morgan. hedge they call ahead to avoid compliance with the law yeah but the important thing here max is this is collateral damage the federal reserve has been quantitative easing the printing money dropping stuff out of helicopters perhaps one of these helicopters that are both flying over us here they're dropping money all over the place and the reason they're doing is because the likes of j.p. morgan itself destroyed the financial system and now because of this quantitative easing it's actually trapped j.p. morgan in this position that ultimately will destroy it so it was the banks time to go this is collateral damage the connection between the fed and j.p. morgan member their share ninety trillion dollars derivatives balanchine if that connection is busted then both morgan and the fed go bankrupt and the big question of the day is. once it becomes clear that the rats are fleeing the sinking ship of their morgan jamie reach into barack obama's account barrack's got over a million dollars wi

morgan why can't they attack morgan to take that stock down to zero you know it could be a desk at citibank you know that there could be an institutional or a group that says. you know we're going to make a quick buck against that j.p. morgan stock which has been down ten percent after the announcement of this two billion dollar and counting loss and whatever else marks behind that but against a very position which will make the unwinding their position just create a bigger loss for j.p. morgan the whole thing goes down and down confidence so rose etc. it could be a bank it could be a hedge fund and it could happen it's very possible. there's so much fraud in all of this and you know jamie diamond made no mention of these problems in his quarterly shareholder conference obviously he omitted some key information which is a is a crime through a mission the options market was quite active on that news obviously some insider trading going on as well there have been buying back their own stock. so talk a little bit about that phase of this multifaceted fraud yeah well in april there was a announ

morgan has hired a former s.e.c. enforcement chief to assist the firm and probes of its loss on credit derivatives trading according to reports how fitting this just all is one insists he was big circle to talk more about it william k. black is here he's associate professor of economics and law at the university of missouri kansas city and it's really so great to talk to you because you are the expert on all of these regulatory issues which just never seem to make sense when we have something like a hearing on the hill today first of all thanks so much for being on the show. thank you ok so professor black today we hear on the hill the f.c.c. and a c f t c top officials saying hey we learned about this j.p. morgan trade from press reports and then as far as the main regulator of the banks or one of them the o.c.c. they at first officials were coming out saying this trade would have been allowed under the volcker rule then a week later according to reports they disowned the opposition and said hey more information com

morgan. people have a lot of questions on this. is it prop, is it not prop, why are you doing this? >> specifically the conference call is going on right now. they're saying that the chief investment office has significant mark to market losses. legal losses of $4.2 billion. reasonably possible and j.p. morgan chase is more volatile as an economic hedge right now. >> this is the last thing that the financials need. if you look at the financials coming out of rning season, it's been atrocious. all these big kwoetd unquote favorites have not performed well. we've seen the charts breaking down. this is probably a nail in the coffin at least short-term. >> people have been worried about a couple things. morgan stanley is going to get a rating downgrade. people are worried about the collateral to post that. this is beyond that. people were looking for j.p. gorman to post collateral this is a new issue. >> a couple things, number one as an owner of j.p. morgan i'm not happy about it. i would not bu

morgan's c.i.a.o. was fired from a firm a few years ago for wanted to take a guess overseeing trading losses that resulted in a regulatory probe so basically dissed by billions of dollars spent on financial regulation that is increased over the years we'll talk about what's missing and why it will continue to fall short of preventing the next systemic crisis and the g eight summit came and went with leaders there you see him taking in a little soccer now they also signed on to a communique where a top mandate read our imperative is to promote growth and jobs so as they seemingly sign their name to more screwed up central planning they do so against the backdrop of this history and the u.s. for the first time ever those who didn't go to college at all may officially be better off than those that just went to high school or excuse me those that went to some college i messed that up but all explain it all in a little bit let's get to today's capital account. taking a look at the numbers this is what we fo

morgan starts looking for buyers. yeah it's going to cost them a dime and covered his bases a little bit by saying they could lose a billion more due to market volatility part of that is probably rival traders figuring out how much they can charge the whale to let him out of the zoo right right so they're going to have to pay an intense cost to unwind those positions which they should have thought of before so you know make a couple of mistake get the capital list punishment total a we'll have to see if it creates any kind of tsunami or a backlash or whatever but i really appreciate you being on the show to help us sort us all out stuart this all out that was heidi moore new york bureau chief and wall street correspondent for marketplace. and still ahead the new york attorney general was tapped by president obama to expand investigations into the housing crisis pacifically mortgage backed securities but critics say that task force is so dark distaff they will tell you what happened when some activists showed up to hel

i'm coming to you live right from the morgan stanley trading floor at headquarters of morgan in new york city. you just heard we're moments away from an exclusive interview, the interview that everybody is waiting for. morgan stanley's chairman and ceo, james gorman, will address the facebook issues coming up in a moment on the program. first, look at what else we are covering at the close. a miserable may for the bulls. the dow and s&p 500 down 6% this month alone. the dow looking set to end the month of may with five days of gains gains. in fact, may is ending lower. that ties a record for the few west days of gain in a month that goes all the way back to 1969. tough month this month. the nasdaq, biggest underperformer after being the biggest leader. 7% decline for the nasdaq in the month of may. facebook, meanwhile, managed to rally into the close up 5% going into the close. way down from the pricing of $38 a share. nonetheless, heavily traded and up on the session. the major averages of where they are for the month, just 30 minutes before the close, check out volume. volume is expect

morgan stock up on fire out of j.p. morgan stock up. i like that i go there well dan for if this guy had his house burgles by j.p. morgan chase also kept copies of important documents inside the house and they were also taken experts said in case of a fire or burglary by j.p. morgan chase it's a good idea to have copies of important documents in a digital form or a safety deposit box but this is something you and i have also talked about not only could j.p. morgan chase lloyd blankfein and jamie diamond type guys steal your stuff but you know you need gold silver are diamonds and in your co it's time to start thinking about that because this is the blitzkrieg coming these are the guys taking your stuff and there's nobody there to protect you right so they steal all your stuff and then they'll sell you insurance to pretty good protection against them spree stealing all your stuff is j.p. morgan bankrupt the community gomery alabama and then everyone's on the street and then they process all of the machinery behind food stamps so they try

morgan. investors dumped the bank's shares today, reacting to that surprising revelation of a big trading bet gone wrong. j.p. morgan stock plunged 10%. that sell off hung over wall street today. the dow lost 34 points, the nasdaq was almost unchanged and the s&p fell more than 4.5 points. erika miller has a closer look at the potential fallout for j.p. morgan. >> reporter: j.p. morgan's $2 billion trading loss may bring back memories of the 2008 financial crisis. but this time, most analysts think the damage will be contained. the situation today is quite different than 2008, when most big banks were massively overleveraged and had far less reserves. for that reason, there's less risk to the banking system. let's be clear: a $2 billion loss is nothing to sneeze at, but it's less than 1% of last year's pre-tax profit. so the embarrassment will likely last longer than the damage to its balance sheet. >> it's a financial hit and it's a reputational hit. the financial hit is about $2 billion and

morgan. well glass steagall would go on awfully long way to do it it would be certainly better than what we have no the banking system since two years it wasn't until people started gaming it that we ran into problems a little the talk about kind of the risks that are that's going on here because while jamie dimon says that hey this is just one bad trade this is just a lot of big mistakes made and this one specific london whale trade there's this whole question about the risk and the cia office because there's this kind of sketchy thing we don't know a lot of details but what we do know is that they changed the way that they evaluated risk in two thousand and twelve at the same time that they were presumably taking more risk and taking more complicated risks and then jamie dimon comes out and he announces this two billion dollar loss and says and we're going back to the old way of evaluating risk and a lot of holes so we don't know exactly why but girl come on we're kind of questions is this

morgan. it's not systemic. it doesn't involve counterparty risk or meltdowns or the other things we're scared about. this is like making a bad loan which j.p. morgan and other bank have made many times. >> rose: does this suggest basically what you just said? that because j.p. morgan was so big that this is not the case to say... or is the case to say too big to fail should be a part or not a part of the kind of regulations we have in play covering the financial sector? >> i think too big to fail is definitely a part of what we should be thinking about. i think that we are on a path to having every institution-- including j.p. morgan-- able to fail, whether systemic way to resolve a problem if there's a life threatening problem. jamie dimon said that on "meet the press," i agree with him. no institution should be too big to fail. but that's not what this problem is. this is a $2 billion problem for a bank with $150 billion of equity value. >> rose: what would you add to what happened here and one of the questio

morgan and other banks this situation simply reflects u.s. law so you talk about these issues that from made off to m.f. global bankruptcy as the result of bankruptcy law explain what those issues are full of bankruptcy courts not really a court it's part of the intersection of branch ok there's only three kinds of equity courts in the united states district courts courts of appeal the supreme court they're the only ones who can make decisions about wife and limb and judgments you know the words to restrain property in the bankruptcy process a judge and a trustee are just concerned with the defunct entity and they see a state that's right to state of the bankrupt entity whether it's a company or. person so there's really nobody to represent the interests of the third party back in the twenty's it was very common for the trustee to also be appointed receiver the difference is the receiver has authority from the federal district court very different so if stanford group for example you had a big fraud no bankruptcy the victims in the fraud simp

morgan has a role has a hand in the m.f. global story in the made off story and of course we have this latest london whale trade gone sour the question comes up is there anything j.p. morgan doesn't have a hand in these days but then when you talk about regulation about making sure that banks don't engage in proprietary trading reining in risk is there an unintended consequence that well let's look at what chris whalen has to say as well j.p. morgan spends his tail as an outlier and the media complies in this task perfectly in reality this is really how a lot of the market generates profit the as not only will implementation of the volcker rule have no impact on the risk taking and true risk exposures of the largest banks but the reduction with put it in many markets in the short run may actually cause the next systemic crisis. i don't know we're going to ask about that with chris whalen senior managing director at tangent capital partners here author of inflated how money and debt built the american dream chris whalen you s

morgan crisis. >> "jp morgan is one of the best banks there is. jamie dimon, the head of it, is one of the smartest bankers we got, and they still lost $2 billion." >> susie: we'll talk with a major j.p. morgan shareholder in just a few minutes. >> reporter: i'm erika miller in new york. still ahead, we look at mother nature's impact on april's retail sales. >> susie: a cautious day on wall street as investors continue to worry about political stalemate in greece. once again, political leaders there failed to agree on a coalition government. tom, that means greek voters will head back to the polls next month. >> tom: susie, the continuing greek drama has u.s. investors on edge. the dow fell 63 points. the nasdaq lost, nearly nine. the s&p lost seven. >> tom: as we told you earlier, some j.p. morgan shareholders are asking the bank to "claw back" salary and bonuses paid to top executives following the $2 billion trading loss. one such shareholder is new york city comptroller, john liu. he spoke with suzanne pratt earlier today, and she asked him ho

morgan unwind it. if you're in a hedge fund world you got had you that it's mel blood and now they're out to get him well that's the thing they're still in the trade now say another hedge fund or a smaller bank might have had to get out of it because they can't take the pain that j.p. morgan can take a lot of pain they could lose four five six billion i'm not predicting they will i'm just saying they could and you know as the congress person said you know they can absorb it against their capital base of course i question the whole premise because their capital comes from the taxpayers in the form of subsidies believe that aside they could lose a lot more money but they're still in the trade they're betting that eventually things will calm down things will come back to normal will make a lot of this money back as this spreads compress but there's no assurance that will happen there's no assurance that they can see it doesn't cost that much money to push the spreads out because. part of the reason j.p. m

i'm sure morgan stanley knew that. to me morgan stanley will probably get less ipo business. that's the way the greed factor works in the capital market. nasdaq didn't have a chance. there's no way that that platform could have kept up, and high frequency trade, they t didn't have nearly enough input for their models to do as much trading to damage it as much as they're being blamed for. when you hook in retail, and they're not happy, retail is the customers of not only the ipo, but facebook in general, in an election year, they're going to dig and dig and dig until they find some scapegoat. one scapegoat i know isn't going to pony up, that's the exchange. the exchange shouldn't. 15 million i heard? that's 14 million more than i thought we'd get out of it. >> thank you. by the way, a strong tdemand fo the two year note. thank you very much, rick santelli. >> last check, facebook 31, 71, down 7% right now. let's get to brian shactman with breaking news. >> i'm keeping my eye on chipol chipolte. cmj. i want to get this right, the u.s. attorney for the district of columbia is ba

jp morgan's stock is the same place that it was in 1997. shareholders should be getting angry, not just the regulators. what we need to do is transform some of the insensitives. jp morgan is not just cammibling with their shareholders money. they're gambling with the depositors money and our money. the fdic ensures their deposits. back in '08, '09, they said from the financial industry you go issue debt and we'll guarantee it because they had a tough time selling it. jp morgan issued a 10s of billions of debt, and they have not yet refinances that. apart from the free money they're getting from the fed they are using our guarantee and our money in effect to do these sorts of things. i think this should shut them up once and for all when we say don't go gamble, don't place bets on redifficulttives and don't run an offshore hedge fund without cash. >> let me summarize this. they can issue debt, borrow for less. they have an advantage over all their competitors. they're using our money to take big risks. if the risks come in, they take the ups

morgan the largest and most profitable u.s. bank are resisting fed efforts to impose tougher restrictions on too big to fail firms whose collapse could hurt the broader economy the banks have pressed the fed to explain assumptions used on this year stress test and have criticized the central bank's proposed rules including limits on counterparty risk now here's what jamie diamond says it's great that people get together and collaborate talk about the facts and the analysis all the interest in having a great financial system the better we do here the better it will be for the u.s. economy well let's get something clear first of all they don't they don't make profits they are gifted money from oss the taxpayer in the same bers who take money out of our pockets and stuff it into his pocket but doesn't make money in the classic sense that he's competing he doesn't compete dollar to big to fail got too big to fail or they're bigger but they're not failing even other grander scale the competition's wiped out the stock called top posi

morgan he is. arguing with the government that he needs less regulation he needs to be able to increase the amount of leverage he has on his books and he needs the swaps market deregulated so just for those out there in the international audience just briefly explain a swap and then what's jamie's problem well jamie's problem i mean in some respects i agree with him when it comes to basel two and three and all the rest of it dodd frank is a disaster we're actually hurting the us economy with all of these initiatives too because they're kind of like calvinists punishment really we're going to punish the big banks because we've bailed them out that's one part of the derivatives and everything else which a p morgan is very important because if you look at jamie diamond's unregulated over the counter derivatives business it makes the bank pale by comparison the banks almost a trivial concern so you know he's talking about two very different things one is do we want to put more regulation on credit crea

morgan has opened his pie hole again so. yes max your favorite friend in new york city here so where well we know he's going to toss it together or go roust well last wednesday in fact he was up in new york spread along with a bunch of other c.e.o.'s of the banks diamond sites give and take after bank fed j.p. morgan chase and company chief executive jamie diamond said there was give and take when bank leaders met with federal reserve officials to discuss industry oversight in new york last week oh yeah well we takes you know a little tape worm. we did tape one. any money for me to still do. and then obama says we can look back we have to go forward let's pass laws to make it easier for tapeworms like james who still money. and jamie to take any money. and he goes back into the warmth of his lair faecal uncrossed of lair where he lives a little family of jaipur. but i maybe because of the tape. and lenders including new york based j.p. morgan the largest and most profitable u.s. bank are resisting fed efforts to impose tough