this was a key swear bear stearns streeter's led by an executive. who's now the c.e.o. of risk out him and his team are literally stealing billions from their own clients those clients happened to be. nano lines insurers and investors in residential mortgage securities certain out some around and he's currently c.e.o. what company a rez capra's cap is essential vision of ally financial the former g.-mac ok so as all of these firms that we're caught in gave us of securities fraud instead of any kind of legal precedent being applied in anyone going to jail they simply change the name of a shop or go to a news shop or a closer shop and re-invent the shop i mean this is a classic got good shop scheme wall street from a few decades ago it reinvented for the modern era using derivatives and in this recycling recycling the men who allegedly in this case actually this time criminal acts of stealing are right but it without the criminal acts of a fraud american economy would show a huge negative g.d.p. growth because it isn't negative action negative accounting and fraud is not

morgan the shorting bear stearns they're going long actually are long assured guarantees that people who think will get a windfall from this it right so you're pretty close to the hedge fund community out there in in connecticut or i think that's actually the head for. and capital of of the world and so you've got your ear pretty close to the street out there in terms of what the head big headphones are doing so you're hearing whisperings from the from the head front street that the time is short j.p. morgan stock is upon us absolutely me it me it's new it's a few friends who are there you know. the very focused energy it might take to me here for this to you know what i mean the interest of course is anyone who is hoping to have america avoid the kind of sovereignty that we've seen in greece or we've seen in ireland if anyone wants the american sovereignty to remain intact and not be taken over by the likes of the i.m.f. working with j.p. morgan then they they would want to see j.p. morgan stock go the way enron down to zero and of course the comparison to enron is a good one becaus

now because they bought bear stearns which is the mortgage servicer that illegal activity happened then they went in took all of the assets out of e.m.c. and put it in tilikum bring onto a g.p. marine chase bank and what that effectively did is any of the plaintiff would meet them hard to recover money in judgments but in the cash in the assets out of e.m.c. now now that's a legal there's a contract that says that they're not to do that the desperation to do he said this is kind of moves that we can see a cheap merchant of scared they know this is real and i think tom around one. point if they're tempering witnesses now it's funny to see some of the techniques is by bucket shop operators used by a firm like j.p. morgan by renaming accounts remembering accounts changing from margin accounts the cash accounts to make it impossible for these accounts to be in their peer into or to have any kind of paperwork associated with them so but this is really associated with a member working on wall street back in the early one nine hundred eighty s. there were some notorious bucket shops working at

the frog instead of bear stearns and he has hours whistleblower tapes and it entails the newly a.g. is looking at now. additionally what's more interesting is one of our whistleblowers his name is matt band and he's an might be an experience the next movie that actually creates test fake and spare stars in a few weeks before he went out and his deposition. he also was lawyer katie morgan said you have to have a lawyer because you work for us and there is a severance successor etc he went into those depositions and he changed his testimony he said what he told me in the documentary filmmaker that he. the that all the illegal activity was whistleblowing on wasn't true what happened he was like. i mean we double checked his information we had multiple sources we saw e-mails we know he's lying so we're trying to figure out right now is a case that the bears out say counsel now say lawyers you know him are done to change your testimony didn't tom moran know in his traders pamela so let the lawyers for these monell minds that the law firm is. based here in new york the lead attorney's nam

now because they bought bear stearns which is the mortgage servicer there. illegal activity happened then the money took all of the assets out of e.m.c. and put it intil they can bring on a cheap camera in chase bank and what they're effectively did is any of the plane has hit me hard to recover money in judgments in the cash in the absence out of me and see now you know that's illegal there's a contract that says that they're not allowed to do that and desperation to do that and he said it's nice kind of news that we can see a jeep scared they know this is real and i think. we are interpersonal are very pretty to tampering witnesses does funniness say some i think mix is by bucket shop operators used by a firm like j.p. morgan by renaming accounts remembering it down strange thing from margin accounts they pass accounts to make it impossible for these accounts to be in their peer into or to have any kind of paperwork associated with them so what this is really associated with i remember working i was three back in the early one nine hundred eighty s. there

tracker from bear stearns is pitching us on it she has a great pitch. between martinis. you know it's just amazing because teachers who will willingly take jobs that don't pay as much as a hedge fund manager because they seek purpose in their life they want to add something to society unlike a hedge fund manager which is just raping society so not only do they under pay the teachers then in their pension accounts they love bed funds willy nilly have access to those funds and dumped all their losing bets now remember bear stearns of course blew up that was the beginning of the financial catastrophe in two thousand and seven march two thousand and seven so bloomberg goes on to say that gene fleischaker was pitching fifty public pension fund managers and she told them that they could get twenty percent return on the bottom level of a c.d.o. the bottom level the equity traunch that blows up one hundred percent when the c.d.o. blows out she said it has a very high cash feel to it i think a lot of people are confused about what this product is and how it works well of course i

there is no one at bear stearns who thought there was a bailout. but when i looked at it, i was conscious of the fact that the fed, the united states of america was assisting that transaction. so, we got a call thursday night that said, you know what, we are going to fail. there will be bankruptcy if the government does not come in. there is something wrong with the picture that says the government is going to come in -- if there was more room, then the government should provide less incentive, ok? why should the government became more so the shareholders would get something? so, i felt that. if but later, the deal could not get done. it was not going to get done without raising the price. and number of others said, you are right, let us not get that in the way. it is not that i was mean- spirited or i wanted people to have the equity wiped out. it was the same thing -- aig was structuring -- look at fannie and freddie. the bill was criticism we wiped out the equity shareholders of fannie and freddie and the preferreds we structured the deal. the g

argument for me saying we're not about six hours bear stearns fell apart thirty six hours and fell apart and it was fine to say there wasn't a full quarter and then it fell apart my first call was that it was ok to keep your money there which turned out to be true all i'm saying is that i don't want to give people for his surance i think things are better than they were i see here. things like that had a bit of a. nerve virgin graber obvious that something that's still hard on him but he's still saying that he thinks that things are better than they were do you think that simon hans has a point there. yeah i mean look the the real issue here is should people panic or not are the markets about to fall even further than they have over the last couple of weeks or not and i think there are a couple of gauges you know couple that i mentioned earlier for example if you look at what's happening with people flocking into cash flocking into gold flocking to the swiss franc or anything that they think is a store of value at this point it suggests that this massive risk off mentality you know isn't

stearns and company the fifth largest u.s. securities firm is hawking the riskiest portions of collateralized debt obligations to public pension funds so this is the media this is bloomberg news reporting in two thousand and seven calling it toxic waste they went to calipers they went to the pension fund managers from texas or new mexico and said why are you buying this toxic waste and they were like who were in vegas and this woman gee. shakra from carstens is pitching us on it she has a great pitch. and between martinis. it is just amazing because teachers who will really take jobs that don't pay as much as a hedge fund manager because they seek purpose in their life they want to add something to society unlike a hedge fund manager which is just reaping society so not only do they underpay the teachers then in their pension accounts they let the edge funds willy nilly have access to those funds and dumped all their losing bets now remember bear stearns of course blew up that was the beginning of the financial catastrophe in

the women bear stearns right to the very g. they gave a aaa rating to. the last good grades for firms that collapsed or were bailed out because of bad debt in fact the financial crisis inquiry commission said the three credit ratings agencies were key enablers of the financial meltdown and this brings us to test three ethics ratings agencies are paid by the investment firms they grade and moody's and s. and p. are publicly traded which means they may be more driven to increase profits for shareholders raising this debate right now you have the companies that are are being judge of paying the bill and i'd like to go to berkshire but mr buffett also pointed out the market requires it because these ratings agencies has been around forever so they're in shrine by government regulations which oh yeah they have a stake in test for objectivity and for legislation the financial reform has restrictions on rating agencies and the rules that are yet to be written and they care a huge deal about what those rules and looking works or it would surprise me if they were

stearns. but relax-- bank analyst erik oja says the sector is in much better shape today. >> we do not expect large institutions to fail this time around. we do not see any breakdown in liquidity. if you look at libor, which is one indication of liquidity, libor is far below where it was three years ago. >> reporter: in addition to increased liquidity, oja says banks have bigger reserves and far less leverage. but it's clear there are still major headwinds for american banks, including the possibility of another recession. >> bank profits depend mostly on how well the economy is going to do. loan growth, credit quality, fee income growth, and then capital levels-- everything depends on how the u.s. economy does. >> reporter: there are also concerns about fallout from the european banking crisis. true, most u.s. banks have little direct exposure to greece, portugal and spain, but as morningstar's jim sinegal explains, there could be serious indirect effects. >> if the european financial system