tv [untitled] November 7, 2013 8:30pm-9:01pm EST
the dogs. i am the president and i'm a society that case i'm big corporation trying to convince to consume can do. the banks are trying to get all that all about money and i'm actually sick for a politician writing the laws and regulations to tax bankers. there's just too much. today's society. that. it's like an active camp at guantanamo where patients are horseback. or
strike turn world's attention to the place that sometimes gulag of our times. there i am marinate and this is boom bust here are some of the stories we're tracking for you today. first up the federal reserve is considering changing the goal posts heard short term interest rates will get beyond the jargon that's coming up right ahead and jacket able to grease the wheels of power on capitol hill as one of the most infamous lobbyists in d.c. ever and iran sat down with us earlier today to talk about dodd frank and the politics of money you won't want to miss that one and ever wonder what goes on behind the doors of the gilded doors that is the goldman sachs we've got the guy who can tell you off or stephen man doesn't work to goldman for more than
a decade and joins me in studio today to discuss his new book but for now let's get to the. i was a look at last year the federal reserve said it wouldn't raise short term interest rates until after the jobless rate dropped below six point five percent but according to new research the fed suggested it could keep she. term interest rates near zero for longer if you lower the threshold for the unemployment rate now these graphs that you're seeing right now these are from the wall street journal and they show how the fed is trying to thread the needle between short term interest rates and inflation the research argues that the market's threshold for rate increases
could be more effective if it were lowered from six point five percent to five point five percent elsewhere tesla is down their stock is down twelve percent today after the company reported disappointing q three earnings tuesday tesla reported a third quarter net loss of thirty million dollars or thirty two cents a share that short of analysts expectations of positive earnings of eight cents a share now tesla delivered a record fifty five hundred model s. luxury electric sedans that's more than the five thousand that c.e.o. must have previously forecasted would be delivered but still fewer than some wall streeters had expected this quarter tesla intends to increase production of its popular model s. in order to meet rising demand for the car both here in the u.s. and overseas now tesla opened trading on the nasdaq today at one hundred fifty five dollars a share and the price fell to one hundred sixty four rebounding but the sell off of
tesla triggered the exchange short sale circuit breaker which does not happen very often now check this out this is a video of a tesla model s. exploding there it is and this will give you an idea of what kind of looks like when the circuit breaker you know. went down earlier today i'm totally joking that's nothing what it looked like. you don't hear that here finally regulators are dropping like flies over the commodities futures and commodities futures trading commission bart chilton is the latest watchdog to announce his departure from the c.f. to see now the outspoken and colorful official says to leave his post at the end of the year since two thousand and seven shelton has served as the agency's most liberal commissioner and hits his surprise exit coincides with the agency's decision to propose a rule that he long champion for his so-called position limits which would rein in speculative commodities trading this is what he told r.t. last year about the difficulties he faced in implementing the rule. fortunately
we've been slowed down there have been delays here and there from capitol hill at the agency itself we've been held up by something called cost benefit analysis which is an extraordinary step you go through to ensure that you're giving people the actual cost of these things but it's been more like cost benefit analysis paralysis in my view and we've been hindered by threatened and actual lawsuits in analysis paralysis now he was a candid wall street critic and unapologetic supporter of dodd frank chilton is the latest high level departure from the agency the cia f.t.c. chairman gary gensler is planning to leave at the end of the year as well while enforcement chief david mr stepped down last month and joel so more a republican commissioner quit in july mr chilton did not specify a reason for the departure of departure date or his future plans. those are some of your advise for this wednesday november sixth twenty thirteen.
jack he was one of the most prolific lobbyist of all time so ambitious in fact that his work landed him behind bars in two thousand and six was sentenced to six years in federal prison for mail fraud conspiracy to bribe public officials and tax evasion join me earlier today from our new york studio to discuss the lucrative business that is the lobbying industry and i started off by asking him how soon after the passage of dodd frank did he big that the lobbyists of k. street started working to have this arranged the bill in the interests of their clients. well i'm not certain they ever stopped trying to do that regardless of the passage but let's give them the benefit of the intel say it was ten minutes. how very funny answer how good
a job do you think they did out of disarray davis bill. well i mean i think they're doing a very good job at moving legislation forward that's going to pick it apart piece by piece of course the the bill about swaps is one of the examples these guys know they're the role they know how to play the game and they know what needs to happen to pick apart a bill like that not that it's easy by the way it's always easier to play defense a sub something from becoming law than to try to change it or make it become a law so they do have that disadvantage but they're doing a phenomenal job from a lobbying point of view they're actually doing a great job that actually is a perfect lead to my next question about the swaps bill exactly one week ago today the house approved a bill that the swaps bill which was designed to undo a measure within dodd frank requiring big banks to separate their riskier derivatives units from their f.d.i.c insured units however the. the bill was passed so banks can now be as risky as they've always been but now here's the thing that i
want to ask you citigroup the lobbyists they wrote this bill or at least seventy of the eighty five lines within it as a former lobbyist yourself how often does something like this happen in the financial services industry. well not just financial services it happens throughout the entirety of the government what happens is yes especially in financial services matters health care matters some of these issues are very arcane very difficult to understand and they have incredible detail so people on capitol hill sometimes out of frankly good intentions try to bring in experts oftentimes those are the lobbyists the problem is as you've identified on the show is that when the lobbyists for the special interests are writing the bill is from their perspective so they're able to craft it in a way that is certainly not only favorable to them but gives them exactly what they want now this leads me to ask you how did you choose which congressman you wanted
to target and which congressman or women were usually the most susceptible to your powers of persuasion. well normally what a lobbyist will do is they'll try to figure out the chain of decision making who is going to control bill who's going to be able in the case of where you're trying to stop a bill what members are going to be most active in trying to stop that bill so you don't necessarily have the same players on every issue once you've identified what your issue is who are the committees who in the leadership is going to be in charge of that you will then laser in all those people making sure if you can get there on your side and if they're not on your side finding a way to marginalize them and get them out of the picture but it's very much driven by who is involved in that particular issue now i want to turn to the subject of tax avoidance now tax avoidance by a major american companies as then a subject of a lot of controversy lately and you know a little something about offshore tax exemption exemptions given your work with tyco are tax loopholes the kind of never ending gravy train for las vegas.
well it's certainly one of the moment you know because of the size of the federal government and the fact that our federal government is literally involved in every aspect of our lives the entirety of the federal government is one big gravy train for lobbyists there are tens of thousands of b.s. unless you're lazy you have plenty to do and plenty of money to make as a lobbyist as it's a continuing employment certainly tax the whole issue of tax has become a very big a landing pad for people who come off capitol hill to become lobbyists and have that expertise and it seems to be never ending because there are thousands of pages of the tax code and thousands more coming so i think that is certainly if you want to be a lobbyist or on capitol hill when you have expertise in tax you shouldn't really wary where your kids are going to go to private school what clubs you're going to join you're going to be just fine now i like you said speaking of experts i got to ask you are lobbyist experts exploiting bad government policy or are they experts
at an influence in the creation of bad policy. the answer's yes there are. yes correct you know a lobbyist job and i am not a you know i was a lobbyist and one hopes a lobbyist for not doing something that's detrimental to the general public but some lobbyists frankly don't care about that they care only about the narrow interest the special interest of the client who's paying them and the rest of the world can just go jump on jump over the board you know it's not really important to them so i think that unfortunately the lobbyists do look for opportunities where they can take advantage of bad government policy make something good for their clients out of it or they will create policy that sometimes is good to give them their due sometimes it's bad but it doesn't matter that's not part of the calculus the part of the calculus is how does my client move the ball down the field for themselves and now you want to jail for conspiracy to bribe public officials and
tax evasion as well now after your conviction how would you say lobbyist have adapted in order to avoid jail time themselves well i think it's important to note that ninety nine percent of the things i was involved in were legal and which is actually quite disturbing that most of the time you really don't need to cross the line and those who are crossing the line often are going to get into a situation like i was in which is the ends justify the means and you really want to win and it's important that are xander but most lobbyists actually don't get near the line they don't have to get near the law and the laws are written by lobbyists and by people on capitol hill who want to be lobbyists in a way that frankly you can be completely contemptible within the law and never have to worry about going to jail now as a lobbyist when you were you were known for your safe cracker method which was a technique of raising money in order to get in the door and in the good graces of congressman what are some of the other tricks of the trade when it comes to being
a standout lobbyist today. well i think there are unfortunately are so many tricks of the trade you'd have to have a five hour special person really even get into the service of them but some of them would come to mind for example lobbyists often offer jobs to people on capitol hill hoping in fact that they'll come work for them perhaps a year or two later and then for the year or two after they've basically agreed that's where they're going they're working for the lobbyist anyway so how do you have somebody on the government payroll who is preparing to go through that revolving door and cashing them their public service to be a lobbyist but in fact they've started working for the lobbyists early on so there are again too many ways too many tricks of the trade but that's one that comes to mind immediately now i've got to ask you jack and be honest with me when you read dodd frank for the first time were you thinking just down i have wished i was still in the game i could crush this legislation. well i mean i guess after i was out of the game in some cases as i was when it was passed i looked at
a lot of the legislation and wondered how do they keep getting away with this particularly the reform bills the reform bills being you know well intentioned by some people but not well intentioned by others so as a lobbyist or a former lobbyist i often looked at what was going on scratch my head wondering how they keep getting away with this stuff not necessarily thinking well gee i wish i could go back and be a lobbyist that's not my interest at all but thinking at times as you mentioned well maybe if i were a lobbyist i would really be able to cash in on this multitude of unbelievable loopholes that are that are sitting within the bill now finally i want to ask you this eugene scalia who is the son of supreme court justice antonin scalia he is known as the pit bull of lobbyists and one of the best there is when it comes to the financial services industry if you need something done in the financial services industry you call him and who in your estimation is the jacket from off of today. well i hope nobody actually you know for the sake of the country but
i don't you know it's hard to know it i think what happens is the media tend to focus or they try to focus that they can on personalities and a lot of these lobbyists they absolutely out of the public eye so the jack today or whoever is playing at that level we're never going to see that person the less like a jackhammer mop they wind up with a senator subpoenaing all their e-mails and dumping them into the washington post we're never going to know who that person is we were never going to follow them during their career they're going to retire having made millions tens of millions of dollars influence policy and we will never know who they were jack i want to thank you for your time and said on the subject we'll have to have you back saying thank you pleasure thank you. that was jack former lobbyist and current author still ahead what happened to goldman sachs we'll be talking organisation drift and business principles with author stephen amanda's after the break and in today's big deal is wall street brain drain the tech sector is gaining half try same effort
will discuss it at the end of the show and as we go to break here are some of here's a look at some of the stock numbers coming out of wall street today stick around. for great productivity gains are you paying prisoners a dollar a day to do any of the ten to twelve hours of work per day they're the most productive workers of america or the prison population and the polls are better than washington want to turn the whole population into a prison population and then they can say look this is so productive really. little these license plates of the goods a stamp oh there's a bit. more to the people who play a lot of the tickets and go to the casinos and blow the out of there so. people simply for so my only goal in life was nothing more than making money as
quickly as possible with what we got to offer the kids. so it would mornings wake up no one to sleep. so it's not a kindergarten or an orphanage it's a host where you live with your family your children five children and you can be a father to seventy children just like your job your husband to twelve mother. why you will shouting i wasn't ready it's like if a man proposes to you answer oh whoa i need time to think so when she called me mom i needed time to see with well i think. you could say mom is the most important. and you know they told me much here is stories about what their lives were like trunk mothers fleeing home and living on the streets listening to their world and it became easier for them to comb.
goldman sachs just two words and you probably already have now whether you think goldman is the vampire squid behind the financial meltdown or the market maker with a reputation for having the smartest and the hardest working employees there is one thing that's indisputable goldman sachs is systemically important to the financial system and the decisions that goldman makes reverberate throughout the markets now in one thousand nine hundred seventy nine goldman senior copartner john whitehead wrote down the firm's principles number one on the list our clients' interests always come first that's the first and foremost number one however more than thirty years later is this still the case that's the big question and to answer the question and get behind the goldman curtain i am now joined by stephen mandas
a former goldman employee and author of the new book what happened to goldman sachs . steve benen thank you i want to start off by asking you about some of the meat of the book you talk about the organizational driftin you say it occurred to goldman sachs what are some concrete examples of this organizational drift and its consequences for the company. will give you an example in terms of a story in the late one nine hundred eighty s. goldman was taking a british company public and they had an opportunity to get out of taking the company public and saving themselves hundreds of millions of dollars they had a legal contractual right and when they were presented with the opportunity to do so john weinberg who was co-writing the firm at the time said i don't care what the contract says we are not we're going to fulfil our duty we're told we're going to do it we're going to stand behind it even if the contract legally allows us to get out of it today when you look at goldman executives when they're speaking about
their duty they speak about it more and from a legal perspective so when goldman executives were testifying in front of congress they'll say that they fulfilled all their legal responsibilities to their clients and i think that's proven to be the case but that's obviously a different approach than it was in the past. now one thing you wrote in your book is that goldman sachs after it went public in the ninety's to quote here we have this quote right here introduced an intrinsic potential conflict or ambiguity between putting the interests of clients first which was a goldman self-imposed ethical obligation and those of outside shareholders which is a legal redefined duty now you just kind of touched upon this but how does goldman really dealt with this conflict today. well it's certainly a challenging position to be in and i and i know they take it very seriously and so they're always trying to balance doing what's best for their shareholders and they're trying to do what's best for their clients but. what i pointed out was the
legally. in most cases have enough. to serve their client's best interests. of their shareholders best interests in some cases they do also have a fiduciary duty to people they raise money for other things but in most cases it's the shareholders they have to be more concerned about and this balancing act is complicated with outside interests as opposed to one goldman was a private partnership in which they could balance that themselves. and now you say another goldman montra to be greedy but long term greedy it's also complicated by the i.p.o. obviously can you explain this a little further. sure i think when you're when goldman was small or a private partnership they could make decisions incrementally that although in the near term they would not make as much money or as much profits this firm was still growing and able to gain market share and grow profitably
as you become larger and larger it becomes increasingly more difficult to grow it's just the law of large numbers and so this poses a challenge and so what i've found is organizations start to take incremental risks or start to make modifications or changes or drift in order to accommodate the ability to grow and so that the idea of long term greedy starts to change in terms of the meaning of that versus what it may have meant when it was a smaller or less complex organization now another common scapegoat for goldman's like you say drift is current c.e.o. would blankfein under whom the firm's reputation has taken a serious hit is this blank finds fault or was he just kind of at the wrong place at the wrong time during the financial crisis. that's an interesting question so my
hypothesis going to the book was that the culture of goldman changed because of the i.p.o. that actually was the most common. hypothesis that people had and then recently people started to point blame at lloyd blankfein or the president or this trading culture that has emerged within goldman what i found is actually the i.p.o. and even lloyd's leadership is really a result of the changes not a cause of the changes and what's happened is that as goldman has grown into trading and has changed its culture. lawyer the current executives are really just been the people that are the result of that and have carried that but they're not to blame i think that what has happened is too much blame and credit has gone to the top people now speaking of reputation and this editorial by
a goldman employee about the current financial shift at goldman i think we're in to put out there it is now famously said that managing directors call their own clients court. you refer to the author of this editorial as a whistleblower in your book why would you consider him a whistleblower. well whistleblower in the academic definition of someone who's trying to point out something. and going outside of the traditional. channels we internally that they felt so strongly about it but in terms of his focus was really pointing the he was saying that there was a cultural change. and that the change was. characterizing you're making a generalization was changes for the worse and the current top executives were to blame for it and i think what my book comes out and then discovered through academic research was that. the change had courage i don't discuss whether or not
the change was for the better or for the worse by i think the change occurred. and that i don't think that as we just discussed that lloyd blankfein or the current. executives are are to blame for that it's really a result of many many changes over a long period of time stephen thank you for the time your time that was stephen mantissa former goldman sachs employee and author of the book what happened to goldman sachs thank you time now for today's big deal. the best and the brightest from the world's most prestigious universities tend to headed to wall street or at least they used to do that now new research published
by the wall street journal shows that recent grads of we're growing the canyons of wall street in favor of the rolling hills of silicon valley now at stanford thirty two percent of grads accepted jobs in technology while twenty six percent went off to finance and a mere two years ago thirteen percent were going into technology while thirty six went to work in the world of finance are we seeing a wall street brain drain that is the question here discussed madame courteous hello my dear now rachel what's going on here is this an east coast west coast thing or is there something a little bit more technical to it i think that it has to do with where the money's at right in terms of regulation in terms of salary caps in terms of figuring out where people think that they can actually make the most money and have the most effect on the places they're going to work a lot of the best and brightest the rocket scientists who were maybe going to wall street before are saying perhaps the greener pastures are in the technology sector and i think that there's also something cultural going on right in stephen man just
your previous guest book he talked about being a goldman sachs and constantly eating mcdonald's whereas if you go off and work at google you get free sushi every day lumina is growing and i get along with you know you get classes in nap rooms that we've previously discussed there's a different conception of what it is to work and work hard when you're talking about technology firms and when you're talking about wall street and also that you have to bring into question the risk it seems like technology while it's on the rise and it's a good thing for american society at the very least if not society as a whole is it really is a sure thing. you're going to wall street that you're going to make six figures by your third year is that a sure thing if you go into tech what do you think about that's a really good question and it depends right if you go to a startup it's really big risk really big reward but a lot of people are imagining that they're going to be the next mark zuckerberg and they see the people who are executives in tech are lauded in a way that people like lloyd blankfein and people like jamie diamond are demonized at this point you know they go to capitol hill and they see a lot of sneering i saw there was a j.p. morgan recruiting event at yale and it was filled with occupiers saying you know
j.p. morgan but nobody's really saying the same thing yet maybe it's the n.s.a. scandal continues to unfold we'll see more of that but at this point they're seen as it really is a dichotomy between the good guys making money and the bad guys making money and leeching off of us and i think that that's going to be a huge problem for wall street moving forward that they can't really get the best and the brightest that they used to depend on so if you're cool you're going to attack if you're not as you know it depends how good you look in a hoodie this is a vendor that's really the deciding factor when you should know that you could be final question has wall street lost its luster yes or no yes yes you're going to agree to a degree and i want to say i hate that yes or no but it certainly numbers show that to a degree it has well yes yes that's all for now but you can see all segments featured in today's show on you tube at youtube dot com slash boom bust r.t. and we also love hearing from you so please check out our facebook page at facebook dot com slash boom bust archie from all of us here at boom bust thank you for
we're not psyched to look back to camp at guantanamo where patients are forced that . our strike never turned the world's attention to the point that some. of our. election two thousand and thirteen chris christie wins big in jersey the rest of the g.o.p. falls short what are republicans need to do the fix the party before twenty sixteen will be conservative radio talk show host dana loesch the root of the report and former george w. bush spokesperson reed dickens helping us figure it all out coming up next on politicking with larry king.