Transcripts For CNNW Erin Burnett OutFront 20120512 : vimars

CNNW Erin Burnett OutFront May 12, 2012



the fallout swept around the world today from america's biggest banks, multibillion dollar loss on risky trades. in washington, senator carl levin held a conference call with reporters about jpmorgan's shocking trading losses which could be up to $3 billion and the credit rating agency fitch slapped jp morgan with a drowngrade citing reputational risk. stocks plunged taking other banks down. the boss, america's most well-known banker was taken by surprise. here's jamie dimon one month ago responding to investor questions about bad trades and his risk management unit. >> it's is a complete tempest in a teapot. sophisticated, complex things. at the end of the day that's our job. invest that portfolio wisely and intelligently over a long period of time to earn income and to offset other exposures we have. >> well, here he is last night when it turned out that tempest was anything but. >> these were egregious mistakes, self-inflicted. we're accountable and what happened violates our own standards and principles how we want to operate the company. this is not how we want to run a business. >> the total about-face scared investors. the bottom line, jamie dimon that doesn't b.s., swears a lot, known for telling it like it is. in no small part because of that his bank was the only american bank to emerge from the financial crisis stronger than ever before. assets have grown 45% at jp morgan from the precrisis level. that's right. they're bigger than ever. $2.3 trillion. "newsweek" called him the banker who saved wall street september 2009. the "new york times" magazine cover of december 2007 was the least hated banker. he was on a pedestal which makes the current trading debacle all the more noticeable and a real black eye. could jp morgan lose more? could other banks? the answer is yes. how did jp morgan get it so wrong. to use a nascar analogy, if the tony stewart of wall street can't keep it together, maybe his car is too souped up. that was one month ago jamie dimon said get out of my face, there's no problem. here we are. >> it's a real comeuppance for jamie. no human being is smarter than the markets even if you're jamie diechlen or that respected. there's an awful lot of people, erin, in washington, d.c., right now chortling, tim geithner who jamie was beating up on, saying we don't need more regulation, we understand the markets, we understand the capital markets. not so much. >> steve moore, talk about chortling. what's going on there? >> i think the truest thing that you said, erin, is when you quoted him saying you don't want to be on that pedestal because he has fallen off the pedestal. he has had a great run as you know. he's been a great banker. but this was -- some of the trades were unforgivable and as you said the losses could reach $2 billion to $3 billion. here's where i think the disagree with the two of you. i think this rush to more regulation of the banks and u.s. financial services is kind of the wrong remedy. u.s. financial services are the most overregulated industry, not just in the united states, but in the world. when you talk about a bank like jp morgan it is regulated as you know by the s.e.c., by the federal reserve, by the treasury department and by the fcc -- >> i'm not sure either one of us was calling for more regulation. you have lloyd blankfein asking for better regulation. i think that's what dimon is saying, better regulation would make more sense. i think better internal risk management would make better sense. >> i think we both agree on that. let's look at the losers here. thank goodness the losers are not the taxpayers because it doesn't like jp morgan is going to get to a bailout. the losers were the shareholders that's the way it should be. when a bank makes a bad decision, the people should lose money out of the shareholders. >> and by the way, the shareholders are regular people who have jp morgan in their 401(k)s. if that made sense to norman people, this wouldn't have happened. i mean, the ceo of the bank said a month ago this was hog wash and then he lost $3 billion. could it have been 30 or more? could 2008 happen again? >> well, it could. we have the multiple tier of regulations already and they haven't prevented these kinds of melt downs in terms of the finances of these banks. look, i'm just worried that we just passed as you know what was it about a year or two ago the dodd-frank bill which was supposed to stop this behavior and it's imposed a lot of costs on the financial institutions. >> jamie dimon is down there in washington fighting against it. >> you need to streamline all of these different entities in washington, put them all together and have one master regulator. i don't think that's more regulation. the other point i'd like to make is the least regulated countries -- >> i agree. >> the united states, the u.k. and iceland, so let regulation is riskier. >> i love an iceland mention. >> yeah. i'm not going to defend iceland here. when you have so many regulators looking at the banks -- >> we agree there. >> transactions, these kind of things continue. i mean, look, the one thing we have to make sure we don't do is continue to bail out banks when they make bad decisions because i think that's the ultimate safety net and hammock for bad decisions. >> let me put this to you then. what we have here in the introduction. jp morgan is 40% bigger than before the crisis. if it was too big to fail them, we'll have to bail them out then. >> i don't believe that big is necessary bad. the only reason that big is bad when it comes to banks is because the impulse is to bail them out when they get this big. are we going to bail out every fortune 500 company if there's losses? >> what about breaking up the banks? what do you think about that? what do you think about breaking up the big four? what's that? >> i'm opposed to it because i don't think big is necessarily bad. 10 or 15 years ago, the top ten banks in the world were not u.s. banks. we were losing competitiveness because of that. >> i don't know they're not so big makes us let competitive. i never followed the argument. we have citi and bank of america, breaking them up, does that make them better? >> do you want to break up wal-mart because it's successful? >> i don't want to break up wal-mart. >> wal-mart -- >> it doesn't sound like what the "wall street journal" wants to do usually. >> wal-mart doesn't control so many american people's savings. that cuts into people and their situation. >> a very good point, but don't forget, people with savings that is depositors who put their money in the bank, they are not at risk -- >> then you have to bail out. >> systemic risk. >> here we are back to the chicken and egg. thanks very much to you. next, new details about mitt romney and the accusations that he attacked a gay student in high school. and then the facebook, the ipo, could you actually get into facebook though? and the wild ride that's now a wild record. 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[ meow ] [ male announcer ] another example of volkswagen quality. that's the power of german engineering. right now lease the 2012 jetta for $159 a month. our second story "outfront" duelling stories about mitt romney's high school years. the conservative website breitbart.com is raising questions about the timing and the accuracy of "the washington post" story about romney led a gang of boys in attacking a class mate who was gay and cutting off his hair. five other students witnessed the attack or took part in it. others say it haunts them today. but breitbart writes about romney's childhood in detroit. it quotes one of the same students who calls romney's attack on a gay student vicious, but it says i'm a democrat, so i probably won't vote for him. he's very mart and very principled. john avlon is here and tim punk is in washington. john avlon, pretty interesting quote there. it does seem to fly in the face of "the washington post" story in that one individual's case. >> that's right. and in that one individual incident. i think that's what's isn't it cant. obviously his overall impression of mitt romney may be different than mitt romney's worst moment in high school. none of us are the sum total of our worst moments, but what's fascinating is why it's rippling so much. it's because romney doesn't have a character narrative into a young man and in -- and this sticks because it seems to pull back the curtain a bit in a way that seems horrifically revealing. not that this is indicative of his values now -- >> people are starving for mitt romney, the man. >> we all do stupid things in high school. but we don't all do stupid things of this nature, pinning down a kid and cutting off his hair because he's different and that's why it's resonating now. >> and "the washington post" article came out the day after the president's announcement that he supports same-sex marriage and that reporter says, look, i worked on this for two weeks. so i did all my own reporting and it's absolutely unfair to say that there was anything political in the rollout of the story. what do you think? >> i think that there is a genuine idea and a belief that there is a political motivation behind this. and i think if you even look to the response that the family has had, the family of john lauber -- i hope i'm saying his name correctly. you know, the sisters said they had no knowledge of this, that it was factually incorrect. but it seems like people are tap dancing on the grave of their brother and that's a poor taste to move a political agenda. i think that's how a lot of people are going to perceive this. there's a sense of why is the timing, it's very suspicious about the timing. suspicious about the sources and then you have the family kind of saying, really enough is enough. i think all of those elements together make it look quite suspicious. >> so before i bring in tim, it could be that there was a timing link and that all of a sudden the president comes out for gay marriage, "the washington post" said there's high interest. that's not politically motivated but trying to time for reader interest. >> that's exactly right. that's why republicans want to present it that way. you have five witnesses including one independently reached out to by cnn, i do remember that. it was horrific. it was match the definition of assault and romney has apologized for it even though he said he doesn't remember. >> when karl rove leaked the story of george bush being arrested for drunk driving when he was younger, it cost him 4 million votes. what do you think? >> i think if it's 4 million vote, mitt romney is in trouble. the bigger issue here is that i think it goes to this -- look both campaigns are fight over this small sliver of undecided and independent voters. they base their decisions on linability. do i like this guy, is this a guy who can relate to my life? that likability factor is why you see folks like mitt romney or the president go on "saturday night live" or david letterman up. they want to tell stories about their childhood. usually it's them telling the stories of how they overcame obstacles. this is a big challenge for mitt romney and this story isn't helpful and they want to move on from it very quickly. >> john, what can he do though? his wife has been out there more, he's done all the things and it has not seemed to connect. i know you can't always choose who people zone in on. >> you can't, but nature and politics abhor a vacuum. the campaign has to set up a narrative the same way that john mccain's real life story was so inspirational because he was a p.o.w. george w. bush, he was a young man who triumphed over alcoholism and found god. you know, that dui story and george bush made an impact because it out the weekend before the election. but it speaks to how much mitt romney needs to fill out his own narrative. >> is that the problem though, people don't see the adversity he had to overcome? >> well, it's a little bit about getting to know the candidate. i agree with john there. independent voters are not going to focus on this and not do in high demand until you get to the conventions and same thing that barack obama did when they introduce who they are, the introduction to the solution when everyone is paying attention. i think there's a lot 06 stories about mitt romney's character that are going to come out. for example, when he helped to find a missing teenage daughter of a partner at bain capital. that's a lot that will put together and define who he is as a candidate. >> thanks to all three of you. there are now three men accusing john travolta of sexual assault. could it bring him financial ruin? and on "time" magazine, a mother is breast-feeding her young son. why? the answer is up next. great shot. how did the nba become the hottest league on the planet? by building on the cisco intelligent network they're able to serve up live video, and instant replays, creating fans from berlin to beijing. what can we help you build? 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at chase we're pioneering innovations that make banking simple. deposit a check with a photo. pay someone with an email. and bank seamlessly with our award-winning mobile app. take a step forward... and chase what matters. our third story outfront. john travolta one of the wealthiest actors in hollywood. he's worth about $2 million and he's a licensed pilot. he owns a gulf stream jet and he flies that plane to australia, new york, he flies around the world on his own. but the a-list actor is now facing accusations of sexual assault. the third man pointing the finger at travolta, saying he was accosted on a cruise ship in 2009. two others claimed he groped them while he was on their massage table. john travolta plans to slap them with a lawsuit. outfront on this case, cnn legal analyst paul callan and a.j. hammer. and all right. great to have you both of you with this. the lawyer said i'm going to file a malicious case, this is a complete load of hog wash, but more and more are coming out of the wood work. >> with celebrities, you have to worry about two things. one, the reputation gets destroyed in a suit like this and secondly, if travolta is making a movie or he has to appear in a deposition in this case, they have to close down the site. and it costs them a lot of money. if you sue him they're afraid of coming after him for copycat lawsuits. if he doesn't pursue it aggressively, there will be more suits against him. >> a.j., you have been covering this. will it do damage to him? >> i think in the short term, no, not at all. i think they're doing the right thing by making a loud and bold statement. sometimes celebrities want to let these things kind of settle themselves and work themselves out. but sometimes because there's such a risk of other people glomming on and jumping on the bandwagon, you have to send a loud and clear message like singer is doing in this case. if there was a modicum of truth to this, they wouldn't be coming out so aggressively and i think the problem could be in the long term if this thing is left to go on and on it's going to dog travolta because people want to ask him about it and it could hurt his reputation, but not right now. >> paul, we talk about copycats and talking about the legal team is coming ought aggressively against it. do you think that will stop copycats? i would imagine it's the press cycle of covering it every day that they don't want. >> the reason that i think the threat of countersuits that will stop the copycat, are you afraid that you'll get sued and not only your lawyer will get sued, you'll think twice about doing it. and the first suit that involved the beverly hill hotels, he touched his leg and he's suing for $2 million. it's ridiculous on his face and the attorney singer said it didn't happen. >> i'm thinking of justin bieber and what turned out to be false paternity claims. >> it goes on all the time. it really does happen all the time. you don't know about it. look, it raises eyebrows when justin bieber decided to speak out after a woman said she had fathered the child. it doesn't squash the copycats but you believe to -- you have to believe it sort of tamps it down. >> how much money does this cost celebrities though at times? i would suppose you end up paying even though you didn't do it, but you settle because you want these things to go away. >> there's a substantial cost to the celebrities because they're running up legal fees to do an aggressive defense in the case. a lot of the cases result in very quiet, very secret, confidential settlements to make the plaintiff go away, even when that's no truth to the allegations. so they do cost money to the celebrities and time. >> how much -- >> well, in terms of this, you have three lawsuits now. easily he could be up at over $100,000 in legal fees if these are aggressively litigated. i'm betting though because i have read a couple of the complaints, these are really bogus complaints and i think they may be thrown out of court early on. >> certainly good news for him. >> the price of celebrity. >> yeah. $100,000 is a lot of money, although as we said, $200 million for travolta, it's not the money but the reputation. we're learning how fbi agents tracked down and cornered a fugitive wanted for kidnapping and murder. and facebook stock is about to start trading. can you get your hands on it? 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