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'Up w/Chris Hayes' for Sunday, July 15, 2012

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Guests: Dedrick Muhammad, Stephen Carter, Victoria DeFrancesco Soto, Alyona Minkovski, Edward Conard, Alexis Goldstein, William Black

CHRIS HAYES, HOST: Good morning from New York. I`m Chris Hayes.

Hillary Clinton heads to Israel today after meeting in Cairo with
Field Marshal Hussein Tantawi, head of the Egyptian military council, where
she pressed the military to work with newly elected Muslim Brotherhood
President Mohamed Morsi to transition to full civilian rule.

And President Obama continued his attacks yesterday on Mitt Romney`s
record of outsourcing while at Bain Capital. We`ll have Ed Conard, a
partner at Bain until 2007, later on today to sort out Romney`s record
there.

But, first, my story of the week: the Voting Rights Act and how it
may determine the outcome of this year`s presidential race.

In closing arguments this Friday, attorneys for the state of Texas
argued the state should be released once and for all from the Justice
Department supervision of its voting process which is currently authorized
by the Voting Rights Act of 1965. The case is widely expected end wind up
before the Supreme Court where it won`t be surprising if we find the five
Republican appointees declaring the Voting Rights Act as no longer
justified, and is gutted, or entirely null.

The portion of the act at issue covers nine states and counties and
townships and seven others largely in the South that have a history of
erecting barriers to black people exercising their right to vote. In
year`s past, this took a variety of forums, grandfather tests that stopped
newly formed slaves from voting since their grandfathers weren`t in the
rolls, literacy tests selectively administered and devilishly difficult, or
simple poll taxes that forced people to pay to vote f they could afford it.

After one of the most powerful and courageous social movements in
history, one which shook the lives of at least 40 people, according to the
Southern Poverty Law Center, LBG signed the Voting Rights Act in 1975
ending these practices.

(BEGIN VIDEO CLIP)

LYNDON B. JOHNSON, FORMER U.S. PRESIDENT: Wherever by clear and
objective standards, states and counties are using regulations or laws or
tests to deny the right to vote, then they will be struck down. If it is
clear that state officials still intend to discriminate, then federal
examiners will be sent in to register all eligible voters. When the
prospect of discrimination is gone, the examiners will be immediately
withdrawn. And under this act, if any county anywhere in this nation does
not want federal intervention, it need only open its polling places to all
of it people.

(END VIDEO CLIP)

HAYES: It wasn`t until the passage of the Voting Rights Act and many
amendments to it over the years that black people in the South and some
places outside the South could actually exercise their right to be full
participating citizens in American democracy.

Texas would now like to get rid of that rule so it can impose a voter
ID requirement and more broadly do whatever it damn well pleases as far as
restrictions on voting are concerned.

It just so happens that while Texas is pursuing an end to the right
of tyranny that is the Voting Rights Act, states around the nation under
Republican control have been waging an unparalleled assault on access to
the voting for the poor and marginal. In Pennsylvania, new voter ID law,
recent study found that 750,000 people or one-tenth of the total electorate
don`t have IDs that will enable them to vote in November.

Alabama now requires voters to provide documentary proof of
citizenship, which 7 percent of Alabama voters were former voters do not
have.

Brennan Center for Justice estimates the total number of voters
nationwide imperiled by laws that have been adopted or that will go into
effect is more than 5 million. Remember, the margin of victory the last
time a president was up for re-election was just over 3 million votes.
When defending these laws, Republicans will cite the odd anecdote of voter
impersonation or voter fraud, but any and all serious inquiries into the
topic find the problem is statistically nonexistent.

Even U.S. attorneys handpicked by the Bush administration and pushed
to prosecute voter fraud were unable to find much of anything.

(BEGIN VIDEO CLIP)

DAVID IGLESIAS, FORMER U.S. ATTORNEY: We took over 100 complaints
and we set up a hotline. I mean, I believe there to be prosecutable cases
but I was going to make up evidence. And at the end of two years, I
couldn`t find one case I could prosecute.

(END VIDEO CLIP)

HAYES: U.S. attorneys who balked at wasting resources chasing down
non-existent villains found themselves condemned by local Republican
bigwigs and ultimately fired by the White House. That was the core of the
U.S. attorney scandal.

No amount of vigor could change the fact that voter fraud or/and
impersonation is exceedingly rare, almost not existent. In fact, this
handy graphic created by the Democratic Party shows UFO sightings are far
more common than actual instances of voter fraud.

Because the effects of restrictions on, say, voter registration
drives and requirements to show ID falls so disproportionately on poor
people and people of color, it`s not unreasonable to see these efforts
pushed almost exclusively by white Republicans loaded racial subtext.
That`s what Attorney General Eric Holder was referring to this Tuesday when
he pushed back on Texas proposed voting regulations.

(BEGIN VIDEO CLIP)

ERIC HOLDER, ATTORNEY GENERAL: Under the proposed law, concealed
handgun licenses would be acceptable forms of photo ID, but student IDs
would not. Many of those without IDs would have to travel great distances
to get them. And some would struggle to pay for the documents they might
need to obtain them. We call those poll taxes.

(END VIDEO CLIP)

HAYES: To conservatives, there is no greater a front than to alleged
racism. The reactions to Holder`s comments were offended and histrionic.
How could he compare the practices of the racist old South with a common
sense, race neutral desire to simply ensure clean elections?

But it`s worth remembering what the original poll tax was like.
Sure, we now understand it as a tool of white supremacy ands oppression,
but the point of the poll tax or the literacy tests, was that those who
pushed them could claim they had nothing to do with race. On their face,
they weren`t discriminatory. Shouldn`t people be able to read if they`re
going to vote? Isn`t that common sense?

Of course, they were designed and implemented to create
disproportionate racial effects. But the genius in many ways of Voting
Rights Act is that intent doesn`t matter, effects do. Lawyers for the
Department of Justice simply consider t the effects of new proposals and
redistricting, not the intent. No one has to do any mind reading.

We can leave aside the question of what Rick Perry feels his heart of
hearts about people of color. Back in the old days of Jim Crow, it was of
course mostly white racist Democratic politicians who oversaw the system of
mass disenfranchisements.

And there were more than a few white Republicans who boldly
championed civil rights, among them this man, Republican Governor George
Romney of Michigan who march with the NAACP in 1963 and walked out of the
1964 Republican convention in protest of Barry Goldwater`s opposition of
the Civil Rights Act.

Those days are long gone. LBJ`s embrace of the Civil Rights Act
followed by the Republican Southern strategy has led to our current
situation in which Republicans essentially don`t have African-Americans in
their coalition but they do have most of the white races, which means that
black voters are understandably skeptical of what Republican politicians
like George Romney`s son, are selling.

Mitt Romney mentioned not a peep about voter restrictions during a
speech to the NAACP this week, though Joe Biden, who addressed this group a
day later, most surely did.

The awkward truth is that when a party gets essentially zero support
from a sub demographic of people, it is strategically sensible, though
morally bankrupt, to attempt to reduce their participation in voting --
which means it`s entirely possible that Romney`s fellow Republicans want to
make it harder for poor people of color to vote simply because they`re
likely to vote for Democrats rather than because they aren`t white.

But as the Voting Rights Act widely says, the intent doesn`t matter,
it`s the effect. And either way it`s wrong.

I want to talk with our panel about the modern GOP race and Romney`s
NAACP speech after this.

(COMMERCIAL BREAK)

HAYES: All right. Good morning. We`re talking about the Voting
Rights Act and the challenge to it by Texas, Mitt Romney`s speech at NAACP
and the politics of race and voting in this election.

And joining me today, we have Dedrick Muhammad, the senior economic
director at the NAACP; Victoria DeFrancesco Soto, senior analyst for Latino
Decisions and a visiting scholar at the University of Texas at Austin;
Alyona Minkovski, host of "The Alyona Show" on Russia`s international TV
network, RT; and Stephen Carter, author of the new novel, "The Impeachment
of Abraham Lincoln", and law professor at Yale University, a columnist for
"Bloomberg View".

I`d just cracked into the book and it`s excellent and I loved your
previous work. So, I think everyone should go out and get it.

So, I found the subtext of everything that happened this week, the
NAACP`s convention, fascinating. I mean, Mitt Romney went there to speak
and, of course, the background underlying thing that`s happening is in
D.C., there`s this trial happening about whether Texas is going to be able
to loose itself from the restrictions of the Voting Rights Act.

It was interesting that Mitt Romney did not address this at all when
he was before the NAACP.

DEDRICK MUHAMMAD, NAACP: Absolutely. Particularly since Attorney
General Holder has spoken I believe that Monday and Mitt Romney spoken
Wednesday. And, you know, as Biden would say the following day, voting
rights has been the key aspect of what the NAACP has been about.

But I think, you know, when you look at the Mitt Romney`s speech, and
you look at some of the reactions to Romney speech, you understand that
reaction because you really wasn`t speaking to the needs and concerns of
the constituents he was talking to. And, you know, it was not only what he
said, but what he didn`t say.

And the fact, as you brought up, that his father took a strong stand
on the voting rights and he couldn`t mention voting rights on his speech to
the NAACP in Texas, while there`s a major lawsuit going on about voting
rights shows to me that either he doesn`t take that issue seriously or
wasn`t taken that address to us seriously.

HAYES: But it seems to me also that there`s this -- there`s this --
there`s this situation in modern politics where the racial politics and the
racial history are also embedded in a system in which there`s just this,
there`s a split among African-Americans in their voting behavior that`s
unlike basically any other sub-demographic in American life, right? So you
have this situation in which 95 percent of black voters are going to vote
for your opponents, right?

So, it creates this bizarre political relationship. I mean, there
are some people who are saying, what the heck do you want him to do with
the NAACP? I mean, he`s a Republican and no one in that room practically
is going to vote for him, so he went in and he made the speech.

What do you think, Stephen?

STEPHEN CARTER, YALE UNIV.: Well, on the one hand, I give him a lot
of credit for showing up and taking those boos and he kept on smiling. And
that`s not an easy thing to do these days. On the other hand, certainly,
all the criticisms of the speech are fair, and not only that he didn`t talk
about voting rights. But actually, remember when he got booed when he
mentioned Obamacare.

HAYES: Obamacare, yes.

CARTER: That he said the affordable act possibly would have gotten a
different response.

But having said that, I do want to say something about the Voting
Rights Act and in particular about this problem of voter IDs.

HAYES: Yes.

CARTER: And I think it`s true. A lot of bad people for a lot of bad
reasons are fighting for these laws. But we also have to recognize that
the resistance to these laws is it`s at best a rear guard action. We`re
moving to a national security future in which everyone is going to have to
prove their identities several times a day for all kinds of things. And in
the end, we`re going to have to accommodate ourselves to that reality.
Painful it`s going to be.

HAYES: You know, I was -- I was just on a book tour in Seattle and I
went into an office building in Seattle to meet with some folks. And I
went right into the building and just they were like on the eighth floor,
and I went up to the eighth floor and I was like, is no one checking my ID?

And I realize now that seems strange. Of course, walking into a
building seemed like something one just did before we created this system
of constant checks.

CARTER: As opposed to getting into this building this morning, for
example.

HAYES: Yes, which is basically like, yes, Ft. Knox.

VICTORIA DEFRANCESCO SOTO, LATINO DECISIONS: In Texas, what we`re
seeing is this perfect solution looking for a problem.

HAYES: Right. Right, that`s the issue.

SOTO: As we were looking earlier, Chris, and you were talking about
this, that there is no evidence of systematic vote fraud, however there is
systemic evidence that such measures do suppress turnout. And, you know, I
have no problem with an act like this if the cost of suppressing turnout is
really going to fight voter fraud.

But we know it doesn`t. There was a study done in Texas where we saw
that you need a valid form of ID. Invalid form of ID doesn`t just mean a
driver`s license. That means it has to be up-to-date and have your valid
name on it. If you get married, you change your name.

HAYES: Right.

SOTO: That means that if you look at the face of it, 91 percent of
Latinos could vote, but when you put in that valid point -- that`s 88
percent among African-Americans that goes down to about 82 percent.

HAYES: Right.

SOTO: That is a discrepancy which does not gel with section five.
And the data is there.

HAYES: Right.

MUHAMMAD: I want to take a it back to the question that you asked.
What would you expect someone like Mitt Romney to say, someone who get
maybe at most 5 percent of the vote.

HAYES: Right.

MUHAMMAD: I mean, what I would suspect is kind of what McCain did.
I mean, the Republican Party really wants to bring in African-American
voters and now, we`re just having a irrational prejudice --

HAYES: No, I wasn`t implying that.

MUHAMMAD: -- that used to vote Republican.

HAYES: Sure.

MUHAMMAD: But then when the political interest, when the political
line of the Republican Party changed, then the African-Americans started
voting for Democrats. McCain, when he came he gave a pretty -- more of a
detailed speech, really trying to laud his policies, there might have been
disagreement, but I think it was a very respectful speech.

I feel -- with Romney speech, it wasn`t so. It was taking a lot of
potshots, a lot of his answers about what he -- potshots against NAACP
policy and then his solutions were just really rhetoric. It was just like
free enterprise, really no explanation.

HAYES: I want to play a clip of him making an appeal that I thought
was sort of a classic one. This is him at the NAACP convention in Houston,
saying, you know, peer into my soul.

MUHAMMAD: That`s right.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I believe that if you
understood who I truly am in my heart and if it were possible to fully
communicate what I believe is in the real enduring best interest of
American -- African-American families, you would vote for me for president.

If you want a president that would make things better in the African-
American community, you are looking at him.

(APPLAUSE)

ROMNEY: You take a look.

(END VIDEO CLIP)

HAYES: Again, a tough sell, but what was -- what was the distinction
between the McCain speech and the Romney speech to you?

MUHAMMAD: We`re like -- I mean, McCain when he spoke it was 2000 and
he was talking about educational policy and he gave a lot of specifics
about things he would do, about tax credits, about greater bonuses and
awards where teachers who were in low-performing areas, while Romney was
saying things more like peer into my heart -- very general things and we
have to free the market and somehow things will magically get better. And
then specifically saying we`re going to get rid of the Affordable
Healthcare Act which is one of the greatest promises of closing some racial
disparity, with health insurance.

ALYONA MINKOVSKI, "THE ALYONA SHOW": Well, saying things like peer
into my heart don`t work because if we`re going to address any voting bloc,
I think no matter how dishonest maybe the effort might be -- like if you
want to talk about Mitt Romney speaking with the NAACP, then I still think
you need about things like the Voting Rights Act, but focused issues,
right? Why don`t you talk about stop and frisk policies? In New York
City, why don`t we talk about the drug war? Why don`t we talk about things
that actually affect this level of the population or this group?

And then I think that, I think it`s not only about race, but I think
a certain level of class applies here, too, right? Why would voters
necessarily believe that Mitt Romney is going to do anything for African-
American lower income population if Wall Street are his biggest donors?

(CROSSTALK)

SOTO: And let`s compare it with the NALEO speech.

HAYES: Right. That`s a great comparison, actually. Good point.

SOTO: OK. So that level of detail that McCain had the NAACP, Romney
had it in NALEO.

HAYES: NALEO, if we could explain what NALEO is, it`s National
Association of --

SOTO: Of Latino Elected Officials, which took place a couple weeks
ago in Orlando.

Romney showed up and he bashed the president over the head with
immigration. Yes, you could feel the breath in the room just be taken.
But then he went on to lay out a detailed approach of what he would do with
immigration. He`d say I`d enforce the borders a little bit more, I would
raise the caps on family reunification visas. I would increase work
permits.

So, he went down the line. You didn`t necessary like his position on
immigration, but here`s my alternative. Romney in saying, we`re going to
do away with Obamacare, didn`t say, but here are my projects X, Y and Z of
the alternative.

HAYES: And that is the difference I think between trying and not
trying, right? Between --

CARTER: But still, even so, I think that before we go too far down
the partisan road, we have to realize --

HAYES: Please? Keep us honest, Stephen.

CARTER: -- that the flip side of what you said in the intro,
Republicans have no reason to go after the black vote in the serious way
because black people aren`t going to vote Republican.

For the same reason, Democrats have reason to actually give anything
to black voters as a group because they know they`re all going to vote
Democratic. And if you look at the data, one of the things you find is
that the situation of poor, black people is just as a bad under Democrats
as it is under Republicans.

HAYES: Let`s talk about -- Dedrick here wants to respond to that --
let`s take a quick break and let you get back at that.

(COMMERCIAL BREAK)

HAYES: So, we`re talking about Mitt Romney`s speech to the NAACP,
the Texas trial on Voting Rights Act.

And, Stephen, you made a point in which people have made in a variety
of different ways, both under President Barack Obama and previously about
the Democratic Party`s relationship of black voters and the political
effects of the fact that African-American voters vote so, in such large
numbers and high percentages for Democratic politicians, which is that
Republicans don`t have to court them, but that Democratic politicians can
take them for granted, essentially.

And I`ve heard this argument in many ways and, in fact, there was
some reporting about people being frustrated at the NAACP convention that
the president himself did not come, that Joe Biden did not come instead,
and thought that was perhaps some kind of a slide.

What do you, how do you see that, Dedrick?

MUHAMMAD: Again, just the point about that African-Americans won`t
vote Republicans. I don`t believe that. It`s not that we won`t vote
Republicans, I think that oftentimes Republican Party is not providing much
for African-Americans to want to vote for them.

HAYES: Right.

MUHAMMAD: So, putting the honest on the African-Americans that we
have prejudice, I don`t buy into it. And I think they do need to court us,
just like Republicans need to court Latinos, just like every year,
Democrats are talking about -- because Democrats haven`t won the majority
of white vote since Kennedy or something like that. So, constantly courting
white male vote. So, yes, all constituents should be courted.

Mitt Romney -- I don`t think did a very good job and didn`t do a very
good job courting African-American vote, NAACP vote. And instead of
saying, oh, there is nothing for him to do, he just needs to actually --
there is records of people who stood by conservative principles who made a
much better, even George Bush, I believe, like 10 percent of the African-
American vote and I think he did court the African-American vote. So,
there is --

HAYES: I want it be clear, the reality of American politics to me in
this respect, in the post-civil rights era particularly. I mean, there`s a
different coalition that sort of pertains to same New Deal to the signing
of the Civil Rights Act. But in post-civil rights era, you have to choose
as political party whether you`re going to have black voters or the white
racist vote. You can`t have a coalition that has them both together.

I mean, that`s just the reality of American politics. I`m sure
people will be offended by that.

And I`m not -- I just want to be clear. I`m not saying that all
Republicans are white racists. I`m saying that the white racist is going
to go to one side and black vote is going to go to the other because why
would you have a political coalition that both of those elements in them?

SOTO: That social conservatism -- that`s something I`ve always
wondered, because with Latinos, the Republican Party tries to reach out and
saying, you`re socially conservative and we`re socially conservative. You
guys are church-going folks. We`re church-going folks.

Black folks, church-going folks, also socially conservative and I`m
just always surprised that there isn`t more of a push.

He mentioned it in his speech briefly, saying I will defend marriage.

HAYES: Right.

SOTO: But just in passing. So, I was surprised he didn`t try to
establish more of a connection like that and just the broader strategy of
Republican politics.

MINKOVSKI: Well, I think it`s hard to do because the overarching
theme of some racism and some prejudice that is involved. But, you know,
if we can just go back to the point of maybe the Democrats take advantage
of the black vote, I think that`s a problem the party has in general, is
there`s an assumption not only African American voters are going to vote
for Barack Obama, again, but it`s also the environmentalists are going to
vote for him again, it`s also the gay voters that are going to vote for
him, again, no matter what happens. And that`s why we`ve seen the
Democratic Party just move to the center because the people they`re
actually trying to court now are those middle-of-the-road voters and not
the others.

HAYES: Right. Although that logic, I mean, the amazing thing about
that logic should pertain, right, in classical political science median
voter theory, right, it should pertain on both sides, but it doesn`t,
right? So, it seems to pertain only asymmetrically, which I think is
frustrating.

MINKOVSKI: It`s a problem.

CARTER: But I think it does pertain on both sides and that`s one
reason that the Republican Party lost the last election, that is both
parties have a problem. Both parties have a fairly solid base, with fairly
well-defined interest -- a base that they pay lip service to because the
truth is, the Republicans, if you look at the actual record in office, they
never actually give much to the social conservatives.

HAYES: The social conservatives.

CARTER: The social conservatives. They talk to them and talk about
them, but the bills they pass not that much. They both have that.

They`re fighting -- both parties are fighting over the same small
group of independent voters.

HAYES: I would just push back a little bit on that. I think that
may be true somewhat at the federal level. I think at the state level,
that`s not true. I mean, when you look at restrictions on abortion --

CARTER: That`s what I was going to say. And actually, Republicans
get more black votes at the state level than they do at the federal level,
also, which is a very distinction. And it`s also at the state level, it`s
in the local churches that you find these various conservative groups going
around and trying to do outreach, not as much they do 10, 15 years ago, but
trying to do outreach based on the social conservative ideas that you
mentioned.

HAYES: I want to read this comment that Romney then made about his
own speech, there`s no sound of, but just a full report.

He`s talking about getting booed. And he said, when I mentioned --
this is him in a Montana fundraiser the same night.

He said, "When I mentioned they were going to get rid of Obamacare,
they weren`t happy. I didn`t get the same response. That`s OK. I want
people to know what I stand for. If I don`t stand for what they want, go
vote for someone else, that`s just fine. But I hope people understand
this, your friends who like Obamacare, you remind them, if they want more
stuff from the government, tell them to vote for the other guy -- more free
stuff."

SOTO: What a great mobilization speech. I mean, you know, hindsight
is 20/20, and then hindsight maybe they should not have invited a
representative from either campaign, because what this does is it`s going
to mobilize the base.

My question is, is this going to mobilize the black base? Is this
going to anger the constituents the NAACP to go back and fight stronger?
So, this is a win/win. It just mobilizes everyone?

MUHAMMAD: Well, I mean, I do think it`s important that NAACP invite
both presidential nominees to come because, again, I think -- there is --

HAYES: Right, because this gets to the exactly what we`re talking
to.

MUHAMMAD: And true, and we want more from both parties to address
our issues, right? Democrats and Republicans who have the opportunity to
have that interaction. But this whole free -- I mean, Rush Limbaugh and
others are taking it like really slamming down this whole free stuff piece
and just the idea that minority voters just want free stuff while
hardworking, middle class and unsaid and white people don`t want free
stuff.

I mean, you k now, this country in many ways was founded on free
stuff, meaning the land. It took some genocide to get to the free stuff --

HAYES: And free labor.

MUHAMMAD: And free labor, right? So, I mean -- and more recently,
the great white middle class was built on a lot of free stuff, on a lot of
free higher education, on a lot of free access to highways of suburbia to
be developed in subsidies on homeownership.

So, you know, just the idea -- it`s been such a racist point in the
past. I`m hoping Mitt Romney wasn`t trying to go down that road, but I
believe some of the more extreme Republican activists are usually that`s
going down on that road.

HAYES: Of course, there`s the welfare queen, the infamous strapping
young buck of the mythology of Ronald Reagan buying a t-bone steak.

Fraud and corruption reached a fever pitch on Wall Street this week.
That`s next.

(MUSIC)

HAYES: A jaw-dropping new study this week provides insights into
what`s driving the seemingly relentless tide of scandals on Wall Street.

A survey conducted by a law firm Labaton Sucharow found that at least
30 percent of professional services found that they feel pressured by their
bonus plan to act unethically or illegally, 39 percent said they believe
their competitors are unlikely to have engaged in unethical or illegal
activity. In this week alone, we have a fresh spate of financial scandals
that seem to confirm the reports` results.

On Tuesday, federal officials accused Iowa-based brokerage firm
Peregrine Financial of fraud and arrested CEO Russell Wasendorf after he
apparently attempted suicide and left a note saying he stole more than $100
million from customers.

On Thursday, Wells Fargo agreed to pay $175 million to settle claims
that its brokers added what the Justice Department called, q quote, "a
racial surtax to the loans of black and Hispanic borrowers."

The next day, JPMorgan revealed some of its traders may have sought
to cover up the bad bet that contributed to its $7.5 billion trading loss.

And, last night, "New York Times" reported that federal authorities
expect to file criminal charges against the banks, the center of the
massive scandal involving the rigging of the key interest rate known as
LIBOR. We talked about that on the show last week.

Joining me now at the table are Edward Conard, former partner at Bain
Capital and author of "Unintended Consequences: Why Everything You`ve Been
Told About the Economy is Wrong", and Alexis Goldstein, a former
information technologist at Merrill Lynch and Morgan Stanley, now a member
of Occupy the SEC.

It`s great to have you guys here.

ALEXIS GOLDSTEIN, OCCUPY THE SEC: Thanks for having us.

HAYES: So, Ed, your book is about incentives, partly, and about
incentives for investment and risk-taking. And one of the things that I
have been struggling with in writing my own book and looking at Wall Street
and seeing the sort of cascades of scandals, they just seems that
incentives can go in a bunch of different directions.

And one of the ways they can do is to incentivize risk-taking, or wok
harder and more performance. But they also seem they incentivize a lot of
cheating and a lot of corner-cutting. And it seems to me that the culture
of finance has something deeply rotten about it.

Do you agree?

(LAUGHTER)

HAYES: I`m serious.

EDWARD CONARD, AUTHOR, "UNINTENDED CONSEQUENCES": It`s not a loaded
question. Well, I just think there is a lot of money changing hands on
Wall Streets and in banks and you`re going to expect the bank robbers to be
there. So, sure, either criminals involved in that activity, and do we
have to look very carefully and supervise those operations, root them out
wherever we find them? Of course we do.

And I think every investor has to recognize that, as well. I know in
my own personal investments, I spread them over a lot of firms because I`m
very fearful that I`m going to find one firm or another, the Bernie Madoffs
of the world --

HAYES: Right.

CONARD: -- that are stealing my money as opposed to investing it.

But I do think that society works on 95 percent of the people being
honest and cooperating, no matter the supervision, which doesn`t mean that
honest people on the margin don`t perhaps do some things that are
inappropriate. But for the most part, cooperation is what`s driving our
economy and our civilization forward. Much more benefit than costs.

GOLDSTEIN: I would disagree with that because having worked on Wall
Street, I mean, everything is a cost benefit analysis. And something that
happens a lot, if you look at what would the cost be if we were to violate
this particular regulation and what is the ultimate fine? If everything is
a cost-benefit analysis, you are almost incentivized, you are incentivized
to push the envelope in terms of what`s legal and what`s not legal if you
know that when you`re caught the fine that is levied is going to be less
than that profit that you make.

We are in an environment right now where we have seen, you know,
Glenn Greenwald calls the two-tier justice system, where we have seen 99
percent of the cases that the Federal Reserve has done in bank enforcement
actions have not resulted in the bank having done any wrongdoing. So, not
only have we not seen anyone go to jail, but people don`t have to admit
they did anything wrong when we do see the regulators come in.

So, even before this sort of environment that has happened after the
crash, you had this cost-benefit analysis where it makes sense to violate
regulations, but, since, we have this culture of immunity for bad behavior
on Wall Street.

CONARD: I just don`t think the math works because my experience in
business is that people care greatly about their careers. And if they get
caught doing something inappropriate or even if they do something
appropriate and it doesn`t work out, they often lose their career. And the
cost of losing their career --

(CROSSTALK)

GOLDSTEIN: -- the guy that blew up Enron (ph) was able to go off and
create a whole new hedge fund.

CONARD: I`m not saying it`s true in every circumstance. But I`d say
in the vast majority of circumstances if you get caught with your hand in
the cookie jar, if you get caught doing something inappropriate or even if
you take a legitimate business risk and it fails, there`s a high
probability that your career is coming to an end. And the likelihood that
you can get back into the game, again --

(CROSSTALK)

GOLDSTEIN: -- seeing a huge amount of banks that have failed
substantially, bailed out by the government, subsidized by the U.S.
taxpayers, lending programs by the Federal Reserve and for both the banks
and private companies and even some foreign governments and foreign
companies, and we haven`t seen any punishment for any of those things.

So, there`s -- again, I say it, again, a culture of immunity and I
don`t think that what you`re saying holds true any more and I`m not sure it
ever did.

CARTER: Wait a minute, there`s two separate problems here. One is,
what are the people like on Wall Street? And I certainly know a lot of
them and the people I know are not the people, in fact, who are going to be
cutting corners in the way that you describe it.

HAYES: I think.

CARTER: I think, I believe. But, please, let me finish. Let me
finish.

GOLDSTEIN: Sure.

CARTER: But that`s not the larger point. The larger point is that
you can`t tell whether there`s been enough punishment meted out until
you`re sure that crimes have been committed, or a very strong civil offense
have been committed. And many times the reason both sides settle, the
government and the regulated entity is because neither one actually wants
to push it. The government might lose the lawsuit and -- or the entity
might be taken down in a serious way. That`s why they settled.

But we don`t know in a lot of these cases. We can`t tell from the
fact that a bank failed that somebody needs to be punished.

HAYES: Right. But we can -- let`s just to ground it here, right?
I mean, in the case of Wells Fargo, OK, we know that there was a
compensation structure that incentivized pushing people into subprime loans
and that they were doing this practice, pushing people on subprime loans on
a racial basis, and these were people who were coming in who were black and
Latino, who could have qualify for prime loans, which would have been less
expensive, but the compensation structure.

Here`s the DOJ Wells Fargo complaint. "Wells Fargo compensation
provided a strong incentive for home mortgage consultants and wholesale
mortgage brokers to originate alone as subprime even if the borrower could
qualify for a more favorable prime loan. This compensation structure
resulted in discrimination on the basis of race and natural origin against
African American and Hispanic borrowers, right?

So, this is -- this is a case where we actually do have a settlement
and we do have, you know --

CARTER: That`s the complaint, not the settlement.

HAYES: Right.

CARTER: But the same is all true, they got hit with $175 million.
Maybe I should have done more --

(CROSSTALK)

HAYES: That doesn`t mean any wrongdoing or not. That`s the point,
is that $175 million is nothing. It`s nothing. They barely --

CARTER: I know. They reported $4.6 billion in quarterly profits. I
understand that.

CONARD: I think part of the settlement reflects what the government
really thought of the case, because if they really thought they had a very
strong case, and they could prove it very easily, they wouldn`t have
settled for a number like that. Like what --

HAYES: Or, I don`t know if that`s necessarily true.

(CROSSTALK)

CONARD: To avoid the litigation costs that would have gone along
with it.

MUHAMMAD: And also, too, because NAACP also was -- had issues around
the subprime lending, targeted lending with major banks and we have
oftentimes found we`re working with the banks that the most important thing
was to try to get a change of practice. I think oftentimes that`s what
they settle -- that`s also the government is looking for, not necessarily
even that we don`t have a strong case, but the most important thing is what
can we do now and that`s the $175 million is for, is to help people who
have -- who are in trouble around foreclosure and have had unsustainable --

HAYES: We have Bill Black, who is a professor and also a former
regulator. He specialized on financial fraud. We`re going to bring him
into the conversation, right after this.

(COMMERCIAL BREAK)

HAYES: I want to bring in Bill Black, professor of economics and law
at University of Missouri, Kansas City, and author of "The Best Way to Rob
a Bank is to Own One".

Bill, I want to get your thoughts on this, is something you spend a
lot of time thinking about and also as a regulator, as a criminologist
looking into about what the kind of conditions are that do produce either
ethical corner-cutting or actually outright illegal behavior.

WILLIAM BLACK, UNIVERSITY OF MISSOURI: Sure. So, we talk about
criminogenic environment -- environments that produce epidemics of fraud.
And we can give you empirical evidence on the debate you just been having.
So, for in the savings and loan crisis, for example, detailed
investigations, the report of the national commission found that at a
typical large failure, fraud was invariably present.

We know that if you use a compensation system, you can produce
endemic fraud. So, fore example, over 10 percent of the appraisers in this
nation signed a petition begging the United States to take action against
appraisal fraud. We found in investigations that WaMu, Washington Mutual,
had a black list of appraisers and you got on the blacklist if you refused
to inflate the appraisal.

Now, think about that. There is no reason why an honest banker would
ever inflate an appraisal. And that happened routinely and evidence shows
that over 75 percent of appraisers were subjected to coercive actions
always to inflate the appraisal and that this came from the lenders. And
note that it doesn`t take 100 percent of the appraisers to go bad for fraud
to become endemic because you simply use the 7 percent of appraisers who
are happy to inflate the appraisal. You send them all the business.

And same thing happened in the credit ratings where you had this
absurdity of AAA ratings for things that weren`t even single C. So, this
is 20-plus grade inflation that happened absolutely routinely over 22,000
times in connection with the toxic waste.

It is not true that 95 percent of the time, if you leave people
alone, they will do the right thing. If cheaters prosper, then it creates
what we call aggressive (ph) dynamic in which bad ethics drives good ethics
out of the marketplace.

HAYES: Ed, I want you to respond to that.

CONARD: Sure. When you look at the micro evidence, you`re going to
find cheating, rent seeking going at all levels. I certainly agree.
That`s the way the world works.

But if you go to the macro level, look what happened to you U.S. real
estate prices relative to Europe, for example. Our real estate prices did
not rise more than Europe. So, they were actually empower and Germany was
integrating eastern Germany, and Japan was suffering a big real estate
boom. So, those economies differ from the rest, but our real estate prices
didn`t rise more than them.

So, I don`t doubt for a second that there were appraisers who were
making inappropriate appraisals. But did that drive our real estate
markets up to the level that it drove? I don`t see the macro evidence to
say it was endemic, for example.

BLACK: Let me give you the macro evidence. Studies found that 90
percent of stated income low-documentation loans involve fraud.
Investigations determine that these are almost invariably produced by the
lenders and their agents.

How many of these low documentation loans were there? By 2006, it`s
roughly half of all the loans made in the United States. You`re talking
about millions of fraudulent loans and they drove the hyperinflation out of
the bubble in the United States.

CONARD: We would have seen --

(CROSSTALK)

HAYES: Well, wait -- but, this question about -- I mean, there`s
also the question about whether there`s a lot of fraud in other places, as
well. I don`t want to necessarily -- I mean, having read into the Spanish
real estate bubble, which was massive and, in some ways does look like
ours, it seems like possibly a tremendous amount of all sorts of fraud
happening in Spain, as well.

BLACK: And in Ireland.

HAYES: But, can we go back to this compensation question to me
because that is really kind of at the core of this, is that my theory on
this, and I would like to get your thoughts on this, is that like, you
know, everybody`s got a price and the larger the absolute payouts, the more
likely it is that price to find you.

Meaning, if someone comes to you and says like, will you do this
thing that is kind of dodgy and here`s $5,000? You`re like, ahh. Will you
do this thing that`s kind of dodgy, here`s half a million dollars? Will
you do this thing that kind of dodgy, here`s $5 million? You said, well,
all the good I could do with that $5 million, I could donate it to non-
dodgy enterprises --

CONARD: Exactly the opposite in my theory.

HAYES: I know -- yes, I want your respond to that right after we
take a break.

And businesses lead the world.

(COMMERCIAL BREAK)

HAYES: So, Ed, I want you to respond to this idea, this idea that,
you know, when the payouts get big enough and I think the sort of the
payouts operate on different people in different ways. I mean, here`s --
there`s, there`s this interesting combination of status-seeking, right,
because the number -- it`s like at a certain point, you know, people, my
bonus can be $10 billion, $15 million, what exactly is the marginal utility
of that extra $5 million. How many more yachts I`m going to buy, or
whatever the -- it`s the status, the number that you walk around with,
that`s your grade. You get to say, I`m an A-plus student, basically.

And then there is this, on the other side, it`s trying to kind of
cover your track if you screwed up. This is the JPMorgan Chase SEC filing
about their own estimated of earnings and traders in the office that has
made this trade expect to mark their positions where they would expect to
be able to execute in the market, recently discovered information raises
questions about the integrity of the trader marks. Basically, they were
plunging the trader marks to hide their losses because they were -- they
didn`t want their losses to be exposed, so just certain individuals may
have been seeking to avoid, showing the full amount of losses, being
incurred and the portfolio during the first quarter. But you disagree with
this sort of picture of motivation that I`m painting.

CONARD: Well, I think the circumstances matter. So, the people`s
careers are a lot more valuable than their yearly payoff. And I think if
you went to somebody and said, I`d pay you $1 million, $5 million, $10
million do something illegal, might you be able to motivate them? Sure, as
a past (INAUDIBLE).

But I think what you find is the people who are making $5 million a
year were making $5 million last year and the year before and the year
before. They worked hard as -- you know, to get all A`s and to get a job
and to work their way up into their positions and they look forward to the
future, and they see $5 million payouts for 10 years coming.

I think they`re very careful about jeopardizing all they have worked
for and all that comes next. Those aren`t -- so, they`re less motivated by
the path, and when you get to those levels, there is high, high, high
visibility. So --

MUHAMMAD: What about below those levels? Like more so with total
mortgage and mortgage brokers and these types of things where all of a
sudden they`re making $60,000, $80,000, $100,000 that was kind of big
money. But it seemed to be almost endemic the amount of unsustainable
mortgage being pushed forward.

So, I`m just wondering how that theory works? I mean, if you know
you have career making millions of dollars for years, so I can understand
you`re being a little more cautious.

GOLDSTEIN: Well, I even disagree with the millions of dollars a year
because I worked with traders, and the behavior of traders is essentially
that if you start to lose money in your book, you go for broke. It`s the
Bermuda trade, right? You double down, if you pull yourself out of the
hole, then you make a great bonus. If you don`t, then you get fired and in
your pocket, a one-way ticket to Bermuda or Brazil, or wherever, right?

And a lot of these traders who blow off can they go off and form
hedge funds just because they made a name for themselves as great risk-
takers, even though they are usually terrible risk-takers. So, I actually
don`t think it ruins your career when you`re paid millions of dollars a
year, at least if you`re a trader and you blow up.

CONARD: You have to be very careful about the Bermuda trade because
when people do lose money --

HAYES: It`s amazing that is a thing. It points to the culture.

CONARD: There`s a lot of supervision in banks for this very thing
because we know when people lose money, including banks in total, that they
will double down trying to save themselves. It`s a big problem.

HAYES: I want to get Bill to respond to this, but quickly, we should
make the distinction between -- I mean, so there`s bad risk undertaken not
fraudulently, just bad management of risk, right? Doubling down on a bad
trade and there`s being deceptive, saying, you know, calling the person
submitting your LIBOR bid and saying, can you nudge it half a basis point -
-

GOLDSTEIN: But you usually when you double down on the trade, you`re
violating internal risk controls, then you usually do have to hide it. So,
most of these traders that blow up are also hiding their numbers.

HAYES: Bill, I want you to respond.

BLACK: OK, we don`t have to guess about these things. There`s a
whole field called criminology that has researched this for years. So,
first, it isn`t just the dollar amount, it`s the fact that you get it
early. So, modern executive compensation is perverse and everybody agrees
with it in terms of the short term payoff.

Second, it`s large.

But, three, it`s sure. This is the Nobel laureate George Akerlof in
his famous 1993 article, "Looting: The Economic Underworld of Bankruptcy
for Profit," where he emphasizes the great thing about accounting fraud is
it`s a sure thing.

And the fourth thing is it`s the opposite. You lose your job if you
refuse to engage in the fraud.

So, the average CFO in America has a tenure of three years. Now,
that`s all kind of problems to begin with. You`re never going to get a
long-term perspective out of that. But --

HAYES: Yes, hold that thought right there, hold that thought, Bill.
We`re going to keep you on the line and we`re going to come back. I want
to keep talking about this. You had a response to that, Ed.

We`ll get right back into it after the break.

(COMMERCIAL BREAK)

CHRIS HAYES, HOST: Hello from New York, I`m Chris Hayes.

Here with: Dedrick Muhammad, senior economic director of the NAACP;
Edward Conard, a former partner at from Bain Capital, we`ll be talking
about your time there in a bit; Alexis Goldstein, former vice president of
information technology at Merrill Lynch and Deutsche Bank, now a member of
Occupy Wall Street; and Stephen Carter, law professor at Yale. And joining
us on satellite is Bill Black, professor of economics and law at the
University of Missouri, Kansas City.

We`re talking about the week that we`ve seen on Wall Street, just in
a week of Wells Fargo settlement of racially bias practices that cost black
and Latino borrowers` money.

We have seen more come out of the LIBOR scandal that is metastasizing
in England and a "New York Times" piece in the paper today saying that the
Justice Department is looking to build a criminal case around it.

We saw the case of a broker, dealer in derivatives called Peregrine
that looks like a mini Madoff situation in which a guy stole $100 million
of his client`s money, and what the sort of culture or finance is and
whether or not it`s systematically driven towards corner cutting, whether
ethically, legally or regulatorily.

And, Stephen, something you want to say. Yes?

STEPHEN CARTER, YALE UNIVERSITY: Well, even -- suppose it`s true
about finance. But that`s actually a kind of smaller picture of something
that`s true largely in American life. Corner-cutting seems endemic to a
lot of the things that we do, and the same kind of practices you refer to,
pushing people into subprime loan was a terrible thing to do.

On the other hand, it begins from the same faulty notion that: (a),
everybody`s biggest asset should be their house, which is a crazy investing
rule, and, (b), you need to maximize your consumption. You need to be able
to get out and buy more stuff and get more stuff where you`ll never be
happy.

You see the same pressure on both ends. You see doing greater damage
when you see it happening sometimes at the top. But it`s actually endemic
to the cultural --

HAYES: So, your indictment is that the entire culture in America is
corrupt, not just the culture of finance. I just want to be clear here.

CARTER: It`s not -- corruption is the wrong word. You can use it if
you want to, that we have a culture that encourages constant consumption,
constant exercise of desire. And here I`m talking about desire like I want
to buy that thing -- and if you`re going to have that culture, people are
going to find ways to cut corners to get the things that they want.

EDWARD CONARD, FORMER BAIN CAPITAL PARTNER: The only thing, you can
focus on the good or the bad. Everything has costs and benefits.

If you look at the United States, we added 40 million jobs on the
base of 100 million employees in the mid 1980s. Europe and Japan grew half
as fast.

HAYES: Right.

CONARD: We increased our productivity from 1.2 percent a year growth
rate to 2 percent while theirs fell.

We created, we brought 20 million immigrants and pulled them into our
country to satisfy our demands for employment and we educated their
children. We put tens to millions of people to work offshore.

When you really step back and look at the mackerel level how our
economy has performed relative to Europe and Japan, and with all the cost
cutting and all the things that have occurred, our working class incomes
have grown twice as fast as theirs. On a per person basis, but total basis
and total number of employees, we have put 40 million people to work and
they`re less than half as much as we have.

HAYES: You`re talking about Europe and Japan.

CONARD: The two other high-wage economies that are the real-world
examples.

HAYES: Right. But the other thing is that, in terms of job creation
-- I mean, if we look at the last decade and the decade that this stuff is
happening, the decade in which traders in the London office of Barclays
were calling up the people submitting their LIBOR bid and saying nudge it
down so I can --

CONARD: Until the financial crisis, we have some of the highest
workforce participation and the lowest unemployment number.

HAYES: Sure, until the financial crisis. That`s like saying I was
perfectly healthy until I was horribly cancer-stricken. The point is that
you can`t separate, the core from the outer.

CONARD: And the question is what caused the cancer, OK? And now we
can relate it back to whatever you relate it back to. What I would tell
you is that the cancer that you`re describing is caused by a massive
withdrawal from our banking system.

HAYES: This is a bank run, had nothing to do with anything that was
happening in the run up to it.

CONARD: If we don`t re-circulate that short term, we will have high
unemployment and slow growth, exactly as we have now when the money isn`t
circulating. That when we attack the banks, instead of the bankers who are
doing illegal things, and we focus only on the corner cutting and not the
things that are beneficial, we end up with $1 trillion in the banking
system undeployed, $2 trillion in corporation undeployed, high unemployment
--

HAYES: Here`s my theory for why it`s undeployed, here`s my theory of
why it`s undeployed. If I knew -- if I was one of those people surveyed
that said 40 percent of my competitors will do illegal or unethical things
to do, you know, to get ahead, if I was one of the people who said my
compensation structure incentivizes illegal behavior, if I was one of the
people who was -- knew those traders on the desk --

CONARD: You would have done that in 2007 --

HAYES: But now that I`ve seen it all blown up, I would not trust the
system and I would silt on my money as I as a personal individual am doing
right now because I don`t trust the system because fundamentally the system
seems untrustworthy.

(CROSSTALK)

ALEXIS GOLDSTEIN, OCCUPY WALL STREET: You`re seeing people pull
their money out of their brokerage accounts, people think the game is
rigged and nobody is investing, banks are scared to loan to each other.
We`re in a climate of fear and it`s got nothing to do with -- you know, it
has everything to do with the fact that we see this massive corruption and
nobody charge the system any more.

CONARD: I`ll give you an alternative view.

HAYES: Yes, please?

CONARD: OK? We used to believe that implicit government guarantees
will hold all the short-term debt in place, and we woke up in 2009 and
recognize they don`t work, and that there`s enormous risk of damage from
withdrawal. And we have to hold money aside now to fund those withdrawals
in the event of another case. If it`s sitting on the sidelines to fund
withdrawals, it`s not funding your houses, it`s not funding your
businesses,. it`s not creating employment and business and growth.

HAYES: Let me explain this in lay terms and then I want to get Bill
Black in here.

Right now, obviously, the FDIC, the idea behind the FDIC and the
program of deposit insurance was the fact that in the wake of the bank run
that precipitated the great depression, that financial crisis in 1929, that
that bank run was, we never wanted to have one of those, again. Federal
Deposit Insurance Corp was set up to ensure people`s accounts so in the
midst of a panic, people wouldn`t run to their banks. Of course, banks
have liabilities in excess to reserves, which means they lent out more
money than they have. That`s the purpose of a bank in some senses. If
everyone goes to get the bank at the same time and the bank will then be
bankrupt.

Right. So, we guarantee it.

What you`re saying is something like that happened in the short-term
funding market, which is there is a whole bunch of complicated ways you can
describe what the short term market looks like, but it essentially is a run
on the banks and so we need something like, not necessarily FDIC, but what
is happening in the short-term lending market.

(CROSSTALK)

CONARD: And we understand there`s 800 years of history.

GOLDSTEIN: And what happened is all these banks were repo`ing out.
And what that means is the short term funding, right?

I have all of these assets. They are all mortgage-backed securities,
or CDO-squared, and I`m using those to fund my payrolls and pay my day-to-
day bills and I go to the repo market overnight and say, I`m going to loan
this to you overnight and in the next day instead of buying it back, like
I`m supposed to, I just renegotiate the terms of the deal.

When everyone realized that all of these AAA ratings weren`t worth
anything, all of a sudden the repo markets froze up. And so, the fact that
all these banks are doing all their payroll and everything else based on
short-term lending is a terrible model.

CONARD: You`re looking at one side of balance and not the other.

GOLDSTEIN: That is the reason that everything fell so hard and so
fast.

CONARD: This is what banks do, they put the short-term money to
work. What do the financial markets do, they put the long term money --

(CROSSTALK)

HAYES: Bill, Bill, Bill, I want you to respond to this sort of, the
degree to which we can sort of untethered what happened in the crisis from
the run to the ball, because I think the most, in some sense, novel and
provocative thesis in your book is precisely that, right, is distinguishing
the real estate market and the way the credit markets look and the mortgage
bubble and all those things in the run up to the crisis from the crisis
itself, and you kind of detaching those two things, is one of the
provocative --

CONARD: The run up before the crisis looks a lot like the rest of
the world.

HAYES: Bill, I want you to respond to that.

WILLIAM BLACK, UNIVERSITY OF MISSOURI: The rest of the world has a
whole lot of accounting fraud as well. So, you can`t assume that the rest
of the world doesn`t have fraud.

Look, it`s really bad for an economy to have this kind of fraud. If
you allow aggressions dynamic to exist, if cheaters prosper, then we have
known for centuries, swift talks about this, of all things in Gulliver`s
Travels, that you`re going to have fraud become predominant and you get
crony capitalism and you get weak growth.

So, enforcing the laws against fraud and preventing the criminogenic
environment in the first place is a really good thing for an economy. How
do you do that? First, you stop executive compensation and professional
compensation from being set up in the perverse way they are now.

Second, you get rid of the three D`s, which are deregulation, de-
supervision and de facto decriminalization, what your guest have been
talking about, the death of accountability. Akerlof and Romer again say
when you deregulated the savings and loan industry what we failed to
understand was that this was bound to produce widespread looting.

Well -- and they said, now we know better. If we have an economic
theory, and if we follow it, we don`t have to have these crises. We did
the opposite. We deregulated, we desupervised, we failed to prosecute.

Out of the savings and loan crisis, we did over 1,000 felony
convictions in major cases. In the current crisis of the folks who drove
it on Wall Street, we have zero. And, so, yes --

GOLDSTEIN: And a key point, Bill, some of the deregulation made the
crisis worse. The 2005 changes to the bankruptcy code that made
derivatives debt senior, and what that means is if a company goes bankrupt,
all assets get frozen, except for derivatives. They are exempt from this
thing called the automatic stay.

So, when everything gets frozen derivatives and counterparties get to
pull all their money out first and that`s what happened in the wake of the
crisis is that everyone freaked out because they knew that was the case
after the 2005 changes.

HAYES: I`m going to thank Bill Black, professor -- sorry, Bill, we
have to go.

BLACK: Understood.

HAYES: Thank you for coming on, professor of economics and law at
the University of Missouri, Kansas City.

And, Alexis Goldstein, former information technologist at Merrill
Lynch and Morgan Stanley, now a member of Occupy the SEC -- thank you for
joining us. We really appreciate it.

All right. Mitt Romney said he left Bain Capital in 1999, several
documents say otherwise. We`re going to ask our guest, former Bain partner
Ed Conard for the inside story, exclusively, right after this.

(COMMERCIAL BREAK)

HAYES: President Obama yesterday hammered away at Mitt Romney`s
record as head of the private equity firm Bain Capital, after new evidence
suggested that Romney may have remained at the firm longer than he`s
previously stated. A rack of new documents unearthed by "Talking Points
Memo," "Mother Jones," "The Boston Globe" and Current TV indicate that
Romney held the title of chairman and chief executive of Bain Capital until
2002, despite claims by Romney that he left the firm in February 1999 to
run the Olympics in Salt Lake City.

On this SEC document from February 2001, for example, Romney is
listed as Bain Capital`s chief officer, president and managing director.
And Romney lists his principal occupation as managing director of Bain
Capital Inc.

The discrepancy matters because Bain Capital closed down several
companies and laid off hundreds of workers, in some cases, sending their
jobs overseas, during the period in question.

And Mitt Romney sought to distance himself from those deals.
President Obama hit Romney on the outsourcing claims yesterday in Virginia.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Let`s stop giving tax
breaks to companies that are shipping jobs overseas. Let`s give tax breaks
to companies that are investing right here in the United States of America.

Mr. Romney`s got a different idea. You know, he invested in
companies that have been called pioneers of outsourcing. I don`t want to
pioneer in outsourcing. I want some in-sourcing.

(END VIDEO CLIP)

HAYES: Despite the new documents, in a series of interviews with
five different networks on Friday, Romney continues to say he was no longer
involved of Bain operations after 1999.

Here`s Romney on NBC.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: In February of 1999, I left
Bain Capital and left all management authority and responsibility for the
firm. I had no ongoing activity or involvement in the affairs of Bain
Capital because I went out to run the Olympics. I don`t recall a single
meeting or single participation in an investment decision by Bain or
personnel decision.

(END VIDEIO CLIP)

HAYES: This despite Romney`s own testimony from 2002 obtained by the
"Huffington Post" that he attended board meetings for companies Bain
Capital invested in, such as Staples during the period in question.

I want to welcome back to the table, Victoria DeFrancesco Soto,
communications director at Latino Decisions; and Alyona Minkovski, host of
"The Alyona Show" on RT, Russia`s international TV network.

All right, Ed, we are confused. America is confused. If -- who --
if Mitt Romney was not running Bain in 1999 to 2002, who was running Bain?
Why doesn`t that person just comes forward and say, I was running Bain?

CONARD: Yes, there was a management committee running Bain to try to
transmission from Mitt to a new structure. So, Mitt announced that he was
going to leave to run the Olympics. It was in fairly short order. Mitt`s
names were on the documents as the chief executive and sole owner of the
company.

And it took several years for us to sort out how to put the
management team in place -- there was a management team in place already,
but, for example, we had to negotiate with Mitt because he was an owner of
the firm. He created a lot of franchise value and we`re going to pay him
for that. We had to recognize that other partners would leave, senior
partners would leave over time. That whatever we did for him was going to
be reflected in what we did for everyone else who left. And we had a very
complicated set of negotiations that took us about two years to unwind.

During that time, a management committee ran the firm and we could
hardly get Mitt to come back to negotiate the terms of his departure
because he was working so hard on the Olympics.

HAYES: OK. This is actually interesting. The reason that the three
years happened, he stays -- he is the chief executive officer during this
period of time.

CONARD: Legally on documents, I suppose, yes. But he has no, he`s
not attending any meetings.

HAYES: No meetings at all. He never showed up at any meetings?

CONARD: I`ll tell you this -- it was 10 years ago, so can I remember
every single meeting? No. But I remember that Mitt was gone, we had a
management team that was working hard to manage the company. We`ve had to
negotiate the terms of Mitt`s departure, and in fact, everybody`s departure
at that time. And it was difficult to get any time for Mitt to even get
him and his attorneys to do that because he was so busy working on the
Olympics.

HAYES: Presumably there`s documents, right, that Bain has that could
just --

CONARD: I don`t know if there is, but there`s an offering memorandum
for example in 2000 when we went out to raise money --

HAYES: Right.

(CROSSTALK)

CONARD: And all investors recognized that Mitt had gone off to the
Olympics and wasn`t involved, and in the fund, he wouldn`t be involved.

VICTORIA DEFRANCESCO SOTO, LATINO DECISIONS: The question is, why
didn`t he own it? Right now we`re dealing with the technicalities of it.
And people don`t like technicalities. It seems gray.

CONARD: But it is technical.

SOTO: But early on, he should have said, I left in 1999, but my name
stayed on there because of these issues. But he didn`t say that. He
didn`t say that.

So, right now, it`s coming up to haunt him that he wasn`t clear about
it early on.

CONARD: Well --

DEDRICK MUHAMMAD, NAACP: My question is, I mean, to me, I`m not a
big Wall Street person in any way. But if your -- if my name is down as
CEO, right, whether I`m being actively involved in management or not, and
I`m getting compensation for that, even though that might seem like a lot
of money to Mitt Romney, seems a lot of money to a lot of Americans,
doesn`t he have to be held responsible? I mean, his name is still down.
His management team doing it but he still needs to take responsibility for
what is happening at Bain during that time period.

ALYONA MINKOVSKI, THE ALYONA SHOW: Doesn`t everyone else find it
incredible that Mitt Romney would have thought this through? I mean, what
part of the -- Mitt Romney has been running to be president for a very,
very long time. This is not his first campaign and so, you would think
that you would be able to address these things. You would --

CONARD: I don`t think there`s any question in Mitt`s mind that he
left in 1999. I don`t think there`s any question in my mind or anybody --

(CROSSTALK)

HAYES: This is the weirdest thing to me. The name is on the
documents. But also, why are you paying him $100,000 a year? I understand
in the structure of Mitt Romney`s compensation, that`s essentially a tip.

CONARD: Mitt created the firm, no, Mitt created the firm, he
enormous franchise value and so did other partners like myself at the firm,
OK? Ands their contribution to the franchise value of the firm have to be
recognized. So, when Mitt left, it`s not like people, oh, see you later,
you don`t get another dime from the firm. They said, hey, you`ve created
something incredibly valuable and you need to be compensated for that.

HAYES: That`s different than the $100,000.

CONARD: You are focusing on the wrong stuff when you think of
$100,000. He has a lot of things in the firm but not running the firm like
a limited partner who`s got investments in the firm is not running the
firm.

HAYES: Let me ask you this, I mean, $100,000 is still -- he`s still
being paid and he still has his name on it, right? If, let`s say -- my
understanding of Bain during Mitt Romney`s tenure was that there were
certain things that Bain would not invest in because of Mitt Romney`s own
faith and his world view, things like alcohol, for instance. That there
were certain bright lines, right?

Did those bright lines go away in 1999 where there are deals that
were made once he was running the Olympics that would have violated this
kind of code that he had, which I find quite admirable, actually, that
changed after he was running the Olympics?

CONARD: I don`t recall strict bright lines before or after. I think
we all looked at everything and said, hey, we have endowments and pension
funds and people in our investments who might not want to assume things
like gambling, for example. And to this day, I don`t think there`s a lot
of those investments in the portfolio, which doesn`t mean we could find
some example here or there, but I think there`s been a general feeling, not
only in our firm, but in many firms to shy away from some areas of
investments as a result of that.

HAYES: When you say this was taking a long time, what was the -- it
sounds like he was driving a hard bargain. Is that the issue?

CONARD: Yes, of course.

HAYES: Because, why? Because he -- what was at issue? What were
the negotiations? I don`t understand what the negotiations were that
created three years. I think part of the problem here --

CONARD: I created an incredibly valuable firm that`s making all you
guys rich, you owe me, OK? That`s the negotiation. And now, the next
person says, whatever you do for him --

HAYES: Doesn`t he get stakes? Doesn`t he have ownership stake
anyway? Isn`t he - -doesn`t he have an ownership stake that that value
will increase anyway?

CONARD: There was not -- you have to decide when you`re no longer
involved in the firm what would then be the economics for somebody who had
really created enormous franchise value like he had. And when you address
those issues, you have to turn to other people who say I created a
franchise value, too. What about me, what about me?

And so, all partners want to get involved in the negotiation of what
it means for him and means something for me, too.

(CROSSTALK)

HAYES: Because that`s the benchmark. He`s the first one to leave
having -- after this thing had been created and the negotiation for him is
going to create the benchmark for the compensation structure.

CONARD: Of massive significance, yes.

HAYES: Let`s talk more about this and also what`s at issue here,
which is this offshoring questions. You`ve got some words on that in your
book right after we take this break.

(COMMERCIAL BREAK)

HAYES: We`re talking about the, somewhat mysterious and baffling
tenure of Mitt Romney between 1999 and 2002 at Bain Capital. Ed Conard who
was at Bain Capital, eyewitness to this momentous doings.

So, he was legally CEO -- just two more things and then I want to
move to kind of like a bigger discussion about offshoring and outsourcing.

CONARD: Yes.

HAYES: Presumably, if he was hard to reach, as you just said before,
because people were trying to reach him. People were trying to reach him.
There was some business doings he was doing with the firm.

CONARD: He was negotiating with the firm, yes.

HAYES: But only negotiating, no management business he was doing?

CONARD: I never saw him. And I was in management meetings making
investment decisions and he was never there.

HAYES: Do you think Bain should release documents establishing this?
I mean, I feel like I learned more from you about this. I`m being totally
honest, the salary negotiation actually makes the thing make more sense.

CONARD: I don`t know what documents they would have to release. I`m
sure they looked that documents. They said the offering memorandum when
they went out to raise fund would be one of the key ones. We`re just
saying, oh, Mitt`s coming back, don`t worry about it, he will come back and
manage the money. That wasn`t said.

SOTO: I also think this is going to die down. It is July, the dog
days of summer, and we`re all looking for something to analyze.

HAYES: I don`t know about that.

SOTO: But I think it is a technicality. He wasn`t there in the day-
to-day, but he was there on paper. He should have taken his name off.

MUHAMMAD: But I think it does speak to this idea out there that Mitt
Romney somehow unrelatable to the average person. And the idea that you
can be president, CEO, to the average person, get compensation and then say
I have no responsibility for what the company has done --

(CROSSTALK)

HAYES: Let me also say this, reputationally, we were talking in the
first block about reputation. I mean, you know, he was the CEO.

If Bain was -- I guess my point is this -- if Bain did something,
decided to do something even if he`s in the midst of working these crazy
days in Utah and turning the Olympics around and Bain decided to do
something that was reputationably massively damaging or incredibly foolish
or unwise on a financial perspective, one presumes Mitt Romney could have
come back and said, hey, guys, don`t do this, right?

Like you guys decided like actually, you know, we decided that the
future is the hula hoop and we`re going all in on a big hula hoop
investment, 100 percent of our money and Mitt Romney got word of this,
presumably he could fly back to Boston and be like, no, that`s a bad idea.

CONARD: You have to presume he was aware of it.

HAYES: He`s aware of his money.

MINKOVSKI: I would hope so, right. But, can I ask one more
question, too. You said that you think that all of this will die down
because we`re in the middle of summer right now? Will it, though?

I mean, if the question is here over a candidate`s credibility and
their honesty with the public, right now people are trying to evaluate
whether they believe in Mitt Romney, whether he might offer the right
policies, move the country forward, as everyone likes to say.

But, you know, we`re so cynical and we have gotten used to
politicians lying maybe once they`re in office and now we caught him in a
lie --

CONARD: We haven`t caught him in a lie.

MINKOVSKI: Come up with a message and a way to explain it, then it`s
dishonest.

CONARD: All the paperwork forward than there is.

(CROSSTALK)

SOTO: I think my name was on it and I probably should have been --

CONARD: Right. You might not like that.

SOTO: Now the media reports have come out.

(CROSSTALK)

HAYES: Can I ask this, the reason that --

CONARD: This is all really diversion, by the way.

MINKOVSKI: A diversion from whether or not people actually want to
trust this candidate.

CONARD: Diversion about whether or not you want 8 percent
unemployment --

HAYES: No, it`s not quite that micro and I don`t think that`s quite
that macro. There`s something in between, OK? Which is the whole reason
this whole thing started.

Here`s Mitt Romney -- Obama campaign hit him on a deal that Bain did,
OK? It was the GST Steel factory in Kansas City, Missouri, they shut down
the plant and the jobs moved offshore.

CONARD: They were not moved offshore. No.

HAYES: They were not moved offshore?

CONARD: No, the whole steel industry moved offshore but we lost our
investment. We didn`t open up a plan offshore.

HAYES: The steel company is shut down and the Obama campaign runs an
ad about this and Mitt Romney`s response. Here is him responding to the
closing of the steel factor.

(BEGIN AUDIO CLIP)

ROMNEY: They said, oh, gosh, Governor Romney at Bain Capital closed
down a steel factory. But their problem, of course, is that the steel
factory closed down two years after I left Bain Capital. I was no longer
there. So, that`s hardly something which is on my watch.

(END AUDIO CLIP)

HAYES: Here`s what I think is so strange about this. The Romney
campaign is essentially saying there is this big distinction, the behavior
of Bain pre-1999 and post-1999 that, if I were there, the implication is,
we would never close down a steel factory and it just seems insane to me
that that`s s the case. Obviously, you guys are basically doing the same
thing in 1998 and 1999 and 2000 and 2001. Isn`t that true?

CONARD: Well, I believe that`s true, yes. I believe that Bain
Capital does what Bain Capital does --

HAYES: Thank you.

CONARD: -- which is make the company stronger and grow them faster.

HAYES: And if the deal doesn`t work out and the plant closes down
whether that happens in `96, `98, 2004 or 2005, right? I mean, this is the
way the business works.

CONARD: I believe these attacks on Mitt and Bain Capital are really
attacks on business generally. Of course, they are. OK? They`re trying
to pit employees against employers, of course they are.

And what they want to do in that argument is pretend that the
customer doesn`t matter. So, the company decides which company to buy
from, they decide which factory they`re going to buy from, they decide how
much they`re willing to pay for products.

And we as investors and employees have to respond to those demands.

HAYES: But doesn`t it drive you crazy that he just won`t defend what
Bain was doing in 1999 to 2002? I just don`t understand, what is he
ashamed of? This is what Bain did.

We`re going to look at Bain`s record. We know what private equity
does and there`s a huge debate partly because of this campaign and partly
because of your book and partly because of the conversation we`re having,
about whether private equity is good for capitalism, bad for capitalism,
destructive or not.

And so, the question is -- why be ashamed? Why be defensive? Why be
defensive about a single plant that closed and happen to happen two years
after you were running a day-to-day, and as supposed to saying, look, this
is how it works?

CONARD: You say ashamed and I see great pride.

HAYES: Right, but he doesn`t see great pride.

SOTO: The president will bash Romney over the head about Bain, yet
he will turn around and say, we need to extend our economy, we need to
globalize, we need to recognize that there are emerging markets. So, why
doesn`t Romney own it?

HAYES: Right.

SOTO: I he owns it, he is in line with what the president --

HAYES: I want Romney to read from your book is what I want him to do
because you own it.

(CROSSTALK)

CONARD: I believe the following is this. When the debate really
starts in August, September and October, we`ll see. I think he`ll own it.
OK? When you`re here in the dog days of summer, with a lot of distraction
by the Obama administration who, by the way, can spend all their primary
money when Mitt spent his primary money in the primary, so Mitt doesn`t
have the money to respond in the ads that really matter, OK? He can try to
make his case in July when nobody is listening to it or he can wait, hold
his fire and make his case in September, October, November, I believe he
has to make his case.

HAYES: I want to talk about the case for actually for offshoring,
right? For moving jobs out of high-wage market like the U.S. into low-wage
markets right after we take this break.

(COMMERCIAL BREAK)

HAYES: All right. So, the center of this, right, is this about a
debate about some long-term trends in American capitalism. A lot of it has
to do with manufacturing jobs which have been sharp decline in the U.S. and
a lot of the manufacturing has moved to places specifically in most
famously China, where it`s much cheaper to pay people. And, the idea, I
mean, the subtext in all of this right when Mitt Romney is being attacked
by the Obama campaign for investing in this practice at Bain Capital or for
overseeing this practice at Bain Capital, is that this thing is a bad
thing, right? That`s why it`s an attack.

But it just seems to me that it cannot possibly be the case that Mitt
Romney thinks it`s a bad thing because most people who work in private
equity, most people at the commanding heights of American finance
capitalism don`t see it as a bad thing. In fact, they see it as a
positive. You write in your book, I think the very stirring defense of
offshore labor.

You say, well, "Let`s not kid ourselves about just how cheap offshore
labor really is. We not only pay substantially less per hour, we also
avoid the cost we would incur if these workers immigrated here. We don`t
pay for their medical experiences when they show up in the emergency room
without insurance. We don`t pay for their pension cost if they don`t save
for retirement. We don`t pay for their unemployment benefits and worker
compensation, their slip and fall torts, their wear and tear on our public
infrastructure and the cost of their drunk driving, drug use and other
crimes.

We outsource pollution, its adverse effects on our health and it`s
clean-costs. Neither the employees nor employers are here to vote and seek
political handouts."

This sounds like you think, yes, this is beneficial for people.

CONARD: I think the problem with defending it, for Mitt -- and I`m
not speaking for Mitt.

HAYES: You`re speaking for yourself. Just to be clear, you`re not.

CONARD: Is that people look very focus on the micro, get their nose
very close to the paper and say, aha, there`s a job that was lost and
there`s job that went overseas, we can talk specifically about Bain.

But on the macro level, what do we see, 20 million immigrants came
into our country. There`s net in-sourcing, there`s not net outsourcing,
OK? We were growing the economy fast enough that we were pulling the
employees into the country, more than we were sending them out of the
country.

HAYES: The jobs are different, though, we should be clear. The jobs
that are going out are different than the jobs of the folks coming in.

CONARD: I don`t -- 50 percent of the 40 million jobs that were
created, 50 percent of them were created at the highest end of the wage
scale. Not the lowest end of the wage scale. Only 25 percent of the jobs
in the 1980s were at the highest end of the wage scale.

So, there was a disproportionate increase at the high end of the wage
scale over that, over that period.

HAYES: That I believe. OK.

But the point is that, there is a case that this is, that it`s
rational and, indeed, beneficial to move these kind of jobs out of this
country.

CONARD: Just a few more things, 85 percent of -- prior to 2000, 85
percent of the manufacturing jobs lost were lost at domestic productivity
gains. After 2002, two-thirds of them were lost to domestic productivity
gains. So, there`s a lot of offshoring that might have occurred.

Now, I was the head of the manufacturing practice at Bain. There
were lousy investments if you take stuff over to China, right? That`s all
the profit margin is gone, the value added is gone. It`s a lousy commodity
product and you`re making it in high volume. That`s not where successful
U.S. business is going in the future.

HAYES: Where are they going?

CONARD: They`re going to much more complicated -- well, they`re
going to local services for starters and much more complicated intellectual
property like Google and the Facebooks of the world.

So, at the top end would be driven by intellectual property. That
has spawned growth -- double the growth in the U.S. relative to Europe and
Japan in the rest of our economy, which has moved into the local service
economy -- doctors, nurses, teachers, waitresses, truck drivers whose wages
have been more insulated, if you will, from foreign compensation.

HAYES: But the politics of this, right, is that you should not be
closing down jobs and shipping them overseas. And what`s bizarre about
this debate is that people are -- both sides and, I mean, Democratic
politicians and Democratic policy has overseen a lot of outsourcing and
offshoring. I mean, NAFTA, obviously, did a lot of that. And a lot of
textile industry and car manufacturers and things like that, moved across
the border to Mexico.

There`s this debate that`s being had about the issue which, I don`t
even think, I`m not even sure the Democratic Party thinks it`s a bad thing.
Or at least --

MINKOVSKI: They don`t, though, if you look at what the president is
doing right now. He`s by no means a champion for the American worker.

And, if you look at, for example, this Trans-Pacific Partnership
Agreements being negotiated with eight or nine different countries behind
closed doors. At the end of the day, this could be the largest trade deal
in U.S. history.

And you have some labor unions, AFL-CIO, that`s come out and taken a
stance against it, saying that it`s actually going to hurt American labor.
But for the most part, we give back to this issue of I think that the labor
unions are obviously going to vote for the president anyway. So, they`re
not making as big of a fuss as they should where he supported in the exact
same policies as Republicans do.

SOTO: It is this love/hate relationship we have here in America and
it also peddles with immigration. We don`t want immigrants, but we don`t
want offshoring, but we don`t want pay $10 for a head of lettuce. We don`t
want to pay $50 for a t-shirt at the Gap.

So, you know, we see these arguments and there`s this big argument
about the uniforms for the Olympics being made in China.

HAYES: Yes.

SOTO: I mean, there`s this outrage of it. But when you go to the
store and you want to buy just some sweatpants and a t-shirt, you don`t
want to pay the $50. You want to buy the ones that were made at China.

So, at the micro-level, you know, we`re fine at that. But at the
theological level, the theory level, that`s where we get the pushback.

MUHAMMAD: But I think there`s also push back because I do think the
middle class, the working class, do feel they have been stretched and not
that the 1 percent are benefiting greatly and that they are suffering. And
so, I mean, you were talking about the micro versus macro, there is a
larger picture of how the middle class and working class are feeling that
they are not being able to keep up and move forward with other --

(CROSSTALK)

UNIDENTIFIED FEMALE: The numbers are there.

HAYES: Middle class stagnation and wage stagnation and frustration
about the economic circumstances is what`s underlying all of this. We`ll
talk about that after this break.

(COMMERCIAL BREAK)

HAYES: Stagnating wages for the middle class and a sense of I think
more powerful than even the economics is the emotional sense for sure in
the horizons that I think is kind of the dominant mood in the wake of the
great recession and the crash at a time of 8 percent unemployment and that
seems to me like that`s going to be what define this election, more than
anything.

And I think part of it, also, though, is the sensation that the game
is fixed, the rules aren`t square. That it`s not on the level and people
feel like, you know, on the tax return issue, for instance, it`s like, what
the world that Mitt Romney is operating in is a very different world than
I`m operating in.

There`s -- you know, I look at my tax returns and, you know, there`s
not all this complexity and Cayman Islands and offshore accounts and
whatever. What is that world? And it seems to me part of what has
happened in the campaign is that Mitt Romney has become a kind of stand in
for a lot of frustration with American inequality.

Do you think that`s sort of what happened?

CONARD: I think the Obama administration has been able to define it
that way.

I think a lot comes with frustration with growth. We want more jobs.
We want faster growth. We want and higher wages.

And the question is, what policies will create that?

HAYES: Right.

CONARD: Are those government-driven policies or private enterprise-
driven policies? I think we have a choice in this election on that.

HAYES: Do you really think, though? I mean, always saying this
yesterday, I think that always ends up being the choice. But if you look
at the last time, it`s not long ago, Republicans ran everything, yet a
Republican president and a Republican Congress, the percentage of GDP grew.
There was no shrinking of government.

CONARD: Grew a lot more afterwards, but, yes.

HAYES: But it grew during that period. They didn`t do any
shrinking. It`s just unclear to me that, actually -- the stakes always get
defined in these ideological ways.

In your book, obviously, you`re not a politician. You wrote a book
about a certain ideology and a certain set of principles. And Mitt Romney
was on the trail, wants to say, this is a choice between this ideology and
principles.

But it actually strikes me that when you dig underneath, there`s no
actual evidence to suggest that there`s going to be some huge difference in
the percentage of government and GDP under Democrats and Republicans. It`s
--

MINKOVSKI: It`s not that cut and dry.

HAYES: -- who it`s going to be -- who`s it going to benefit?

SOTO: Interestingly enough, this rise in debt is going to be tacked
on to the tax argument. So, you know, the president wanting to let the
bush tax cuts expire, except for those making under $250,000. If I had a
crystal ball, I would say that the Republicans are just going to say, nope,
it`s about the debt relief.

And, so, you get Americans thinking, not so much about the taxes, but
about the debt. Look at the spend thrift government. All they do is
spend, spend, spend. And that gets people very angry and you take that
emphasis off of the tax, off of the individual level and you put it on the
debt and that`s where it comes back and the Republicans have a much
stronger argument.

HAYES: That`s the one they`re making.

MINKOVSKI: The Republican support, they support government spending
just as much as Democrats do, but they like to hide it by national
security. And, I mean, when it comes to defense, this is where, the
Republicans are the number one proponents of massive government spending.

HAYES: I just think there`s that much evidence that there`s that big
of difference in terms of balance --

CONARD: Government spending rose from 20 percent of GDP to 24
percent, 25 percent federal government spending.

MUHAMMAD: Under Obama?

CONARD: Yes.

(CROSSTALK)

HAYES: In the wake of the recession, it rose everywhere else across
the world, if we want to across the world comparisons.

I want to thank Ed Conard, former partner at Bain Capital, author of
"Unintended Consequences: Why Everything You`ve Been Told About the Economy
is Wrong" for joining us this morning. I love to have you back because we
didn`t even get to marginal tax rates, which I love to talk about.

CONARD: Chris, thank you for having me.

HAYES: All right. What we should -- what you should know this week,
right after this.

(COMMERCIAL BREAK)

HAYES: Just in moment, what we should know for the week ahead.
First, a quick personal update.

My book "Twilight of the Elites" is on sale now at online retailers
and your local bookstore. This Wednesday at July 18th, I`ll be appearing
at the Common Good here in New York to discuss it. Check out "The Twilight
of the Elites" Facebook page or our Web site at Up.MSNBC.com for more
details and information other upcoming appearances.

So, what do you need to know for the week coming up?

You should know just how common places corner cutting and ethical
bridges are on Wall Street. According to a survey of 500 financial workers
in the United States and Britain by law firm Labaton Sucharow, a quarter of
Wall Street workers said they believed unethical or illegal behavior could
help people in the industry to be successful. You should know that 26
percent said they observe first hand, knowledge of wrongdoing in the
workplace.

My personal favorite statistic from the survey, 30 percent said their
compensation structure created pressure to compromise their standards or
violate the law, while 16 percent of respondents said they would commit
insider trading if they believed they could get away with it.

You should know it turns out it`s hard to design a system with
massive monetary rewards for performance that isn`t also a system with
massive monetary rewards for cheating.

And speaking of ethical breaches, you should know that a separate but
related study from the Transparency International Corruption index shows
the United States has slipped in the ranking of least corrupt countries
from 16th place in 2001 to 24th place in 2011.

We should know the World Bank also reports the U.S. is falling behind
most other developed nations to a weakening of corruption control since the
1990. We should the U.S. Department of Agriculture has named 1,000
counties in 26 states, natural disaster areas due to a savage drought that
has been destroying crops for farmers around the country.

You should know this is the largest such designation in the program`s
history. While Congress will most certainly pass a farm bill this year, it
is doing nothing to reduce carbon and mitigate the effects of climate
change. You should know that all the price supports, crop insurance and
the rest of it isn`t going to count for very much if Republicans who
represent farm areas get the future they seem to want.

And finally, we should know that while the party that ruled Mexico
for 71 years, the PRI, appears to have regained power in the latest
presidential election, you should know that challenger Andres Manuel Lopez
Obrador has filed a formal complaint to annul the victory of PRI`s Enrique
Pena Nieto, over charges of improper campaign financing and outright vote
buying.

You should know Pena Nieto has denied wrongdoing, but you should also
know the PRI has a very long history of corruption and vote buying, which
might explain why in a recent poll by the newspaper "Reforma," 40 percent
say they didn`t think that the election was clean.

Law professor Stephen Carter back with us at the table.

And I want to know what you think people should know this week,
Dedrick Muhammad?

MUHAMMAD: What I would like people to know is to look at the legacy
and life of Willis Edwards. He`s a national board member who passed away
this past Friday from cancer. You know, a long history of activism and I
just -- you know, I think like most Americans the -- what we contribute
most in life is not what we don`t get a paycheck for, but what we do day by
day just because we believe we need to make our community a better place.

And his type of activism helped make the NAACP Image Awards, what it
was -- what it is today. He also is co-chair of the HIV/AIDS subcommittee
and really pushed the NAACP to make AIDS also a civil right, he died with
that type of activism is something that all of us can reflect and learn
upon.

HAYES: Wonderful. All righty.

Stephen Carter?

CARTER: What people should know this week is with all of the scandal
at Penn State involving Joe Paterno, the national icon, and so on. We just
saw a similar scandal with much less attention in Montana, a football team
as well. It`s merely the tip of the iceberg.

Wherever you have enormous power concentrated with people surrounded
by lots and lots of acolytes and followers, you`ll have the instinctive
drive to protect that even at the cost of some of these people`s lives.

HAYES: I think there`s been an interesting conversation that`s been
opened up about college sports in the last year or so.

CARTER: It`s not just sports. In all the areas of life where we
tend to elevate people very high and where a lot of people`s living depends
on, keeping them at the high elevation, that`s where we`re going to find.

HAYES: Victoria?

SOTO: I want us to think about food and security. You mentioned in
your stories of the week, that fact that there`s been a drought that has
ravished these crops. Over the past several weeks, we have seen a fall in
these crops which means increases in grain prices.

So what does this mean? You have a decrease in crops. You have
people going hungry. You have economic instability which leads to
political instability.

So, down the road, thinking about that connection of food and
security.

HAYES: Alyona?

MINKOVSKI: You mentioned the transparency report. I`d say that you
should know that David House, from the Bradley Manning support network, he
put up on cryptome.org notes that he took when he was called in to the
grand jury, that is looking into trying to find a way to prosecute
WikiLeaks in Alexandria, Virginia. And I know that WikiLeaks Julian
Assange, they are very politically polarizing issues and figures, but
overall everyone should pay attention to the way that they are trying to
lead this investigation, the way that they`re trying to use the Espionage
Act, that could have a lot of repercussions for more journalism and for the
free press.

HAYES: Yes, I saw the posting in the testimony. It was pretty
creeping --

MINKOVSKI: Cryptic?

HAYES: Well, also, yes, very cryptic.

I want to thank my guests today, Dedrick Muhammad from the NAACP,
Stephen Carter from Yale University, your new book --

CARTER: "The Impeachment of Abraham Lincoln. It`s a courtroom
thriller.

HAYES: Courtroom thriller and kind of serve an alternate history.
I`m about 40 pages in and I`m loving so far. Check that out.

Victoria DeFrancesco Soto from Latino Decisions and Alyona Minkovski
of "The Alyona Show" on Russia`s RT television network -- thank you all.

And thank you for joining us. We`ll be back next weekend, Saturday
and Sunday, at 8:00 Eastern Time.

Coming up next is "MELISSA HARRIS-PERRY". On today`s MHP, Melissa
has a few things to say about Mitt Romney`s remarks in the NAACP. Let`s
just say the words "free stuff" are about to meet their match. She`ll have
her answer on "MELISSA HARRIS-PERRY" coming up next.

We`re going to see you next here on UP.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

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