let's get back to scott cohn. scott?ntinuing to try to follow this and gauge which way it will go. we told you a moment ago that judge steven rhodes ruled that the city did not negotiate in good faith with the unions, which is an essential element they need to be eligible for bankruptcy protection. but he went on to say that it's impracticable, in his words, to negotiate with a stone wall. this is exactly what the city had argued, that the unions weren't willing to negotiate. so he said that the city filed its bankruptcy in good faith. again, it doesn't necessarily mean that he's allowing it to go forward. he could require more negotiations. but he sort of split the baby here and said that, the city did not negotiate in good faith, but it couldn't negotiate in good faith, so the bankruptcy itself is in good faith. we'll see what that means as he now nears the finish line in reading off this ruling. >> scott, this is fascinating. so for a lot of people who are just trying to catch up with the news flow, basically, today i

scott cohn joins us with more and what could happen. tell what happened in court today and what does chapter nine mean for detroit? >> well, susie, it is hugely significant for detroit, but it's also significant across the country. that's why this ruling is such a big deal, not just because it's the biggest in u.s. history but because of implications not just here in detroit but for cities, unions, pensioners and investors. the u.s. bankruptcy judge who is presiding over this case said that detroit could get through restructuring some of its massive debt saying that the path of the city is on now, piling up debt cutting services not only unworkable but dangerous and says the city needs help. >> so what is he telling me? we're sorry, we're going to take your pension and make you homeless, starve you out and send you to a superline? we're telling judge rodsrodes g hell. >> the union almost immediately filed a notice of pean appeal a talking about going to the supreme court and for some 20,000 retirees. in the mayeantime, as that play outc

scott cohn has the story. >> reporter: terry and stephanie thought it couldn't possibly get any worse. still mourning the death of their 5 month old daughter caitlyn from sudden infant death syndrome, they claimed her as a dependent and the irs rejected it. >> the irs said someone claimed your dependent. >> reporter: using caitlyn's social security number. >> it was the very last time we had to claim her as our own and somebody robbed us of that, as well. >> reporter: all it takes a name and social security number to file a tax return and collect a refund and the treasury says there are $3.6 billion in fraud refunlts last year alone. they think the thieves got caitlyn's information from a government database set up to prevent fraud. the social security administration death master file is exactly what the name suggests, a list of more than 85 million names and social security numbers, every death reported since 1936. gene ol' gists use it, investigators and insurance companies verifying a death. a quick-thinking identity thief can do it, too. terry testified before the finance committe

scott cohn joins us with more. what do we know now? >> there is a push to get this done by the end of the year. we're not sure who is pushing hard. as you said, $2 billion, it would be about a billion or so to the justice department and another billion or so to regulators probably including the controller of the currency and treasury department and there is likely to be a deferred prosecution agreement, which is a stiff penalty for money center bank. they would basically have to agree to reforms, with the justice department continuing to hold the threat of prosecution over their heads if they don't compile. >> you know, scott, jp morgan is writing a lot of big checks recently. what exactly did they do wrong this time or allegedly? >> we should point out it's allegedly and the bank said they acted in good faith. a lot of it goes back three years, almost exactly three years to a lawsuit that the bankruptcy trustee filed, the same allegations that jp morgan was bernie madoff's primary banker. all of the money flowed through one account, t

scott cohn, "nightly business report." >> to read more about bernie madoff five years later, go to our website. >>> shares of mastercard and visa are charging ahead, out performing the broader market this year, but are credit card stocks still a safe investment, even as competition heats up? >>> facebook will be the newest member of the s&p 500. the company replaces terridine. the news was announced tonight after the closing bell sending shares of facebook initially higher. >>> talk about a rewards program rising a staggering 1600%, since going public in 2006. mastercard recently announced a 10-1 stock split and dividend hike like it's competitor visa, the payment processer is benefitting from the trend of paying with credit cards instead of cash, but is it time for investors who have made profits to cash out? marry thompson has our story. >> you can swipe it any time. >> reporter: it pays to be in the payments business. >> i'm a big credit card girl. i'll never stop using credit cards. >> i use credit cards for most purchases. >> it's more convenient. i don't like carrying cash around

scott cohn reports. >> good afternoon, everyone. my name is pete -- >> reporter: when the u.s. attorney speaks. >> today, we announce three law enforcement actions. >> reporter: the financial world listens. pete bharara is the sheriff of wall street and in 2013 he's been busy tackling stride did transactions. >> the largest international money laundering case. >> reporter: dubious deals and insider trading. >> the scope of the legal trading was deep and it was wide. >> reporter: pete's crack down has completely changed the way information flows on wall street in that critical phone call, there is no telling anymore whether a federal agent is listening in. 77 people convicted since 2009 and in 2013 the propeeked with the guilty plea of sac capital, the hedge fund's owner steven cone in the government sites. >> there is no immunity or protection. >> reporter: he's not just fighting insider trading. he charged two jp morgan traders with hiding losses at the nation's largest bank and part of a nation-wide task force investigating the financial crisis. >> we're as aggressive as any

scott cohn, great reporting following this as well. >> i caught up with somebody else from the crisis period today that we've never heard from on cnbc. the former co-president of merrill lynch. a lot of people have sort of pointed the finger at him for a sizable part of merrill lynch's near demise. he now runs a restaurant group and a very profitable and successful restaurant group with 13 restaurants. >> and he left merrill when? >> many, many years ago. he had said in a print interview that i saw at one point that he had regrets about the situation. so i asked him about what sort of personal responsibility he felt for merrill's problems. >> it was a regretful period. we all have things we would have done differently. certainly with more information, i might have known or others, you know, you would have made different decisions that would have been different for the shareholder and the clients, hindsight is 2020 these have thousands of people in audit, hundreds of people in risk and in compliance and still things ultimately happen. >> that's ahmass. interesting to hear from him, fiv

>> scott cohn in detroit, thank you very much. >>> time for the "power lunch" countdown. joining us phil lebeau and he is in chicago. start with the big news of the day. the auto sale were good friday, more like a great friday for some of the automakers out there. >> sue, we usually don't think about black friday being important for auto sale but it's clear when you look at all of the numbers it was a very strong black friday leading into a strong weekend and that brought a lot of traffic into the show rooms. look at the sales numbers for the leading automakers. as you look at these permgs keep in mind they are all coming in better than expected. chrysler is the one that stands out with sales increasing 16% compared with the estimate of an increase of 10%. bottom line, november coming in at a sales pace above $16 million. that's the expectation. >> the big red ribbons they put in the commercials on top of cars. makes you want to buy a car. >> true. >> turn to union membership. it has been hurting recently. now a 25% increase in dues that will go into effect. that's going

scott cohn we understand the passion behind it. >>> folks, while you may not care about the muni bondket or detroit story, you need to care about this case because it may impact your city, your town, your state. let's bring in rick santelli. rick, expound on this here. detroit, many people believe, is just a precursor of what is to come perhaps for cities that look a lot like the one you are standing in right now? >> and it's so funny, it happened today because the big news in chicago and if not the entire state of illinois is that there's going to be a vote ultimately, whether it's today or soon, to try to deal with our under funded pension liabilities. i would look at it this way, it's a very straight forward issue on many levels. if a city can deal with public tensions in the same way it deals with other debt, then, indeed, many cities like chicago or states like illinois may be able to deal with their fiscal underfundedness in a more -- in an easier fashion. i think this would potentially set a pick for illinois to now deal with this problem in a more efficient process. if i'm a h

. >> scott cohn thank you very much. >> main street is talking about it so we're going to talk abouthis. greg zuckerman with the wall street journal joins us. you were on top of the financial crisis. and we see these crises repeat over and over again. so first of all, why do so many people miss the warning signs and do you agree with the judge? should there be more prosecutions of a higher level? we've seen, you know, the district attorney here in the southern district of new york be very aggressive but a lot of the big fish are to the being rounded up yet? >> right. so with all due respect to the judge, instinctively makes sense they should have gone after more high-level executives but it's hard to prosecute stupidity and my argument is that the experts got it wrong when it came to the financial crisis. the guys who led the banks, bernanke, greenspan, so i don't think it was willful. there were times when you look at the rating agencies there were people that realized there was lot of junk put into some of the other products, but for the large part a lot of the people were fooled t

scott cohn has more. >> reporter: scott, this is a sitting federal judge, and one thing you can say aboutto routine settlements with big banks like citigroup and bank of america, and not shy about blasting the u.s. attorney's office, where he cut his teeth. this opinion asks the question a lot of people have been asking, why no high-level prosecutions following the financial crisis? he doubts there was no fraud. the failure to prosecute those responsible must be judged one of the most egregious failures of the criminal justice system in many years. he criticizes attorney general eric holder and lenny brewer. you don't go after the companies because they're too big to jail, and you don't go after the individuals, because that would involve the kind of years-long investigations that you no longer have the experiences or the resources to pursue. the u.s. attorney's office in manhattan, which prosecutes most securities fraud cases, has declined to comment. we just got a statement from the justice department in washington, spokesman brian fallon, saying the judge does not identify a single cas

we are thrilled to welcome chef scott cohn scott conant back. welcome.'s it's dlishs it's delicious. >> you're not biased. go on. >> concentrated tomatoes caramelized and butter cake as well. >> so many visitors for improperly cooked pasta. >> you know, there's way do things sometimes and i'm always open to, you know learn different styles and different things, but, you know things are the way they are because they're meant to stay that way. so a big fan of tradition in that sense. >> when you started out, you originally went to school to be a plumber, right? >> well, you know i applied for the plumbing classes and i couldn't get in. it's really interesting. too many people applied for the program. so as a second choice i chose culinary arts. by the way, it's really good that it happened because i'm not a fan of physical labor as it turns out. >> how did you pick culinary art. >> after pluming? >> it was the only class other than gym i had gotten an "a" in number one, so i figured it was a shoo-in. my third choice hair dressing. >> different do than we'v

scott cohn is covering the latest trial in this.incredible details for us. >> reporter: if you're going to false fi documents, have you to make sure they look authentic. the scam of the century collapsed in late 2008, almost five years ago. he is talking for the first time about his experience in the trial of five former madoff employees. he's been talking about the lengths, as you said they would go to to hide the fraud. back in the late 1980s, kpmg the accounting firm was doing an audit on behalf of hsbc who had money with madoff. they wanted trade reports. you know most of the trades in the madoff operation were falsified. they didn't happen. they had to go up with something very quickly. a trade report for one specific day the auditor wanted and one day's trade report stood about three feet tall, de pass kelley said. he gets them to false fi the report and he finds them throwing it around like a medicine ball. what are you doing? he's told, well, they need to make it look used. and if they're going to use it, they say they need

scott cohn has all the details. >> if jpmorgan and u.s. on the settlement they're working on over the bank's role in the madoff scandal, could some of the government's leverage have come from bernie madoff himself? that's the latest claim from bernie madoff in a brand new series of e-mails that he sent me from the federal prison in north carolina where he's living out his life. he said he has provided key information to the treasury inspector general's office which is among those investigating jpmorgan which, of course, was madoff's primary bank for decades. the ig's office confirms that it heard from someone saying they represented madoff but they haven't said if that information was of any use or even if they received any information. for months madoff is claiming that he was instrumental in pressuring those who were complicit in his scheme to return the money. picard has recovered millions but his business says no thanks to madoff. >> i think he would like to turn his image around by suggesting he lass something to do with it. as far as

. >> wow, scott cohn thank you very much, sir, for following that for us all day.tions in jeopardy in detroit are municipal bonds, which compared with stocks, haven't been doing very well this year. they are a huge source of income for a lot of retail investors. joining me now is john miller co-head of global mixed income at nuvene asset manager. welcome. >> thank you very much. >> you are one of the biggest creditors of the city of detroit. are you confident you'll be repaid? >> our credit is in the water and sueewer system of the city of detroit. we have a combination of insured and uninsured water and sewer bonds, the emergency manager has stated those are secured bonds, secured by revenues of the water and sewer system itself. we feel reasonably constructive about that holding. >> what's your take on the implications more broadly of what you heard from the judge today? >> this was expected. expected they would be deemed to be eligible, insolve ant and they goss a pass on whether or not they actually negotiated with key stakeholders. i think that detroit has had

our scott cohn.t above $60 this morning hitting a new record for the fifth consecutive session. this despite two down grades. suntrust evaluating to neutral saying the valuation has become stretched. he does maintain his price target. robert, great to have you. good morning. >> thanks for having me again. >> you make note of the last two weeks in the 40%, 50% run. why the down grade now? >> the stock is more than doubled since the ipo. in the last two weeks, it has run over 40% on really no new significant news this wasn't already expected by the market. when you look at what that implies as far as the multiples, it is about 36 times revenues. we historically went back and looked at other high-fliers and saw how high they got back. 28 for linked in. we think the valuations run a little bit more in the near term. >> where does it get interesting again, the share price? >> our price targets $50 for the end of 2014. if you get some sort of pullback, it will be something for investors to pull back. we ha

our scott cohn got a look at madoff's life behind bars and is back at headquarters with more. s, and i can tell you life for bernie madoff could be a whole lot worse than it is at the medium-security unit in butner, north carolina. it's where i spent two hours with him back in january. we sat together at the corner of a large table at the warden's conference room. the conversation off the record, at his insistence. but he looked good. he was very much at ease, different from all of the infamous court appearances back in 2009. seemed more normal, his hair shorter, different glasses, he's put back on some weight. while i can't reveal the conversation at this point, this on the record e mail gives you a sense. as remorseful as i am for the pain and suffering i've caused, i take comfort that my assistance will accomplish what i originally claimed, with all of my assistant, my recovers will recover the original principal, which they tell me is bunk. >> i think he would like to sort of turn his image around by suggesting he had something to do with it, and as far as irving and i know