It was really funny. I think Zach Galifianakis to a little funnier than the president. Of the first time and said, theyre so funny. I watched it again, and zach was so funny. Serious news. Is one steptric closer to getting out of the Consumer Lending business. The company is registered to file for an ipo of its north American Finance unit. They plan to complete the ipo later this year. Callediness will be synchrony financial. The Biggest Investment Bank may be taking a hit in the first quarter. According to jp morgan, revenue from trading them under running, and m a may follow total of 11 simply because clients are cutting back. And also the biggest losers will be barclays and hsbc. Nothing toys it has hide. The government denying reports the missing jet flew for several hours after the last reported radar contact. U. S. Investigators increasingly suspect that whatever happened to the plane did in fact involve a criminal act. We want to bring you to bloomberg investigations into of the biggest names in Corporate America. Target and general motors. Both are facing crises. Our reporters have uncovered a permission about the hacking a target in the longdelayed vehicle recall by gm. We are going to dive in both of these stories now. Our bureau chief is standing by to tell us what he learned pouring over the numbers. The legal documents related to problems with the ignition switches that have led to at least a dozen deaths. Were going to start with our legal reporter michael riley. He and a team uncovered some alarming details about one of the biggest hack attacks ever. The Holiday Season theft of credit card and personal information for as many as 110 million americans. Michael, we have heard for the past several months that targets explanation for how and why this hack occurred in and around shopping and christmas. I want you to fill us in on what you have found. Some of it strikes me as being at odds with what we have heard from target. From the beginning, target has emphasized it were the victim of a very Sophisticated Group of hackers. The truth is, target has spent a lot of money to create an i. T. System and i. T. Security system that is incredibly sophisticated. What we essentially found is that system worked perfectly well. In fact, the i. T. Security fact detect the hackers. The key point is, not only did they detect the hackers, but detected them before any of the stolen data was taken. How is it possible then that if target new these hackers were trying to break into a system and steal Customer Data that they did not do anything . What is the chain of events . It is really a human fail. This is not an uncommon story and security. Yet some sophisticated tools. Use sophisticated tools, one of which is used by the cia and other intelligence agencies around the world and to do what it did, which is detect the malware that hackers would have used to remove the data from the system. It detected them on november 30. Keep in mind, the data did not start leaving the network until december 2. A sickly, there is a chain of events that goes from an initial detection target has a roundtheclock Monitoring Service that it has created with a vendor in india. That roundtheclock service saw up alert, so i was picking malware. They forwarded that alert to very sophisticated ticky Operation Center in minneapolis. The problem is, the Security Operations center did not do anything. Can you put into context, simon security office, how many of these type of alerts and my getting . One would think if you ran as a business, maybe youre getting the message is all the time and it would be easy to miss. There is a huge number of different products out there as a security boom. Every one is selling something different. But there is the quality of alerts. Antivirus put out 10 or cap without tens of thousands of alerts on a big system like this every day. The system used by the cia and that is aon, however, very sophisticated tool and the number of alerts it sends out is small and the false positive ratio is really small. When it picked up a sign that said, you have malware on your network, and they did not respond, that is a pretty serious security fail. Why are we hearing about any of this from target itself and what does the company have to say in response to your findings . They did not say much. Wheret, this is a period theyre facing more than 90 different lawsuits in every single these are from customers who had their car data stolen. The lawyers for all of those people, in fact, some of the card issuers like visa and mastercard commercial it in for this kind of data. Looking for culpability, looking for signs that target missed. When we presented this data, they basically gave us a pretty pad response that said, were still investigating. We dont want to impact that investigation. But were not going to really tell you much more. I think that is because they are facing legal liabilities. There in the middle of their own investigation, which is set to be published later than the Company Later this month. A really arent saying much about it. Just hit the has wires. What has happened this morning since it came out . Have you received any Additional Information besides, oh, my god . Target hasnt said anything this morning. We have gotten a lot of response from other media who were trying to confirm the story. It is a hard story to confirm because we spent more than six weeks interviewing people who worked on the investigation, trying to get a sense of what the chronology was, how things unfolded. It is a tough story to get. I think it is going to be interesting to see if target responds over the next couple of days. Heres a comment, you go, girl. Why to go. Thats. Great. You couldve said, you go, guy. I spent the last 38 years for people saying, what ago, dude. Saying, should start you go, girl. I encourage everybody to check out the investigation. You can find it on businessweek. Com right now. It will be on newsstands and your tablet app tomorrow. Lets go from washington to detroit. General motors new for more than defect thatut a doze caused the engine to sometime suddenly turn off. The carmaker did not recall the vehicles until this month. It is now facing multiple federal investigations and wrongful death lawsuits. I want to bring in our own reporter. Tell us what took so long. I guess it was just not taking it seriously. They clearly knew. They put out statements in minting these cars would shut off when driving. They said it was not a safety issue. The car shuts off, you can still drive it to the side of the road. I guess that was their cover for the longest time. It wasnt until they started connecting the fact the car shut off in the air bags that did not deploy in a crash that they really started to look at it hard. 2007, which isin seven years before they did the recall. It is a long time coming. Gm has amended into down go the way it should have. Theyre trying to figure out how it will not go again. I feel as if i am confused by what gm has been saying and what you and others have been reporting. Truthre is there some to that, that gm cannot get his story straight or get the timeline straight or cant get straight quite was asked to share with us . They have been Digging Deeper and deeper every time some of gail but what about this . Georgia whoawyer in do depositions and learned about some of the problems from these depositions. At one point an engineer realized, this which is different from the one we knew about will stop they looked and there been a change they had not picked up on in their own vehicles. Is this kind of stuff. More or less, every new revelation for gm has said, my bad. Bad . M sorry, but my is that enough . Is there a wrongful death lawsuit . If they knew about this for a decade, can they say, should have not done that, wont happen again. There has to be some punishment. There is the congressional hearings, doj investigation. They could be fined 35 million under a law that came out after the toyota recall a few years ago. There are criminal charges possible against individuals. There are all kinds of repercussions. One thing a little different with this case is there owning a pretty much that they screwed up right from the beginning instead of trying to justify it, which may or may not help them in the end. One of the things i think people are wrestling with this, how could gm let this happen to an ignition switch . You understand the industry, manufacturing. Why couldnt gm just build a new switch . Isnt that difficult . They dont they did build a new switch. Some parts of jim did not know the other part of gm, a supplier who change the switch and made it so it did not fail. The really hard to understand for many people is knowing full well, having car reviews of the 2005 cobalt in 2005 saint, when i drove it, my wife knocked it off with her knee at 55 miles an hour on the highway. That is not a recall because it is not really a safety issue. I think theyre probably regretting saying that back then. Thing thatind of your eyes scratch are headed were like, ok, if my car shuts off at 75 miles per hour, it is still a safety issue for me. I would agree with that. And how big is your keychain have to be . A fair question. Theyre talking about just a couple of keys. It was the kind of thing a lot of owners a lot, i have keys on my other cars. Why do i to be careful how many keys i have on this car . That was back in 2005 as well. Also report. Gmi target is in the hot seat. You can read his great story on bloomberg. Com. Coming up, a rare bright spot maybe not so rare, but it feels like it. Bill ackman and his campaign against herbalife. Than as eight is more bright spot. This is like a fourth of july extravaganza for him. Another guy who likes fireworks, the battle is escalating between carl icahn and ebay ceo. More on that in a moment. Youre watching Market Makers. Welcome back to Market Makers. We have breaking news. Dave and busters and Chuck E Cheese could be combining to form a Family Entertainment colossus. This is like the super bowl and disney world in star wars all wrapped into one for seven euros old for sevenyearolds. What are the benefits of owning these two companies . That is a lot of pretty gross pizza. The same company that took over Chuck E Cheese about a weighing a bidw for dave and busters. The benefits are uncanny. First off, both of these companies are headquartered in dallas. Theres a lot of cost savings there. And the cost savings from purchase being a huge purchaser of food and beverage. And beverage. In the arcade games themselves. Think about this combined company, they would have about 75 of the market that is huge. That said, however, these establishments have been facing lots of competition from games at home. I dont know about your kids, but many kids want to stay home and play those highdefinition video games from the comfort of their own homes. That is were the competition really is for these establishments. They have got to really bump it up and offer more and more services. Maybe a little laser tag. Where are they in the sale process . Bythis company is owned another private equity firm, and they have tried to sell it before. The sale process was not successful in those cases. This one seems to be a lot further along in a lot more robust. That is in part because dave and busters has been performing well, even though it does have quite a bit of debt. We are about the second round of bidding. The next 45 days or so, we should have a conclusion to the sale process. That is just a lot of tragic behavior. How do we get hit sitting at home using her ipads into our emporium with kind of dirty video games and unhealthy food . That is like a bad snap shot of america that leads to really successful business. Thank you for the latest. Crisisthat the financial is more or less over, time to look for the next one. The seven sins of wall street. A new book analyzes the relationship between wall street and washington. It draws an alarming conclusion. I cant believe there are only seven sins. Regulation has is to choose utilized, in other words, were already sown the seeds of the next crisis. Bob is with us in new york. Are you ok . I would say 700 fans. What are they . I had to cut it off at seven because there needs to be something for the sequel. Got it. Or volume two. To my publisher next year. What are they . Youre putting me on the spot. You brought them up, sell it. Lets start with lust. These are the seven sins. These have been around for a long time. Pride. Ly, it is that is the big one. Without excessive pride, all of the other sins are less likely to happen. If you believe you are a master of the universe and believe all of your success is due to your genius and the government should do whatever you tell them to do and the customers should take second fiddle to your desires and you can trade against your customers, then Everything Else kind of falls into place. Industries, institutions, only become these mammoth beast when their environment lets them. They only become divas when they are serviced. Absolutely. That is why the subtitle is washington lackeys. The quattro biggest depository banks are 50 bigger than they were in 2007. That is a Crucial Point to make. In your book and right here right now, what youre saying is, youre not putting ourselves in the Elizabeth Warren camp or the numerosity cap, or champion for regulation. Youre saying the whole system is bad and needs to be rethought. What have the regulators done in the last eight years that has inspired her confidence . Not that much. Lets be honest about who the regulators are, who has those jobs, and how theyre compensated. Were talking about complex financial instruments. The people are trafficked them. The people who get paid millions of dollars a year. We are expecting someone who lives in a claim, virginia who gets paid 95,000 a year to figure out how to rein in and regulate these people . I will go one step further and say that guy that makes 23 million a year that is sitting on the top of the organizational chart doesnt know what is going on in his own organization and cannot police it properly. Then who knows . Nobody. These banks are too big. Nobody knows what goes on in them. And otherfrank regulatory action doesnt fix the problem, how do you fix it . Is, your institute some form of glasssteagall or you have a bank you sound like Elizabeth Warren. Sometimes. If you make the bank small enough, it can do within reason whatever it wants and its failure on impact anybody but the shareholders and the employees and the taxpayers dont have to worry about it. It is a glasssteagall that would prevent things from getting too large. While it was in place, there were some very large banks that did not do Investment Banking but nobody rushed cap week in meetings at the fed to save capitalism. When con illinois went down, it was a big deal, but it wasnt like them bernanke and Timothy Geithner got all of the chieftains of wall street together hang on. As smart as you can get. To the people who are in these regulatory bodies actually understand what smart regulation is and how to implement it . Do we have evidence they do . I dont necessarily know. I dont necessarily know what smart regulation is. When you get these organizations are so mammoth, when their own bosses dont know what is going on, how can we expect the regulators to . Lehman brothers. You go girl. Lehman brothers by definition wasnt too big to fail. , girl, tea. You go i heard him. This kind of thing happens every day. Lehman brothers wasnt too big to fail, wasnt saved, but nearly brought down the Financial System. It wasnt a commercial bank dabbling in security underwriting. How does that fit in . That was the last financial crisis. But what is to stop another Lehman Brothers . Not so big as bank of america or citigroup Lehman Brothers was not gambling yes, yes, in another self, enough to threaten the money Market Industry and jaw must bring the Financial System to its knees because of the interrelationship. Absolutely. It was a nontransparent Financial Institution that was huge and too big. Now you have an transparent Financial Institutions that are even bigger and take deposits friendstomers like our come as civilians out on the streets. I do think inside these organizations, i think those who dont realizeors it. Take the london whale. Do you actually think he believed he was going to be putting the bank at the kind of risk he did . No. He was doing well in his traits. People liked it. They said to double down and he did. He did not realize the ramification of the kind of trades he was putting on. I think bob is right. Im not saying bob is wrong. Im just asking, where do you draw the line . That is the challenge. If this becomes a regulatory issue, then we go back to trusting people in congress and trusting the regulators to figure out where to draw the boundaries. One last time. That doesnt inspire a great deal of confidence. Lets put it on its head. Bring it. Im more concerned about what to big to fail has done to our democracy and what it is really done to morality, which is not a word you hear on Market Makers that often. These banks because we are immoral . We dont have morality. Is that what you mean . Tom keene he is the reverend. Continue. But i cant. When was this a comedy show . Every day. You have institutions that are above the law. They are above the law. The attorney general of the United States said that to congress. He said, these organizations are too big to jail, too big to prosecute. To me, that is are they werent when they were doing so well. Everybody loved them. Remember how people felt about jamie dimon four years ago . But what about now . May be worn buffet is too big, because we love him. He is not trying to rig the electricity market