the f.d.i.c. ee what happens to your money when your bank has failed. >> they're gonna start at one branch, pull the cash out, take it inside the bank. >> this is a team of f.d.i.c. agents preparing to seize a bank outside chicago. >> what we need to do is, we need to pull the corporate records. >> they've checked into this hotel under a fictitious name, cb and associates. to prevent a run on the bank, they don't want anyone to know who they are or why they're here. >> you all know that this is for the closing of heritage community bank. >> cheryl bates and arthur cook are in charge of the operation that has been given the code name "happy." strange, considering what they're about to do. >> do not discuss outside of this room what is going on, what we're here for. >> they're here to seize all five branches of heritage community bank, a 40-year-old illinois bank providing savings, student loans, mortgages, and checking. but like so many others recently, heritage made ruinous bets on real estate. she

very very narrow slice all the rest of the derivatives can be held in the part of the bank with the f.d.i.c insurance now pushing the swaps and derivatives operations outside of the banks if you will be insured depositories and into these capitalized. what would that do you know how would this help the banks and the consumers well it helps the banks because there's two different credit ratings on those two different parts of the bank credit ratings agencies tend to give a higher credit rating to the part of the bank with f.t.c. insurance because they see it as kind of an implicit government guarantee if anything happens to that part of the bank their thought is they'll get bailed out and so they give them a higher credit rating this separately capitalized and t. usually has a lower credit rating and so it's cheaper for the bank to do business in the part of the bank with a higher credit rating is cheaper for me if i have a higher credit rating if i want to borrow money but it hurts consumers because we're essentially backstopping their risky behavior and they're risky derivatives with you k

their total risk is but there's nothing preventing them from pushing all of their swaps out of the f.d.i.c account and into this separate entity but they don't want to do that because it's more expensive for them and what are the costs associated making it so much more expensive because there are operations that aren't banks that do just this correct well sure i guess it's just they have to borrow money every day just like you know to fund their operations to pay their employees because they don't just have a giant stack of cash that ing around they like to play with it and so the higher cost is they have to borrow money from this separately capitalized account which has a lower credit rating because they have a lower credit rating when they borrow money they have to pay a little bit more than they would if they were borrowing money out of this. part of the speaking if you can you expand on that a little because it's my understanding that two hundred fifty thousand about corporate or individual how does this really factor into you mentioned it before you expand on that so the f.d.i.c fund

protection from further criminal investigation and they asked the f.d.i.c to take on some of the thirteen billion dollar price tag this is according to a washington post article now j.p. morgan has argued that they should be responsible for the bad mortgage securities wall move issued before the financial crisis now j.p. morgan acquired washington mutual out of receivership in two thousand and eight and they claim the f.d.i.c which put the bank in receivership in the first place should pay for the losses associated with woman also everyone's favorite formaldehyde shark art collector yeah that's a real thing steve cohen he's back in the news first and foremost yes he did actually purchase the dead shark for reported eight million dollars i understand he's supposed to be involved in good fun managing but anyway now his fund sac capital will plead guilty to securities fraud and possibly pay one point two billion dollars as part of a settlement with prosecutors the settlement over insider trading is set to be announced next week now this would be on top of the six hundred million dollars fine

you mentioned that there are a trillion in deposits backed by minuscule amounts of insurance at the f.d.i.c seven hundred trillion in derivatives of course is against a global economy with only approximately sixty trillion in g.d.p. so those is it unfair to say that what hank paulson goes to congress and says gave us a. trillion dollars for tarp that he's being extortionate and he's wielding the weapon will collapse the system using derivatives unless you give us our cash is that an unfair characterization no not at all let's talk about what your group does how would a public bank and of course i'm talking with mark armstrong of public banking bear dot org how would a public bank address the problem with this model so the premise behind the public banking institute of which i'm a part and one brown founded along with a dozen or so other people. is that all of public finance has been co-opted by private financiers so so there's no true public finance in the us anymore in virtually all forty nine of the fifty states public dollars tax receipts fees are deposited into private banks and that be

you mentioned that there are a trillion in deposits backed by minuscule amounts of insurance at the f.d.i.c seven hundred trillion in derivatives of course is against a global economy with only approximately sixty trillion in g.d.p. so those is it unfair to say that what hank paulson goes to congress and says give us a. trillion dollars for tarp that he's being extortionate and he's wielding the weapon will collapse the system using derivatives unless you give us our cash is that an unfair characterization no not at all let's talk about what your group does how would a public bank and of course i'm talking with mark armstrong of public banking dower dot org how would a public bank address the problem with this model so the premise behind the public banking institute of which i'm a part and one brown founded along with a dozen or so other people. is that all of public finance has been co-opted by private financiers so so there's no true public finance in the us anymore in virtually all forty nine of the fifty states public dollars tax receipts fees are deposited into private banks and that b

the economy. and we were surprised by his candor. mr. chairman, i'm gonna start with a question that everyone wants me to ask. when does this end? [stopwatch ticking] >> no one comes in without f.d.i.ces. >> could your bank be shut down? that's what's happening to this bank and to banks across the country. it's being done in secret by a group of agents led by the f.d.i.c., who move in after closing time when a bank has failed. [stopwatch ticking] >> it's weird economics when it

the economy. and we were surprised by his candor. mr. chairman, i'm gonna start with a question that everyone wants me to ask. when does this end? [stopwatch ticking] >> no one comes in without f.d.i.c your bank be shut down? that's what's happening to this bank and to banks across the country. it's being done in secret by a group of agents led by the f.d.i.c., who move in after closing time when a bank has failed. [stopwatch ticking] >> it's weird economics when it

that they're as the federal deposit insurance corporation the f.d.i.c in other words you and me taxpayers to cover part of the fine what's the deal. well that's a major sticking point that's one of the reasons why the deal is in jeopardy right now. chase is insisting that the f.b.i. see assume some of the liability for washington mutual a company that if you remember correctly back in two thousand and eight chase got to acquire for basically nothing one point nine billion dollars for the six largest bank in america. this was right after chase had taken a twenty five billion dollar loan from the tarp bailout so they essentially were lent the money to acquire this massive banking institution by the federal government. which in turn then took all of or most of washington mutual's toxic assets off of chase's hands through a bit special bail out facility in the federal reserve called maiden lane so the chase basically got this gigantic bank for free they've been raking in gobs and gobs of money year for year after year ever since they. acquired this bank and now they don't want to have to pay

that people need and use on a daily basis without the cost or the balances required for a regular bank account it will also be covered by f.d.i.c insurance the occupied money cooperative is working with visa to get the card launched nationwide and have it be widely accepted and while there will be no of from fees to obtain the card it will carry with the typical a.t.m. fees like a dollar ninety five for withdrawals and ninety nine cents for balance inquiries but still members of the occupy money cooperative hope that their card will give millions of americans access to low cost financial services outside the major banking corporations so is this something that could get legs and actually challenge wall street stranglehold over the banking system and what should be made of this relationship with visa does that undermine the anti corporate greed message that the occupy movement has been pushing join me joining me earlier was one of the brains behind this step a card carne ross a former british diplomat who now sits on the board of the occupy money cooperative and i first asked him how this idea of an occupy card was conceived of

but you know who stop them the tea party they said excuse me with the whole world watching you want us to pass a bill guaranteeing f.d.i.c insurance for gambling i think we in the tea party don't want that so another queasy place i am i'm actually agreeing with the tea party thank you very much for stopping this absurd taxpayer bill much as i disagree with you on obamacare at the center of this debate is debt republicans are focused on debt in a lot of democrats are focused on debt how is wall street's culture and financialization fueling our growing debt in the united states are not just talking about bailouts but just their general business practices day to day well you raise a pact in your question is many tomes of economic research so i know in limited time let me just try this wall street is agnostic about what you and i might call bad how much debt whether there's a balanced budget wall street simply profits by predicting the direction of something and if the direction is what we would call bad they'll make money if there's action is what we call good they'll make money they don't care about deficits other than to

to the supreme court which would eventually reveal the exact amount of federal reserve money goldman received which was in addition to tarpon f.d.i.c money now here we have a graph that shows goldman borrowed as much as sixty nine billion dollars from the fed during the height of the panic and it's the same story with j.p. morgan city and the other usual suspects. now of course no one wants a repeat of that so regulators at all levels have proposed various measures to strengthen the balance sheet of your favorite too big to fail bank thursday the federal reserve proposed rules that would call it that they call it liquidity coverage ratio now originally part of basel three the fed's version is a bit tougher and it requires the big banks to collectively hold about two trillion in liquid assets in cash bob first in either of us and out of the question is how is this different from other rules such as capital requirements that we currently have with capital requirements the banks have to go into the capital markets and issue for instance stock equity portion in order for investors to then invest in the company the banks retain that the

brokerage houses these are not banks this is not f.d.i.c ensure these are all money market funds and more money market funds are based on treasuries and treasuries if the price of treasuries goes up and really starts to spike it will break all these money market funds people will be wiped out do we really want to do this now of course not and that was you know then why do you have republicans like that on even saying there you have to quote one guy i mean and that that does not become tyrants not holding the debt ceiling using that is for another oh you know what let's talk about the number of times that people have negotiated over the debt ceiling you know you get eight zero eight times and fifty years. yes a few times but this is the one time when we're not going to do it right you know what the debt ceiling was originally put in place back in one thousand. nine hundred thirteen whatever it was it was put into place so that the treasury could have more flexibility in borrowing money to fund world war one because it was like we've never had a war before we don't know what is going to cause so congress just so you can go ahead and borrow up to this see