tv [untitled] April 20, 2012 4:30pm-5:00pm EDT
good afternoon and welcome to capital account i'm lauren lyster here in washington d.c. these are your headlines variable twentieth two thousand and twelve u.s. banks will now have more than two years to comply with the global rolled of federal reserve and other regulators announce this pushes the date back significantly from what was supposed to be the deadline of july this year and it means banks will have to warriors to push for changes to regulations that are supposed to stop the kind of excessive risk taking with federally insured money that helped lead to the financial crisis in the first place and speaking of lobbying for regulation so they work for you remember john poor design m.f. global reportedly did just that helped to allow him to make the huge bets on europe that brought the burned down edge of more than
a billion bucks of customer money with it all next week the case heads to the hill again and new e-mails have been produced has more information come out that helps build a criminal fraud case and what is the show is about the bigger picture and going after possible crimes committed during the financial crisis that we've seen so little understand for and as the international monetary fund has its spring meetings are going on right here in washington forget the play by play analysis of who's pledging what amount of money to boost i.m.f. firepower what is the real role of the i.m.f. we'll break it all down in a word of the day web exclusive you can catch our you tube channel this weekend let's get to today's capital account though.
it's friday so let's take stock of this whole m.f. global issue because it's been almost six months since and the global surprise its customers with this rather. hollow when surprise bankruptcy filing. and the global filing for chapter eleven bankruptcy protection but we are continuing to track the bankruptcy of m.f. global. jon for signs we are continuing to go through all of this. this bankruptcy filing just this morning by m.f. global. everyone was paying attention when it was breaking news but since then we've heard reports from sources close to the investigation in the mainstream press saying that that case has gone cold but the case really gone cold or those who are in charge of the investigation the regulators and the trustee is simply spray and teflon on every potentially sticky piece of evidence that could lead to criminal
prosecutions and ultimately the recovery of stolen customer money we wish that m.f. global were just a one off affair of bad apple if you will unfortunately it seems more likely to us that this is another milestone in the history of what we see as criminality that is swept through the financial services industry like some sort of medieval black leg the black death for capital formation it seems the only time people are held accountable anymore is when they commit crimes that affect the super rich bernie madoff is a prime example how long did it take for the media and the courts to hang the man accused of running the largest ponzi scheme in history not very long or a made up a securely behind bars but john teflon dawn quarantined is busy who knows what ordering carmel property you know that the local starbucks as he goes to shop for office space in new york is reports have come out only by the load in of discontent
and the dating from the blogosphere and shows like this account what a nuisance we must be to the new god fellows of wall street but ok that's not entirely fair we have had some hearings on capitol hill and there will be another one next week planned on tuesday by the senate banking committee remember these have really been the fertile ground for some eyeopening statements made by m.f. global execs take a look. i was not aware of the transfer before it was made so i would know that i was away but the majority of that week and i apologize in advance if i'm unable to. pull civil responsibility was of the global finance function i was not responsible for but as you could see it was quite a lumina so tell us what we should your next be is someone who has been following this all very closely since the start is mark malema host of uncorrelated investing show and author of high performance manager is a veteran of the futures industry was shocked when this all went down and since
then i think he's only become more shocked i would imagine it everything that you've uncovered first mr malema welcome back to capital count it's nice to see you . likewise on now let's go to this hearing because there is one coming up next week and last time we had the legal counsel of the sea oppose the treasurer your deflecting blame on the case of the treasurer pleading the fifth now this hearing we're going to hear from some new folks the trustees in that case also regulators and for money it's been reported this is supposed to focus on what can be done to prevent this kind of thing from happening again my question to you mr mullin what really should be the focus of this hearing next week. well i hope that this isn't a message that's been sent that this issue is going to be swept under the rug and that this is going to be the end of the global investigation because quite frankly i believe the world is watching informed people know what is occurred here and i think there is going to be a hit some market integrity and the perception of u.s.
markets security thought enough global's entire swept under the rug that's my concern so in these hearings there are some great people to should be answering some questions you know in my opinion louis freeh among them you know mr freeh it's been documented held the information global and there were reports that louis freeh was supposed to be providing information to d.o.j. but evidently that didn't happen because mr corazon six months after what is arguably a criminal offense has yet to be questions ok so you know but i find that troubling well let's get into a couple of the points that you made because we have politicians railed against and of global hearings according to you there's been over a hundred thousand letters sent to congress about this and of course there is a report of one point six billion dollars that's missing from everyone from farmers to ranchers to hedge fund managers investors it's part of an investigation what is
going to be a question do we know if he has or has not or what's happening with that well in congressional testimony on march twenty eighth we learned that he has yet to be questioned and then that that also confirms an earlier report by the new york times that identified that he hadn't been question and that's very unusual usually if you look at the other cases they question the leading people in the company right away the siloam and to not question the principle officers of a company where fraud was alleged from the start is just beyond belief to me what do you think is going on. well i tend to think these are political decisions and right now we're in an environment where if this can be swept under the rug it's going to be swept under the rug and you know if that happens you know i really think we're going to take a hit in the united states in the in the financial services industry i was speaking with a hedge fund manager from korea the other day and he was telling me all about how
they're protecting investors over there now korea had their bout with scandal and they learned from it so if you look at how korea for instance is setting up their alternative investment space it's very interesting i think the u.s. we want to be the investor protection haven not necessarily the place where people are afraid to put their assets i think that's a key point that you know if we go forward in just sweep under the rug there's a good chance that you know we're going to be as an industry fighting harder and harder to attract capital to the united states i think that's an interesting point you make and something about that i talk it has rattle rattle and the u.s. i have people from switzerland that if that i'm just to be clear and follow up is the person you're talking to in korea were they aware and concerned about them. oh yeah my assessment of you know my individual experience is there's not a professional investor who is not aware of. you know i and i talked to
a number of this conference in new york that i was that there were a number of people from different regions of the country different regions of the world and you know i deal with a fair amount of people from outside the united states and i can tell you that there's concern among people who are informed and you know some people say oh this will go away people will forget well intelligent people you know professional investors family offices these are people that are going to remember and i just i fear that if enough global swept under the rug we're going to be damaging a whole segment of the market and as far as what it would take for this to not be swept under the rug and if there should be any kind of criminal charges or prosecutions against john i want to know because something into a crisis we really have not seen any of the major players be charged with crimes being prosecuted we've seen several cases but not major criminal ones and there's you know all sorts of speculation that can be had about why that is lots of questions that it raises but one for people that tend to be i don't know slightly
more conservative side than i am oh it's very difficult to prove fraud in criminal cases and they you know i'm not a lawyer so i don't really know but is there more evidence that has come out that would prove or that would substantiate a criminal fraud case or john or sign. ok well let's talk about this and i again like you i'm not a lawyer but if we just look at what has occurred there's criminality in the transfer of money it violated the commodities exchange act in two locations and potentially three locations so that's a fact so when we talk about the m.f. global money transfers we have to understand that they were illegal money transfers and you know that's just based on what's known in this case so there's criminality there then i think what needs to be investigated is the level of planning that went into this entire event i'm not going to say that john corazon wanted m.f. global to go into bankruptcy or planned for it to go into bankruptcy i'm going to say that question needs to take place as to exactly what they knew exactly the
instructions that they gave the back office and exactly the extent to which planning took place for them to wire transfer money to counter parties but then send checks to customers which john wrote pointed out in his great p.d.f. although that's one example of clear criminality a little bit more into doubt because one of the things that you need in order to prove criminal fraud is proving intent and one of the way that this will m.f. global bankruptcy has been characterized by sources close to it and pocketed by the media that i've seen is that there were a bit chaotic final days were a good customer money defense here and so who knows what happened it's very hard to figure out who knows where this you know billion dollars disappeared to you you're saying that there may be some evidence out planning you want to just expand on that again but we know about how this possibly was more of a calculated event. ok let's just look at what is publicly known for
instance the back office was essentially cleared out of the top three people the week that they were known to be going into a liquidity crisis this report in the wall street journal now futures industry practice is going to have the top three people in your back office in charge of protecting customer assets to have them gone at any point in time would be unusual but when you know that you're headed for a liquidity crisis when you know that things are going to be a little crazy you can not let those people go now in congressional testimony christine's or when ski one of those top three people the c.f.o. of north american finance called back to the office and she asked hey is everything ok there's still no it's fine ok so let's understand that mr corson is testified that things were so chaotic and you know mr branscum is tough to find that she called back to the office things were fine why didn't mr cord sign call the top
people in his organization back to the company it's all hands on deck at that point i would think but you know that's so that's one of the surplus point let me let me let me let you right there mark because this is that's an important conversation i love to get to a break which is going to unfortunate things right this second but we are going to come back in a couple minutes we're going to punish your thought and i'm going to talk to you about regulatory capture because it plays a role in this m.f. global case it's important to look at as we see that the volcker rule has been delayed and the time that banks need to implement it for two more years so right there we will have more with mark leno author and host of the uncorrelated investing show. and still ahead a loose change dedicated to me a loose change dedicated viewer feedback i'll share my responses to your comments from this week but first your closing market numbers.
if we just put a picture of me when i was like nine years old i like to tell the truth. i confess and i am a total get a friend that i love driving because he is a planned trip. he was kind of the jester. i'm very proud of the world without you has played. the game. you know sometimes you see a story and it seems so bleak you think you understand it and then a glimpse something else you hear sees some other part of it and realize that
everything is ok if you don't know i'm charged welcomes a big picture of. what drives the world the fear mongering used by politicians who makes decisions and to didn't break through it if it made who can you trust no one who is your own view with a global missionary see where are we heading state controlled capitalism is called sasha's when nobody dares to ask we do our t. question more. before the break i had to stop our guest mid-sentence as he was telling us all of
the things that fly against the face of the conventional wisdom perpetrated in the mainstream media about the global bankruptcy i believe the eighth largest in this country's history taking unprecedented more than one billion dollars in customer cash that supposed to be secular segregated cash that has not been returned nobody's in handcuffs we don't know the state of an investigation but here filling us in on how those days were not chaotic is mark melinde host of the uncorrelated investing show and author of high performance managed futures and he's been covering this since the very beginning of a very deep level really. pounding the pavement with this one so mark before the break i literally had to cut you off when you were talking about some of the questions that have been raised about the planning that was going on at m.f. global's bankruptcy do you just want to finish your point about what the significance is of the questions that you have. well i want you sir to get into the details of how an f c m operates and then compare it to the story that's been told
it really doesn't match and so you know when you start to look at planning that's when you get into intense and when you take a look at that check case for instance where checks were delivered to customers that bounced but wires went to counter parties that takes planning it's been reported that this was sloppy or keep in sloppy is when you don't do things consistently sending all checks to customers and then sending all wires to counter parties that's consistent and you know and i think once you start to get into this case you can start to learn that instructions were were sent from a certain levels i think that's what an investigation logically identify and then once you start to get into who actually gave the instructions to undertake some of these criminal acts that's where you sort of lead to the back office and and you know why i'd like to see them have a voice well what do you think that we would hear from the backup if we heard them talk and we didn't hear it at the bryant thing at beth. ok well in terms of you
know i can speculate and i want to make it clear that i don't know edith and i have not directly spoken to anyone who is a subject of the investigation but if i had to speculate based on informed sources you know some of what i might speculate is that when syringe. called back to the office she came in on a sunday she was initially surprised as quarter congressional testimony but you know the brand might have come up to it with a small batch of papers and said here's the problems here is we're overdrawn and here's exactly what happened and here's why it happened and here's some issues with these money transfers and here is the story of what happened they were shocked then they look around and they see no one investigating cory's time you know so all the sudden they are hard investigated on the record that they were they they were ask questions twice it was you know it was a hard investigation they were siloed after the bankruptcy they were put into communication silos they weren't allowed to talk to one another compare that with
the c. level executives who weren't questions and who ran the company afterwards and they were translate they had the ability to transfer money after the company declared bankruptcy for up to six weeks and you know there were some issues about certain holding companies finally bankruptcy later than other holding companies i mean it's it's it's just unusual it sounds very unusual mark i want to ask because when we talk about how we got bear in the first place how this all was allowed to happen how or if i was able to have these large business and then use passing the money we get into regulatory capture and this is i think important to talk about because we've just learned that the federal reserve and other regulators are going to give banks to more years to comply with the volcker rule which to me based on all of the things that i've heard from sources about how much banks are lobbying this regulation it is said to me banks had two years to either lobby for loopholes or a-q figure out ways to get around this role so. when we talk about regulatory capture can you talk about john because he lobbied against regulations that would
have put tighter restrictions on customer money this was of course months before m.f. global a bank doing the very things that this regulation was supposed to curtail so what do we know about regulatory capture in this case because there are some new e-mails from the c f d c i believe. ok well here are a couple of points about regulatory capture the the regulatory sources i talked to say that we're on a descending trend in regulatory capture as a matter of fact if these as we manage futures trend followers they would and so on this thing it's continuing to go down and this is not a one off and i think you know we started in two thousand and eight and i think we've gotten to the point now where a case can be made that you know regulators are not just turning a blind eye but in certain cases they might be aiding and abetting to a certain degree and i think that as you see documents in my opinion deserves investigation and then coupled that with the decision on one point two five that
was a celebrated lobbying effort i guess you could call it celebrated and if you look at that chill why twentieth date that's an important date because that's the date that they were supposed to be a decision on rule making but they held off that decision so mr kors on and is so vague that trade would remain intact now it can be logically argued that if the c. f.t.c. did nat's. its soft shoe that rule one point two five at that point mr corps and later bond offering on august second of that same year that the three hundred million dollar question will bond offering would have been very different and there was there was talk. and part of what could where the senate investigation could go if they wanted to really go somewhere is that search to talk about all the meetings mr course i had with finra who actually stood from what i'm told stood up to a course on but the f.c.c. pretty much stuck back to down and there was debate there was dissent from what i
understand within the c. f.t.c. as to whether to give mr corps carte blanche spurs definitely a fight and it's just amazing missed ten cores and probably has more influence in washington d.c. than any trader i have ever known and there were no. of course i personally and mr malone we have to leave it there the rest is of course history but important lessons as we look at regulation it continues to be stymied or a lot of the so that it doesn't even get to the point that it had in the first place as i believe the volcker rule illustrates thanks so much that was mark maleng author and host of the uncorrelated investing show.
it's friday so time for viewer feedback in this week is a loose change dedicated your feedback as there were a lot of comments that caught my eye so earlier this week we talked about the expansion in drone education as it becomes a college major as well olds with quite successful looking prospects and eric friday of the daily reckoning i'm very touched to say he liked it and in his latest post on barrel drones and other invasive species quoting from the show here take a look at his piece as i said that's the title feral drones and other bases species and he he like that there's a bull market in targeted killings and he quoted that and then goes on to write about the bull market and governmental intrusiveness which he says is very robust and trending sharply higher in his view it is a great read i recommend it and thanks to eric cry for including us in his analysis and your analysis if you're watching now we also bantered about payday loans which
wells fargo is getting into the business of and which is increasing in political involvement via increased campaign contributions if you need a refresher this is what they are. i need extra cash right now one day my car broke down and i wasn't going to give you till friday whatever the reason when you needed emergency cash i made a phone call and that was payday one is here around the clock so we asked if we asked your opinion on a payday lenders should be regulated at the end of the show and we did get some different responses so white chocolates said payday lenders should not be regulated the birth of crony capitalism comes from the idea that regulation is good either the regulators don't do their jobs or they go to bed with the very institutions they are supposed to be regulating the free market is the ultimate regulator first of all great point about regulators not doing their job or being in bed with the institutions they're supposed to regulate because we see cases of that time and
a murderous right wing fanatic this is what a norwegian court must determine in the wake of last year's massacre of seventy seven people. you know sometimes you see a story and it seems so poorly you think you understand it and then you glimpse something else you hear or see some other part of it and realize everything you thought you knew you don't know i'm tom harvey welcome to the big picture. there hasn't been anything yet on t.v. . it is to get the maximum political impact. before source material is one hopes he journalism honest we. we want to present. something else.