Ethics, the office of government ethics. He is in an awkward position because it his job to make sure that politicians behave and talk about their conflicts and is sort of let the public know what is going on. He is in an unusual position because donald trump, unlike any president in modern times has basically kept quiet on many of the entanglements he has in the business world. That has put him in the unusual position of saying, mr. President elect, you should do this, and the president elect basically ignoring him. That has caused him to publicly say this is not a good thing and undermines the whole notion of the open skies, clean air we do in american politics, and that has gotten him in an awful lot of trouble with republicans. He has been vetting quite a lot of nominees, and because of the wealth of a lot of the nominees, it is taking a lot of time, but they compress the time to do it to the point where people are actually having confirmation hearings before they have been completely vetted. It is an unusual situation and he has run into a wall with the president elect saying he does not have to be subject to the same law, which is true. But its a question of just because you have the legal responsibility, should you abide by the spirit of the law and make sure you have the trust of the voters . Oliver lets talk about a story in the market section, how banks identify rogue traders using a bad behavior index. It is interesting because it revolves around a Company UsingMachine Learning which is essentially Artificial Intelligence to sort of look at the traits that that actors and Financial Services have. They have assembled a huge database of people who have done bad things, financial fraud, swindles, sort of violated rules and they put it into a database and had the computer start thinking about the profile of what a bad person is. They compare that to the behaviors of people who work at Financial Service companies and are able to assign an index score on how likely you might be to be a bad actor. Certain things we think of his good behavior, people who work all weekend, people who call their coworkers in the middle of the night, people who always seem to be around, often those are signs that there is some reason to take a closer look at a person, so that is what things like this catch up on. Carol i love that. Bad behavior index. Hey, lets talk about the cover story, which is about Deutsche Bank. It takes a look at Deutsche Banks culture through a relationship with another old bank. It is a strange and fascinating and still ongoing story about the banks involvement with an italian bank, which i have butchered on the pronunciation. Carol got it right though, i think you did. Jim it involves a story that comes from a single trade where they have to construct a trading system where there was a gain and a loss so that monte dei paschi would not have to recognize 400 million in losses on its books. Thats the kind of thing you pay investment banks to do, but there was internal dissent at Deutsche Bank that maybe we are skirting the line here on what we can construct for them, and one of the people who was against this ends up being found dead. Oliver wow and it is an ongoing piece with a lot of complexities. We dug into the details. This is a story about how the worlds oldest bank, monte dei paschi, a bank in tuscany, ran into some trouble and how Deutsche Bank, germanys biggest bank, helped them to get out of that trouble, and what is interesting is that it opened a window into really one of the trouble spots that investors are concerned about in europe, which is not so much the little bank in italy, but what we learn about Deutsche Bank through this one deal that has turned into a legal case and scandal in italy. Carol it is really about the culture of Deutsche Bank, and by digging in to its relationship, you do learn a lot about Deutsche Bank. Tell us about the relationship between these two and how that kind of tells you a little bit maybe about the risk culture at Deutsche Bank. Exactly. The approach we took is a historical thing, what happened at Deutsche Bank through the decades as it built up risk. Deutsche bank used to be a lending bank, and starting in the 1990s, expanding in the 1990s, expanding in the u. S. , built up its risk, doing derivative deals, buying investment banks to compete with the big Global Investment banks, and that leads us to the early 2000s where monte dei paschi de sienna, after hundreds of years, a 500 year old bank, decided it wanted to expand and starts buying of bankshares and needs to generate cash off of those and made a Perfect Match in Deutsche Bank. Deutsche bank was able to do a complicated derivatives deal with them that instead of sitting on the shares, they were able to get cash out of them, but it was a bet. When the financial crisis started to crest in 2008, that bet went bad, and Deutsche Bank was in a perfect position to sell them in another deal. And this is the one that went wrong. Carol it was essentially a derivative bet that the bank made. Explain this trade, because it is fascinating. It is a simple trade to became complicated. Actually monte dei paschi was sitting on these losses that were growing every day towards the end of 2008. In october, it was 180 million lost and by the end of the year it was going to be about a 300 million loss. They were going to have to report their earnings at the end of the year, and the guys at Deutsche Bank that new about this deal because they had done the other deal in the first place, came to them with a proposal which essentially said we can give you a winning bet and a losing bet, and right now you can extinguish the loss before you have to report your year end earnings, but we dont give away money here. You have to pay the losing bet, and that is kicking the can down the road. And a losing bet, and right now you cant just sell a bet that has no risk in it, so they start with this simple thing, we will give you money now, essentially a loan, and you dont have to report it and you can cover it over years and years as a loss and never have to tell investors, but we have to work some risk into it, so there is some financial engineering, that they got a to the finish line in 2008, and if it hadnt been for a whistleblower a couple of years later, no one might ever have known about it because they made 230 Million Euros in this one trade just disappear by pushing the accounting of it down the road in a slow accounting, perhaps hoping that that would eventually turn around, but it came home to roost, and not only did they have to report the loss and account for it, Deutsche Bank had to change its accounting for the deal, and now a trial has just started in milan where Deutsche Bank is a defendant, along with some of the bankers involved in the deal. Because you are not allowed to cover up a loss. Its called false accounting. Oliver Corey Lewandowski is rebranding himself as a way into Donald Trumps white house. Carol brazilian voters get their own version of trump as the country prepares for National Elections in 2018. Carol welcome back to Bloomberg Businessweek. Im carol massar. Oliver im oliver renick. Carol President Donald Trump former Campaign Manager has a new business. Oliver he is selling himself as the business worlds introduction to donald trump. We talked to politics editor matt phillips. Carol donald trump repeatedly talked about draining the swamp, and yet Corey Lewandowski is setting up a lobbying firm a couple of blocks from the white house. What is going on here . This is the exact opposite of draining the swamp. This is filling the swamp. But they argue this is actually draining the swamp because they are the outsiders. They are doing away with the establishment, and Corey Lewandowski, who was trumps Campaign Manager in the first half of the campaign, was a pretty controversial guy, had some sharp elbows, dustups with reporters. He left the campaign to be a cnn contributor. Critics said he was a trump surrogate onair. He has since started his own lobbying shop called app strategies, two blocks away from the white house. Standing in his corner office, he can point out the window and say there is the president s bedroom, so that proximity not only suggests the physical access he purports to have, but actually his ideological kind of proximity to the man. His fealty is 100 to donald j. Trump the man, not washington. Oliver that is essentially his value add, what he presents to potential clients, he knows trump personally. But hes also going to basically standby and only work with people that can further some of the ideological principles donald trump has campaigned on. Matthew thats right. I mean, they are very direct in the way they describe what they will be doing. They are saying their loyalty would not necessarily be to clients. Their loyalty will be to the trump agenda, and if you are not on board as a company, then they dont want you. They said we will not waste your time looking for a maybe. If you are not into this, we are not into you. That is kind of a backwards way of thinking about how lobbying has worked for decades. A lot of the established lobby shops are bipartisan, a republican and a democrat as your principles, and it is a onestop shop where no matter what kind of company you are, you can find somebody who can give you access to capital hill. No matter who is in power. That is not what they are about. Their fealty is to donald j. Trump and his agenda. If thats not who you are, then they dont want you as a client. Oliver speaking of donald trump, in the Global Economic section carol the qualities political candidates share with trump. Oliver who right now is sort of leading the race . Who are the top candidates for this election that will be a couple of years down the road from now . With this spontaneous poll, you ask them who they will vote for without giving them options, the number one is lula, which is something of a signal that his Workers Party has difficulty in finding new stars in political renewal, and then number two is a deputy from rio since 1990, a former army official, army parachutist, and he is sort of similar to a trump phenomenon. He says things that are wildly inappropriate. He told a fellow lawmaker twice in congress that she was not worth raping. Carol oh he later said that was because she was ugly and not his type, and that it was sarcasm. He said that the military dictatorship made one big error, which was in torturing them dissidents rather than killing them, so he says these things that are incredibly offcolor, offmark, and still his popularity grows. Oliver that is the bombastic version. The celebrity version, tell us about him. He is the mayor of sao paulo, brazils biggest city. He made history by winning in the first round rather than have to go to a runoff. He was once host of the brazilian version of the apprentice, which is an amazing coincidence. He has shown himself to have something of a flare for showmanship. In his first couple of weeks in office, he put on a street sweepers uniform and was out there pushing the broom. And he is also, he has published a couple of wealth books, how to get rich quick, and has an affinity for cashmere sweaters. He is very wellheeled candidate that managed to win over the poor, too. Carol another neophyte is sort of a star out there. You do have a lot of neophytes out there. You also have a Plastic Surgeon that is well known. This speaks to what . The general malaise in brazil . Whether you look at the economy or corruption, people have had just kind of enough. Thats right. You can see it in the poll numbers. You look at the congressional disApproval Rating, the highest in history, almost 60 . You have the president with a near 10 Approval Rating and they are trying to push through reforms that people are strongly opposing and that they did not vote for because the Vice President took office after the impeachment, so you see this opposition to the establishment opposition to the establishment politicians, and at the same time, these politicians are trying to put through reforms that they say will restore brazil to growth. Pull it from recession. In the meantime, limiting expenses on Government Spending isnt popular. Oliver up next, donald trump surprise attack on drug prices, but what can he change . Carol what it is like for a top ceo to go to the mayo clinic. Details about the executive health program. That is next. Oliver welcome back to Bloomberg Businessweek. Im oliver renick. Carol im carol massar. You can listen to us in new york, boston, 99. 1 in washington, d. C. Am 960 in the bay area. Oliver and in london and in asia on the Bloomberg Radio plus app. In the companies and industries section, why the pharmaceutical industry gets most of its profits in the u. S. Carol and why that could change under president trump. Heres reporter doni blumfield. Doni we saw a right after the Election Results came in that biotech stocks surged, and this was on a combination of things, expectations that obviously they were worried about Hillary Clinton and some pricing control that she might have brought in. She had actually proposed some of that, and also the allowing of these tax holiday so that Drug Companies could bring in dollars from abroad, but since then, we have seen a bring back from those High Expectations as there has been a lot of uncertainty about obamacare and uncertainty about obamacare and the potentially tens of millions of people thrown out of their insurance, also questions about medicaid that are related to that, and of course there have been Major Concerns because we have heard trump now on multiple occasions say he wants to rein in high drug prices. He said the drug industry is getting away with murder. Carol the drug industry is getting away with murder. Yes. Trump has a way of putting things. We dont know know what he means. As is often the case. I mean, the truth is that during the campaign he wasnt exactly kind to the drug industry either. He said he wanted to negotiate with Drug Companies. He said he could save 300 billion dollars, which is an impossible number. So he was making some impossible promises there, but he was saying these companies were getting away with murder and he wanted to cut kind of cut back on drug prices that the u. S. Was spending. Oliver do we know what to expect in terms of sectors, drugs, or companies he might finger as being particularly egregious . Doni we have not seen that yet, and of course we dont know what kind of levers he can pull beyond twitter in order to target specific companies, but there is no question that people are worried that some of these high price to drugs that help where diseases that can cost hundreds of thousands of dollars a year, that could be something. We dont know what he could do if there was another situation like the epipen situation when they were raising the price of this old medication like mylan kind of did. Carol doni, we have donald trump saying i want to get drug prices down. That has been a major theme for him. You break it down and ask a couple of questions. Trump has talked about Drug Companies would having to bid for business with the government. What exactly does that mean . Doni right now, Medicare Part d, drug program for seniors which went into law in 2003, the government cannot bid for drug business. It is basically farmed out to many different private contractors and businesses, so there is less leverage they have over drug manufacturers, so what he may be proposing is something that we have also heard from democrats, which is that the entire federal government can together try to force price concessions from Drug Companies by having a giant chunk of billions of dollars in spending on drugs a year, use that and have leverage over Drug Companies. Carol to change that policy, congress has to say lets do that . Doni thats right. Doni thats right. Because the very powerful lobby the drug industry has got a 2003 law to prevent specifically the federal government from negotiating together as a bundle and having that huge leverage, so they need congress and especially the powerful republicans in control in congress to get on board and reversed their position in a very big way, and they would also have to give the federal government more than the power to negotiate. They would have to give it the ability to say no. The real reason drug prices are high is because there are monopolies, in this case, patents, and when you cant say no, you dont have leverage. Carol in the Health Section oliver how ceos get treated in exclusive hospitals. These are called executive Health Programs. If you are a busy ceo, you dont often have the time to schedule all the appointments you have to schedule, so these executive Health Programs allow you to take almost every test you would want to take in a