banks. hit -- the defense blamed the culture of the bank. but the court found that the blame rested should sort -- solely on the shoulders of the road trader. >> this is a recut mission that the bank could not have known about the fraudulent system, showing that the allies, the forged documents, all of the methods used to deceive the message -- the management were unknown to the bank. >> jerome kerviel was allowed to leave the court today to prepare his appeal. many in france see him as a scapegoat for a banking industry that was dangerously out of control. >> joining me now to discuss the verdict is our chief economics correspondent. essentially the court has blamed the entire multibillion- dollar fraud on this one man. >> yes, george, i think the bank will be quite believe that this outcome, although we are hearing that there will be an appeal, so the bank could go down that avenue. the bank pointed to the judge's comments that jerome kerviel was not even given tacit authorization to speculate in this manner, that he went beyond his remit a

of influence new york city wall street the devil's den home of the devil's currency the new york federal reserve bank of the u.s. dollar is seeing today a visitor stacey herbert welcome to the cars a report. ranks kaiser i'm here in new york you can hear the noise behind me i'm actually out here in the skyline of new york so those noises you hear you'll hear the train every once in a while this is the real thing you mentioned wall street and that's my first headline here max wall street sees world economy decoupling from us and that's why i'm here because i see here that the u.s. has actually decoupled from the first world everywhere you go from from my flight here our american you know big american airline it ran out of fuel on the flight here so we had to stop in the arctic for refueling you come into j.f.k. you take a taxi which is like literally held together by a wire you come into new york city and it's possible worlds and ramshackle and then you arrive in new york city and it's even more ramshackle yeah well that's the information we're getting is that the u.s. is slipping and sliding down the

economy. >> the u.s. banks have been making this argument. if you deduct all the instruments they are still about 6%. you're talking about -- granted their assets are going to grow. but, over time, they can deal with that problem by selling those bad assets off. going from 6% to 7% is not a lot. basel gives them 9hyears =-- -- basel gives them nine years. i do not think they need that long. our estimates are within a few years of retained earnings, they can get to easily get to above 7%. so, i don't buy that. you know, you can retain earnings. you can decrease your bonuses. a lot of things to do to conserve. a lot of things to do to build capital without cutting back on lending. the place is a wash it cash. -- awash with cash. whether it's 7%, 8%. there's still plenty of lending capacity. to get that going better. we need better borrowed demand and that's going to dependent depend on confidence in the community. i think needs to be tightening -- linda needs -- lending and needs to be tightening up of credit sta

around central banks around the world savers told to stop moaning and start spending this is charlie being who is a senior bank of england official and he was interviewed on channel four and he said quote it may make sense for them to eat into their capital a bit where you can have capital about capitalism of course so he's saying we should destroy capitalism and then you know the challenge for a presenter goes on to show very vividly the costs of these low interest rates for was as a must i paid by twenty six billion pounds because of those interest rate reductions for savers of lost by twenty billion pounds as a direct transfer from savers to borrowers yet but these very central bank governors are telling everybody around the world you know they bleat the word socialism we don't want socialism we don't want socialism but here we have evidence of them committing redistribution of wealth from savers to debtors so this final clip here of charlie bean to actually this disincentive. to use for saving is kind of it's the point would be or it

they bought them from the banks. eir concern is that the value of those securities has declined sharply and they are saying, basically, this wasn't just, you know, a bad bet that went wrong. this was mismanaged, this was sold to us on false pretenses. we deserve a refund. >> brown: and how big a risk is that to the banking industry as a whole? >> in financial terms that is probably the much greater risk. >> brown: much greater. >> much greater. even if some homeowners begin to successfully avoid foreclosure that doesn't add up to a lot of money very quickly. but a couple of cases from investors, this suit against bank of america concerns $47 billion. there are tens of billions of dollars in other securities that could very easily be pulled into this. that where the real money is, is in these investor suits against the banks. >> brown: and the government in all this continues to try to figure out how to handle it, right? i mean on the one hand wanting to make sure the process works right and on the other on the other h

all of the banks that have disappeared we had a robust competitive system and now thanks to the bailouts instead of putting most of these giant debacle is out of business and you know i talk about citigroup i think citigroup and bank of america if they had an honest accounting of their books they're technically insolvent and what we've done instead of forcing banks to do what in the united states we have two systems of resolving financial crisis one is kind of japanese like and the other is swedish like the swedish system is what the f.b.i. see does the federal depository insurance company that is a clause government agency that's run by sheila bair and when a bank is insolvent the f.b.i. see steps in they guarantee all the deposits under i think it's a quarter million or half a million dollars now they fire the senior management they tell the shareholders we're sorry but your bank is insolvent you wiped out they take what's left there they find a buyer washington mutual's a great example i want to j.p. morgan for a couple of billion dollars and once the net of that leftover money is goe

for the banks, the motive is simple -- money. d by packaging and selling the toxic home loans and profited again, by betting against those same securities. a bet in essence that a fraudulent loan they made wouldn't be paid back. but why would politicians allow this? the simple answer? to stay in office. giving people houses makes them happier. and makes local politicians more popular. at the same time, the financial services sector, the banks, making all the money, were donating to the political campaigns. in 2008, the financial sector was the top donor to both democratic and republican candidates. so where are all of these fraudulent loans now? >> you own them, at the federal reserve, fannie mae and freddie mac. the banks and politicians will do whatever it takes to prevent a legitimate foreclosure proceeding, one that would easily reveal the lack of qualifications and bad documentations in the loans the banks have been selling and giving to the government for years. and finally, the last and most important why -- why isn't our g

it appears that the broadway bank, the giannoulias family bank, has ties to the mob, convicted felons. this is a portion of the ad that you're running this with the senate republican committee. >> alexi giannoulias, he'd make tony soprano proud. >> are you saying he has ties to organized crime? >> this is a list of all the bank loans to convicted mobsters and felons. the ones in yellow are the ones where he was the senior officer at the bank. these are all infamous mob figures and bankers who have very long and storied record. you don't have to pull their rap sheet. it was in "the chicago tribune." >> again, this is the congressman, who's never worked in the private sector. who doesn't know what it takes -- what a bank does when they look at whether or not to approve or deny a loan. he pulls some names and tries to make it a political attack. people aren't buying it. that's why we're up in the polls. this is what's wrong with politics. someone like congressman kirk, who has no idea what it's like in the private sector, to go out there and say these are convicted mobsters. those aren't

well they're all indoors a huge problem but the banking industry is not nearly as stable as it seems despite these bonuses the foreclosure gate problem that you mentioned the top of the show that is an enormous accounting scandal an enormous fraud scandal covering up much more fraud i mean if you pull away the legal liability embedded in there you have the entire two point six trillion mortgage backed securities market that can be thrown at the front door of all of these banks there's no way those banks can survive the losses from that from that scandal so so then i guess the government is just going to have to cover it up. so we've forgotten like it never happened that is what that is one solution but another solution is to actually restructure the system because we've had a crisis and we tried to just cover up for them for the past two years and that clearly has not worked i guess to see what happened in the meantime they are raking in the big bucks that thanks so much for being here thanks for having me all right time for our first break but still to come tonight the foreclosure ga

seen anything like it something's dodgy it's not right and i said to him yes it's the central banks open spigot there it's all there fraud well it's as we've been reporting on the show stacy for a number of months now. people don't understand the role of the gold vigilantes and i saw something on business insider yesterday about the gold vigilantes these are hedge funds that are giving the global financial system cardiac arrest by forcing comix and other places to give them physical delivery of gold this of course is causing gold to have fresh new highs and silver as well and anybody who's in paper money right now is starting to feel really sick inside their intestines and they're spewing paper out of every orifice as fast as they can and they're trying to convert that speer you into gold as fast as they can and the result is paper bad precious metals good you know the other observation here so we were approaching these midterm elections and it's their nonstop political ads going on and basically every ad runs as such my opponent is a fraud a scumbag and a liar but nobody none of the

government that is now happening with the banks. do not let the system clear the taxpayers will be on the hook for some time. >> given the history kneel, of the past year or two, if the -- neil, of the past year or two, isn't it inevitable we'll have calls for another bail out? >> if if the big banks get in trouble the government will have to bail them out. >> the real trouble is the small banks the fdic says of the 8,000 banks that it oversees 10% are in a danger zone. yes, you are going to see a lot of failure. >> tell me please, mark we are not going to see another middle class bail out? >> these banks pay premiums into the fdic. it isn't a government -- i don't see where this is a problem. [ talking over each other ] >> the feds have been buying these bad mortgages and putting it on its balance sheet. [ talking over each other ] >> i'll tell you something, look at the u.s. dollar this is another [ talking over each other ] >> the dollar is plunging to 15 year lows versus other currencies this is a real problem. will the dollar b

is partly owned by the taxpayer and make the banks lend. well do you know you may have got a lot of beef jerky and there to survive. it all right stacy your word thanks so much for being once again on the con is a report thank you max don't go away much more after the break so stay right there . today. these are the images. from the streets of canada. i know. welcome back to the kaiser report time now to go to north carolina to welcome back to the show william b.j. lawson the republican candidate for congress of north carolina's fourth district is receive the backing of ron paul b.j. lawson welcome back to the kaiser report thanks max great to be with you all right b.j. lawson first i want to talk about china it seems that there is a brewing trade and currency war between the u.s. and china last year north carolina your state exported one point nine billion in goods to china a business insider lists north carolina as one of the top ten states to be harmed by a trade war with china your thoughts p.j. lawson well i think that's a great point a

tonight, growing fury about how the banks went about it. first word of the robo signers, bank wores, signing over on paperwork they never read. one worker admitting he signed off on 10,000 homes a month. and now we learn it went even further. overseas. in this deposition by the florida attorney general's office, an employee at a law firm hired by the banks was asked about the paperwork. instead of doing it here in his office, they would do it in guam or the philippines? >> correct. >> it's been outsourced and being produced in guam or the philippines, and then being shipped overnight for courtrooms over the country. >> reporter: two major banks have said they no longer use that law firm. and then there was this. a homeowner in orlando, who wasn't even in foreclosure when contractors showed up to knock down the door anyway. >> i just know somebody is breaking -- somebody broke into my house. >> did they kick the door in? >> i don't know. >> reporter: jpmorgan chase has now admitted they made a mistake. >> it's the wild west. >> reporter: he s

>> that is the fear we are going to see more keys being sent to the bank. fan any -- fannie mae and freddie mac aided, the housing crisis. they were the conveyor belt for all that came out of wall street. all of a sudden they waded in, one year you do not put 1.7 trillion worth of bad loans on your sheet. they didn't get out like everybody else, they were reckless. >> neil doesn't it concern you some might be encouraged not to pay their mortgage bus they see so many let off the hook? >> there's a huge moral hazard. what we are doing now is compounding it. with the fha, allowing people to get new homes with only 3 1/2% down. we are encouraging people to take on loans they can't afford to pay back. they are giving them tax breaks up to $10,000. if you can't afford a house we've decided we are going to throw bad money after the good and still sell morehouses to people who can't afford them. as a way to support the housing market >> vicious circle going on. >> neil is right david. the big problem is with all this involvement from washington taking over the housi

the bank says it is doing additional reviews. as the worries over foreclosure processing build, mortgage bond insurers saw buying interest. ambac financial and m.b.i.a. each saw double-digit gains. ambac remains below $1 a share, though. it's a two-year high for m.b.i.a. and assured guaranty stock saw ten times its average volume on its 9% jump. some speculate business may pick up with the foreclosure mess. after the close tonight, google blew away earnings expectations, and its shares responded in kind. first, the results-- earnings were almost a full dollar over the estimate. advertisers paid google more money per click last quarter compared to a year ago. google stock was a little weaker today; after the close, it jumped 9%. if that holds through until tomorrow's session, the stock would hit its highest price since april. speaking of search, buy-out rumors were back around yahoo. this time involving private equity investors and a.o.l. this chatter got shareholders excited. yahoo stock up 4.5% on strong volume. the rally takes y

the banks were the primary supervisor. we have been collecting information that you have not been implicated in this. that's because they have small portfolios. it was really a symptom of size. it's very unfortunate. so in our back up policy. we have been told this is a process issue. that all the information is in the file. the person who needed to sign the affidavit had not been looking at the file. we need to independently verify that and make sure good title is in these files. the adequate staffing is provided so there's full compliance with the state law. foreclosure is a very serious thing. and that, you know, the files are fully documentd and it's a good case to move forward. we need to verify that. we know it's a process issue. not that anybody should jump to conclusions until we completed our review process. >> you are the primary regulator. this affects the largest banks. you do insure these banks. >> i think, as back up supervisor, we are working with the fcc and the fed. my personal opinion is they have do seri

again is a kind of it set up by the bank that's supposed to be bankruptcy remote it's remote from thebank so that if the bank goes bankrupt the special purpose vehicle won't or it won't affect those properties. so everything's spinal through this special purpose and it's like one day deals it's like one day on shot deals where the big investors put their money into it into a special purpose vehicle but they can get it back the next day so it's called the purchase and sale or repurchase agreement but if it's a sale it's then you saved at a conflict here is it a sailor's a disk here it is asian if it's a sale and if you're actually buying real estate then according to state law you're supposed to prove your chain of title if you're going to foreclose on this property and that's what they haven't done they've left out they've missed the step they're in the chain of title and there's just no way to get that chain of title back but means they can't foreclose on these properties the price so all the investors have been is not actually a secured interest they have an interest in equity. they

defaults and three other defaults makes a second package and sells to a third bank the third bank sells six of these things from them bundles them and sells them to some investor no idea what he has. they borrowed against those layers which is the real crime they would take a little piece of a layer of the security underneath the which somewhere there was a bunch of home buyers and they would take it and they would borrow thirty times the amount of money that it represented five big investment banks dominated wall street it is really who took the subprime loans purchased from banks packaged them as bundled investments to be sold worldwide there were reports that there was what was called. from wall street other words wall street investment houses as they began to make billions on these securitized loans and c.d.o. those derivatives were pressuring the mortgage people at the local level give us more give us more give us well there the reason why wall street was putting the pressure or the sucking sound that you referred to or the lower the originators because the profits that they were g

one was the bank of england and the other was a clerk in the bank of france. only trouble was that they did not agree. [laughter] we have not made a lot of progress since that time. it does occur to me that, i do think out of that conversation, we have reached a point where questions of international, financial, and financial reform are becoming front and center. no one wanted to talk about it. they did not know what to do about it or felt they did not have to worry about it. now they do want to talk about it because of the mountains that have a risen. the clear born in -- the clairvoyant foresight says that china will purchase $3 trillion in reserves and the u.s. will lose $3 trillion of debt. would you want to do something about it to prevent that from happening? and-year by year end it catches up to you. it is like the fog in the hot water. -- the fraud. he does not feel it until it is really hot. if it is a real problem, how do we attack it? the said we would not have the curve of the conversation with seven people. then it escalates to 20 people. the 21st

on friday, bank of america became the first bank to halt foreclosures in all 50 states. jpmorgan chase and ally financial have already suspended foreclosures in 23 states. but both wall street and the white house are against the moratoriums. on monday, the securities industry and financial markets association warned that "it would be catastrhic to impose a system wide moratorium on all foreclosures and such actions could do damage to the housing market and the economy." was in a congressional democrats have joined the calls for national moratorium on foreclosures, the white house is arguing against punishing the industry. on sunday, white house adviser david axelrod said a national moratorium is not needed. >> we're working with these institutions. i am not sure about a national moratorium because there are in fact valid foreclosures that probably should go forward. >> shaun donovan, secretary of housing and urban development, said monday -- federal housing administration commissioner david stevens also opposes a nationwide moratorium, telling the washington post is not t

we're going to have to close the banks to sort this all out and oh by the way while we're closing the banks to sort out the mortgage mess let's reconfigure the global currency grid and oh by the way the u.s. dollar will be fifty percent cheaper versus other currencies when this whole thing reopens again oh i guess that means in the u.s. your energy and food costs just go up by sixty or seventy percent overnight and that's the way it goes and to pay for it we're going to have to take back all your social security benefits but have a nice day and vote for whoever else is running on behalf of the corporations so you too can drive yourself into an early grave over there in the u.s. because. as you are lacking in all self-interest whatsoever well stacey thanks again for being on the kaiser report thank you max when we come back i'll be speaking with the famed economist over there i tulip dot com eric jansen. seventy years of the red machine would show me and people wanted to believe in the power. to make changes. but was it possible to change the country's machine so quickly. with. the cal

in the united states citi group wells fargo j.p. morgan chase and bank of america together the financial times reported they originated a hundred billion dollars in sub prime mortgages between two thousand and five and two thousand and seven almost three quarters of the total. what i did in the mortgage industry i first got involved in about ninety three d. i was a loner originator. and during that time what i had seen was nothing short of amazing in terms it was very predatory the techniques that were being used the salesmanship that was being used to gimmicks on the loans and how they were structured it really disturbed me catchall to this and how they could get away with that is people here full disclosure depending on the lending institution you went to in other words a bank a broker or a way in the institution or three different all three have different sets of regulations that govern them and so full disclosure it wasn't necessarily important to the loan itself just get them to sign on the dotted line if they were happy with the numbers you have a

sters who run banks. the big banks pulled in $21.6 billion in the last 3 months. that's pretty darned impressive, thank you american taxpayers. before the happy days are back, bailed out banks paid top executives $1.6 billion in salaries, bonuses. somebody's got to buy a rolls-royce around here. for a job well done tovrnrchinge entire place and taking the money out of the government. two years later, 30 million americans either out of work or underemployed and the numbers are rising. america's biggest corporations hoarding cash instead of investing in expansion. specifically when it comes to the origination of small business, you can forget it. lending for small business is down an incredible amount. look at the line. the big banks find it mar more profitable to gamble with the money or lend it to china while sticking taxpayers with losses they might incur along the way. they collect the bonuses. why would you lend to american business when you can take american money to china or gamble it between each other?