of a huge storm that was going to put at peril and ultimately did a vast number of other institutions. >> rose: beyond agi, there was goldman sachs and morgan stanley. >> and wachovia failed after that. so you have to deal first with the ones that have the most risk and vulnerable but there was a much more wider and powerful storm. >> rose: the banks have made enough money to -- >> we forced them to raised $400 billion in capital so they would be stronger. >> rose: they rayed the capital. >> and make sure they pay back the taxpayer quickly and did that much quicker than had been thought we could do it and that's one reason the government earned $20 billion on the investments in the banks. >> rose: wow would do that again in a second? >> every country around the world when they look at the experience in that context. >> take bill clinton, bob reuben, larry somers, tim geithner, they are very different men, with different experiences, one academic, you government, bill clinton from politics, bob ruben from wall stree

we hadn't seen the loss of the lehman brothers and maybe that's what he's referring to. >> it's more important to arguably break up the banks because they're much more concentrated than they were. it's also not hugely surprising. you are seeing the diver intelligenvur intelligence where the retired guys say it's time to break up the banks. regulators are saying the same thing. the only ones not saying it, of course, existing ceos. >> there's talk of bringing back glass steeg el. you made a point of that might not have solved some of the issues we faced in '08. >> sure. wouldn't have solved arguably aig or solved citibank and mortgage problems they had and long-term capital management and no one heard of until it was a systemic risk, sue. >> it was a much, much smaller failure. >> i talk to guys on the street today who said this is like somebody took the ball away from sandy weill and then saying i don't want to play that game anymore. he doesn't want to play basketball because he doesn't get to shoot. this is what they're doing. there's a -- we built the monsters. break up morgan sta

company to jack up their rating on ddi which lehman was also handling the banking for the ipo and one of those kinds of deals. romney's name and signature are on those documents of selling bain shares in that. but he has also maintained i had nothing to do with that because that took place while i was gone even though his name is on it. and so on. and things can be conflict of interest issues and so forth could come up. and are likely to come up as this goes along. he'd like to draw this distinction now before those become issues. >> chris, i mean, clearly there's a reason for him to try and distance himself. but again, i repeat the reason it's important, we're talking about people's jobs. we're talking about a man that wants to be president of the united states when he's outsourcing. and talking about a man who has been dealing in the cayman islands and bermuda with his own money. he's the one that told us judge me by my business experience. he sent us to bain. we would have gladly asked him how as governor massachusetts came in last in job creation. but he guided us to bain. now we'

this is the lehman moment inamerica avoidable? >> i dot thk so. lehman itself, we had no authority to touch. >> rose: no matter what paulissen says. >> and chairman bernanke was a part of that process. >> rose: is there a consensus among you and bernanke and paulson, the three principal figures. >> without a willing buyer and you tried to find one and we got pretty close but not close enough. remember the world was burning at that stage so everybody was running for cover and trying to protect themselves and not come in and take a lot of risk. >> rose: because of the question of government and the role of government -- >> can i comment on that, it is an excellent question. lman was importa in th coext zz lehman was just the leading edge of a huge storm that was going to put at peril and ultimately did a vast number of other institutions. >> rose: beyond agi, there was goldman sachs and morgan stanley. >> and wachovia failed after that. so you have to deal first with the ones that have the most risk and vulnerable but there was a much more wider and

morgan had transferred one hundred thirty eight billion dollars into lehman's coffers so that lehmann could see oer do traits this hundred this hundred thirty eight billion the j.p. morgan advanced to two layman after lehman had collapsed in my view there's a direct line from that to j.p. morgan suddenly. having an injection of eight billion dollars worth of less than one year. swap derivatives added to their book in the first quarter of two thousand and nine i mean that this this is so this is so blatantly obvious to me what is occurred there i mean j.p. morgan was in the hole wanted to be in the market j.p. morgan didn't want the notoriety of being in the market so j.p. morgan pre-prepared the collateral that that lehmann was going to need to to to produce the trades that j.p. morgan needed to do and you know what and i should back off a little bit because when i talking about j.p. morgan j.p. morgan strapping on a trillion dollars worth of less than one year swaps isn't j.p. morgan to begin with because the orders are coming from the u.s. treasury specifically the exchange stabiliz

of course is where we have lehman brothers a i j bernie madoff m.f. global why is london such a crap regulator i think at the the right really set in a big bang in eighty six when he says that should government deregulated the financial sector and she demolished the silo like structures and the partnerships that used to exist within the city and in those days i'm not saying it was totally clean but it was less less easy for conflicts of interest and corruption to occur and the various key dates that as i said one thousand nine hundred two was a key day when there was the last ever criminal trial of high level bankers from the city of london which was the blue arrow trial three senior executives of a bank called that west was given suspended sentences for rigging a rights issue and one that one stop broker who helped them from u.b.s. phillips and drew was also given a suspended sentence for reading a rights issue now the trouble was this didn't go down particular well with the establishment so they they engineered. a court of appeal case in july ninety

>> the sale of the parts of lehman to barclay's and lehman bankruptcy, that portion of it which was a 363 sale which is what this was was done more quickly. >> and mr. feldman, you are familiar, in your experience, of any company independent going through a bankruptcy proceeding givinged 1 giving $1 billion to another company? >> certainly they honored a contract and made a decision to honor the contract based on a business judgment. >> how do you respond to that? >> well, first, i would say i have never seen a bankruptcy like this at all. i've taught bankruptcy for 15 years. i practiced bankruptcy. i've never seen a bankruptcy case in which secure creditors received 29 cents on the dollar and unsecured creditors received 44 cents on the dollar which is it what happened here. again, some of the secured creditors were other retirees, the indiana policemen and teachers and retirement union. i've never seen under the guise of a 363 sale which amounted to effectively a plan of selling the company and dictating how the assets are going to be distributed. we also saw in this case was an auc

>> well, i think that everybody is on the edge of their seats and they're waiting for a lehman brothersoment. i mean, it's truly across countries, it's across industries, it's amazing. >> so the companies you're dealing with are specifically not hiring because they're worried about another lehman kind of moment? >> absolutely. absolutely. the ceos i've met with just here in europe over the past three weeks, it's amazing the stories. energy companies. everybody's operating from the same playbook, you know, uncertainty is certainty. and we've got to break through this. >> what is the lead, what is in their mind, the lehman moment that they're waiting for? what is it? >> you've got a transition in china. they've now cut rates, which is good, but that's going to take about a year to work through the global economy. you've got a potential leadership change in the united states. you've got a fiscal cliff in the united states. then of course, you've got here where everybody's kicking the can forward, which will probably happen in the united states as well with the fiscal cliff. >> so, actually

bailouts are a choice. >> we ran the experiment i think when we let lehman brothers go. >> did it workd it worsen things, gentleman, thank you so much. appreciate your time, see you soon. be sure to watch "closing bell" tomorrow. ly be talking to barney frank. earlier we asked if you agreed with sandy weill's kaulg to break up the big banks, here are some of the things you said. tom said he is spot on. dump doth frank and refort g glass steagall. but alex says the glass stegall act is old news. keep sending your comments in and we'll get them on the air. you can also voice your opinion on this topic by voting in the yahoo finance poll. shares of zynga plunging right now. >>> the shares falling off a cliff, now down about 35% after the light earnings. another key point here dragging down in addition to the lower outlook. the amount of money that the daily active users are spending decreased. so people are spending less money to play zynga games. they're dragging down facebook, shares also trading down about 7% there. maria back over to you. >> breaking news from john harwood in washingt

. >> what we had three years ago, for example, with the failure of lehman's. in financial terms, that was much bigger. three years down the line, these are the scandals. it gives a clearly public opinion against bankers. investors will start shying away again. all this uncertainty surrounding them. >> he is talking about banking in general. devon questioned by politicians today. it does raise the question about what they have been doing for all of these years. >> absolutely. it highlights that. it highlights criticism because they failed to properly monitor hsbc. this whole global picture, the question is, where were all of these regulators? today, at the treasury committee, here in britain, we have this 0 libor, inter-bank lending scandal going on. number 1 and number 2 of the bank here. the bank of england, and dexter, takes on further regulatory powers. one of the other questions i had to ask was, at the end of the day, who is responsible for this? is it the bank itself or the regulators? >> everybody is partially guilty for this. the truth is that all part

lehman brothers filed for bankruptcy.the worst financial crisis in modern times, and perhaps the end of an era in american... >> in 2008, when the music stopped, in the fall, they pull chairs short.s, they're several >> narrator: the county suddenly owed hundreds of millions of dollars in fees and penalties to its debt holders, including j.p. morgan. >> when the derivatives and the variable rates shot up, we knew we could not sustain the debt that we had amassed. and so we just put off the fact that we were in bankruptcy, just like an alcoholic who never admits that they're alcoholic. >> narrator: and there was more. it turns out lecroy had paid money to langford's friend bill blount. according to federal prosecutors, the money was for bribes... $3 million from j.p. morgan to blount, who in turn passed money and gifts to langford. >> i can't say that j.p. morgan paid bribes. certainly didn't pay any bribes to... to larry. now, what j.p. morgan did is they paid some benefits to bill blount. is it bribery, is it undue influ

we haven't had the kind of lehman moment yet.e haven't had the cataclysm, although it's a possibility. i think the europeans will pull back from the precipice. there was another summit two weeks ago. i call it the "save our summer holiday summit." they're just about doing it -- >> getting through. >> i think it's a dangerous strategy. >> i basically am sympathetic to the view that it's not going to blow up. i'm dying to take this contrary position -- i can't quite take it yet. but i'm watching spain. now, i thought this business about raising the spanish vet from 18% to 21% was the typical austerity mistake that the europeans make. imagine anything dumber than that. >> explain, a national sales tax >> these people have so much unemployment now, we're cutting into their income by jacking up the sales tax which applies to everybody. by the way, a regressive tax. they ought to have a flat tax like the eastern europeans. but having said that, i am interested to see if they're going to let the spanish savings and loan banks, i call th

the shearson lehman investment brothers guy made the comment as he chewed a cigar in his black range rover outside a romney fund-raiser expected to generate $3 million. cigar chomping? this has to be satire. look at the photos from this thing. look. look at the caption on. a southampton police officer directs a rolls rosie arnts the protests are around the estate of david koch. actual rolls royce. an actually porsche. an actual i think second in line is that a bentley? maybe it's another rolls-royce. it's definitely behind an actual bmw. all of the coverage was from just outside these three hamptons fund-raisers because there was no press allowed inside. two cnn reporters did report overhearing what mitt romney told his cartoonishly affluent and callus hamptons audience. he said "by the way, he said the, you guys are doing fine. if you're here, by and large, you're doing just fine." see, people paying $25,000 to go to this event by and large mitt romney thinks they're all doing okay. presumably some of them are really struggling. by and large, the people at the $25,000 a plate fund r

with the lehman brothers bankruptcy. at the time, rapid action was called for.here was little time for talk. a first bailout package managed to stem contagion. now, european leaders have agreed on the european stability mechanism to allow struggling countries easier access to funds, but it will require those countries to yield some of their independence. >> if a state is heavily indebted, there are two alternatives -- bankruptcy or bailout assistance that comes with strict conditions attached. and restrictions on their national budgetary autonomy. at that moment, the state is no longer free. where is the autonomy if the only alternative is bankruptcy? than four years of crisis and only now are eurozone countries turning their backs on local solutions in favor of a european solution combining the ecb as banking watchdog, the fiscal package, and the esm bailout package. even economists admit a dialogue >> i can well understand that citizens and national parliamentarians say they feel ignored. we are facing a completely new situations. there are not any textbook so