citi group wanted to acquire travelers fact it did acquire travelers before the glass steagall act was repealed and so it was at the time an illegal combination of a commercial bank and an investment bank was travelers which was at the time an insurance company also owned a large investment bank. but alan greenspan the federal reserve gave them a pass gave them a one year exemption in during that one year exemption they got the law changed they got glass steagall repealed. fancy that and now the chairman the former chairman is advocating for something that sounds a lot like it or at least the spirit of it things seem a little paranoid paranormal needless to say this is wall street begin suing itself over a lie we're manipulation here to talk about all of this and more is our co-host today he will stay with us the whole show jim rickards senior managing director at tencent capital partners he's also author of the best seller currency wars the making of the next global crisis we'll bring our guest today resource guru rick rule on shortly but first jim records thank you for co-hosting cap

we go back to november 2009 the ten-year repeal of glass-steagall. >> bring glass-steagall back.ld not be at risk. if the bangers want to put their money at risk, that's their problem and that's the signing ceremony where they're all laughing it up, yes, this has got to be great. we're all going to make money and every american taxpayer will suffer greatly. >> cenk: well, to be fair, he put it in an entertainment show. >> that's why i'm still drawn to the show. that's why i keep watching it. now we'll throw a little journalism at you to be clear what olivia was saying about glass-steagall, that's essentially correct. a couple of graphics to back that up. incomes since the repealed glass-steagall in 1999 this is the average salaries of bankers versus the rest of us, people in the financial industry. and our incomes have been relatively flat while theirs sighskyrocketed. >> that's why they pushed to for it. >> and then here is another graphic with subprime loans. there is a huge spike and then a further spike as we get closer to the recession. >> cenk: man they screwed us royally,

of people who say look this is just a mistake let's go back to something like what we had glass steagall work for sixty five years it was an active one nine hundred thirty three it was you peel the one nine hundred ninety nine so sixty six years you know we have some we have some business cycles we have some individual bankers but nothing like what happened in two thousand and eight so let's go back to it it does work so you think that that is the solution you think so. the while and these guys are feeling a little guilty well again maybe maybe not but i applaud the honesty and again it's very hard to me he was so outspoken he was such a leader in the repeal of glass to go along with others it takes a certain amount of courage to come out and mature mistakes so i applaud him for that i mean remember why they enacted glass steagall in the first place in the one nine hundred twenty s. we had you know the roaring twenty's we had a huge stock market bubble then the stock market crash there were investigations and hearings in the early thirty's it came to light that the banks who organized th

let's remember we have had decades of bank stability under glass steagall.ce that came down the financial system was soon to follow. we need an up to date version. >> to be continued. thank you very much. programming note, former senator chris dodd will be on "squawk box" tomorrow morning. interesting talk about the whole issue. that's it for tonight's show. thank you for watching. tomorrow we talk about settling fiscal cliffs in washington, d.c. on free market principles. i'm kudlow. see you tomorrow night. my volt is the best vehicle i've ever driven. i bought the car because of its efficiency. i bought the car because i could eliminate gas from my budget. i don't spend money on gasoline. it's been 4,000 miles since my last trip to the gas station. it's pretty great. i get a bunch of kids waving at me... giving me the thumbs up. it's always a gratifying experience. it makes me feel good about my car. i absolutely love my chevy volt. ♪ home protector plus, from liberty mutual insurance, where the costs to both repair your home and replace your possessions a

so and and becky quickly he was talking to us like wait a minute that's more radical than glass steagall and he was like you know let's do this. is he just suggesting this because the banks are under attack and if they were to break them up like much like one thousand. in the antitrust action stockholder equity actually went up as a consequence of that that this might be very profitable for the banks to be taken to don't know what his motives are but i do know it is a staggering admission and i wish we would have a few more admissions about economic policies that we've had and that need to be rolled back so it's a fantastic thing to hear because we do have a too big to fail problem what it does is it it is actually a subsidy to the biggest banks because people who are doing business with those banks will lend into those banks with depositing with those banks know that those banks will be bailed out if they get into trouble that's what too big to fail me simply bailed out because we can't afford to have them fail because they pull down the system and that then makes these big banks even m

. >> sandy weil was crucial in getting the elimination of glass-steagall. glass-steagall was the depression-era law that had separated investment banking from commercial banking, protecting us from bankers pretty well for 70 years. finally, he and his friend robert rubin drove a stake through glass-steagall. it was dead and gone. then he began a massive empire known as travelers group, which the merged with citigroup. he was a beneficiary of the elimination of glass-steagall. >> use it at rob rubin, who was treasury secretary, went back after that. was it a $100 million job? >> $115 million over time, being an eminence grise at the board who did not have to do much but certainly made a lot of money. >> robert rubin is a democrat. alan greenspan is a republican, or something on the other side, right of center. is this a political matter? >> this is, again, across the aisle. home ownership was push that really involves both democrats and republicans, private-sector and public-sector. it was a push that asked regulators to team up with the regulated entities,

you're almost referring to bring back zas steglass-steagall in s respects. >> glass-steagall as it relatedestment banks was done away with in the glass i'm the taxpayer will never be at risk, the leverage of the banks will be something reasonable and the investment banks can do trading, they're not subject to a vol kerr rule, they can make some mistakes, but they'll everything that clears with each other every single night so they can be marked to market and they would have the same kind of leverage -- >> you sound tougher than vo volck volcker. >> i want to see us be a leader. >> what does that say when you think about the model you developed and now you're prepared to break it up. >> i think the world changes and the world we live in nour is different than the world ten years ago. there are a lot of things in silicon valley that don't work for the few that end up working. there's no other place in the world where you see the creativity you see in the financial states now. i'd like to see this in the financial industry. this isn't solution? >> bus of voters -- do you think the bad from ha

i'm not against big banks i thought glass-steagall worked well for 60, 70 years. whatever it was.r two decades of slow deregulation, it didn't happen overnight. slow deregulation saying well, this one small step is okay. you end up with that reality and they woke up one day and just accepted reality. my argument at the time and today is when you have a speed limit of 65 mph and slowly but surely everybody ends up going 85 mph. the answer is not to raise the speed limit to 85. the answer is to reinforce the 65. >> eliot: it was death by a thousand cuts in terms of the regulatory approach that left us with a system that was doomed with a failure and too big to fail. >> we still have congressmen advocating for that. >> eliot: your friends across the aisle, still want deregulation. i think they're nuts. thank you for your time on this. >> thanks. >> eliot: for more on secretary geithner's hearing. here with dennis kelleher, thank you for being here. you saw some of the hearing. you heard the two congressmen. you've seen sandy wild. is there a convergence that will break the logjam for

greatest act of kleptocracy of the of that decade he's back he's saying we should restore glass steagall. why because he wants to break up all these banks and then step in and put them all back together again and reassemble a global too big to fail bank again for sandy weill because he sees that there's no punishment for guys like jamie diamond and lloyd blankfein he's thinking you know what i made five billion or ten billion these guys are making thirty forty billion there's no law against doing what they're doing i'm gay i think game too soon let me back into the game i could make another fifty billion dollars split up all the banks first just bottom up it's a good thing then let me recall them all back into one super megalomaniac good advice any while the biggest financial tower the best one of our. i mean this guy american express you know totally connected to the guys down at the docks you got shares of lehman hotton involved in a wholesale theory on the subway line or front sandy weill got to be considered one of the top crony guys in that nineteenth ernie's horrid period of. dr se

weill came out and said that he's against big banks and wants to break them up and bring black glass steagall of course that's impossible that would never happen well max of course. operates farmville in which people around the world grow virtual vegetables and raise virtual cows there's also a drought happening in the real farming world report drought intensifying across oklahoma a u.s. drought monitor report shows parts of northwestern oklahoma in exceptional drought the western one third of the state the panhandle and parts of central to southeastern oklahoma are in extreme drought while most of the remainder of the state isn't severe drought the only rain do max is no golly washer or strangler as they say down in those parts of course not but you know this drought that's happening in the physical world the analog world that's just drawing the economy it's really reminiscent of the one nine hundred thirty s. dust bowl when you had the depression which was caused by wall street in the twenty's and all the activities that predated glass steagall at that time and then why the dust bowl and th

major lobbying to end glass-steagall.s is what he is saying. >> we will both take a shot at this, but there's a reason this law, glass-steagall, went into place after the great depression. there was no reason whatsoever to change it. everybody recommended it was flat wrong. weill must have some terminal disease and was to clear his conscience. it never should have been repealed. the serve to benefit only one tiny slice of the population. the people at the top. it did enormous harm to middle- class america. it is part of the reason why people lost their homes. >> one of the things that happened after the removal of the far wall is it then became -- >> commercial banks and investment banks. across the whole mortgage industry was transformed by this. if you go back a few years and you're buying a house or condo or copper what ever, he almost had to mortgage your firstborn child in order to get a mortgage. you had to go through dramatic process. but because selling the mortgages, the fees and so forth, was more important than

when not institut glass- steagall? wall street will always try to find ways around guest: it is a fair point. it was a depression-era law that forbid regular main street deposit taking banks from investment activities. for example, the best way i can describe it is, you take a bank of america. they absorbed merrill lynch. if he brought back glass- steagall, you have to cling merrill lynch offer of bank of america. the could no longer engage in wall street activity. can only take loans and deposits. it is a fair point to ask -- it is a fair question to say whether we would need -- whether it is better to have that system and get rid of the rules for some of the current regime they are in. congress had an opportunity to do this during the dodd-frank debate in the spring of 2010. two senators shared brown from ohio. they were both pushing a provision that essentially would have forced the largest banks to let up because they were getting too big for the system over all. that provision failed. at this point i do not see co

it's not about glass steagall.e investment banking structure back to where it was in the early days, it's simple, take away the permanent capital. when the investment banks went public, you changed the entire internal risk profile. when you use other people's money -- and that's what you do when you have permanent capital -- it changes everything. when the partners are at risk every day, i can tell you many of those things would not have happened in 2008 and won't happen again. you can split the banks, take away the permanent capital changes everything. >> so partners' capital were on the line, then you think that that would have the most effect? >> well, i'm sorry, i had a little bit of an ear problem. say again. >> you're saying if the partners of the firm had more capital on the line, they put their money where their mouth is, that would be the best taker-outer of risk out of the system, basically? >> absolutely. i know firsthand when i was a partner at cowen in the 1990s and our capital was at risk every day, d

will you commit yourself to signing onto a glass-steagall legislation this week? >> it will not shock you that i will not commit to that today. we passed a major reform of banking regulation in the last congress, as you know. that was absolutely essential to put in effect the referee on the field. we have had some major events happened since that passage. jpmorgan chase in particular, which i think will focus the congress and the american people on the necessity to ensure that the regulatory part of the banking world works and it works to the protection of the american people and the creation of solid competition. i think in that process you will see a lot of a preview of what was done previously with respect to that. what is being done to the proposals in the financial reform at to see whether they are going to work to accomplish this. >> another question in the front row here. and by yourself. as the question. >> thank you. >> as the president [unintelligible] do you support the level the president is supporting or those making a million dollars or more of? >> i

. >> the glass-steagall law is no longer appropriate... >> narrator: and traditional commercial banks could merge with trading-oriented investment banks. trading activity and bank profits rose quickly. >> the trading side became overwhelming-- three, four, five times bigger than the banking side. but the banking side grew as well, but not as much as the trading side. >> this is very much the beginning of the brain drain, when wall street looked at people who had technical, scientific training, and it said, "we'll pay you double, triple, five times what you could make in any other field." and if you're looking at those kinds of incentives, you're trained as an engineer, why wouldn't you want to make three times more money? >> two and a quarter points at five million. >> narrator: so they came. and many ended up doing what is called proprietary trading-- trading for the bank's own account. some bankers were uncomfortable. >> i think that sometimes we weren't really serving the interests of the clients. but we were serving our interests. and i didn't like that. >> narrator: claudio costa

. -- why not just reinstate glass- steagall? guest: that was a depression-era law that sought to prohibit main-stream deposit taking banks from investment activities. the best way i can describe it -- take bank of america. bankamerica absorbed merrill lynch during the crisis, which was an investment bank. if he brought back glass- steagall, you would have to remove merrill lynch from bank of america. they can no longer engage in wall street activities. they can only make loans and take deposits. it is a fair question to raise in terms of whether we would need that kind of -- whether it is there to have that kind of system and get rid of all these other roles, versus the current regime we are in. congress had opportunities to do this. during the dodd-frank debates -- two senators, one from ohio and one from delaware, who is no longer office, they were both pushing this provision which would have essentially forced the larger banks to break up because they were getting, in their view, too big for the system overall. that provision

we repealed glass steagall. >> sandy weil helped repeal glass steagall and now in the news and otherout maybe some of the firewalls that should be put back into banking. >> full disclosure, erin sorkin says that character is modeled after -- >> you. >> i kind of use it for that reason. not often you hear somebody talk about it on television besides another financial reporter. people are worried about banks being so big. they're worried about protections in place or not in place since the financial crisis and people are worried about what congress did and didn't do that led to the financial crisis and it is an interesting moment. >> one thing you should know about your money. >> the one thing you should know about your money is i think we could have a down day in stocks. it will be a little rough here. we have europe still on the ropes, still very concerned about the earnings reports watching every day to see what the impact is and i am worried about the fiscal cliff and the facebook after the bell. that's four things to know. >> up yesterday, down yesterday. thank you. it is 24 minut

we are right now but yeah sort of so everything from fiscal policy to things like killing glass steagall in one thousand nine hundred nine which under the clinton administration that's right you know the commodity futures modernization act which came about the year before and was pushed really hard by senator phil gramm whose wife wendy gramm was on the board of enron and he put a nice little enron loophole in there there's there's a lot of blame to go around i found very interesting about the occupy movement is how many of those taking part in demos and stuff are aware of the financial influence the corporations and the banks the u.s. have on u.s. politics they know the amount of financial contributions and donations that are being made to every u.s. alexis social all the way to the top all the way to u.s. president barack obama. is that the biggest hurdle for this movement to really overcome because if he wants corporations that are so powerful and giving so much money to the people in the united states that are governing and making the decisions and writing the laws how do you change

and it's not talked about is and i know you've talked about on many talk many occasions is glass steagall being able to divide out the specter of side of banks and the prop that's the banks from their plaintiff in the puzzle taking until that stone i mean that's just one of the many things that needs to be done no mustn't be leaving the financial system downsizing financial systems were massively overbuying to and over financial life and that's strangling the real economy and in the colonies all over the world and until these are done then they can be no solution to this crisis what we're talking about there a back last day call for example that would be a micro economic solution by separating at the point of price discovery the negative influences of predatory but all we hear from policymakers around the world in the g. twenty nations are macro economic solutions about monetary solutions about fiscal solutions this top down approach it's hierarchical approach which doesn't seem to be getting anywhere what about a more fundamental micro-economic of approach looking at the way that the mar

he made citigroup this gigantic and to see that it is today breaking the last provision of glass steagall but they got a certain one year exemption with the critical help of robert rubin who not coincidentally was given ten million dollars per year at city can you journalist did a little deeper well yeah we can we've talked about it before on the show it just wasn't the focus of this particular episode you're referring to but here's charles ferguson getting into that interview with us. one of the people who was instrumental in getting that done was robert rubin winston the secretary of treasury and what you were charge from the treasury department you became vice chairman of citigroup you know at citi group he made over a hundred million dollars to keep beating up the financial crisis so. he also just point that out. for to was asked does warren ever get to take a night off that's dedication for a governor a's no not really i don't get a lot of time off and yes please on the race thanks for suggesting that on that note it would be a good time to leave you there's more i want to get to but