tv Prime Interest RT July 18, 2013 2:29pm-3:01pm EDT
the monetary paddle but today he told congress that unemployment could fall because people simply drop out of the job market which is something that we've been hammering on for weeks do you think the fed watching dr interest bob i really do think he does and speaking of the fed the consumer financial protection bureau finally might have an official leader this is after elizabeth warren the head of the agency in an interim basis before becoming a southerner and oh that connection to c.p.s. the falls under the aegis of the federal reserve i mean its budget comes from the interest on all the securities it buys as part of q.e. and it also means the agency does not have to report to congress every and boring profiles as agency would later in the show finally and still are talking up the fad you're out of rebukes and burn named mark carney at the newly installed head of the bank of england said and no more bond buying in other words and no words for england u.k. central bank voted unanimously against more bond purchase
a british pound rallied and the dollar found in just a bad bob english will talk about the fall and john of course signed with john breaux and james gets a list of the commodity customer coalition as to what's in your prime interest. well the global saga continues as corazon appears in the crosshairs of the primary futures regulator that would be this you have to see but leaks from the department of justice suggest no jail time for the next goldman i x senator x. governor of new jersey earlier i spoke with the. listen john rule of the commodity
customer coalition and i first asked about the most recent developments in the corazon court case is. it's pretty good news for customers all around to see if to see a couple weeks ago simultaneously filed and settled with m.f. global inc and customers are going to get one hundred percent of their money back both those who trade on u.s. and foreign futures exchanges and we anticipate that coming probably around here around this year also the c a t c s filed a civil foresman action against toronto. complaints pretty damn name i think it's a good story in there and if there's a good story or a bad story behind it if you're our point of view but good in terms of actually nailing this guy at least for civil offenses right and john what are the odds that quare resign is actually prosecuted by the d.o.j. because we've seen this story kind of floated by the mainstream media it's not going to happen but we've seen this time and time again we had the whole vapourize
thing last year the media just seems to be a tool kind of of of you know the prosecutors and are we actually going to see a case against john corazon well if you believe what you read the answer is no and of course in a criminal proceeding you have a higher standard of you have to go beyond a reasonable doubt much lower standard of evidence in the sea of the civil case but i think the justice department is going to take a pass here i think there are clear violations of the commodity exchange in which everyone seems to be out there saying you've got to prove a fraud prove fraud but actually don't have to prove fraud if you prove willful violations of the commodity exchange act so punishable by up to ten years in prison at the other day though the d.o.j. i think doesn't prosecute well they could also get him on perjury or obstruction of justice that's how they got martha stewart so what are what are the odds of that well it's all up to prosecutorial discretion and we're going to push the department of justice to do we think is right but at the end of the day if we can't find someone over there who's willing to make a case a case will get made ok let me ask you james edith o'brien ok we only see two people named in the suit by this. see against john core design and beautiful brian
the little brown was a treasure she wasn't even an executive why is she in this why are we not seem to people like laurie ferber who is general counsel named in the suit. yeah not even the treasurer of the assistant treasurer i drove around of global i mean it's pretty mind blowing to read that complaint and read the trustees reports and see all the things that the cio wonderfully said and did i mean it looks like she kind of took it upon herself to try to play savior of the company and. you don't want to bring anybody else down with her but. i mean the appears that she clearly knew what she was doing was wrong and then we go in and be her and of course i both knew that they were transferring money out. and the question is the plausibly could have belong to the company itself on the global because m.f. global kept its own money in the customer accounts but it seems as though based on the dialogue that we have now that they knew it was actually belonging to the
customers is that your understanding yet and i think that when you say plausible we're talking about plausible deniability here i mean m.f. global made a five hundred forty million dollars manual adjustment with no supporting documentation whatsoever in order to claim that they had exactly two hundred million dollars left in of their own money in that account when there was nothing to indicate that that was true there was a run on the bank going on and then they immediately transfer that money to their own house account to j.p. morgan bright and promptly wired to j.p. morgan all without the approval of the c.m.e. which as the sorrow had come in there and said no wires or a lot of the customer accounts about are written for approval and let's let's get to that c.m.e. why was the direct is why were the directors of the c i mean not followed and why has there been no up or enforcement against well the seamy was asked to stand aside by the. c. of t. c. and do their own investigation in terms of why. the regulation or why their request
was a ball of think that's pretty obvious and that they knew they inform c.m.e. that they were transferring this money out of segregation the seamy of what is that stop you don't have the money there we need proof we need documentation that the money is there right well and let's talk about it it's a bright again she has one of the most high powered attorneys in washington d.c. read women in the how did she get this person and is there any back story behind this that we can tell well i don't know how she was able to get him in particular it's a high profile case it's entirely plausible that he would want to just take the case over these very expensive i'm not sure exactly how she's going to be able to afford a thousand dollar an hour attorney as we go for have potentially years in litigation on this for a cost millions of dollars so in a sense they're i'm not sure where that money is coming from ok and let's talk to james now about the latest efforts you're talking with congressman grimm you are trying to pursue criminal charges is it possible that there is going to be a grassroots effort again by people calling their senators calling their congressman that will support
a case against yeah and what we're primarily working with kareem on it is two things one is a commodity customer protection act which has some improvements to the climate change act to protect our summers but also on the perjury case because i think the perjury case is really open and shut i mean if anyone is paying attention to these hearings i mean corps and said i simply do not know where the money is that's a lie he knew it was j.p. morgan and he said that he had no knowledge that customer funds were a risk until the night before the bankruptcy when even before we saw the see if he sees recordings we could read in the trustees report the j.p. morgan's chief risk officer barry's who broke called course i'm personally put him on notice of this and let's talk about that because there was an e-mail from laurie ferber that happened on the monday night of the bankruptcy she basically said there is a shortfall of course more customer funds and then the bankruptcy attorney for m.f. global the next day said there was no such shortfall so i mean are there going to be any repercussions from this. i mean we don't want more work at all of us i mean
i think of it if you really look at this case there is malfeasance all over the place and i think it's very suspect as well the lori ferber and brad avallone who were injured goals of the collapse and about global more than later paid to help on why my firm for months at m.f. global holdings you know former director of the f.b.i. claiming privilege on their behalf and in refusing to turn over documents to investigators the whole thing just a small right well let's talk about what are you doing right now to improve the protection for customers in the future is industry what it what are you doing right now well the first thing we're doing is we're working on a bill with representative grimm that helps solve some of the conflicts between the bankruptcy code in the commodity exchange act to give customers priority over all other creditors to their money at a commodity broker bankruptcy we think that's extremely important we're also working on a private insurance model where customers can purchase insurance for their commodity accounts we think that's a better solution than having yet another alphabet soup government agency exactly
who has some bankruptcy authority so maybe we can sit down and talk to fifteen different agencies before a broker goes bankrupt just figure out who's in charge well let's talk about that you see i know that you say it's opt in but how exactly does that work of not everybody upset and are some people going to be left out of the insurance protection scheme will of course if you don't buy a home insurance you don't get your house and sure if there's a fire so yes we do all that are left out but that's by design some of the more sophisticated bigger players don't need insurance necessarily because they have had years maybe i will they have they may have crop insurance so they may have means to mitigate how much money they have in segregation in a given but for the smaller players who may want you know just a twenty five thousand dollar insurance policy how much could that really cost this isn't you know this is a five hundred year flood of it doesn't really it's not a cost that much of the day all right let's talk about gary gensler now he is of course and we talked about this a couple weeks ago he is a guy who worked actually under a chorus line when corazon was head of goldman sachs and gensler kind of abdicated his. role as an investigator into this whole m.f.
global mess when it came out and then you know he was in charge for a few days and they dropped out is he really the person that needs to be in charge of the swaps derivative market the seven hundred trillion dollar market as it exists today well it looks like he's going to go holy see as a whole is is. is pretty much the entire commissioner slade is being turned over here i mean summers has left chilton's term has expired gensler is not going to seek renomination supposedly so i mean you might see a completely different commission six months from now but gansler i think his real skill is it's not so it's really like pretending like he's doing things to protect investors when what he's really doing is help protect the monopolies the big banks have in the swap deal or space. that certainly seemed like it was his intention and that was all he cared about their work because there were complaints from another commissioner that the technology at the c.f.d.
sea was not being properly addressed and now we have this new person amanda. she doesn't really have any experience in the in the derivatives or the future of space what are the i mean how is she going to contribute to having one of the largest futures organizations and i start a comment i know she's got so i think experience with senator stabenow on the committee stuff but i've never met her i don't talk to her i really know very little about our so it's hard to speculate as do i but i will say is that very often the case with c a t c commissioners is we sometimes get people who have much more capitol hill experience and they do market experience and that's one thing i'll say in defense of chairman gensler going to does have market experience he's one of the few guys there now who has a legitimate bona fide market experience that i think you want maybe not necessarily goldman sachs' running to see if you see what you do want people who had that kind of experience either on the investment bank side on the buy side who have that experience or. on the see if you see it more so than creatures of capitol
hill i hear that completely thank you so much this has been john breaux and mr catullus thank you so much for joining us today thank you. coming up terry and boring profiles the consumer financial protection bureau that's a fed funded bureau founded to make sure consumers don't get the short end of the stick but it's the fox guarding the hen house and just exactly who has been appointed to head fox don't worry j.p. morgan primary dealers subsidies will continue unabated then later i do all james catullus over the role of futures industry regulators and as a newly appointed national futures association board member you won't want to miss this one. wealthy british style some time to find the time.
markets why not. come the. find out what's really happening to the global economy with mike stronger for a no holds barred look at the global financial headlines tune in to conjure reports . he's. exactly what happened that day i don't know but a woman got killed. years later is when i got arrested for. for crime or did not
do. we have numerous cases where police officers lie polygraph results. people to consider the police officers don't beat people anymore and it just doesn't happen really. in the course of the target because there's been this is like no because the psychological techniques are more effective and obtaining confessions than physical abuse they were taking they could do what they wanted they could say what they want and there was no evidence of what they did or what they said.
after a stall the battle to usher richard cordray through the senate confirmation process he was finally confirmed as the director of the consumer financial protection bureau last night the c f p b it will affect hundreds of millions of consumers so let's take a moment to profile the agency it was created with the passage of the dog brain financial reform law of two thousand and ten before the agency's a formal opening elizabeth warren was in charge of implementation convinced she would never pass a senate confirmation that president obama did not nominate her as director the federal agency is responsible for the oversight and regulation of consumer finance protection wise its mission is to make markets for consumer finance products and services work for america they do this in three ways first is through education the agency believes and informed consumer is the first line of defense against abusive practices and second they have the power to enforce federal consumer. finance laws
over banks credit unions and other finance companies and thirdly they study finance trends to better understand consumer behavior now this third row of the c f p b has sparked privacy concerns the agency is collecting personal financial data but they're not transparent about how many accounts they're following and what specifically they're used for richard cordray tried to alleviate congress's concerns during a senate banking hearing. really interested in personally identifiable information for us it's just a hassle and it means we have to we have to make sure that it's being properly handled that it's not being disclosed that we have to devote a lot of time and attention to guarding it carefully and making sure it's handled the way every other agency under federal law has to handle it. but this is just the start of transparency concerns at the c.f.p. be the agency is unique because it's structured under the federal reserve and its budget is set by the fed not congress so the director does not have to testify
before the senate appropriations committee further the c.f.b. has been clear that corduroy would not testify about it so they are my credo expressed his concerns during the nomination of rich cordray. unfortunately the c.e.o. of p.b. lacks this transparency and openness regarding its operations budget and intended. its intended mission. the dog frank that specifically elevated the director of the c.f.p. the so that he or she holds unique power to determine the agency's budget and mission priorities without any public debate or input from congress. senate republicans were very concerned about several structural provisions within the c.f.p. and they vowed to block or dres confirmation until the single director leadership was replaced with a five member commission and its budget was subject to congressional approval republicans feared that a single director agency would put too much power in the hands of any one person it
has been said that the director will have more power beyond anybody else and the federal government they also one of the agencies budget to be under congress' jurisdiction however at the leaders of this opposition team it took an about face last night after striking a deal with cordray which hardly met their concerns the c.f.e. we issued a statement with said that they're they're happy to provide informal briefings to members on the budget now that richard cordray has been confirmed the c f t v has its first director the bureau that's taxed tasked with protecting consumer finance does not have to answer to congress regarding its budget this is the profile of the consumer financial protection bureau your first off balance sheet watchdog now let's get to today's daily duel.
well joining me for the daily duel today is james catullus co-founder and president of the commodity coalition come out of a customer coalition sorry and i understand that you were recently involved in the polar bear experiment or accident i'm not sure how that happened. no it was actually sharknado ok once we got that out of the way let's talk about your experience on the national futures association board how did you get there and what is this doing for us in the futures industry wasn't easy to get there you know despite all the john minds work the mammoth global imperator and bankruptcy we saw it's a petition to get on the ballot so we petition do we want to contest an election i think i beat out a guy who was on the board since i was fifteen and now that we're there we're trying to kind of take a more political tact or
a more diplomatic tactic to getting things done i mean so there is for him but i mean what is he and if they actually able to do we saw the you have to see we're just talking about gary gensler he kind of recused himself see if c. is an absentee landlord what good can the n.f.l. you do well so that if they could do a lot of good. to clarify like what it does it operate on a thirty delegated to hit from the sea if you see right itself regular so we saw organizations that would governs its member firms which are commodity traders commodity hedge funds commodity brokers things of that nature and what it does is it kind of acts. like a team member with a c. if you see where it's going to doing some of the audits it's doing some of the investigations and it could you know we have only seen that on the security side we have finra and bertie made off was once had a finra i mean is there any really oversight at the end if a now that you're kind of involved with it i know you can't speak necessarily on behalf of it and if they but it is a real change being affected i think there is and i think if she was kind of the
end phase made off situation i mean the fraud being perpetrated there for twenty years the auditors didn't catch it and in the wake of that you see a lot of push for change so along with myself and john there are three other directors who position it on the ballot so we've got some new blood there on that board and then if they commissioned a special report identifying like things that they need to change to make the organisation more. proactive and i think they've been working on that well i mean with the end of faith i have to go back to this this article of this actual letter that i found in two thousand and four that i'm going to read from the n.s.a. supports to propose amendments to see up to see rule one point twenty five allowing f c m's to engage in the purchase agreements with collateral deposited by customers the safeguards included in the proposal such as marketability of exclusion for specifically identified property and required compliance with rule one point twenty five report provide ample protection for a customer deposited securities that's a lot of gobbledygook but basically that's how we got to m.f.
global and then if they supported this so how can we rely on a self regulatory organisation that supported the very measures that got is to john corazon situation well i guess there's two parts to that so one enabled incredibly risky trades however if you read the trustees report the customer money has now you know if you're getting support because we're money was not lost due to that incredible leverage it was lost because when that trade was at the end of the line course i mean it took the customer money out of those accounts and transferred to j.p. morgan to meet margin calls so this rule is now gone only and i don't think it needed to be there in the first place but to be clear like i am of global happened because corazon decided to steal well yeah but they had very poor risk controls and i think the sea up to see had gone after them and john corazon wanted m.f. global to become kind of a goldman sachs type company and he wanted to become a primary dealer and in order to do that the c. of c. and the actual new york fed said you've got to you've got to stay straight for one
year so we hired problem in tory financial group you know these this big shadow regulator that had hires all these acts as you see o.c.c. people accept to see people on their payroll and they basically signed off on m.f. global's risk controls just maybe six or nine months before the firm blew up i mean what's up with this shadow regulatory process can we even trust that there is any protection for customers because of it well i mean sit. system wide i think it's very difficult like m.f. global would was subject to a whole slew of regulators i mean they were primary dealer regular but they were a bit i see in me like and in favor of their sales practices i believe not the actual exchange activities but our regulatory system just nationwide is not streamlined and it means a lot of improvement while in great britain they have the f.s.a. the potential to stability associate actually that's the wrong turn of nation but it f.s.a. and they do both futures and securities but we see
a lot more problems in the city of london they have almost unlimited loveridge so is it really more a streamlined regulatory process is that the answer. well i think that that would help give some clarity but to me the real answer is always enforcement i mean you're against lower go but i think at some time last year say see if you see doesn't have the budget to carry out all the enforcement actions that we've like to do so we've got to go ahead and drop some enforcement actions the same time passing four hundred seventy one pages of new rules so if you can't enforce the existing rules you have what the hell are you doing and more rules well it seems like you spending a lot of money just creating new rules and one of the commissioners was complaining that he wasn't updating his technology and there was a serious rebuke on there was a serious rebuke on gensler because he was spending too much money on you know this new swaps derivatives regulation and completely abandoning the futures industry so can we count on the futures industry to be regulated by the c f t c at all especially in light of you know certain whistle blowing scandals in light of the
comics that have just gone unchecked. i hope so honestly i mean you know it's a lot of there's a lot of question by the way it's a loaded question but that's a fair question and i think we're going to see a lot of turnover at the c.f. to see and i can't predict whether or not it's going to be for the better for the worse and i think we're really going to have to see how their commission involves but one thing i will say is they do seem to be working with the industry quite a bit to improve customer protections and. one of the things we're trying to do in the end i think is not just be proactive and fight like the last war of. global but one of the. new types of fraud is well we've got to say goodbye here if you want to weigh in on today's show be sure to like us on facebook at facebook dot com slash prime interest you can follow james could tools right here at james catullus and you can follow me english thank you so much for joining me on today's duel.
and it was the bait and switch day at prime interest our beloved chairman testified in front of the house this morning he promised the moon and low unemployment then he threw that out the window and said just trust him i'll be back in front of the senate and we're not expecting much difference and after years of broader bottling the monetary spigots of the bank of england mr carney it just the home has been bad . sorry but c. and now that richard cordray has been confirmed as the director of the c.f.p. be the top consumer watchdog won't be talking to congress about its budget and of course zine or not to clarify that's the game the mainstream media play is leave the fourth estate to us here at prime interest will tell you the elites and regulators and that means you mr sacks and thanks for watching up please. tomorrow
eleven aiding the enemy sticks as a military judge sift through whistle blow bradley manning's charges which could potentially could the private life behind bars with no reporter was there shortly also the come to fill streets in central moscow this evening in protest against the five year jail sentence for russian anti corruption blogger. he's been found guilty of embezzlement and. also ahead nothing on the table for syria america's top general reveals that he's presented options for a military intervention. and the president is considering whether to use the. money to be made by getting britain out of the e.u. we've got a report coming up on how one think tank plans a road.