Dylan Ratigan   |  November 11, 2009

Crooked insurance still a problem?

Nov. 11: A Morning Meeting panel debates why the government can’t successfully regulate the insurance industry.

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This content comes from Closed Captioning that was broadcast along with this program.

>> rob johnson and shawn coda. owner of a energy marketing company and i met yesterday with several members of that commission insight what is keeping us from getting this crooked insurance into the marketplace. shawn , welcome into the conversation. you represent groups of people who are offered this crooked insurance. i say, listen, i can insure the cost of heating oil and food and i can ensure the cost of housing at my bank and it will be very cheap to you and it will be very profitable for me and as long as there's no problems, nobody will be hurt other than the taxpayer. that's basically what is offered to you, correct?

>> that's correct. that's what a lot of those derivatives are. instead of having a car loan , you've got a car lease and whoever takes advantage of the leaving company, leasing company, runs the contracts and you pay a higher fee than you normally would pay and the same thing you're seeing in the markets whether energy or food. the end-consumer, the purchaser of these financial instruments pay more than they would if it were the same transaction on an exchange in a line of credit with the bank.

>> almost as if the politicians and the bankers got together and said we've got a scheme that allows us to cheapen the price of housing and cheapen the price of food, cheapen the price of energy, ala, this is the 1999 meeting. everybody wins . politicians win because they got cheap food, housing and oil. banks win because they have a huge profit center when technology is eliminated, there are other profit centers and the only loser is every taxpayer and wage earner and saver in america when it blows up.

>> when it blows up you have huge amounts of volatility and the investment banks make money on that. it doesn't matter whether it goes up or down. when they decide it's time the market should go down they tell everybody we have a new peak coming and short the market and who pays for all of this stuff? the consumer. if you're in the development of food or in the development of energy you can't make long-term plans on any of these things because what happens is you can't depend that you're going to have a steady price in your commodity.

>> almost like the insurance fraud , rob, created a false price for houses in this country, the insurance fraud created a false price for food in this country and the insurance fraud created a false price for energy in this country and now the politicians and everybody in america is forced with dealing how do we get house prices back to a fair price and are we delusional that food and energy as cheap as they appear to be when they are not.

>> well, they're not. the taxpayer is picking up the bill is what you attach at the back end. you're exactly right. senator cantwell is talking about dark markets and there is also associated with that, a dark process. where the lobbying money from the people who benefit from this steal the tax base to underwrite the losses so that everybody can have these subsidized prices. it is painful in the transition to take the subsidies away but it is the healthy thing to do.

>> the beneficiary of the subsidies are the bankers and politicians.

>> they call them the people that do commodities and so forth, that aren't putting up proper margin, aren't contributing to the safety of the system where they are getting the insurance from.

>> understood. this conversation will continue. shawn , a real pleasure to meet you and for you to talk to us. rob, always a pleasure to see you. the president promised to