tv Anderson Cooper 360 CNN April 20, 2010 1:00am-2:00am EDT
and kara dioguardi. donate now on americanidol.com/idol gives back. sarah silverman is here tomorrow night. anderson cooper is here right now with "ac 360." anderson? we'll have the latest on where the clouds of ash are now going and a "360" dispatch from gary tuchman from deep inside the dangerous clouds. up close tonight, they call themself the patriot movement. you'll hear what members believe about 9/11, whether it was a government conspiracy. and later, new clues in the murder of a school principal who was getting results, winning the respect of his students. it looks like the volcano that has shut down air travel for days cost airlines hundreds of millions of dollars is getting stronger, spewing more ash, up to 15,000 feet in the
air. look at those pictures. to make matters worse, is that new cloud is now spreading south and east toward the united kingdom. the new development could complicate a plan to resume flights on a wider scale tomorrow over europe. it could also pose other dangers. first we want to show you what that ash cloud looks like up close or from inside. gary tuchman is on the ground in ice lan. he got caught in the middle of an ash cloud today. take a look. >> reporter: in the western part of iceland, it was almost completely normal. in the capital, the winds haven't blown in that direction. but to the south of the volcano, to the east of the volcano, this is what's going on right now. the people who live here, this is a farm.
there are farmers who live here. you can see you can't even see their land, it's covered with ash. it's unknown how much property damage these people will suffer. you can't clean it up because they don't know how long the volcano will last. we visited a farm yesterday. the farmer had ash that turned into mud. he wasn't sure how long it would last before he got more ash. today this farm is down the street covered in ash again. it's unknown how bad these health effects are but the situation is very serious. it's surreal right now that you you can't see anything whatsoever because we are in an ash storm. >> gary tuchman joins us on the phone. a live shot just went down. he's on the phone for us. seems pretty dangerous to be driving in that area, to be walking around in that. what is this new cloud? how big is it? what are you hearing about it? >> reporter: there was a 20-second span, objected son, on
that street today where visibility literally was less than zero. you would have seen more in your eyes were closed. we had to stop our vehicle quickly. when the fog lifted a little bit there was a car opposite us, ten feet away. thankfully he stopped too. a very bad situation. you have a combination of the ash on the ground which is slippery, flood waters in the last couple of days from this volcano, and complete darkness. it is utterly dangerous. the pictures you're looking at, this is where we went up in a helicopter to take a close look. this is the most unbelievable thing. people thousands of miles away can't travel because of this volcano. we were 300 feet away from it. our pilot said to us, how close do you want me to get? i said, let's make sure we're safe. he got within 300 feet of it. the reason is because we're on the safe side, on the west of it. we looked at these clouds. it almost looked like a fireworks show out of control. sparklers hurling what looked like stones, actually huge boulders. we saw lightning bolts, shards of glass coming through these clouds. an unbelievable advertise play
of mother nature. it was frightening, awe-inspiring, and otherworldly. you see this right now, it looks like cotton, powder puffs, fireworks. it was just continuous and it was just something that was hard to believe that was real. it's causing problems all over the world. what's unbelievable, anderson, not causing any problems in most of iceland. where the capital is, the airport has been open. that's because the winds have not been blowing in that direction. >> when you're inside it, is it hot? i mean, what does it feel like? >> reporter: it's so cold outside here. ra rakevic is at 10 to 15 fahrenheit every night we're here. we had the windows open and the helicopters take the pictures, we didn't feel any heat. 5,000 feet, being that high. if you get out of the helicopter and jump near the crater, if you happen to be hiking, you can hike in these craters when the volcano is not erupting. if you happen to be up there, it would be an inferno. from where we were we did not feel the heat. >> on the ground how far can you
actually see through this cloud? >> that's what's amazing. we were literally -- it was a beautiful day by iceland's standards. very cold but very sunny. we saw like a great curtain in front of us. we started driving, we drove into the curtain. then you couldn't see anything. you know what it reminded me of, anderson? it reminded me of a solar eclipse. it reminded me of pictures, completely dark. the ash kept fall like heavy rain. got in our hair, your eyes. you had to wear those masks. you don't know the health effects of continuous ash that falls on the ground. you had to have the mask. it was like being in a funhouse. that's the best way to describe it to you. >> gary tuchman on the ground, thanks very much. stay safe. keep wearing that mask. take a look at the developments with chad myers. how big is this thing, where is it headed? >> this is a 15,000 high ash cloud. the first eruption or explosion was 40,000 feed high. so that ash actually got into the jet stream and blew around in different directions.
this lower level, even though it's three miles, we'll call this lower level ash, will be picked up by lower level winds and surface winds blowing toward the uk. even though other countries are opening air space, so to speak, the air space that they're opening is above 35,000 feet. because that ash that was very high has either blown away or settled out. so the air above 30,000 feet is clean. clean enough for planes to go through. the problem is getting to that 30,000-foot level because you have to start from the ground and you can't fly through the dirty layer at 10,000 to 15,000 feet. so people thought they were going places, they are not. anybody who thought this thing was going to be over soon did not study the history of this back in the 1800s. this thing erupted for two solid years just like this. but there were no airplanes to affect and the boats didn't matter. there's damage being done also to the terrain and the surrounding areas because that volcano ash is not fertile. you put ten inches of ash onto farmland, that farm is ruined
for a long time. >> chad, for folks who are sitting in an airport watching this and groaning as you're talking, because their trips are ruined, we don't know how long it's going to be like this. in terms of where planes can fly and how we know where planes will be able to fly tomorrow or the day after that, i mean, is it just a day by day thing? >> it is. it's basically not guesswork so much, but they did fly, they flew airbuses through the air today, they flew f-18s. one of the f-18s did see ash in the engine when they landed. all right, this is bad, we can't do that again. also they found that glass, that glass that occurs when you melt lava. the reason we can't fly this is not because you can't see through it, it's because it's very, very coarse, like a pumice stone in miniature. then it will melt in the engine. when it melts it turns into obsidian. remember that glass, black
glass you used to look at in fifth grade geology? obsidian will deposit itself in the exhaust of the jet and kill the engine itself. you don't want to be running through this. then all four engines all of a sudden stop at the same time. because that would be disaster. this no-fly is not optional. it's not a precautionary measure, this is, we can't fly airplanes because they might crash. that's how serious it is. >> what do you recommend for folks traveling later in the week even? even once this backlog of planes -- once planes can fly there's this huge backlog of flights to get through the airports before the regularly scheduled flights can take off. >> they put 80,000 extra seats on the chunnel trains that go from london down to the south of france. lyon is open. even a producer called me sunday night and said, my husband is stuck. one of our producers from "situation room." my husband is stuck in london,
what should i do? get on a train, get him to venice or rome. those airports are still open. you can get out from there. by the time that happened, all of those seats were already taken. so, you know, people are trying to scramble. we also heard of a lot of gouging going on with rental car companies. planes can't fly, rental car companies asking for $1,600 for one-way fares because they have to drop the car off. if you're going to drive to venice, you're going to leave the car there. $1,600 to go 500 miles in a rental car. >> one of the guys from monty python took a $5,000 cab ride across europe to get out of this thing. appreciate the update. we'll talk with richard quest after this commercial break for more on the airline issue. he is also stranded. also just ahead, on the anniversary of the oklahoma city bombing, members of the far bright patriot movement -- the president, the government, paying taxes, enforcing the law. when i grow up,
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breaking news tonight continuing, fresh plumes of ash erupting from that icelandic volcano. disrupting airline travel. an estimated 8 million airline passengers across the world have been affected by the iceland volcano so far. as chad mentioned, economic disaster for airlines. losing an estimated $200 million a day or more. some flights did resume today in
european air space but not many. on a normal day there are around 28,000 flights over europe. today there were fewer than 9,000. the european commission said it would open air space on a wider scale tomorrow. three different flight zones, only one of which will be open to all flights. i want to show you where things stand are stand right now with air travel. take a look at what it looks like tonight. up in the air, you can see the ash cloud outlined here. you can also -- are we showing the ash cloud? it's hard for me to see on this monitor. there we go. you can also see flights coming into and out of european air space. on a normal night, this map would show much more air traffic. but compared to the last few nights, it's pretty active. richard? you're looking like you want to get in on this. >> well, on a normal night, the top part -- do you see where the
blue lines are on the top of the ground? they are the tracks that go across the atlantic, to the uk and northern europe. this time of night, anderson, it would be absolutely heaving with planes. there's not a flight there -- there's one going westbound, but look at the southern part going to spain and italy, and there you see the only flights that can get into europe at the moment. that's quite remarkable. >> so if you're heading to spain or italy, it's okay. >> yes, but the northern part where most of the transatlantic flights are going, that top bit, nothing at all. you rarely see that. >> you were caught up in this like everybody else. you're supposed to be flying to england? >> tonight, i was supposed to be on a plane that should have been going across to the uk. >> what have you been told? do you have a sense how long it's going to be? >> sunday night, at least. and then i've got -- >> are you kidding? >> no. the airline can't even tell me when i'm going to be flying. they have protected me on a flight sunday night via frankfurt. >> wow. there's a chance it could happen before sunday? >> i wouldn't put money on it. >> can't they fly over this thing or under it?
>> yes, right, now i saw today the instructions and the advice given by airbus to pilots. do you know what the instruction was? if you find yourself -- besides making sure you don't get into one of these clouds in the first place. if you find yourself flying into one of these clouds, do 180 degrees and fly in the opposite direction. >> that's the advice? >> besides doing things with bleed air and a couple of other things. don't rev the engines. don't go to maximum thrust. basically fly out of it as fast as you can. the dangerous and the risk of that being ingested. these engines are vast and they are designed to do one thing, to suck in as much air as possible to create the thrust. it will melt in the back of the engines and stick on to the vanes at the front and back. >> i want to show the plumes of ash. the pictures are unbelievable. that's the last thing you want to see as a pilot head into. there's a text 360 question from a viewer in illinois who wants to know, what's the expected financial strain on the already troubled commercial flight industry?
>> roughly for european airlines it's about $1 billion give or take. nobody really knows. it's a number out of the air. they're seeking compensation from the european commission, from european governments, largely on the basis, and the same precedent that was set on 9/11 when the u.s. government compensated american carriers. >> but it's not just the hit airlines are taking. companies are taking hits on both sides -- >> look, whether you are a flower grower with tulips in amsterdam or carnations in kenya. whether you've got fresh fish that needs to be brought into the united states or europe, it doesn't matter. whether you have semiconductor chips you're using as an air bridge across over through europe. the financial implications are billions. and i've seen one estimate -- and again you can't guarantee these numbers -- one estimate says the economic effect could knock up to 2% off european growth. if that happens, we're back into double dip. >> unbelievable. all right, richard quest. i hope you get home soon. thanks very much.
just ahead tonight -- inside the so-called patriot movement. they call government a threat to their freedom. the question is, are they a threat to public safety? on the 15th anniversary of the oklahoma city bombing, we'll talk about that ahead. and later, details on the banks accused of helping a hedge fund billionaire build himself a deal and made chumps out of other investors. was it a rip off or business as usual? or both maybe? looking good, dan. oh, we want to make sure all our ducks in a row. yeah. volume control syndrome. but we focus on the talent and skill that each person... brings to the team. i mean, no one's really concerned about labels. not even mine. labels get in the way. disabilities rarely do. visit thinkbeyondthelabel.com to evolve your work force. i have asthma. and that's what it sounded like when my symptoms came back. i'd get this tightness in my chest. like i was breathing through a straw. so i went back to my doctor again. we talked about choices in controller medicines. we chose symbicort to help control my asthma.
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it was, up until 9/11 the deadliest terror attack on u.s. soil and it happened exactly 15 years ago today. the oklahoma city bombing of the murrah federal building. 19 children killed, 850 others injured. this morning at exactly 9:02, the time of the bombing, a moment of silence was observed at the memorial after the names of the victims were read aloud. the anniversary comes during a surge of political anger and rhetoric. a lot of americans are not happy with the government and the direction the nation's heading and that's everyone's right. the governor of oklahoma at the time, frank keating, said today, to have a group of people who are angry about taxes and the government is quintessentially american. those individuals were demonstrating in washington and virginia. pro-gun rallies by people who fear their second amendment rights are being taken away or
threatened. a lot of people are upset with the government, nothing wrong with that. there are a few fringe groups whose views have become alarming to washington. the question is, are they a real threat? up close tonight, here's more. >> reporter: not far from the texas capital, down a dim staircase, is one of the new faces of a political movement coming to a boil. 9/11, government conspiracy? >> i don't know, but everyone should question it. >> obama, born or not born in the u.s.? >> i don't know that but we should question that, too. >> reporter: we met katherine in this bookstore, brave new books, where this leader of the liberty restoration project tries to explain her anti-war, pro-community garden, and extremely anti-obama conservative movement. are you necessarily anti-government? >> no, i am anti-coercion and i'm anti-force. so i believe any sort of
government should be consensual. >> reporter: she believes we the people are being unfairly taxed, illegally spied upon, and more and more controlled by a federal government that's starting to look like other governments. is this the direction? >> i don't know. >> reporter: it sounds like what you're describing. >> possibly. it's sad, isn't it? >> reporter: she's not a militant, not violent, but she is a tea partyer, a patriot, and sees nothing wrong with the growing number of gun-toting militias in this country. >> it makes me feel safer. if you look around our society, who's actually committing acts of violence right now? is it the people who are advocating individual gun ownership?
or is it our government? >> reporter: you tell me. >> it's our government. >> reporter: stewart rhodes is also action about government powers. he's a former paratrooper, a yale-educated lawyer. and a former congressional staffer. he began oath keepers, 8,000 strong now. its aim, to teach military and police officers, current and retired, to refuse orders they view as violating the bill of rights. that's controversial. and many would say a recipe for anarchy, but rhodes believes it is necessary. >> we don't get sufficient training on the bill of rights. we don't get sufficient training on whether or not they should confiscate weapons, search without warrant, detain american citizens. >> reporter: here in upstate new york, an old hand, bob shultz, has been preaching anti-government rhetoric for 30 years and he's gotten in trouble trying to convince people they don't need to pay taxes. he sees the new movement on the right not as a threat but a liberating return to freedom. >> it's thrilling after 30 years to see so many individuals and
groups springing up and beginning to talk about the constitution. >> reporter: all three share views that are not mainstream, but bleisch insists the conspiracy theories aren't so wacky if you learn the truth behind them. is the g preparing fema camps? >> yes, hr-645. >> you believe, to intern u.s. citizens? >> i don't know. i hope not. >> reporter: that last one, that the government is preparing political internment camps, is growing in popularity. largely because of this documentary, "camp fema," which examines a now-stalled house bill, hr-645, calling for six fema camps to be prepared to hold large populations of americans. >> is it possible? sure. we interned japanese americans back in world war ii. >> reporter: what concerns them all is the political left in this country that labelled them extremists. potential terrorists and even racists. and what they see as a willing media, including cnn, that goes
along with those labels. that includes the often-cited studies by the southern poverty law center, including the most recent intelligence report by the group called rage on the right. which these patriot group members say unfairly tries to link them with racists. the tea parties and similar groups that have sprung up in recent months, the report says, cannot fairly be considered extremist groups. but they are shot through with rich veins of radical ideas, conspiracy theories, and racism. do you find that true? >> no, i don't. >> reporter: she says the real danger is the current political climate that is polarizing all americans. tea partiers see conspiracy between left-wing politicians and left-wing media. liberals see tea partiers as potentially violent racists. it is politics as usual she says, dividing us all. >> i think people need to start sitting down, taking a deep
breath and understanding we're all concerned about what's going on in this country. everyone can feel it. people are hungry, people are scared, and we need to start working together as human beings and stop labeling and dividing. >> reporter: grew griffin, cnn, austin, texas. >> let's big deeper into some of these groups. john avalon joins me, author of "wing nuts and the lunatic fringe is hijacking america." you were at the two rallies in virginia and d.c. today. how are the groups that were rallying today different from the tea party movement which held rallies last week? >> they're quite different. these are second amendment rights activists. primarily. the tax day protests were of a different vein. but they come out of the same broad anxiety we're seeing. taxes are down, yet the tax day protesters felt the tax burden was increasing this year. in this case, actually the reason that one of the armed rallies was able to be held in virginia on national parkland was because of a bill signed by president obama. in many cases what we're seeing is a phantom menace.
the evidence of fright-wing politics. people very afraid in a time of anxiety and economic distress, willing to believe the worst in their government. believing they're people trying to undermine this constitutional republic. they're being fed a steady diet of fear and hate and politics and it has a trickle down effect as we learned 15 years ago. >> some saw the fact that they were protesting on april 19, the anniversary of the oklahoma city bombing, as offensive. but this wasn't tied to the oklahoma city bombing. >> no. >> there are other events on this day. >> april 19 has taken on a talismanic performance. it had with the militia movement even before oklahoma city. but it's also the 235th anniversary of lexington and concord. but there's a history. waco occurred on april 19. that is what inspired timothy mcveigh to murder 168 men, women and children in oklahoma city. and a long series of events. the larger themes are one of resistance, and vulnerability. but we have an obligation to
learn from our history. it's not enough just to say it's a coincidence. it's about accepting responsibility for decisions made and learning from mistakes of our past and realizing the last time we saw a massive increase in militia movements, it did not end well. we need to be careful about the forces we're playing with sometimes. >> just for accuracy, they were saying it's because of patriots day they were protesting on. >> that's right. >> which you mentioned are the battles of lexington. >> that's exactly right. you do see, they wrapped themselves up in the american flag, as defenders of the american revolution, true defenders of the american revolution. the problem with with that is it posits others as lesser patriots. and i do this that in this time, everyone thinks they're fighting for freedom, but we do need to take a deep breath and take a look with a sense of calm, the rise and the return of the paranoid style of american
politics which only has the impact of dividing us. of increasing, kind of pumping up hate and fear. conspiracy entrepreneurs trying to make money off these people. and it all contributes to what's an increasingly toxic political environment, and we should know better now. we should learn from this. >> john avalon, appreciate your time, thanks very much. coming up next tonight, did goldman sachs rip off investors so that a hedge fund billionaire could get even richer? the latest on the lawsuit that says so. the billionaire and the larger effort to regulate wall street. we'll talk to author michael lewis ahead. so i was the guy who was never going to have the heart attack. i watched what i ate. i worked out. personally, i thought i was invincible. once it happened, i realized it's a different story.
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we'll tell you why in a moment. first, a "360 news and views bulletin." the two most senior leaders of al qaeda in iraq were killed in a joint u.s./iraqi operation north of baghdad. the men were reportedly hiding in a safe house. u.s. and iraqi officials are calling their death a major blow to the militant group. toyota has agreed to pay a record $16.4 million fine to settle claims that it hid a gas pedal defect from federal highway safety regulators, but the company denies it did anything wrong. separately today, toyota said it will recall more than 9,000 of its 2010 lexus gx-460 suvs. for possible rollover problems. take a look at this. what do you think? is this an actual iphone prototype or is it a scam? the tech website that posted these photos is not saying how it got a hold of this device. but over the weekend, another website said someone found this
phone on the floor of a bar in san jose. maybe an apple employee left it behind? apple hasn't confirmed that a new version of its iphone even exists. and a new study shows that women find steady-voiced men more attractive than men whose voices vary in pitch. the researchers said they found men who speak in monotone had more sexual partners possibly because their voices exude authority and confidence. so now we know what urkle's problem was. >> thanks, joe. still ahead tonight, keeping them honest on wall street. the accusation against goldman sachs. did the bank help a hedge fund billionaire get even richer by ripping off investors? that's next. michael lewis joins us for that. plus, the investigation into the ft. hood shootings heats up. the obama administration being subpoenaed. we'll tell you what information the senate committee is looking for. a road.
keeping them honest tonight on wall street. did a big wall street bank rip people off by selling them toxic securities based on risky mortgages, investments literally designed to fail? designed largely by a guy betting on exactly that. mortgages failing, other investors losing their shirts. we're talking about paulson and
goldman sachs. goldman is being sued by federal regulators and is the poster child in the obama administration's push to regulate wall street. we're going to talk with best-selling author michael lewis shortly. first i want to introduce you to the players and the scheme that's pretty simple when you get down to it. first up, this guy, fabrice torre, it's not a great picture, named along with goldman in the s.e.c. suit. fab russ fab he calls himself apparently. he has a math degree from one of france's elite university. a masters from stanford. he reportedly pulled down $2 million in 2007 when the deal of paulson was arranged. fab fab is just 29 years old at the time. the lawsuit alleges that he knew john paulson's role in cherry picked toxic mortgages for the deal and the fact that paulson was actually betting against the deal. now the government also presents e-mail evidence that fab fab knew the mortgage market was melting down.
telling a friend "the cdo business is dead, we don't have a lot of time left." he also brags in an e-mail, "the only potential survivor is the fabulous fab." the fabulous fab is now on paid leave. there's also this guy, his boss, goldman ceo lloyd blankfein. he said, "appropriate steps to defend the firm and its reputation are being taken." and likely to defend also its ability to make money. they make a ton of money. goldman has profits of more than $13 billion last year and will release first quarter numbers tomorrow. they'll likely be huge. the company expects to hand out $5 billion in bonuses. lloyd blankfein got $9 million in goldman stock last year alone. in '07, when paulson -- when the deal went down, paulson pulled in nearly $68 million. john paulson, let's talk about him. he picked the toxic mortgages then bet against them. here's the lowdown on him.
according to the "wall street journal," his firm paulson and company made $15 billion betting against the housing market in 2007, of which paulson personally got $4 billion. he made slightly more than $1 billion on the goldman deal. but despite being named in the lawsuit neither he nor his fund are defendants. officials say there's simply no basis for any charges. so tonight, what really happened at goldman? is the scandal real? or is the real scandal, like so many others in washington and wall street, perfectly legal? is this an exception or par for the course? is there something fishy about the timing of the lawsuit? just as the white house is pushing for greater regulation on wall street. joining us now, michael lewis, he's got three books on the "new york times" best seller list. including number one, "the big short." which lays out how the economy crashed. who was responsible, who saw it, who saw it coming and made a fortune off it. so michael, you read paul krugman in "the new york times" who says this is looting in loafers.
you read "the wall street journal" editorial who say is this all there is? what do you make of it? how big a deal is this? >> the s.e.c. case against goldman i think is a really big deal. because basically i think what they're saying is they're launching a war into what is standard practice. i mean, this is -- i don't think there's anybody on wall street who didn't know that goldman sachs was helping john paulson create securities that would go bad. i mean, i heard about this two years ago. and it wasn't just goldman. other firms were doing it, too. so i think we're living through a real culture change on wall street. what was thought to be normal and acceptable is now going to be demonized. >> in terms of the description of this on friday, everyone was describing this in terms of selling used cars or selling car parts which frankly i found made it even more confusing. literally. we did it on our show and at the end of it i was, i still don't understand what this means. in terms of describing what they are accused of doing, i mean, essentially marketing securities
that one of their big investors was betting would fail, is that correct? >> well, worse than that. they essentially collaborated with someone to pick out the absolute worst loans in the sub prime market to bet against. packaged them all up in a security, and then represented that someone else had vetted this thing, and used them to sell it to investors. so that they -- essentially, they duped people into buying things that they shouldn't have bought. now, there is -- it does make you wonder what the people who bought these things were thinking of. and i think this is one of the strange subplots of this whole sub prime thing -- >> by the way, the people who bought these, according to "wall street journal," weren't mom and pop on main street. i mean, these are big firms, these are players who -- >> it's german state banks. yes. the german state bank was the biggest buyer of this. but look, what happened in the sub prime market the only people doing the analysis on the loans were people like paulson who
were betting against it. betting against them. it was crazy. now i think where goldman is -- whether what they did is illegal or not, i have no idea, but is it right and proper to help some guy design bonds that you know are going to go bad? the people at goldman knew exactly what they were doing. in other instances, it's pretty clear they made the same bet john paulson did. they're only one of a couple of firms that didn't end up owning the stuff when it all came crashing down. they had their own bets against the market in place. >> we'll have more with michael. stand by, more with michael in just a moment. we're going to talk to david gergen and alexis glick. the question is, can and should washington set new standards for wall street? we'll look at that angle and more ahead. i'm on an aspirin regimen now. my doctor told me
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talking about a guy, john paulson, who made a fortune when many americans were losing their homes. in fact, he made a fortune in some ways because they were losing their homes. we're talking about that and the wall street company goldman sachs that put the deal together. now facing a government lawsuit. as senate democrats are getting ready to start voting on new banking regulations. we've been talking with mike lewis, author of "the big short."
now lets bring in senior political analyst david gergen
and alexis glick who once worked as an analyst at goldman sachs i should point out. david, how political is this? i mean, is this just a coincidence? this is happening on the eve of, you know, debate over financial regulation? >> i do think it's suspicious. i think the timing is probably not a coincidence. eliot spitzer argued today that it was not a coincidence. and it's going to make a big difference in the senate debate. let me go back to what michael was arguing. anderson, the big question to me tonight is, goldman sachs says, yeah we may work with paulson but we bet against paulson and lost $90 million doing that. michael says i don't think that happened. but it does seem to me that's the most material fact to learn. because it just would be hard to believe that goldman sachs would intentionally defraud itself. >> for me, the layman lesson is don't give yourself a dumb nickname in an e-mail. you know? this guy torre, what did he call himself?
the fabulous -- >> yes, yes. look, he's --
you know, one of the things i got my hands on in the last 24 hours was the document they used to sell this deal, it's called abacus. his name is rather far down on the list of goldman employees involved with the thing. and the trader who's at the center of it has been mentioned in the newspaper reports but not the s.e.c. suit. jonathan egal. jonathan egal was legendary for structuring deals that enabled him to get short the sub prime market. so it would really surprise me if this deal was structured so he could be long the sub prime market in march of 2007. i mean, it's -- the whole thing -- it smells. but i would say this -- this is very important to realize. that this is not a case of an isolated transaction. it was pretty standard practice for -- in this market, for the people who were short the market to in effect pick the loans that went into the -- into the bonds
and the weird thing about the subprime mark set when wall street went to basically replicate the subprime loans with side bets, they picked the absolute worse ones to replicate and magnified the losses in the system as a result. >> in terms of regulation, where does regulation -- the regulation being debated now with chris dodd, what exactly is it proposing? how will this change it? >> michael brings up a very important point. and that is how would these instruments put together? what was the regulatory framework like that? a lot of these derivatives have been trading in a black market, a shadow market. they have not been trading on an exchange where people had been able to see the trading and the activity. that's one of the biggest movements down in washington, d.c. in terms of financial reform. there's transparency behind the complex industries. that is probably the biggest
feather in the cap for the framework here. but it's also mary schapiro and the s.e.c. who fell down on radar, this is a big feather in the likes of the cap for the s.e.c. they may understand who was behind it. >> no doubt they've been asleep for a couple of years. maybe this is them waking up. this will definitely -- from a prchl r. standpoint, this helps democrats in terms of getting some sort of regulation. >> listen, there's no question this helps the democrats. that's why president obama is coming to new york on thursday and beat up on wall street. chris dodd, barney frank have all jumped on this. they've going to use it. the feel of the question is did the s.e.c. move in a convenient tyke. what we also learned today was at the s.e.c. itself, there are five votes, three democrats who voted to bring the charges in,
two republicans who oppose that. when the market heard that, they began to think, thab these charges won't stick. i think michael is right. there's something about this that smells. until we know the facts, i think it's unair to vilify or judge goldman sachs or the whole transaction. we need to know more than we know now. >> anderson, one obvious thing that needs to be addressed is why on earth should a wall street firm be making bets for itself on bonds that it's advising its customers to boy and sell. once they can make money by creating things they can explode, they'll create things that explode. thee functions need to be separated. this is what the rule gets at. i think it's -- i'm all for
wisdom and making this whole discussion nonpartisan. but the fact is, that reform is going abbe an act of violence. you'll be reforming a culture that has grown up over the last 30 years. it's a pretty dramatic social change. >> and where were the rating agencies? why aren't we talking about them? >> they're boeing paid -- the firms are paying them to vote th for them. we have goldman 101. a time line. coming up next, hidden dangers in your food. and friday night shock was supposed to be larry wilson on larry king. joe john's reaction was
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a hate crime conviction on long island, new york. a jury has found jeffrey conway guilty of manslaughter in the stabbing death of an ecuadoran immigrant. they say conroy and six friends targeted latinos in december of 2008. a senate committee subpoenaed the obama administration for documents related to last year's shooting spree at ft. hood, texas. lawmakers want to know if the defense department or justice department could have prevented the shootings. the accused gunman, major nidal hasan, an army psychiatrist, faces 13 counts of murder. for those of you who like meat when doll, researchers at the university of texas say eating lots of overcooked meat increases the risk of bladder cancer. they warn charred meat can generate cancer-causing chemicals. and a florida family has adopted a wild deer. they say the young deer named bucket got attached to 8-year-old hunter brozio.
the boy and the deer even share meals together. the two of them have gotten together for a long time now. the family has spend something like $3,000 getting licensed as a state game preserve. they've even built a pen for bucket to live in. that's sweet. i don't know about the deer at the dining room table. >> yes. >> doesn't sound healthy. tonight, the shot, joe. it's an encore performance of the best reaction shot of all time. >> oh, no. >> i was thinking about this all weekend. on friday night we re-edited larry king interaction with willie nelson. really by his own admission, he smoked a little pot beforehand. larry was not stoned. tv magic followed. take a look. >> i don't believe this. >> did you smoke today? >> did i smoke cigarettes. >> pot today, this day. >> yes. >> before you came here? >> yes.
♪ never saw the sun shining so bright ♪ ♪ a memory of love sweet refrain ♪ >> love you, buddy. >> love you, too. >> that's kind of extraordinary. long pause there. >> well, we re-edited. it didn't actually happen. we made that up. we edited all the pauses together. yes. >> i got it. >> i love that you believed it, joe, too. >> i totally fell for it. >> i can't believe you thought that's what actually happened. >> hook, line and sinker, i could not -- that was well edited, you know. you have to give them credit. >> lee smith did a very good job on that. i love that you were so naive. >> that's me. >> rather extraordinary. rather extraordinary. joe, you're not going to live
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