Good show for Mr. Hayes this am. He also seems to be subduing his need to wave his arms and sharp object holding hands around at everyone on his panel. That's good because it is inherently passive aggressive, unless of course he is in training to become a fellow who waves in jets on an aircraft carrier. Then again if he was in the service and passively aggressively waved his hands around in folks faces, he'd get slugged. Bam!

FIRST RULE OF SETTLEMENT NEGOTIATIONS: Never give up the legal high ground during settlement negotiations. In effect, that is what Ed Conrad, a former contemporary of Mitt Romney and partner of Bain Capital, said Mitt Romney did between 1999 and 2002 by remaining the CEO and a paid employee of Bain; he kept his position of power while his lawyers fiercely negotiated what the other partners would pay him for his equity share in Bain. Only after a settlement was reached, did Romney surrender the reigns of power at Bain. Thus, it was no oversight that kept Romney as Bain’s CEO from 1999-2002. He did it for a financial reason. That’s why all the documentary evidence shows him as Bain’s CEO for 1999-2002.

In addition, as reported by the Huffington Post and Mother Jones, Romney testified to the Massachusetts election qualifications commission that while in Utah he traveled to Massachusetts to take care of Bain business matters during what he called his "transition period." He was testifying to secure residency so he could run for governor of Massachusetts.

Now, none of this matters very much, except that it goes to Romney’s credibility.

Bravo for having Ed Conrad as your Sunday guest.

Carl Kirsch, Atlanta, GA

The problem with Conrad's position is that he believes that the costs and benefits of risk taking are balanced. Sure, there may be multimillion dollar bonuses for a trader taking risks, but in Conrad's mind- this super smart guy knows how enormous his value is. These megastars know that if they engage in dodgy activity that their reputations will be sacrificed.

It is a meme that plays well to people whose egos actually buy the notion that they are very very special people, and that loss of there very very special reputation will outweigh the temptation of profits for their firms in the billions, and bonuses for them totaling into 8 figures. Note that Conrad is not making a moral argument- that what constrains the trader should be social norms. His evaluation is cost benefit that ultimately is measurable in terms of profits for the individual. Loss of reputation means loss of future income, so the player is deterred from reckless activity.

Conrad's claim is that the traders have a powerful constraint due to the risk of their reputations, but Goldstein's response was devastating. The facts simply do not back up this fairy tale of how traders actually behave. There are mounds of emails documenting how traders behaved and evaluated risks. The most infamous is well known to UP viewers- it is the "I'll be gone, you'll be gone" proposition.

There is no balance in the cost benefit, and asymmetries in benefits and information is extremely well known, and in fact ancient. Take a builder in the time of Hammurabi- 4 millenia ago. Information asymmetry is what Wall Street traders know and regulators do not. 2000 years BC, it was the same thing. Home builders made a lot of money and knew they could skimp on foundations and no one would know- possibly for years until a heavy rain caused the collapse of a house. The interests of the builder were not aligned with that of the home owner, in the same way that the interests of the wall street trader are not aligned with the interests of the country whose economy will collapse if the traders misbehave. This is called the principal-agent problem, and the intent of bonuses are to align the interests of the trader with those of the firm. The trouble is twofold-

1. the interests of the firm are not aligned with those of the country
2. the incentives (benefits) are asymmetric with respect to the costs (punishments for misbehavior).

Hammurabi solution to the principle agent problem was to elevate the costs. Homes that collapsed, causing the death of the owner would mean that the builder of the house would be put to death.

Goldstein pointed out that the costs to the firm are so low that the possible punitive fines from the SEC are regarded as an acceptable cost of doing business. Essentially, there is zero cost, and very high benefits.

Defensively, Sheila Bair is attempting to rally a defense of the minimal protections in Dodd-Frank and the Volker rule, as she explained to Bill Moyers. The trouble is that even seemingly massive fines such as the half billion that Barclays had to pay for manipulating Libor are miniscule compared to the benefits of dishonestly manipulating the percentage interest on trillions of dollars of transactions.

Something that the US media gives very little attention to is the massive collusion of US Wall Street firms that was required for the Libor manipulations to work. This will be a massive story in the coming weeks and months. The way Wall Street will prefer to play this is to take their half billion dollar miniscule lumps and declare the post Dodd Frank system is working and need not be modified.

Analysts like Goldstein and Robert Reich see the truth. Wall Street firms simply are too big. They are big enough to own DC regulators and lawmakers, and too big to fail. The solution must be radical. Reich hopes that the libor scandal will be enough to power a breakup of the too big to fail institutions (source)

My view is that Reich's proposed solution is far too modest. Even after Wall street firms are chopped up, it is no time to rest. The profit motive and massive profits for cooperating on fraudulent schemes will still exist.

We need to inject a discussion of measures whose strategy is sufficiently aggressive to meet the substantial challenge that Wall Street power presents to our economic and political interests. Like what for example?

We must align the interests of the firms with those of society. When unemployment is down, middle class income is tracking along with GDP growth, and GDP growth is increasing, then these firms enjoy minimal taxes. However, then the numbers go in the opposite direction to the interests of the US economy, these firms are taxed so heavily that their profits are essentially confiscated.

These firms may then decide what mix of bonuses and punitive measures will address the agency problem within their own firm.

Hayes fits right in with the entire MSNBC team. Fast talking idiot who trips over his own words and can't complete a coherent thought.