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American Morning

Goldman Bet on Housing Program; Hollywood Banks on 3D

Aired April 26, 2010 - 07:00   ET

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

KIRAN CHETRY, CNN ANCHOR: Good Monday morning to you. Glad you're with us on this AMERICAN MORNING. It is April 26th. I'm Kiran Chetry.

JIM ACOSTA, CNN ANCHOR: And I'm Jim Acosta. John Roberts is off today. A lot to tell you about. Here are the top stories we'll be telling you about this morning.

Tornadoes on a terror. Homes are shattered and lives too after the deadliest wretch of storms this season. One town in Mississippi is suffering a direct hit, at least ten people were killed, cars tossed at least 600 homes damaged. We're live on the ground.

CHETRY: And the showdown on Wall Street reform could come to a head today. Senate Democrats are planning a test vote on their first bill later this afternoon. Republicans are trying to slow things down and some of them trying to work out a compromise deal.

There's a backroom wheeling and dealing going on. We're live in Washington with a status check in a moment.

ACOSTA: And desperate efforts to plug a leak that's causing more than 40,000 gallons of oil a day to gush into the Gulf of Mexico. The leak is the result of last week's explosion that sank an oil rig off the Louisiana caost. An update from the Coast Guard command center just ahead.

And of course the "A.M. Fix" blog is up and running. We want to hear what's on your mind. Go to CNN.com/amfix.

CHETRY: First those stories of terror and survival, this morning after a number of the tornadoes in the southeast. The storm system was fast, powerful, and deadly -- homes torn apart and trees knocked down in seven states, including South Carolina.

The worst in the hardest hit, Mississippi. One twister carved a path of destruction at least 97 miles long. It killed at least ten people and injured dozens more, left many homes and communities unrecognizable.

Our EL Lavandera is live in Yazoo City, Mississippi. Ed, when you hear the destruction and see what a big path of destruction it was, it is amazing more people weren't killed or injured.

ED LAVANDERA, CNN CORRESPONDENT: It really is. What we've heard over and over in the last couple of days is that many people didn't have that much time to react. The warnings had gone out, they knew the storm was coming, but this area is full of hilly terrain with massive trees. It was hard to see on the horizon that this storm was coming. Many people says they didn't realize it until it was right upon them.

(BEGIN VIDEOTAPE)

LAVANDERA: We found Matthew McCray and his wife, Jo, on a back road on Choctaw, Mississippi, their house blown 40 feet off the foundation. His guitar is muddied, but it's days like these that inspire the Mississippi blues.

LAVANDERA (on camera): What was it like being in there when this happened?

MATTHEW MCCRAY, SURVIVOR: That quick, whoosh, then whoosh again then the tops were gone.

LAVANDERA: Was it incredibly scary?

JO MCCRAY, SURVIVOR: I started praying, asking the lord to save me, save me. I told my husband and said, honey, I don't believe he's going to save us.

LAVANDERA (voice-over): Along the dirt road, the tornado killed its three youngest victims, two sisters and a three-month-old baby girl. The girls were here with their parents when the storm hit. The force of the storm is so powerful it essentially disintegrated their mobile home. The grandfather told us the bodies were found back in the woods over here.

J.W. CARTER, VICTIM'S GRANDFATHER: Nice kids, good grades in school, just amazing.

LAVANDERA: Ron Sullivan and five others were able to walk out of this grocery store.

UNIDENTIFIED MALE: There's a coke machine turned over that kept the roof from falling on me.

LAVANDERA (on camera): Can we see it?

UNIDENTIFIED MALE: Certainly. And I never touched the ground. When it hit, it blew me back. The next thing I felt was that wall and myself falling backwards. They always talk about you hear the train. There was no train. There was a bomb.

LAVANDERA: What goes through your mind when something like this is happening?

UNIDENTIFIED MALE: The only thing that went through my mind -- two things -- please don't let anything else fall on me, and I hope my wife is OK.

LAVANDERA: His wife Peggy was just a few feet away. When the tornado struck here it launched that 5,000 pound gasoline tank into the back of the grocery store and rolled this way. Peggy Sullivan was standing behind this freezer and the tank lodged up against it and saved her life, keeping her from getting crushed.

(END VIDEOTAPE)

LAVANDERA: Kiran, to give you a sense of how massive this storm has been, we shot that story, that's Choctaw County, about 100 mile drive from where we are in Yazoo. Preliminary reports say the National Weather Service says the storm here at one point measured a mile and a half wide with winds at 160 miles per hour. Kiran?

CHETRY: How do you even begin to protect yourself from something like that? Ed Lavandera for us this morning, thank you.

(WEATHER BREAK)

CHETRY: Today we may find out whether Democrats and Republicans can actually agree on something. It's a big day for the president in his pledge to Wall Street reform.

Democrats have scheduled a test vote on their bill later this afternoon in the Senate, and that has some Republicans scrambling to try to cut a bipartisan deal.

Suzanne Malveaux is live at the White House. When you look at reforming Wall Street, there are many things everybody agrees on. But when it comes down to writing a bill, it doesn't seem so obvious.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: It looks like at this point perhaps Democrats and Republicans can find some middle ground here. I had a chance to talk with the president's economic advisers Austan Goolsbee and Larry Summers, and both of them seemed pretty optimistic that they can push through financial regulatory reform.

We'll see Senate Majority Leader Harry Reid to at least do a test vote to see if they can start the debate on this issue. It is controversial, Kiran. Make no mistake about that. But it does seem that members of Congress are more concerned they are going to look like they are defending Wall Street, the big banks, irresponsible behavior, and against the little guy.

And that is what President Obama is counting on. That is the message he has learned -- the lesson learned from the health care debate -- do not allow the opposition to control the message, to control the debate.

We've heard from him over the weekend, his Internet radio address saying, we saw the auto industry, they tanked. They have come rolling back. That financial regulatory reform is a way to allow big banks to recover as well but also be held accountable. Take a listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: These reforms will put an end to taxpayer bailouts. It would bring greater transparency to complex financial dealings, and they will empower ordinary consumer and shareholders in our financial system.

(END VIDEO CLIP)

MALVEAUX: Kiran, one of things we'll be hearing from the president, he's also going to talk about this notion of bailing out these big banks, that that is just not true. That is one of things that opposition and Republicans have been saying, they believe financial regulatory reform could potentially bail out the banks.

The president is saying that is misinformation and will be taking that message to the road. Once again, he is continuing his what is called White House to Main Street type of tour. I'll be with the president tomorrow. We'll go to Iowa, three different stops and talk to farmers, small business owners. He'll have a town hall meeting and Missouri and Illinois.

But clearly trying to push forward and seize this momentum to get this thing done. They say they think they can do this by Memorial Day.

CHETRY: Suzanne Malveaux for us this morning with an update, thank you.

ACOSTA: And 42,000 gallons of oil a day spilling into the Gulf of Mexico. We'll go live to the command center in Louisiana for an update from the Coast Guard on efforts to stop the leak.

CHETRY: At 7:25, an "A.m. Original," going surgeon shopping, the high cost of insurance forcing some to roll the dice when it comes to their health. But do people get what they pay for, or can you find bargains in the health care world?

ACOSTA: And the big short, how the housing crisis was a win-win for Goldman Sachs and how top executives will answer tomorrow on Capitol Hill. It is nine minutes after the hour.

(COMMERCIAL BREAK)

ACOSTA: It's 7:11. Welcome back to the Most News in the Morning.

An oil leak deep underwater in the Gulf of Mexico is growing along with fears of an environmental disaster after last week's oil rig explosion of the Louisiana coast. The good news, the oil is expected to stay well offshore for the next few days. The bad news, more than 40,000 gallons of oil a day are spilling into the Gulf.

Crews are deploying robot submarines to stop the leak. And joining us from the command center in Louisiana this morning, Coast Guard commander Mark McCadden. Commander, thanks very much for joining us this morning. We want to know, first of all, how serious this spill is. Can you give us a sense in terms of perspective as to how serious this is?

COMMANDER MARK MCCADDEN, U.S. COAST GUARD : Sure. Of course, any oil spill is significant, but the situation we have here right now is that we have approximately 40,000 gallons of oil being discharged out of the relief pipe that is -- extends out of the well.

And that you can figure the pipe itself is bent in several locations, and if you can figure like a garden hose would be restricted for its discharge, that is helping to curb the amount of oil that's coming out of the well that's pressurized.

So the operations that are underway right now are focused on several contingencies, and that is one primarily trying to stop that remaining flow of oil out of that pipe

There's a remote operating valve that the company, the oil company, BP, is working to actuate to stop the remaining flow of oil. So those operations are ongoing right now with remote operating vehicles. We have additional remote operating vehicles to take a look at and we can actually monitor the discharge.

I would say the situation of awareness here is very good. We're working very closely with partner agencies, mineral management service and BP, there's a unified command established there.

ACOSTA: And commander, how much of this spill has to do with the explosion? Was this unexpected, the fact that this leak is happening right now, because as far as last Saturday, we were told that there was really no oil leaking at that point? And then this developed over the weekend. Was this unexpected?

MCCADDEN: Well, I wouldn't say it is necessarily unexpected. You never can be quite sure what's going to happen when a large rig like that sinks and has a significant length of pipe, 5,000 feet of pipe to the ocean floor.

But the initial appearance was that there was very minor residual oil rising to the surface. So further exploratory, we are able to determine it wasn't just oil residual oil from the rig, but in fact that there was some oil that continued to leak from the pipe itself.

ACOSTA: And commander, this is a nightmare scenario for a lot of people who live along the Gulf Coast, especially those beach communities who are worried about the offshore drilling and exactly whether or not some of this oil might reach their shores and disturb some of those pristine beaches. Should folks along the Gulf Coast be concerned about that at this point?

MCCADDEN: Well, I think, you know, certainly people are concerned and we're concerned here. And that's why we're working very closely with all stake holders and the states and elected officials to keep everyone informed. Right now, the oil remains 30 miles offshore. The weather is still looking favorable for us to continue with our cleanup operations --

ACOSTA: So, you don't think it will reach the beaches of the gulf coast at this point? You don't think that's going to happen or is it still a possibility?

MCCADDEN: It is a possibility, but not at this time though, we are monitoring out three days. And we have reliable imagery from satellite and as well as predictor models that we're getting from the NOAA and from BP, separate models that beat (ph) them that are matching up. The Coast Guard is bringing in a cutter to serve as the on-scene commander for the operation. And we're working very closely. There are contingency plans that have been developed by each state and by the companies that operate these wells, and those plans are being implemented. And fortunately, I'd say that our response posture is robust and certainly adequate as we move forward for this.

ACOSTA: Commander Mark McCadden, we appreciate your time very much this morning. We know you'll be keeping an eye on it. We'll be keeping an eye on it as well. Thanks again, this morning for joining us. We appreciate it.

MCCADDEN: Thank you.

ACOSTA: Coming up next on the Most News in the Morning, Kiran, I guess, we've got some economy news, is that right?

CHETRY: Yes, that's right. We're talking about the economy slowly recovering, but the stock market simply taking off. Why the disparity? What's going on Main Street? And what's going on the market? Christine Romans joins us "Minding Your Business" next.

(COMMERCIAL BREAK)

CHETRY: Twenty minutes past the hour right now. That means it's time for "Minding Your Business." Christine Romans is here with us talking a little bit about something we talk about a lot, why do we see, you know, stock market taking off and yet at the same time some of the other key indicators, the big things in our economy like the jobs, like the housing markets aren't doing the same.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: And this is the new normal. Will this last all year? Will we see a stock market -- the past that we saw (ph) isn't for the stocks seems to be up. I mean, it's an eight weeks in a row. We haven't seen the stock market up eight weeks in a row since 2004. Remember 2004? Oh, you could buy a house and you knew that it would be worth more the next year. A lot of people had jobs and would come out of couple of icky recessions and things were looking up.

The Dow, right there, you could see above 11,000. Something that -- you were saying, I keep looking 11,000, how did this happen? It happened pretty consistently over the past year or so. And it's been about 1200 points just from February to April.

ACOSTA: Yes, and a lot of those fueled by those impressive private members that we're seeing from, you know, the big companies out there.

ROMANS: Last week, we heard from Citigroup. We heard from American Express --

ACOSTA: Goldman Sachs.

ROMANS: And Goldman Sachs. We heard from Apple. It's not just the banks. The banks made a lot of money, $18.7 billion in profits for the banks in first quarter. That's a lot of money, but a lot of other companies making money too. They're making money in many sectors after cutting costs very dramatically, and they're making money compared with last year, which was uttered an illation (ph) for Corporate America.

ACOSTA: They only had up. There is nowhere to go but up.

ROMANS: Corporate America is basically, you know, the most improved student right now. And the question is if you're the most improved student but you're still getting Cs and Ds, what does that mean for the overall economy and for people without a job?

CHETRY: Right, and a lot of the reason why they're doing better and they cut their bottom line is because they laid off many people. They are not paying these full-time employees benefits, et cetera. Are we going to see that start of change?

ROMANS: That's what a lot of people are wondering. Last week, Andy Busch in Bank of Montreal said he's been looking at tax receipts, and he's been looking at some other indicators, and he thinks there's going to be a sharp hiring push later this year. There are others who are saying that companies cut so dramatically that they are going to have to -- if the economy really, you know, gains some traction, they're going to have to hire back pretty consistently.

Labor economists, though, tell me that there's this long-term unemployed that have been out of work for six months or longer that are really out of luck right now in this recovery. There just really aren't the opportunities for them. You mentioned the contract workers, Kiran, and I think that's a really great point. I think we have a record-high percentage of our labor market right now are contract workers.

CHETRY: Meaning freelancers?

ROMANS: Freelancers. No benefits, no job security. They have to pay taxes four times a year. They don't get unemployment benefits if they lose a job. It's not the big solid kind of labor base that you would like to see.

ACOSTA: And the big problem is in the middle of the country, where so many manufacturing jobs have been lost over the last several years, this recovery we're seeing on Wall Street has no connection to what's happening in those -- I mean, I'm about to go to Detroit later today to go to a story about how they're going bull dose a quarter of the city to bring it back to life and to square that with these impressive things that are happening on Wall Street, I have a tough time with it.

ROMANS: Is this what it's going to look like? I mean, is this what it's going to look like after the recovery? And no one knows yet. But if this is what's going to like, there are going to be a real political implications. There are going to be fiscal implications because how are you going to pay to sustain a country where so many people are out of work or so many parts of the country aren't participating?

ACOSTA: Right.

ROMANS: And is that right to have a two-speed or two-tier economy? What are we going to do about that as a country? I mean, the stock market has come back. The stock market is coming back. It's still well off the ties (ph). It's coming back, but that doesn't mean that we fixed all of our problems. And I think that, you know, we'll keep on going to those places and then covering these things and try to figure out the best things for people to try to adapt to what is this new normal.

CHETRY: All right. Christine Romans, thanks.

Coming up next for the Most News in the Morning, when every dollar counts, people are always interested in finding a good deal, but is it smart to do that when it comes to your health care? Something is risky as a surgery. Elizabeth Cohen with an "AM Original" next. Twenty-four minutes past the hour.

(COMMERCIAL BREAK)

ACOSTA: Welcome back to the Most News in the Morning. It is 7:26. Our top stories just minutes away, but first an "AM Original" something you'll only see right here on AMERICAN MORNING. You know, Kiran, everybody loves a bargain.

CHETRY: Of course.

ACOSTA: I know I do, but is it really a good idea to shop for rock bottom prices when's it comes to medical care?

CHETRY: Yes. A lot of people are wondering about this because there's so much waste in our health care system, costs we've seen continue to skyrocket and some Americans are actually sniffing out cheaper surgery deals overseas. Senior medical correspondent, Elizabeth Cohen, introduces us to one of them.

(BEGIN VIDEOTAPE)

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: You're quite the bargain shopper there, look at those coupons.

GODFREY DAVIES, BARGAIN SHOPPER FOR SURGERY: Absolutely.

COHEN: And you've had to do this not just with food?

DAVIES: You're quite right.

COHEN: So, what other things do you bargain shop for besides, you know apple sauce and pasta?

DAVIES: The big ticket item right now that I'm confronted with is having nasal surgery.

COHEN: You actually went surgeon shopping. You went from place to place to find the cheapest price because you don't have insurance?

DAVIES: That is correct.

COHEN: So, how exactly does one go surge in shopping? Can you show me?

DAVIES: I can. It's quite an adventure.

COHEN: OK. Let's go have an adventure.

DAVIES: Sure.

COHEN: So Godfrey, this is the first place that you went to to get a price quote.

DAVIES: That's correct.

COHEN: If you would have to done by these surgeons, what would have been the total bill for the entire procedure?

DAVIES: Almost $34,000.

COHEN: I mean, $34,000, you're semi-retired, you have no insurance --

DAVIES: That's correct.

COHEN: Could you even pay that?

DAVIES: I wish I had 34,000 sitting around. No, we don't.

COHEN: So, what did do you? I mean, $34,000, what was your next step?

DAVIES: I thought, I'm going further. I'm going surgeon shopping again because this is ridiculous.

COHEN: All right. So, let's go to that different surgeon. Let's go and see what that price was.

DAVIES: Absolutely.

COHEN: OK. So, Godfrey, this was your next stop, this surgeon's office.

DAVIES: That's correct.

COHEN: What would it have cost the entire procedure to have it done by these folks?

DAVIES: It would have been approximately $33,000.

COHEN: Oh, so, only $1,000 less than the first place?

DAVIES: That's correct. My shopping didn't do much for me, did it? COHEN: So, you found that you basically could not afford to have your polyps removed in Indianapolis?

DAVIES: Absolutely not.

COHEN: And so you need to think outside the box?

DAVIES: I went way outside the box for this.

COHEN: So, you're going to go to the United Kingdom, right?

DAVIES: Uhmm, it's correct.

COHEN: Getting on a plane and getting the surgery in Wales, the airfare, the surgery, the whole thing, what's that going to cost you?

DAVIES: $3,600.

COHEN: And the cheapest price you could get here was $33,000?

DAVIES: Yes. Terrible, isn't it?

COHEN: Oh my gosh! It's almost ten times less expensive. Give me a call and let me know how it goes and the best of luck.

(END VIDEOTAPE)

ACOSTA: And Elizabeth Cohen joins us now. Elizabeth, this series of stories you've been doing on our outrageous medical prices in this country has just been fantastic. I have to ask you, are prices for surgery much higher in the U.S. than elsewhere, is this, you know, one of those outlier cases or is this across the board?

COHEN: You know what's incredible Jim is that it isn't an outlier. Take a look at prices for various procedures here versus in other countries. These numbers are really going to make you go, oh, my goodness. So, first let's take a look at heart bypass surgery. If you want to have bypass surgery in India, it will cost you $8,500. If you want to have it in Costa Rica, that's $25,000, and do you want to venture a guess as to what it costs in this country?

ACOSTA: 100,000, yes.

COHEN: Any thoughts?

CHETRY: 150,000?

COHEN: A 144,000. There you go.

ACOSTA: Wow!

COHEN: $144,000. Very good. $144,000. You got it. So look at the difference. Now, if you're insured, of course, insurance is going to pay for most of that. But a lot of us have 20 percent co-pay. So 20 percent of that it is still a huge amount of money even if it's slightly lower than that. ACOSTA: I don't know if I'm more amazed by the price in the United States or that Kiran got it right. Anyway.

CHETRY: But you know, listen, it does lead us to a question -- you take a look at the range of differences, is there a range of expertise? Meaning that, if you get it cheaper, are you putting your health at risk?

COHEN: Right, that's what a lot of people want to know is how good are these? And so there are ways. There are things that you can do now to try to assess the quality of what you're going to get overseas. And if you go to cnnhealth.com later this morning, you'll see, we tell you what you can do to try to figure that out.

Now, I want to say that Godfried had a great experience. The guy that we had in our piece. He did well. We talked to him afterwards. I was sitting next to him in that car. I could hear him breathing, wheezing through his nose. I mean, he was really struggling at times to get air in. And he says now he's doing great.

CHETRY: There you go.

ACOSTA: Fabulous stuff. Elizabeth Cohen, thanks so much. Appreciate that.

COHEN: Thank you.

CHETRY: And also tomorrow morning, we're going to be taking a look at some of the outrageous markups on your medical bill. You're going to meet a doctor who was billed $863 for a pair of disposal forceps when she needed surgery. Elizabeth Cohen keeping them honest tomorrow at 6:00 a.m. on AMERICAN MORNING.

ACOSTA: It is 7:31, time for this morning's top stories. A massive cleanup effort is under way across the southeast after reports of tornadoes in seven different states over the weekend. At least 12 people were killed. This has been the worst outbreak of violent weather so far this spring. In Mississippi, more than 600 homes were damaged. Governor Haley Barbour of Mississippi has declared a state of emergency in 17 counties. Kiran.

CHETRY: And crews are using a robotic submarine to try to stop a stubborn oil leak in the Gulf of Mexico. As we know, this explosion and oil rig causing a lot of problems. 42,000 gallons per day are now spilling into the ocean off of the Louisiana coast. It is where the rig exploded last week. Now the robotic submarine is now attempting to activate a shut off device that will be located near the well head. It's nearly a mile beneath the ocean surface.

ACOSTA: And a Senate hearing on mine safety is set to begin in Washington tomorrow. President Obama in West Virginia Sunday, remembering 29 workers who died in a mining disaster there, earlier this month, promising to honor their memory by making conditions safer for miners moving forward.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: All of that hard work, all that hardship, all the time spent underground, it was all for the families. It was all for you. For a car in the driveway, a roof overhead. For a chance to give their kids opportunities that they would never know and enjoy retirement with their spouses. It was all in the hopes of something better. So these miners lived as they died in pursuit of the American dream.

(END VIDEO CLIP)

ACOSTA: And the nation's top mine safety officials expected to testify on Capitol Hill when hearings get underway tomorrow. Kiran.

CHETRY: Jim, thanks.

Well, there is new evidence this morning that Wall Street's most profitable bank bet on the housing crash and in some cases even bragged about it. E-mails from Goldman Sachs traders themselves and at least one that called worthless loans that ruin many American lives "good news."

Current and former bank executives were facing angry lawmakers when they testify tomorrow on Capitol Hill. And joining us now to talk about "Business Week's" senior writer Roben Farzad and also our own Christine Romans. Good to see both of you.

So you know there's a lot of populist anger out there aimed at the banks. But Goldman has basically always towed the line that what they were doing was they were starting to short the market, betting against the housing market. They weren't necessarily trying to earn gobs of money but what they're trying to do is just manage their risk.

I want to show though a couple of the e-mails released by senators on Saturday, painting a little bit of a different picture. One is from a manager in 2007 saying, we've got one manager of a trading unit saying, "it sounds like we'll make serious money," and receiving a respond, "yes, we're well positioned."

And then also the CFO David Viniar in 2007 saying, "tells you what might be happening to people who have the big short." And that e-mail is in reaction to a $51 million profit from shorting housing securities. Does this contrast with what Goldman Sachs publicly has said about their situation?

ROBEN FARZAD, SENIOR WRITER, "BUSINESS WEEK": Not yet. Some of the e-mails you saw from (INAUDIBLE), who is increasingly being portrayed as this rogue trader. The 27-year-old who set fire to the global capitalist system, might have some of that strutting in everything else, but nothing yet to suggest there was, you know, like a Dr. Evil thing that we're going to make a billion dollars off of this and laughing as (INAUDIBLE).

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: This are $5 million and $51 million. It sounds like an awful lot of money to you and me, but when you look through these e-mails and sift through them. There were 20 million pages of e-mails I think that Goldman actually turned over and they say that this committee, this Senate committee is actually cherry picking through them.

But these are different individual deals where Goldman is showing, look we lost 2.5 million on this one but hey, we made -- good news, we made five million on this one. Goldman was standing there in the middle of the mortgage crisis with some bets that were long, housing and others that were short.

And they told me a while ago -- they told me in late 2006, there were 10 days in a row when their internal risk bell starting to go off saying there was something wrong with housing. And so they started to get -- move back to neutral.

FARZAD: Because we need to come back closer to home.

ROMANS: We have to get closer to home.

CHETRY: In general, there are some who argue that they shouldn't be able to trade these as it is, that if falsely -- it gives a false sense of prosperity that isn't necessarily there. That it's a casino like atmosphere. These isn't really grow the economy. These risky trades going back and forth for billions of dollars between companies. What are your thoughts?

ROMANS: This CDOs are dead. I mean, these part of the market -- the free market killed it, right?

FARZAD: Yes.

CHETRY: Explain that for people, who say wait a minute, Congress needs to step in and Congress needs to make some change so that this can't happen again. And you say it's already dead?

FARZAD: There's a disconnect for this. There this nostalgia for a brokerage firm of yore that kind of holding your hand and take you, and let's go buy a factory and let's fund your acquisition, and do this. I think Wall Street has really changed in the past 10 years, to become more, you put it casino-like but more eat what you kill, kill what you eat. Go out there and use your own capital and bet on the house account and really have your own sense of what's going on and have self-determination as opposed to depending on dwindling commissions.

ROMANS: And that's what Goldman was doing. Goldman was betting its own money on things. So not only was it putting a buyer and a seller of a company together, the old-fashioned way of doing it. Investment banking business but it was out there, actually putting its own money at risk to make money. Sometimes putting its own money against its other money and the question is, that Congress is trying to look at now is they create some really complicated structures that other people were buying and selling as well that may have contributed to the crisis?

We know that Goldman saw the crisis coming and profited from it. That's what investment banks are supposed to do. But did they cause it in any way, that's what congress is trying to find out. FARZAD: Kiran, everybody is looking for that sub prime villain. We thought it might be Countrywide. We thought it might be Lehman Brothers. I think Goldman is a especially convenient villain because it made so much money last year as the unemployment rate soared.

Everybody is looking out that suddenly these e-mails are coming out. The SEC was accused of being asleep at the switch. It's such a convenient villain but I think it's going to be vexingly difficult to find an aha moment, a smoking gun where you can prove that there was this cognac and cigar meeting.

(CROSSTALK)

CHETRY: What about giving loans, to knowingly giving loans who you knew, couldn't pay them back and will eventually --

FARZAD: Goldman didn't do.

CHETRY: No, no. I'm not saying Goldman.

(CROSSTALK)

FARZAD: No.

CHETRY: But you're saying people that --

FARZAD: ... you want a mortgage, I'm not defending anybody here. I mean, it's hard for me to do that but say your mortgage banker did that. Your mortgage banker was abled by Goldman because it knew they could sell securities downstream. But did homeowners want those loans. Goldman could and it's never able to say this on Capitol Hill and no senator will, but America wanted this.

ROMANS: One thing about the timing of these e-mails. I mean, we look at them now and we say this looks like an arrogant company that stood in the middle of something that hurt America so terribly and was gloating about making money.

At this time, pretty much everybody in the housing market was in a big get rich quick scheme. The whole world believed the housing is going to keep going up, from the homeowner, to the banks, to (INAUDIBLE) loans, to people who (INAUDIBLE). And Goldman had clients who were begging them for more of these things that they could bet on that housing was going to go up. So remember, when these e-mails were written as interesting and salacious as they are, it's like peeking into what was going through their minds. At that time they didn't look so smart.

CHETRY: So quickly, does the SEC have a case, a fraud case against Goldman?

FARZAD: It's going to be vexingly hard to prove. I mean, certainly to the extent especially now that Goldman is going to Capitol Hill again this week and it's going to be contentious and you got senators who are going to try to paint this as a kind of a moral ethical thing and Goldman's going to state that company wide, that we are market makers. We are doing what we did legally.

It's so difficult to prove. If insider trading is difficult to prove, you can imagine this kind of malicious intent in a very esoteric sub prime scandal will be hard to prove, but one thing that is -- I think, irrefutable at this point is that Goldman had an enormous PR problem.

ROMANS: Oh, yes.

FARZAD: And it might need outside help. I think some of these executives could be damaged goods, but if for no other reason that the fact that America recognizes them and you're not supposed to know the CEO of Goldman.

ROMANS: You just can't make money and say, all that matters to us is that we make money and that our clients are happy. The world has changed. And that stubborn, that stubborn face of public relations has really hurt them. I think this is going to be a hard week for Goldman Sachs.

And I'd like to know if Warren Buffett -- Warren Buffet is a huge investor in this company. He thinks they are the smartest guys in Wall Street. But what is he going to say about all this?

CHETRY: He's going to insert himself in there in other ways, perhaps tap to the company--

FARZAD: You're hearing whispers about this so far. Warren Buffett is really in the twilight of his career and he's looking to give up the rein but he did this before when Solomon Brothers and other investment of his was damaged. He swooped in and he's already lent his capital to Goldman Sachs.

CHETRY: Right.

FARZAD: He can loan some of his reputation for Goldman Sachs as well.

CHETRY: That will be interesting if that happens.

Robin Farzad with "Business Week," senior writer, thank you and Christine, as always, thank you. Jim?

ACOSTA: Thank you, Kiran. Great discussion.

What is hot on our blog this morning? What's got our viewers riled up. There's still time to join the conversation at CNN.com/amfix. We'll be back in just a few moments with some of your comments. It's 7:40. 40 minutes after the hour.

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ACOSTA: Comments coming into our blog as fast as that song was moving there. It's 7:43 this morning. Let's take a look at a couple of them this morning. I wanted to read you one because you just had the discussion on Goldman Sachs.

CHETRY: Right.

ACOSTA: And they are just getting put through the ringer these days, but this viewer had a different perspective. He says that in regards to Goldman Sachs, we're a country built on entrepreneurship. We are mad at Goldman because they were smart enough to see a trend and possible housing slump. Where were all of our government agencies responsible for monitoring these company? And as we know, from that story that was (INAUDIBLE) last week, there were some folks at the SEC spending a little too much time at their computers as opposed to regulating our markets. Yes.

CHETRY: Watchdog found them, 33 different people surfing for internet porn.

ACOSTA: Exactly.

CHETRY: Not doing their jobs. Also a hot button issue today was the Arizona state law, signed law by the governor there requiring -- I mean requiring that police if they suspect is somebody is an illegal immigrant --

ACOSTA: Right.

CHETRY: To actually ask for proof that they are not. Roberto Lopez (ph) writes "starting off on the immigration reform in Arizona, I think it's very unfair to downgrade a race that wants to thrive in this country and live peacefully among Americans. I hope the state finds enough people to do the jobs they leave behind." And his being a live blog, people that weight also respond to each other.

Isawa Kumo wrote in to Robert, saying, "When you immigrate here legally, you're assigned documentation to prove your status. This has always been the case. All this law says is you have to carry this documentation (a simple card in most cases) in the event they question your status.

I carry my driver's license, social security card, insurance cards on me at all times, and when asked to produce them to prove my identity, I never felt the need to take offense that I may be racially profiled."

ACOSTA: Well, and some of the big talk in Washington right now is, you know, whether or not the White House should be pushing immigration reform, putting it in front of climate change legislation. And now the -- you know, there's talk in Washington that perhaps the White House no -- has no other choice but to confront immigration reform, Democrats as well, after they get through financial reform, because of what's happening in Arizona.

This is really going to drive the debate and it could go right into the summer because this is not one of those issues that's going to be legislated easily.

CHETRY: No, you're right. You're right. So we'll be watching all of that, and we're glad you guys are joining the conversation. We invite more people to get online, cnn.com/amfix.

Still ahead, deadly tornadoes, severe thunderstorms in the south, Mississippi hit especially hard, rainy in the northeast. Rob Marciano is along with more on where this storm is headed next.

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CHETRY: Indianapolis, Indiana, let's check in with you right now, courtesy of WRTV. It is 50 degrees, cloudy. But don't worry, it's going up to 60 a little bit later.

Unfortunately, though, bring the umbrella in Indianapolis this morning because they're looking to see more rain throughout the day.

ACOSTA: Yes. It would be nice if things were to settle down weather wise across the country, Rob. We had some really nasty weather in the south and how are things looking down there in the southeast, Rob?

ROB MARCIANO, AMS METEOROLOGIST: Florida's under the gun right now, guys.

Good morning, again. A tornado watch has been allowed to expire, but this -- there's a couple of cells that are rolling across the everglades right now that have some pop in them, and as they get closer to the populated area, along the I-95 corridor, these tornado warnings have been allowed to be extended.

Now, we've got one in Broward County, and as this cell continues to move off towards the east, everything north of Miami right now and pretty much north of -- of Hollywood, getting up towards Fort Lauderdale and West Palm Beach, be on alert here. This is moving at about 30 miles an hour to the east, and it could possibly have a tornado.

No confirmed reports of that touching down, but this is likely a rain-wrapped event, much like what happened -- well, at least to -- not the size and scope of what happened in Mississippi, but the danger of southeast tornadoes is that the hilly terrain coupled with the fact that often they're wrapped in rain, they're just hard to see. So South Floridians, just keep an eye at the sky and look out.

We're looking at rain across parts of the northeast today. It will be heavy at times with scattered thunderstorms, but we do not expect severe weather as this storm rolls up the northeast seaboard.

Jim and Kiran, back up to you.

CHETRY: Wow, look at that. Just behind you, still (ph).

All right, Rob. Thanks so much.

We're going to take a quick break. When we come back, this morning's top stories just minutes away, including a man with a gun near Air Force One allegedly playing cop, arrested as the president leaves the airport.

So what he's saying this morning and whether the president was ever in any real danger.

ACOSTA: And at 12 after, damage control over birth control, what the British government is saying about an embarrassing memo about Pope Benedict-brand condoms.

Those stories and more at the top of the hour.

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ACOSTA: Welcome back to the Most News in the Morning.

A fiery comeback at the box office -- have you seen this yet, the 3D animation --

CHETRY: Not yet.

ACOSTA: -- "How to Train Your Dragon"? It's a big hit, a return to the number one spot this weekend, raking in an estimated $15 million.

CHETRY: And critics penned (ph) this one, but Jennifer Lopez debuted at number two with "The Backup Plan", followed by "Date Night," which you said you saw.

ACOSTA: I saw and I --

CHETRY: You were on a date with your wife? (INAUDIBLE) see it.

ACOSTA: I -- we did, and we had a great time. It was a lot of fun. It was a good movie.

CHETRY: Very cute.

ACOSTA: Tina Fey, Steve Carrell -- how can you go wrong? Come on.

CHETRY: You can't, actually.

But forget about all of that, because the big moneymakers seem to be these 3D movies. The technology isn't new. In fact, 3D films have been around for decades.

ACOSTA: But as CNN Entertainment Correspondent Kareen Wynter tells us, experts say we're just now able to see 3D's full potential.

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JAKE SULLY, AVATAR: But we would send them a message --

KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT (voice-over): "Avatar's" message is that the future could mean big buck when it comes to 3D. Created and shot with 3D technology, the film is the highest grossing movie of all time, with roughly $400 million coming from 3D screens alone in the U.S.

SULLY: Outstanding.

WYNTER: With so much money-making potential, hopes are high that this latest 3D boom doesn't go bust, and there's a movement underway to blaze this trail straight into the future.

WYNTER (on camera): Is it fair to call you a 3D guru? You've been doing this for -- since the beginning of time.

BUZZ HAYES, CHAIRMAN, SONY 3D TECHNOLOGY CENTERS: Sure. I mean, yes, but there's a bunch of gurus out there.

WYNTER (voice-over): Buzz Hayes began working in 3D before it was cool. He's the lead instructor at Sony Pictures' brand new 3D Technology Center where filmmakers are immersed in an intensive, hands-on course --

UNIDENTIFIED MALE: (INAUDIBLE) just this from the screen --

WYNTER: -- on how to actually film in 3D, a method much different from converting 2D movies to 3D.

That process drew mixed reviews from critics where it's used in "Clash of the Titans".

WYNTER (on camera): But some would say how important is this? Does the audience really see the difference?

HAYES: I think they already are. I mean, based on some recent releases in theaters, I think people are very vocal about the quality of 3D that they see, both good and bad. So we just wanted to raise the bar.

WYNTER (voice-over): And stay above it, says camera director Jack Masset (ph), who enrolled in the class because he says his future depends on it.

JACK MASSET (ph), CAMERA DIRECTOR: The language of 3D is really different than the language that we've all learned to utilize in 2D. With the great increase in 3D, I don't want to be left behind.

WYNTER: One exec who says he's ahead of the game is Jeffrey Katzenberg, CEO of Dreamworks Animation. He recently blasted the 2D to 3D conversion process, warning that it could turn audiences away.

JEFFREY KATZENBERG, CEO, DREAMWORKS ANIMATION: For the first time in well over a decade, we're actually seeing admissions go up, and 3D is the reason.

WYNTER (on camera): Yes, and they're willing to spend a little bit more for that experience.

KATZENBERG: Well, if you give them something great, and that's the thing we just -- I think everybody is being very protective of right now. This is a beautiful golden goose and it's -- you know, giving us golden eggs.

WYNTER (voice-over): And in this golden age of advanced technology, where 3D movies have fired up the box office, industry leaders like Buzz Hayes say the future looks bright.

Kareen Wynter, CNN, Culver City, California.

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ACOSTA: All right.

Well, we're back in just a few minutes right after the break, with your top stories. Stay with us.

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