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American Morning
Found Body Suspected to be Missing Yale Grad Student; Obama to Give Speech About Financial Industry; Experts Debate If Wall Street Has Changed Since Financial Collapse
Aired September 14, 2009 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN ROBERTS, CNN ANCHOR: I'm John Roberts good morning to you.
KIRAN CHETRY, CNN ANCHOR: I'm Kiran Chetry. Thanks so much for being with us.
Here are the big stories we're going to be breaking down for you in the next 15 minutes.
The search for a missing Yale grad student is now a homicide investigation. Sadly, police say they found a body stuffed inside of a wall of the lab building where Annie Le was last seen alive. Yesterday was supposed to be her wedding day.
An audio message believed to be from Osama bin Laden has surfaced on the web just two days after the September 11th memorial. The speaker says Americans need to be reminded why they were attacked eight years ago.
In just a moment we get some insight on the tape from our Pentagon Correspondent Barbara Starr.
CHETRY: It's been a whole year -- surprisingly, it's been actually a whole year since Lehman Brothers collapsed sending the economy into a tailspin. There's been many adjectives used to describe what has happened since.
But today President Obama heads to Wall Street to talk about what went wrong with our financial system and what's being done to make sure the crisis never happens again.
We're going to get an economic panel to join us to give us a preview of what they want to hear and what they think they'll hear from the president's speech.
ROBERTS: But first this morning, major developments in the disappearance of that Yale grad student Annie Le. Yesterday police found a body stuffed inside a wall of the lab building where she was last seen five days ago.
Le was supposed to be married yesterday. The case is now being treated as a homicide investigation.
Our Susan Candiotti has been following the story. She was working her sources late into the night. What do you have for us this morning? SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: First of all, you have to wonder who would do such a thing? Police have spent all night at that scene at the medical lab on Yale's campus trying to find Annie Le's body.
Everything started to unravel Sunday night. For days police kept their focus on that medical lab building.
(BEGIN VIDEOTAPE)
CANDIOTTI: It's now clear why no one had seen Annie Le leaving this medical research building last Tuesday. Apparently she was trapped inside, her body found Sunday night hidden inside a basement wall.
ASST. POLICE CHIEF PETER REICHARD, NEW HAVEN POLICE DEPARTMENT: She hasn't been positively identified as of this time. However, we assume it is her.
CANDIOTTI: The 24-year-old grad student often worked in a basement lab performing experiments. She was majoring in pharmacology.
Le was last seen entering the building on Tuesday, her image captured on security cameras. No one saw her coming out, and investigators had been reviewing videos frame by frame and pouring over blueprints.
Then the law enforcement says they found blood-stained clothes inside some ceiling tiles Saturday. "The New Haven Register" reports the clothes are different than the ones Le was seen wearing on camera.
KIM MERTZ, FBI SPECIAL AGENT: All I will say is that items that could potentially be evidence have been seized. None have yet been associated with Annie Le.
CANDIOTTI: Investigators also spent Sunday searching through a recycling plant in Hartford about 40 miles away. They were looking through garbage hauled there from Yale. Police called it routine.
The main focus of the building where Le was apparently murdered.
REICHARD: Detectives and investigators right now have a large amount of physical evidence at the scene that we're going through to determine if it's linked to this case or not.
CANDIOTTI: Yale's president reached out to the victim's family and sent an email to the campus announcing Le's death.
RICHARD LEVIN, PRESIDENT, YALE UNIVERSITY: I met earlier this evening with Annie's family, with her fiancee and his family, and I conveyed to them all the deeply felt support of the entire Yale University community.
(END VIDEOTAPE) CANDIOTTI: And students are planning a vigil on campus. Police have interviewed dozens of people, including family, friends, professors, employees. No one is being called a person of interest, and no one can come up with a reason why.
ROBERTS: OK, so here we have an area that's heavily surveilled, probably controlled access as well. There has to be a limited number of people that can get into that building.
CANDIOTTI: You would think, and everyone wears badges when they go in. There are 75 security cameras around the campus. Again, it's stunning, and obviously people around campus want to know how could something like this happen? And we're wondering the same thing, of course.
ROBERTS: All right, well, Susan Candiotti will stay on the investigation for us. Thanks for the update this morning, Susan.
CHETRY: Three minutes past the hour. An audio message believed to be from Al Qaeda leader Usama bin Laden has been released now on an Islamist Web site. It shows a picture of bin Laden. There's no video. We haven't seen new footage of the Al Qaeda leader in nearly two years.
Pentagon Correspondent Barbara Starr joins us now with more. Hey, Barbara.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good morning to you, Kiran.
I have to tell you that all previous messages have proven to be bin Laden. There's every expectation this will be confirmed to be his voice as well.
Let's get right to what he says in this audio message. We have a quote for you. He says, "From the beginning we have stated many times that the cause of our disagreement with you is your support of your allies, the Israelis, who are occupying our land in Palestine.
Your stance, along with some other grievances, are what led us to carry out the offense of 9/11."
Now, of course, the U.S. reaction to previous messages has been that these are recruiting and propaganda messages by the al Qaeda leader, that he has been in hiding for so long that some of his ability to directly plan and carry out attacks certainly is diminished.
But recruiting and propaganda -- OK, what does it really mean about the status of the hunt for Usama bin Laden? Just a few weeks ago we had asked Defense Secretary Robert Gates about that.
He wouldn't address bin Laden specifically but reiterated the constant administration strategy, which is to go after the senior leaders, hope you can stir them into moving, and that that will somehow stir bin Laden into moving. But by all accounts, eight years after 9/11, he remains deeply hidden inside Pakistan and well sheltered by those loyal to him -- Kiran?
CHETRY: Barbara Starr for us at the Pentagon this morning, thanks.
ROBERTS: We're crossing five minutes after the hour. And also new this morning, lots of questions surrounding the death of a former top aide for impeached Illinois Governor Rod Blagojevich. The medical office is waiting for toxicology before it determines what killed Christopher Kelly.
Police say they found Kelly slumped over his steering wheel on Saturday. He later died at the hospital.
Kelly was supposed to start an eight-year prison term this week for federal mail fraud. The local mayor says police found drugs in the car, but he is backing off comments that Kelly might have overdosed.
CHETRY: President Obama's health care speech heckler says one sorry is enough. Congressman Joe Wilson, who yelled "You lie!" during the president's join address to Congress last Wednesday says he is not going to apologize on the House floor this week because he already apologized to the president and the president accepted that apology.
House Democrats plan to censure Wilson if he refuses to do so.
ROBERTS: A touching tribute to Michael Jackson to kick off the MTV Video Music Awards last night in New York City. His brother Jermaine and father Joe were in the crowd as look-alikes recreated some of his famous moves to songs like "Thriller" and "Smooth Criminal."
And sister Janet joined them on stage for "Scream," the only video that the two ever made together. It was her first performance since his death.
From the king of pop to the prince of pompous, there's always at least one whacky moment that people are talking about the morning after the VMAs, and last night it came courtesy of Kanye West. We all know that he can a sore loser or at least play one on television, only for the first time ever he wasn't thinking of himself.
Too bad for Taylor swift this sudden bought off altruism came during her big moment when she got the moon man for best female video. Check it out.
(BEGIN VIDEO CLIP)
TAYLOR SWIFT, SINGER: Thank you so much for giving me a chance to win a VMA award.
KANYE WEST, SONGWRITER: Yo, Taylor, I'm really happy for you. I'm going to let you finish. But Beyonce had one of the best videos of all time, one of the best videos of all time.
(BOOS)
(END VIDEO CLIP)
ROBERTS: Beyonce is in the crowd there saying, what are you doing? Maybe he was upset that Taylor Swift outsold him and everyone not named Michael Jackson this year. Kanye was booed off the stage and any mention of him the rest of the night pretty much drew the same reaction.
CHETRY: Maybe they were booing his haircut, too.
Anyway, poor Taylor Swift, such a nice girl. And Beyonce, as you saw from some of those shots, she looked shocked. She was mortified after it sunk in what happened.
When she won the biggest award of the night, which was video of the year, she told the audience about her first VMA win when she was just 17 years old with Destiny's Child and how much it meant to her, and then she handed over the microphone so that Taylor Swift could say her thank yous and have her moment. Beyonce certainly is a class act.
And poor Taylor Swift. Apparently in some of the write-ups this morning Taylor Swift, who is just 19, her mother gave Kanye West an earful backstage, which he said...
ROBERTS: I can imagine she would.
CHETRY: And then he apologized.
ROBERTS: That was just -- think about these things before you actually do them. It's one of those talkable moments, I guess.
So President Obama giving a big speech today on the financial industry. It's one year ago today that Lehman Brothers collapsed.
Is Wall Street any different than it was 365 days ago? We'll check in with Diane Swank and Bill Cohen coming up next. It's eight minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Shot of the White House this morning at 7:10 there in Washington this morning on this Monday. It's sunny and 65 degrees, and a little bit later it will be a beautiful day in the nation's capital, sunny and 85.
Meanwhile, some headlines coming out of the beltway in your political ticker this Monday morning. Some key Democrats are questioning the mission in Afghanistan, saying the president needs to make it clear what the mission is there eight years after the 9/11 attacks.
Intel Committee Chair Senator Dianne Feinstein told CNN's John King that there should be a timeline as the White House considers another troop increase.
ROBERTS: The White House reacting to one of the biggest demonstrations of Barack Obama's presidency. Thousands of tea party protestors marched on Washington over the weekend protesting unprecedented government spending.
White House Press Secretary Robert Gibbs on CNN's "State of the Union" yesterday said the president didn't think the anger has anything to do with the color of his skin. Some liberal critics have suggested that the tea party protestors are motivated by race.
CHETRY: The man who took over a key Senate committee after the death of Ted Kennedy says that a Senate health care bill will include a strong public option. Senator Tom Harkin of Iowa also predicted that a health care reform bill will pass Congress by Christmastime.
But one key moderate Republican, Senator Olympia Snowe, who is part of a bipartisan group trying to hammer out a deal, is now asking the president to take the public option off the table, saying it is universally opposed by all Republicans in the Senate.
For the latest buzz, the best political team anytime, head to CNN.com/ticker.
ROBERTS: We're just a few hours now until President Obama delivers a major economic speech. It comes one year after the collapse of Lehman Brothers sparked a global economic panic.
But what has changed on Wall Street since then? Here's to give us an inside look in New York is Bill Cohen, he's a contributing editor to "Fortune" and contributor to the "Daily Beast," and in Chicago, Diane Swank, chief economist and a managing director at Mesirow Financial.
Diane, let's start with you. What changed in the financial services industry on Wall Street in the past year? What has really changed?
DIANE SWONK, CHIEF ECONOMIST AND SENIOR MANAGING DIRECTOR, MESIROW FINANCIAL: Almost everybody has changed. I think it's easier to find out what's similar to a year ago than what changed. What's similar is that we still have the large -- too large banks to fail are now bigger than they were ahead of the Lehman failure.
We still have a couple of old investment banks, Goldman Sachs and Morgan Stanley, although they're bank holding companies today, and we still don't know what the financial infrastructure, the regulatory infrastructure we are going to live with to rebuild the financial services industry for the 21st century rather than the 20th century.
ROBERTS: All right, so that's what's changed on Wall Street in the last year, but let's go to Bill Cohen and ask, really, how different is the culture on Wall Street than it was a year ago?
WILLIAM COHEN, CONTRIBUTING EDITOR, "FORTUNE" MAGAZINE: Change in culture on Wall Street? I don't think so, John. (LAUGHTER)
Not at all. I think that, in fact, it's -- there's been a huge pent-up demand for Wall Street services, and Wall Street is providing those services and making record profits by and large as they accommodate that demand.
There's not been any, I don't think, any real change in the culture. Yes, two or three major competitors are out of business. Yes, that's better for the Goldman Sachs and Morgan Stanleys and J.P. Morgans of the world.
And, as Diane said, they have access to the Fed window now, which gives them cheap financing which is like rocket fuel to their profits.
ROBERTS: We should point out too that Bill is the author of a fine book. It's "House of Cards, a Tale of Hubris and Wretched Excess on Wall Street."
COHEN: So I have a viewpoint.
ROBERTS: You certainly do.
Diane, President Obama has called for touch reform what he calls "an outdated oversight system" and has also called for tough new common sense rules when it comes to regulating the financial services industry.
We haven't seen a whole lot of that. We actually have fewer companies that seem to be doing very much the same thing as they used to be doing. Are we setting the table for another potential crash somewhere down the line?
SWONK: I think, you know, history has a way of repeating itself. Much of what we saw came from - 100 years ago we outlawed many of the laws that allowed us to do exactly what we did in 2000 -- in this last ten years, and that is made side bets on Wall Street, these so called credit default swaps, which were sort of a faux insurance policy, but they really weren't, were like taking Wall Street and legalizing gambling. And we outlawed that in 1907 and then re-legalized in 2000.
So history has a way of repeating itself, and I have to agree. The animal spirits here, the incentives that got us here in the first place, greed and the idea to make money and the culture of Wall Street has not really changed, and it really won't change because it's human behavior.
ROBERTS: Bill, as Diane was mentioning, we have mortgage-backed securities, credit default swaps. Certainly there's no shortage of creativity when Wall Street tries to make money. They have not got these new things they're talking about called life settlements, selling life insurance policies that people are selling for cash.
If you keep coming up with creative ways to make money, some of which may be very, very risky, are you not again setting the stage for a potential crash somewhere down the line? COHEN: I think you are, John. And when you combine that with a lack of accountability in terms of compensation, in other words, just sell as much as I possibly can this year, get my big bonus and put it in my pocket and go away, and without any possibility of claw backs or accountability for their actions or what they've been selling, I think you're just creating another big potential for a bubble.
ROBERTS: Let's drill down a little bit, Diane, on this idea of compensation, because there is an energy trader at Citibank, he's their star energy trader. He stands to make $100 million in bonuses this year. Goldman Sachs set aside $11 billion for bonuses. CEO Lloyd Blankfine is counseling his employees to be discrete what they do with the money.
How can you change the compensation structure when that really is a lot of what makes Wall Street Wall Street?
SWONK: You can change the compensation structure. One of the biggest mistakes we made, we didn't make it during the Great Depression but we made in recent years, was allowing these companies to go public.
When these companies were private partnerships where people actually had skin in the game, they survived the Great Depression. Many of these companies survived the Great Depression because they actually had long-term their money in the game, and there is a whole partner structure that encouraged them to think long-term as well as short-term.
And I think that's one of the key issues, is not allowing these companies to go public. If they are going to be taking on excessive risk, they've got to actually have skin in the game. They've got to hold that risk themselves.
ROBERTS: Bill, when you look at a company like Citigroup that was in so much trouble last year and so many were got let go from the company, and now there's an energy trader who may make $100 million in bonuses, you just got say to yourself, how does that work?
COHEN: It boggles the mind.
Well, it probably goes back to a contract he has that enables him to get this compensation.
But again, and I completely agree with Diane. I felt like I could have been saying what she was saying. Unless these guys have more skin in the game, it will just encourage them to take big risks.
When they were private partnerships, their entire net worth was on the line. We can go back to a system like that. It wouldn't be that hard to do it. Take the top 100 of these guys at these firms, put their full net worths on the line in the form of capital that they can't get out until the company does really well or there aren't any losses they need to absorb. It can be done. It takes a little creativity.
I'd like to see President Obama call for that today.
ROBERTS: One of the things that the president will talking about, Diane, and calling for is new new regulations of the financial services industry.
But when the market continues to move up, the economy is starting to look better, the nation is consumed with health care reform, this stuff all seems to be moving to the back burner. Do you have any faith that meaningful financial services industries regulation and reform will get done this year?
SWONK: I think we'll see some meaningful regulation and reform. The problem is you can't regulate against fraud, and that's what we keep trying to do. We keep trying to regulate against yesterday's problems and human nature.
And at the end of the day you want to get the incentive structure right rather than the policing structure right. And I know there was a lot of holes in regulation, but I think Bill and I are on the same page is change the incentive structure.
ROBERTS: Diane Swank and Bill Cohen, it's always so great to sit down and chat with you and hear your views on things. Thanks for joining us this morning. I really appreciate it.
COHEN: Thank you.
ROBERTS: And you can see President Obama's speech live right here on CNN and CNN.com/live. Our coverage begins at noon eastern today.
CHETRY: And also tomorrow in our 7:00 hour we're going to interview former New York Governor Eliot Spitzer about financial regulation and reform, what he thinks is needed.
And still ahead, quite a tirade for tennis champ Serena Williams after she tells a line judge what she's going to do with one of the balls.
ROBERTS: Or what she'd like to do with one of the balls.
(LAUGHTER)
CHETRY: And we'll show it to you, and we'll show you the fallout. She's facing fines, but there could be more.
It's 19 minutes past the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the most news in the morning.
Much of Texas will see more rain today. Parts of the state got drenched this weekend. They had flash flooding that took out a main bridge in Salado, about 50 miles northwest of Austin. Transportation officials say it will remain closed until at least this evening. (WEATHER BREAK)
ROBERTS: A new series on the most news in the morning -- "Banks gone Bust," can Wall Street be trusted with our money in the future? Our Allan Chernoff with our first installment coming up next. Stay with us.
(COMMERCIAL BREAK)
ROBERTS: Good morning, New York. Beautiful day there for the men's final out there at the U.S. open at Flushing Meadows. Sunny, 61 degrees right now. Later on today mostly sunny with a high of 80.
Welcome back to the most news in the morning. It's been a year now since Lehman Brothers collapsed, and we learned about the big risks that Wall Street was taking with all of our money.
CHETRY: That's right.
So all this week we kick off a special series of reports, "Banks gone Bust." And we're asking a lot of questions. One, if Wall Street can ever be trusted with our money again.
Allan Chernoff is here to tell us whether or not we're any safer today. And it's funny, we ask this, and meanwhile we're already trusting Wall Street with the money. Anyone who has a 401(k) or does any investing, we're still there.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: The money is still there, but should we trust Wall Street? That is another question, and it's a very good question.
And the fact is financial regulations today are what they were a year ago. It may seem incredible when we consider how the financial system ground to a halt.
On the very same day Lehman Brothers collapsed, Merrill Lynch, realizing that it was close to the same fate, threw itself into the arms of Bank of America in a rapid fire merger.
Within days an international financing crisis was underway. Firms like Lehman, Merrill Lynch, and Bear Stearns, which you'll recall was the first to fail last year, undermined the economy's stability by taking too many risky bets.
(BEGIN VIDEOTAPE)
CHERNOFF: Wall Street last year was virtually a casino. Some of the street's biggest players, Merrill Lynch, Lehman Brothers, Bear Stearns, had bet big on mortgages to home buyers who couldn't afford them in the first place.
The mortgages were sliced and diced into investments, and big Wall Street firms in pursuit of profits were betting the house on it.
PROFESSOR DAVID BEIM, COLUMBIA UNIVERSITY SCHOOL OF BUSINESS: In retrospect it looks very irresponsible. In retrospect they allowed themselves to become too leveraged and to deal in assets that became too risky and too complex.
CHERNOFF: As the housing market crumbled, so too did Wall Street's bets. The failure of Lehman Brothers led to an international crisis of confidence that virtually shut down the financial system. Bankers and big investors stopped lending money.
It was a failure of Wall Street's risk management and a failure of government, admits the treasury secretary, who was president of the New York Federal Reserve at the time.
TIMOTHY GEITHNER, TREASURE SECRETARY: We allowed too much risk and leverage to build up in the financial system. That was a classic, tragic regulatory failure and requires fundamental financial reform.
CHERNOFF: But there has been no reform. Since taking office the Obama administration has been busy trying to prevent a financial collapse.
Only in the past two months has the Treasury sent comprehensive legislation to Congress to create a national bank supervisor, give the Federal Reserve more power over big financial firms, oversea investments at that don't trade on regulated exchanges, and tighten monitoring of credit rating agencies.
Aside from holding hearings, Congress has taken no action. The financial rules that allowed firms like Lehman Brothers to turn Wall Street into a casino are still in place.
ARTHUR LEVITT, FORMER CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION: My god, have these people learned nothing? They have health care, which is on page one. So it's not going to be done. And that's tragic.
BEIM: People should be outraged that there's so little change. They should be demanding of their politicians that there be change.
(END VIDEOTAPE)
CHERNOFF: While the cry from the public right now is all about healthcare reform, financial issues have taken a back seat. Unless Congress does act, Mr. Leavitt and Mr. Beim warn, the country remains vulnerable to yet another financial meltdown.
(CROSSTALK)
KIRAN CHETRY, CNN ANCHOR: It's amazing. It was only two months ago that the treasury sent the recommendations to congress. There's been no action on that. And meantime we've seen the stock market slowly creep up and up and up and up. And now we're what, 55% on the year.
(CROSSTALK)
CHERNOFF: Which increases the possibility that nothing may happen, because all of a sudden it seems that we're not in a crisis anymore, right? Happy days are here again.
JOHN ROBERTS, CNN ANCHOR: Yes. It's just kind of stunning when you think that this guy at citigroup stands to make $100 million in bonuses this year.
CHERNOFF: It keeps on going, huh? The business keeps on rolling, and at some point you've got to have some outrage in there in order to get these reforms passed. The higher the stock market goes.
ROBERTS: The less the outrage goes.
CHERNOFF: Exactly.
CHETRY: Great piece this morning. Appreciate it. Our "Banks Gone Bust" series continues tomorrow by the way with an inside look at the collapse of Lehman Brothers. Our Carol Costello will talk to a former vice president at that firm about how it all went down.
Well right now it's 32 minutes past the hour. We check our top stories this morning. You remember the Iraqi journalist who hurled his shoes at former President Bush. Well now, apparently he's caught up in some red tape. Muntadhar al-Zaidi was supposed to be released from prison today, but his brother said that paperwork has delayed that release. Al-Zaidi served nine months of his one-year prison term. He's being released early for good behavior.
A new message believed to be from Osama Bin Laden has appeared on radical Islamist websites. The message says President Obama is "powerless to stop the wars in Iraq and Afghanistan". We have not seen any video footage of Bin Laden in 2 years now.
Well, Congressman Joe Wilson still feeling the heat for heckling President Obama during last week's healthcare speech. House democrats now plan to censure Wilson if he refuses to apologize on the house floor. Here's what Wilson said about that yesterday on Fox news Sunday.
(BEGIN VIDEO TAPE)
REPRESENTATIVE JOE WILSON, CONGRESSMAN OF SOUTH CAROLINA: I am not going to apologize again. I apologized to the President on Wednesday night. I was advised then, thank you, now let's get on to a civil discussion of the issues. But I've apologized one time. The apology was accepted by the President, by the Vice President, who I know. I'm not apologizing again.
(END VIDEO TAPE)
CHETRY: Interesting note Representative Wilson, as well as, his opponent for re-election -- this was just a sleepy campaign there in South Carolina. Well now, each of them is fueled by fund-raising on the web. Because of this incident have raised more than $1 million since Wednesday's outburst.
Well, it was one year ago when the world's financial markets were stunned by the collapse of Lehman Brothers. The failure of a top U.S. investment bank panicked investors and scared the federal reserve into action fearing a domino effect. It became more than $700 billion of an effort to help save Wall Street (UNINTELLIGIBLE). Well in our "banks gone bust" series this week, we're looking at the U.S. economy and the rescue effort one year later. Should we have bailed out those banks, and is the economy recovering, and is there enough regulation or any regulation in place to prevent it from happening again?
Joining me now to help answer the questions is Representative Ron Paul of Texas. Congressman Paul also wrote a new book, "End the Fed." Thanks for being with us this morning, Ron. Congressman Paul. We know that you have long felt the Federal Reserve was not an organization that did any good. You felt that they had unchecked powers. As we take a look, I mean, many are feeling the fed is the hero out of this thing. That if it weren't for the fed, we'd be in a Great Depression. After what happened one year ago with the collapse of Lehman. What do you think?
RON PAUL, CONGRESSMAN: I think the fed has done a wonderful job for Wall Street. But you know, the people the average guy lost a lot of money. They come in with more credit and pump it up and bail out all the big guys and getting all these bonuses for these individuals who should've failed. They claim there's a recovery. But the recovery ought to be measured by the people working. You know true unemployment is now 16%, and the people who lost money have not regained the money. The people who lost their houses have not gotten their houses back. There is no recovery. All there is is a lot of fudging. And I do agree that we do need a lot more regulation, but we need regulation of Federal Reserve because that's the source of the problem. They create the easy credit. They create the bubbles and we need enforcement of contract law. We need enforcement that when you do something dumb you ought to go bankrupt and we ought to have anti-fraud laws. We shouldn't protect these people. We protected them all the time.
CHETRY: Let me ask you about this. This is interesting. We've been doing this series all week "banks gone bust" just about how we got here and what the answers are. We just heard from our Allan Chernoff in the proposal that were given from treasury to congress. Apparently, two months ago for you guys to look over, it calls for in this regulatory overhaul to give the Federal Reserve more power over big financial firms.
PAUL: This is unbelievable that is typical Washington politics. You know somebody messes the system up. You know, the fed is supposed to have full employment, at the same time stable prices and a good dollar. They've destroyed 97% of the dollar, we have 16% unemployment rate. They bring on this financial crisis and bail out all their buddies and the little people keep suffering. So what do we do? We wanna give more power to the Federal Reserve? It makes no sense whatsoever.
(CROSSTALK)
CHETRY: You're playing devil's advocate, then. Who can be trusted less going from your point of view? They're talking about the fed having power to regulate some of these financial institutions that most economists we talked to say are still doing the exact same thing but just finding another way to do it. That all the moves and the risky moves that ended up bringing us down or bringing down some of these big firms a year ago, it's still happening, nothing's changed. So what's the answer?
PAUL: Well the answer is end the fed. The fed is the culprit. They're the ones who destroy the money and manipulate the economy. They have central economic planning. The people who love war love the fed because you finance the war. The people who love welfare love the fed because they monetize that debt. So you want to stop this, you have to look at the fed and find out what they're doing. They will not tell us who they bail out, who their friends are and the trillions of dollars they're involved in. They're bigger than the congress. They have more power than the congress. The fed chairman probably is more powerful than our President, and yet we refuse to look at it. Fortunately, though, our congress is getting more in the mood to look at the Federal Reserve. We do need to find out what they do and where these benefits go. They've been doing it for years, but the time has come for us to look at the fed and then find out that the market can work, sound money is mandated in the constitution not to the central bank. Regulations by bureaucrats cannot compensate for all the harm and evil the Federal Reserve does. So that's what they're trying to do. They're trying to regulate something that shouldn't even exist.
CHETRY: Alright, one of the other things you mentioned twice and people are probably wondering why you said unemployment is actually at 16%, because when we get the labor statistics it's hovering around 9.7%. But you're also counting and many others do. If they take a look because people who have simply given up - they've decided to either take early retirement or they're no longer actively pursuing a job because they feel that they can't. As we look at that situation, retail sales is also a big indicator of whether or not things are turning around. We see the uptick in the stock market and we see that things are going really well on Wall Street. We haven't seen some of those other indicators changing, and people talk about the -- perhaps the problem with getting into a double- dipper recession, meaning we seem to recover and then drop back down again. What are some of the solutions to that?
PAUL: Well, I don't think we seem to be recovering. I mean, there are more people unemployed all the time. So that the solution is that we have to liquidate debt, and we don't permit it. All the bad debt and bad investment were bought out by the taxpayers - transferred to the treasury and the Federal Reserve. What you want to do is get rid of the debt. Pay it off or liquidate it. And we're doing everything wrong. We're doing exactly what we did in the Depression. We're doing exactly what the Japanese did in the 1990s. And they prop up the bad investments. So you want to liquidate the debt. You don't want the consumers to spend more money. The consumers should spend less and save money. Go back to work and pay down the debt and go back to work. And then the recession could have been over in a year. But no, when you prop up bad debt, and prop up these prices, and all the mistakes that we made, this prolongs the agony. This is exactly what we're doing. They've had this year and a half or so of pumping in trillions of dollars. And there's been no good results. I see no good outcome from the policies we have. We ought to believe in sound money, free markets and getting the government out of the way and to enforce the laws of the market. If you're doing a bad job, you should go bankrupt. You should be liquidated instead of propping up all the bad companies. We shouldn't permit something like Goldman Sachs to come out here. Goldman, they're the ones who came out, and they have a lot of influence in our treasury and a lot of influence in our federal reserve.
CHETRY: Alright, well your new book out, "End the Fed." By the way, are you going to send a copy of that to Ben Bernanke?
RON PAUL, CONGRESSMAN: Oh yes, because his name happens to be in that book. I think I'd like to get a comment from him.
CHETRY: Yes, alright, well it's good to talk to you this morning Congressman Ron Paul. Thanks.
RON PAUL, CONGRESSMAN: Thank you.
ROBERTS: It was all the talk of the U.S. open over the weekend, Serena Williams' outburst at a line judge. 2 points away from losing the match to Kim Clijsters. The line judge called her for a foot fault, and Serena Williams called the line judge a whole bunch of things. The line judge says she threatened her.
How bad was the threat and what should the penalty for that be? There's been one penalty assessed, but there could be more. We'll talk about that coming up. 41 minutes after the hour.
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Welcome back to the most news in the morning. Belgium's Kim Clijsters became the first unseeded woman to ever win the U.S. Open. She's also the first mother to win a grand slam in nearly three decades. Her daughter was born 18 months ago. Clijsters beat ninth seeded Carolina Wosniyaki 7-5 and 6-3 late last night.
Well, a profanity-laced outburst by tennis superstar, Serena Williams could cost her a lot more than originally thought. Williams already hit with a $10,000 fine for swearing and waving her racquet at a line judge. She was also fined an additional $500 for racquet abuse when she threw her racquet and broke it earlier in the match. The whole thing with the line judge occurred after she was called for a foot fault in the semifinals of this weekend's U.S. Open. If you haven't seen it, take a look. Here's what happened.
(BEGIN VIDEO TAPE)
LINE JUDGE: Foot fault! (UNINTELLIGIBLE)
(END VIDEO TAPE)
ROBERTS: Grand slam officials are now looking at that tape. If they decide that she committed a major offense under the Grand Slam rules, she could lose all of her prize money, maybe even be suspended from a future Grand Slam event. Jon Wertheim has been covering the event for Sports Illustrated, where he's the senior tennis writer. And he's with us this morning.
Have you ever seen anything like that?
JON WERTHEIM, SENIOR TENNIS WRITER, SPORTS ILLUSTRATED: Not like that, and certainly not from Serena. I mean, we've seen players lose it with officials, but to get that close and to threaten like that. Also, at that stage. I mean a grand slam semifinal. That was unprecedented as far as I've seen.
ROBERTS: You know, there is no clear angle that I have seen on the foot fault. Apparently that line judge, though, she's very good. She's very confident in the calls that she makes. Serena had been called for a foot fault a couple or three games earlier on the other side of the court by a different line judge. But, the question is raised. If it was an infraction, it was a minor one. It's not like she was a foot into the court or anything like that. Maybe, she touched the line. And John McEnroe was looking at it said you don't call something like that at that point in the game. It was 15-30 with Serena serving, and she touches the line. Should that have even been called?
WERTHEIM: I mean, you know, in a perfect world it never happens. But, I don't think you can waive off infractions based on where.. My feet get on slippery terrain pretty quickly when you make calls or don't make calls based on where you are in the match. I mean, it's not like a foul or its judge.. You know, you're over the line or not. Unfortunately, you wish one way or the other there was some conclusive video. It was a pretty, pretty shaky call. But again, that in no way excuses what followed.
ROBERTS: You see her when she's, you know, serving up the second serve there. She lifts the toe of her left foot. Does it wander over onto the line? It's really unclear. In a press conference afterwards, which I know that you were at, she didn't say whether or not she actually foot faulted. She said maybe I did. She certainly didn't apologize but she did talk about the encounter between her and the line judge. Let's listen to that.
(BEGIN VIDEO TAPE)
SERENA WILLIAMS, U.S. OPEN FINALIST: I think she said I would kill you. And I was like, "What?". I was like, "Wait a minute". But then I hadn't misheard she had said that. So that was just something -- I was like -- I was whoa. I was like wait a minute. Let's not because I'm not that way.
(END VIDEO TAPE)
ROBERTS: So, maybe she didn't say, "I'm going to kill you", but what she did apparently say because we've seen this on camera, "I swear I blank want to take this ball and shove it down your blanking throat". You were at that pressroom. What did you think of her appearance there?
WERTHEIM: She had calmed down considerably, which was good. But you would have liked to see a little more contrition. I mean, this was a pretty big violation. It's sort of semantics. She didn't say, "I'll kill you". But she threatened. Regardless, I mean this was way over the line. And, you know, Serena had calmed down, was even sort of joking about it but not a whole lot of apology. So that was disappointing.
ROBERTS: You know, John McEnroe, famous as one of the bad boys of tennis when he was playing in his hay day said you can't defend the indefensible. Talking about what she did to the line judge. You look at what McEnroe has done over the years. I was just reviewing an old match that he had with Lendol. You really can't put it on television because the umpire called an ace , McEnroe comes over and there's so many "F" bombs and "S" bombs coming out of his mouth that's its not suitable for television. He was called for unsportsmanlike conduct. So, what's the difference between the way he behaved in his heyday and how Serena behaved on Saturday night?
WERTHEIM: Well, first he faced consequences. I don't think there's a double standard here where people turn to blind eye. But also, I don't recall John McEnroe approaching the official and making a physical threat like that.
ROBERTS: So what do you think is going to happen? Mary Carillo was mocking the fine that was assessed to her.
WERTHEIM: Nothing special.
ROBERTS: Yes. $10,000 for the unsportsmanlike conduct, $500 for racquet abuse because she threw and broke a racquet earlier. But, she says that she should be suspended from the game, at least suspended from a Grand Slam event. What do you think?
WERTHEIM: Well, I think maybe there's a creative solution. I mean, a fine is going to be silly no matter what. She'll make $500,000 this tournament alone. $10,000 is shopping money. But, by the same token, she's done an awful lot of good for the sport. We've seen players whack balls at fans in anger and not be suspended. I think, a suspension is hard to justify. There's got to be another alternative there. Clearly, this needs to go punished but I think, there are options other than fine or suspension.
ROBERTS: Well, she's got a new book coming out this week, by the way. "On the line." She's supposed to be here on Wednesday to chat about that. So we'll see if she makes it. I certainly hope she does. I mean, we'll get her side of the story. Jon Wertheim, great to talk to you this morning. Thanks so much for coming in. Carol?
WERTHEIM: Thanks. Bye.
CHETRY: Alright, still ahead we're gonna be talking about the swine flu vaccine. There's some good news out there about just how many doses you actually need for protection. So a lot of questions though, about exactly who needs to get it. So, we're gonna be talking all about that with Dr. Thomas Freeden coming up.
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CHETRY: Good morning to Atlanta. 53 minutes past the hour right now. It's cloudy in Atlanta this morning. 71 degrees and a little bit later, they could be looking at some showers in the afternoon and evening. A high of 81. And that's where our Rob Marciano is dancing this morning -- I mean, standing this morning. Sounded like some music you might want to dance to, right?
ROB MARCIANO, AMS METEOROLOGIST : Oh yeah, now listen, we were rocking out off camera, of course. On cameras -- well, they might not let me back in the door tomorrow morning. That's pretty much the ongoing request here guys.
CHETRY: That's your daily fear. But somehow, your key card still works when you swipe it in, right?
MARCIANO: It is, it is. Lately, I've been sweating quite a bit, but I'm happy to say, that so far, it's worked. You guys, check this out. You guys actually have some dry weather across the northeast. That is a nice thing. It's been a really pretty wet the last couple of days, as you probably know. Where has that rain gone? Well, that particular splash of rain has gone out to sea, but what's going on down across northern and central Texas and now moving into parts of the mid-south is some pretty heavy rainfall. Check out some of these numbers. This is just for yesterday. So, you can pretty much double these, in some cases for the entire weekend. Dallas, seeing almost 6 inches. Arlington 5.13. Lovekin, Tyler, also, and then, New Orleans also getting in the act with some rainfall there. Here's where it is right now. And the rain doesn't look to be moving very quickly anywhere. So, Dallas, you're under a flash flood warning right now for mostly these urban creeks and small streams. So, that's gonna stick with you, I think for a good couple of hours. That will create some delays at the airports, including DFW and Lovefield. Memphis, also, maybe some delays. Atlanta, Miami, Tampa, some afternoon thunderstorms potentially and Los Angeles and San Francisco, some low clouds there. Daytime highs 73. Its rain cooled obviously and Dallas 76 degrees. Also some rain in Memphis. 82 in Atlanta and 80 degrees as we start to wrap up summer. Not the end of summer yet, officially, by the calendar, so 80 degrees should feel nice in New York today, the men's final there at the U.S. Open. Guys?
ROBERTS: Looking forward -- did you see the shot that Federer hit yesterday against Djokovic?
MARCIANO: The between the leger dealer?
ROBERTS: Unbelievable. Djokovic hits a lob over Federer, Federer runs after it and the only choice he's got is hit it between the knees. And it's a cross-court volley that scores on -- And Djokovic stands there like, "What am I even doing here?" You know. And Dick Emberg hit a great line. He said, "For my next trick, I'm gonna hit it winner from inside a box, while they cut me in half."
MARCIANO: He has a few skills, that Federer.
CHETRY: That's right. That's why everybody who Richard Roth interviewed about it said, "Have you seen him play? Have you seen him play?"
ROBERTS: It was just incredible. Rob, thanks so much for that.
MARCIANO: Alright, guys.
Well, we talked about the bad behavior that Serena Williams had on the court on Saturday night. A little bit of bad behavior at the Music Video Awards last night too. We'll talk about that, coming right up. 56 minutes after the hour.
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