the first time we talked we were talking about glass steagall so let's pick up kind of like where we left off so nine hundred thirty three stiegel legislation it was an attempted solution to some of the problems that caused the great depression and now glass steagall essentially separated the banking universe from the gambling universe and there were attempts to reinstate it with politicians using twenty twenty hindsight hopes are they doing it well let's be clear i still stood from thirty three until ninety nine or two thousand grammys boiling right and i don't know if it went into effect which in europe but you know it's and at that point suddenly the gambling banks could merge with the banks that keep your checkbook and they could use your checkbook money to gamble with no one that blew up. in two thousand and eight and two dozen seven to go and so now there are just i think it's twenty twenty hindsight i think it's a good idea to bring back those the problem that i see is that there is so much money involved i think graham leech wiley which was basically used to replete the repea

institutions that caused the financial crisis may now in south dakota have approved a gas glass steagall resolution while state houses from arizona to illinois have expressed interest in this school of thought democratic senator elizabeth warren led the charge but has so far has little success on a federal. love all so well these states actually have what it takes to hold congress this feet to the fire and finally to mount demand accountability for the greed of big banks while bob inglis from a prime interest team is here to weigh in bob matter how much for coming over to this side of the studio. let's start off with will these resolutions on a state level really accomplish anything well the short answer is no basically this is a grassroots movement elizabeth warren has been leading the charge to break up these big banks however the states don't have the authority to force the feds to do anything so basically this is kind of like signing a petition and even if enough people get involved if enough people call their congressmen then something can happen but this has to come from a federal

warren he wants to bring in glass steagall reintroduced glass steagall going back to the reforms of f.d.r. after the last crash or the biggest crash of twenty nine meanwhile on wall street they're working to reduce the requirements for capital on their balance sheets are looking to increase their loan to reserve ratios they're constantly nibbling on the edges to completely transform the system so that there is more speculation less equity and then the lows but the war is trotted out saying well we're going to bring back glass steagall maybe that's never going to happen and if it does it'll have been mitigated into total ineffectiveness by the all these other married of policies engineered by bankers for bankers at the expense of everyone else well it's even more than that because this is the fraud these are the collateralized debt obligations what they're saying is they should be able to package those more because right now they can't they can't push fraud on to the pension schemes and therefore they're trying to they're going to congress and they're using those american dream due to the

for me because it's not just the inevitability of having the reminder i know you're back to glass steagall in the fact that yes on the surface that that does make sense that we should separate investment banking from banking ok well let's talk about what point in the free market is oversight needed because when you have a lack of it you see such tragedies as the west texas explosion in the in the in the fertilizer factory and also the b.p. oil rig exploded i mean where do you draw the line well well first of all you're drawing a line between financial and you're drawing a line between health and safety are now moving on to health and safety and every market no gun deregulation all government has a role to protect you and i again state individuals groups corporations foreign governments that would do us harm so in that context the workplace needs to be safe and our individual workers are going to be able to accomplish that or is that a role of government pat passing that sort of legislation and then fall. going up look i think government. i think the fertilizer example is a bad example beca

about the free market i mean would you support legislation like reinstating legislation like glass steagall and if not how do you prevent monopolies from forming or do you think that's no i'm not i do think about those things and i think glass steagall would be something you know looking at it. it seems like a common sense thing to do but i will tell you that even the most common sense solutions end up having unintended consequences and now i'm talking about. the fact that mark to market accounting was was brought about. and i'm forgetting i'm forgetting the piece of legislation. but as a result of enron mark to market accounting was legislation that passed that seemed like the most practical thing in the world to do and yet that was a direct contributor to the collapse in two thousand and eight because of. because of securities having to be marked at five cents on the dollar because there was one trade at the end of december for hundreds of thousands of dollars in a multi-trillion dollar market for five cents on the dollar and now all assets have to be. have to be graded at five cents as o

or do you think that that's not about i do think about those things and i think glass steagall would be something you know looking at it. it seems like a commonsense thing to do but i will tell you that even the most common sense solutions end up having unintended consequences and now i'm talking about. the fact that mark to market accounting was was brought about. and i'm forgetting i'm forgetting the piece of legislation. but as a result of enron mark to market accounting was legislation that passed that seemed like the most practical thing in the world to do and yet that was a direct contributor to the collapse in two thousand and eight because of. because of securities having to be marked at five cents on the dollar because there was one trade at the end of december for hundreds of thousands of dollars in a multi-trillion dollar market for five cents on the dollar and now all assets have to be. have to be graded at five cents as opposed to a dollar and that was the that was the entire meltdown of two thousand and eight all banks were insolvent but still though the cons of the mon

dorgan pleaded with his colleagues to reconsider their yes votes warning that repealing the glass steagall act of nine hundred thirty three the new deal era law that kept wall street and main street banks separate that repealing that would open up the economy to a dangerous new level. risk take a look. at the fusing together of the idea. banking which requires not just safety and soundness to be successful but the perception of safety of us but to merge it with inherently risky speculative activity is in my judgment unless. there are some nations that represent transcendental. that are cruel over time and one of those in my judgment i fervently believe is that we with this piece of legislation moving towards greater risk senator dorgan also warned his fellow lawmakers the sometime in the near future they would regret their decision. i think. we will in ten years' time look back and say we should not have done that. because we forgot the lessons of the past it actually didn't take ten years only nine for that prophecy to come true in two thousand and eight wall street's gambling fueled bubb

quickly we got here because the republican congress got rid of regulations they got rid of glass steagall i'd say get rid of the bucket shop laws that have been around since the early one nine hundred that prevented you from gambling on other people's things look if i buy a house insurance all right and i have a fire i get coverage but i should be able to bet on whether your house burns down or bet ten times or whether your person here house burns down because i might have an incentive to burn your house down ok those are two separate argument so let me get to glass steagall first first if we have to live with the banking system that we have i'm all in favor of that wall are we going to get that wall again i doubt it unless there's another financial crisis but then what was your second point my point is you should get a bet on other people's mistakes the whole point of insurance the whole point of hedging is to protect yourself like i said like fire insurance what credit derivative swaps did is you know it let you bet on other people's mistakes so goldman sachs could sell these terrible t

have an incentive to burn your house down ok those are two separate argument so let me get to glass steagall first first if we have to live with the banking system that we have i'm all in favor of that wall are we going to get that wall again i doubt it unless there's another financial crisis but then what was your second point my point is you should get a bet on other people's mistakes the whole point of insurance the whole point of hedging is to protect yourself like i said like fire insurance what credit derivative swaps did is you know it let you bet on other people's mistakes so goldman sachs could sell these terrible terrible collateralized debt obligations to people at the same time as they bet against the same things they were selling that kind of betting and that kind of non-regulated capitalism that is the cause of the crisis fannie mae and freddie mac. they jumped in no question about it they jumped in late they jumped in much smaller than everybody else and frankly they are partly to blame but very very small part to blame well i would say that a lot of the blame gets back to the

if she becomes chair might she reinstitute some way glass-steagall? >> that is legislative issue.e more aggressive in bank regulation. summers feels deregulation that took effect is correct and he might have a lighter hand. i think on regulatory side either will arise. david: it's a legislative situation but alan greenspan did a lot to get rid of glass-steagall from the sidelines when he was fed chair. a lot can be done from the chair of the fed. liz: good to have you. we'll have you back. thank you very much. tawdry campaign. david: oh dear. how about getting vip privileges on facebook? we're not talking about a new service for the average user of the social network. only the elite can apply. does that sound too much like what happens in britain? we'll bring you details next. liz: we asked you on facebook and twitter, now that billionaire investor carl icahn is betting on apple, would you? we'll read some of your answers. that's next. don't go away. ♪ this man is about to be the millionth customer. would you mind if i go ahead of you? instead we had someone go ahead of him and wi

the congress repealed the glass-steagall act, and president bill clinton signed the repeal. >> it was a bipartisan repeal. >> right. it's a joke. that allowed the banks to make risky bets with their depositors' money. eight years later, our financial system collapsed. it's like a joke. don't you learn over and over again that the regulations are simply another problem from the businesses you're regulating? this is a system that creates in the private enterprise a core mechanism and a logic that makes them do the very things that need regulation and then makes them evade or undo those regulations. >> you probably saw the recent story that facebook, which made more than $1 billion in profits last year, didn't pay taxes on that profit. and actually got a $429 million rebate from you and me and all those other taxpayers out there. ge, verizon, boeing, 27 other corporations made a combined $205 billion in profits betweenq 2008 and 2011, and 26 paid no federal corporate income tax. what will ultimately happen, richard, if the big winners from capitalism opt out of participating in the stren

senators elizabeth warren and john mccain are leading the charge to re- instate a section of the glass- steagall act that would seperate traditional banking from investment banking..politico reports lawmakers in at least 18 states have introduced legislation calling on congress to break up the banking business.some members of the tea party don't want government involved with bank rules. citigroup is scaling back. the bank is reportedly backing off from alternative investments that have, according to the wall street journal "caused regulatory and financial headaches for the bank."the pressure is on for banks to exit hedge funds and private equity -- under dodd frank regulation. citi is the latest bank to scale back on the investments. jpmorgan made a similar move last month. discover is offering more than credit cards... this week the company moved intoome equity loans. discover estimates 80% of its customers are home owners. and wants to compete against quicken loans. discover will offer home equity loans up to $100,000. fixed rates will range from 5.99% to 11.99%. during the financial crisis ma

these banks will be dramatically smaller. >> you mentioned glass-steagall being reduced. you have volcker rule part of that. basal overseas, there are so much out there. nothing is really connecting. >> you're right. so much of that is really conflicting. i really believe that the volcker rule and, which stops banks from doing proprietary trading and some of the stuff in dodd-frank is designed to keep the banks big. lori: that is interesting. >> it is designed to regulate big banks. if you had small banks, if you had, for example, a bank not attached to a depository institution why would you care if they rolled the dice like john corzine at mf global? not systematically important. that's different than other issues that you mentioned which is, like elizabeth warren, the senator from massachusetts, is actually talking about reinstituting glass-steagall, breaking them up specifically. adam: are some of the banks we would call too big to fail healthy enough to be broken up? when you talk about bank of america, the government is going after a bank to fine them, a bank we had

but lehman brothers was not a depository bank there we we had glass steagall had been repealed whichmeant that investment banks and depository banks could to mingle their funds but lehman brothers that type of bank now what we have is the two biggest. banks the big wall street banks dealing in derivatives are bank of america which their merrill lynch branch they're investing and j.p. morgan chase and both of them have over seventy trillion dollars in derivatives and over one trillion dollars in deposits and they are allowed to commingle derivatives in their deposits so are the derivatives i mean they're there at that casino and the deposits are one big system so when when they have another big gambling bust the derivatives claimants actually get to go first before everybody else before they depositors because the bankruptcy reform act or two thousand and five which was pushed through by the banks which gives super priority to derivative claims which makes no sense at all because they are sheer gambling where is the deposit that depositors' think that that's actually their savings in

end what can we do about it sure we can pass more regulations we can pass legislation like glass steagall to try and limit the damage that wall street bankers can do but really how do you legislate away psychopaths we have to stop lionizing people like for example jamie diamond the c.e.o. of j.p. morgan chase i think we have to make it culturally shameful to exhibit psychopathic behavior and we're not going to be able to legislate our way around this but we can have a culture shift and i think the one thing that wall street is vulnerable is to is shame wall street is vulnerable to shame occupy prove that so in a way the occupy movement was just trying to hold an intervention for the bankers unfortunately wall street and its friends weren't ready to listen and they likely won't be ready to listen anytime soon as long as all that if you money keeps flowing in. in washington observing wall street from a very safe distance. r t. what was a day over you guessed it was a willing and hypocrisy prime interest began mr holder who says he's finally going to crack down on our wall street was as we m

target the stupid electorate who say ok why not so they'll say ok why not why not get rid of glass steagall so we can have more of the quiddity in the system and expand the economy and of course until it all collapses as we saw in the two thousand and eight crash you have the same thing everywhere you look whether it's genetically modified food or fukushima that was like some stupid people being sold on this idea that we could have free infinite energy with no cost then as we're all being plucked plucked were completely blocked were being plucked and were being plucked of our senses or being plucked of our network or being plucked out our food or being plucked of our water .

this is the same guy at the last end of of the clinton administration who pushed through the glass steagall act that deregulated the banks that allowed them become to become because c. knows they gamble that brought about the panic of oh wait that's larry summers and then you look at yellen and go back to the fed minutes that were released five years later after as they always do they hold them back and she along with the rest of them every one of them called the panic of a way wrong as it was evolving so it's more of the same and worse well yeah that's actually something we pointed out on yesterday's show was that if you look at yellen she was she was simply cheerleading on this expansion of monetary policy during a real estate bubble and then if you look at summers another thing we've highlighted is that she pretty much tanked the harvard indictment fund so could it be that there is going to be a third person that comes in here is this just like a p.r. campaign for the media to float various options here whoever it is it's going to be a member of the club and it's going to be much differe

the repeal of glass steagall had nothing to do with it.ook at the institutions that failed, fannie mae, freddie mac, none were banks and regulated by glass steagall. >> citi corp failed, bank of america. >> citi corporate got in trouble later. >> even the things -- >> they were too -- >> even the think that got citi corp and bank of america in trouble would have been legal activities before 1999. >> except getting rid of glass steagall they became too big to fail. >> i don't think that's true but we can have that debate separately. at least acknowledge my point it was not the proximate cause of the financial crisis. >> it wasn't the only cause. >> i'll tell you what, man, i got to defog my glasses watches liberals like that fight. >> how was that? >> that's hot. >> politico's mike allen, thank you very much. >> have a great august. >> thank you. >> still ahead, going to be okay? >> i'm getting over. it slowly but surely. i need a cold drink of water. >> take a shower. >> the new cover of "time" magazine, how american couples are reshaping

do any of the candidate support the reinstatement of glass- steagall?st: that is a good question. i do not think so is the short answer. glass-steagall separated out commercial and investment and was thought to keep deposits in the bank's separate from the riskier trading and financialthat the firms on wall street do. glass-steagall was repealed in 1999 with the support of people like larry summers. that is controversial in terms of what role that has played in the financial crisis. i do not believe janet yellen support restoring that. larry summers was a supporter of the. create moreit did risks of the big banks, created some of the huge banks that became too big to fail. it may be too hard to put that genie back in the bottle from what i understand. host: let's take more calls. danny, on the independent line. question is simply this. i do not believe they are using the correct items in the economy to determine whether or not there is inflation. true inflation is based on whether or not a family anywhere in the united states is able to survive, whether

the kinds of minimised sharing that mark refers to and here is the joke of jokes we had the glass steagall act coming out of the one nine hundred thirty s. to control banking the banking system went to work to evade it then they weakened it and finally under bill clinton they got rid of it eight years later the financial system collapse again we do die hard frank and here's the joke we are doing it all again it's as if we didn't learn the lesson you've got to go beyond what the liberals want control reform of bill here a bill there the corporations are laughing all the way to the banks they control because that they know how to undo they've already done that in the last century of our history we've got to learn that we have to go much further and i'm not abolishing. cooperation i'm taking the democratic way make a corporation as responsible to the will of the people directly expressed one person one vote as we make our politics we have the stream and i hear you're so happy with everything you say without a democratic economics that's not a viable good point marc you want to reply go ahead

target the stupid electorate who say ok why not so they'll say ok why not why not get rid of glass steagall so we can have more liquidity in the system and expand the economy and of course until it all collapses as we saw in the two thousand and eight crash you have the same thing everywhere you look whether it's genetically modified food or fukushima that was like some stupid people being sold on this idea that we could have free infinite energy with no cost. being plucked were plucked were completely blocked were being plucked and were being plucked of our senses are being plucked of our network are being plucked out of our food are being plucked of our water pluck pluck pluck to look at this this is your future oh i know. that. well that looks like a genetically modified factory farmed chicken and that's the same sort of sinkhole of food system that we have because so many stupid people just care about the price they don't care what's in it but we're going to look at the energy system right now in this fracking because fracking is coming here to the u.k. and we're seeing that very little

going to regulate and i don't believe that you have to break them up and that's why you know a glass steagall before separating investment banks from the commercial banks the simple commercial banks love to see something like that brought back again because they don't count on the regulators to prevent basically commercial banks from speculating with government insured deposits but if you let's say that you're j.p. morgan and you spin off their commodities unit like they're doing let's say they completely abide by this division is it possible that we end up with still into too interconnected to fail well you can never guarantee that you won't have that situation but if you downsize these banks you know currently j.p. morgan their assets depending on their counted are somewhere in the order of three to four trillion he knocked it down to one tenth that size. would it still be able to fail i think you probably could live with that you know three to four trillion you know three hundred billion i might still like a little smaller than that maybe two hundred billion and i feel better with but i th

men what can we do about it sure we can pass more regulations we can pass legislation like glass steagall to try and limit the damage that wall street bankers can do but really how do you legislate away psychopaths we have to stop lionizing people. like for example dreamy diamond the c.e.o. of j.p. morgan chase i think we have to make it culturally shameful to exhibit psychopathic behavior we're not going to be able legislator way around this but we can have a culture shift and i think the one thing that wall street is vulnerable is to is shame wall street is vulnerable to shame occupy prove that so in a way the occupy movement was just trying to hold an intervention for the bankers unfortunately wall street and its friends weren't ready to listen and they likely won't be ready to listen anytime soon as long as all that a few money keeps flowing in in washington observing wall street from a very safe distance same sex party. every day we are constantly surrounded by the fruits of past scientific research from vaccines to the smartphone in your pocket but there are also forms of research t

target the stupid electorate who'll say ok why not so they'll say ok why not why not get rid of glass steagall so we can have more liquidity in the system and expand the economy and of course until it all collapses as we saw in the two thousand and eight crash you have the same thing everywhere you look whether it's genetically modified food or fukushima that was like some stupid people being sold on this idea that we could have free infinite energy with no cost. being plucked plucked were completely blocked were being plucked and were being plucked of our senses are being plucked of our network for being plucked of our food are being plucked of our water pluck pluck pluck to look at this this is your future oh. well that looks like a genetically modified factory farmed chicken and that's the same sort of sinkhole of food system that we have because so many stupid people just care about the price they don't care what's in it but we're going to look at the energy system right now in this fracking because fracking is coming here to the u.k. and we're seeing that very little of the negative downs