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American Morning
Goldman Execs to Testify in Capitol Hill; Going Accused Bomber Caught in Training Video; Oil Slick Spill Closing in on Land; Goldman Sachs CEO Testifying; New Crisis in Mideast; Sex Sells for Craigslist
Aired April 27, 2010 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: Welcome to AMERICAN MORNING on this Tuesday, it is April 27th. I'm Kiran Chetry here in New York.
John Roberts in Washington this morning. Hi, John.
JOHN ROBERTS, CNN ANCHOR: Good morning to you, Kiran, from Washington. The big story we're leading off with this morning, money talks. In just a few hours, current and former Goldman Sachs executives will testify on Capitol Hill. Did they know they were creating a monster that almost brought down the entire economy?
CHETRY: Also, the accused Christmas day underwear bomber surfacing in a training video produced by Al Qaeda. Umar Abdul -- Abdulmutallab on tape discussing the attack in advance. It's a significant find for U.S. intelligence officials and we're going to get a live report on why it could help from London in a moment.
ROBERTS: And the United States and Israel taking steps to mend a diplomatic riff, because of a growing concerns that Israel may be preparing to take Iran's nuclear facilities and charges that Iran is secretly arming Israel's enemies. Are the winds of war blowing again in the Middle East.
CHETRY: Also, the amFIX blog is up and running this morning. Join the live conversation happening now. We want to hear from you and anything that's on your mind in the news today. Go to CNN.com/amFIX and we'll be reading your comments throughout the morning.
ROBERTS: But first, everyone has to answer to someone, even the so-called masters of the universe. Today, bigwigs from Goldman Sachs, the fastest and most powerful investment bank, will testify on Capitol Hill and deny that they ran a crooked casino, one that profited by pushing the rest of the nation's economy to the very brink of collapse.
Christine Romans joins us this morning in Washington. Today is going to be a big day on Capitol Hill.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: It is going to be a big day on Capitol Hill. And Wall Street is going to really face a grilling here, Wall Street in the form of Goldman Sachs. The big question here, is Goldman Sachs doing what it is supposed to do, John, making money under any scenario imaginable or was Goldman Sachs actually making products to help make the housing crisis even worse?
Now, you're going to hear from Lloyd Blankfein. He's the CEO of Goldman Sachs. He'll be testifying later this afternoon and will likely hear from him. We've seen his testimony. We know what the line of the narrative is that the company is pushing. And that is that Goldman Sachs didn't do anything wrong. Goldman Sachs was just hedging its exposure to the mortgage market and actually did better than anybody else because they were smarter than everybody else. We didn't have a massive short against the housing market and we certainly did not bet against our clients.
We are expecting him to continue to fight back and say that they did not do anything wrong here. They did not manipulate the market and, in fact, they were simply finding a way to make money in every scenario. So that's going to be challenged, John, and challenged sharply by the people at this hearing who think that Goldman Sachs and the kinds of products that it was creating and selling were actually increasing the volatility and the unease in the market.
And as Goldman was profiting from a decline in the housing market, that actually it was making things worse. Goldman denies all that. So this is what will have to be seeing today in terms of the Goldman defense.
ROBERTS: Now the chairman of the Financial Services Committee Carl Levin has said, hey, it's not just this one particular instrument that has been in the news. They've got evidence in e-mail chains that there were a lot of things that Goldman Sachs were using to bet against the market.
ROMANS: And Goldman Sachs points out that they turned over 20 million pages of documents and e-mails to Senator Carl Levin's committee and that four of them were released. And we've seen those four e-mails and they're pretty specific. They show a Goldman Sachs that's basically doing a victory lap at the end of every trading day about how much money they made on one of their securities as the market was going down.
So, we're going to hear more about those. You're going to hear about some interesting characters. You're going to hear -- and from "Fabulous Fab" Tourre, one of those senior traders who helps create these things. He called them monstrosities. I created these monstrosities that even I don't know the implications of, which was suggested Goldman was creating some pretty technical and pretty dangerous vehicle. You're going to hear from him. You're going to hear from Lloyd Blankfein, (INAUDIBLE) postal worker and a receptionist who grew up in the projects in New York City, came to the very top of Wall Street. You're going to hear from some pretty interesting people.
ROBERTS: All right. As you say, they're firing up thee grill on Capitol Hill. Isn't it?
ROMANS: Oh, yes, they are. Yes, they are.
ROBERTS: All right. Christine Romans is going to be with us all morning. As Christine mentioned, one of the former Goldman traders who will be testifying today, expected at least to testify, a man named Fabrice Tourre. He could be the real villain of the housing crisis or the fall guy, depending on who you talk to. He is the only Goldman Sachs employee named in the SEC's lawsuit against the firm.
In his own e-mails, he refers to himself as the "Fabulous Fab" and was paid millions to create complicated financial instruments all at the age of 31. He joined Goldman straight out of Stanford University. The SEC claims that that "Fabulous Fab" created and peddled an investment tie to subprime mortgages that was designed to fail. Only investors didn't know that the deck was stacked against them.
We want to know what you think about the Goldman Sachs deal. Join the conversation on our live blog going on right now. CNN.com/amFIX. More live coverage of the Goldman grilling. Special coverage starting at 9:00 Eastern right here on CNN. And of course, down here in Washington this morning, we'll be covering all of the ins and outs of what's about to happen up on Capitol Hill. Here right now, though, back to New York. And here's Kiran.
CHETRY: Should be a very interesting day to say the least. John, thanks.
Well, also new this morning. A just-released videotape of suspected Christmas Day bomber Umar Abdulmutallab training in Yemen with Al Qaeda. The tape obtained and broadcast by ABC News shows the 23-year-old Nigerian speaking in Arabic about his impending attack and also firing at targets that include a star of David. Abdulmutallab is accused of trying to blow up a Detroit-bound plane last December with a bomb hidden in his underwear.
Paula Newton is live for us in London this morning. Paula, tell us more about why some authorities think this video is significant.
PAULA NEWTON, CNN INTERNATIONAL SECURITY CORRESPONDENT: It will be significant, Kiran, in terms of showing the extent to which Al Qaeda has been able to have a full hold in Yemen and how sophisticated its training may or may not be. It's already something that they decided to release the video at this time, clearly trying to show their effectiveness. What's not so clear is this video was most likely taken last fall, exactly if Yemen with the U.S. helo has been able to put a dent into those Al Qaeda training centers, if they've had any effect at all. But certainly a chilling video showing the intents leading up to that attack in Detroit -- Kiran.
CHETRY: Also, will the tape have any impact on Abdulmutallab's case?
NEWTON: This is interesting. You know, U.S. authorities say that Abdulmutallab has, for the most part, been cooperating. So in terms of a body of evidence, it won't really amount to much in terms of his case only because he has been cooperating. Key here though, Kiran, what we heard from Abdulmutallab in the hours after he was arrested was that they were more like him. And it will be an interesting piece of video to assess and look at the kind of training techniques and who presumably might be on the video.
CHETRY: Is the president -- all right. Thank you so much. Paula Newton for us this morning.
Also new this morning, the former dictator of Panama, Manuel Noriega, arriving in Paris overnight to face charges of laundering money. Secretary of State Hillary Clinton signed the order extraditing Noriega to France after two decades in U.S. custody for drug racketeering. The Supreme Court last month refused to hear Noriega's appeal to stop his extradition to France.
Well, from the political to the personal, former President George W. Bush's memoir reveals 14 life-changing decisions. The publisher of "Decision Points" says that former President Bush has been working on the book since he left office. He talks about his response to the 9/11 attacks as well as Hurricane Katrina, along with launching wars in Iraq and Afghanistan. The book also details his battle with alcohol and his decision to stop drinking back in 1986. Also how faith influenced his decisions. The book goes on sale a week after November's mid-term elections.
The high-tech blog Gizmodo has posted police documents showing that the house of one of its editors was raided. Police took computers, digital cameras and cell phones all because they were investigating a leak of what's thought to be the new prototype of Apple's iPhone. Gizmodo made headlines last week when it posted pictures and video of the device online. The site said that the smart phone was left in a bar near Apple's California headquarters, and that's how they ended up with it. Gizmodo has since returned that device to Apple.
And Red Sox fans might want to look the other way for a minute. This video may not be suitable for viewing. The world champions New York Yankees were honored by President Obama at the White House yesterday. The president scored a number "27" jersey signed by all of the players. Last year, of course, was the Yank's 27th World Series title.
There you go. Seven and a half minutes past the hour. We check in with Rob right now. That's has to be one of the hard things about being president. You know he's not a Yankee fan in any way, shape or form, but he has to congratulate them on kicking the butts of all of, you know, his favorite teams and everyone else's, for 27 -- well, 27 times over the years.
ROB MARCIANO, AMS METEOROLOGIST: I would imagine it's very, very difficult. But as a professional politician, you know, that's one of the -- it comes with the job. So I'm glad that the president was gracious and Joe Girardi never looked better.
All right. Let's take a look at the rain across parts of the northeast, including New York. Just a little bit left over this morning. And then behind it, it's going to be some cooler air. Look at the white across Ontario there, getting near Watertown, one of the lake-effect snow capitals of the world across I-81. It's not going to amount a whole lot but nonetheless, give you an idea just how chilly the air is behind this thing.
Just a couple of showers left over in New York and Boston and New Haven and Hartford will be a little bit later drying up. Behind this is a little weak system. It's going to roll across the mid-South and the Tennessee Valley that will bring some rain through the area. A stronger system, though, getting into the West Coast and we'll be watching that as it progresses across the western U.S. and into the plains over the next few days.
That's going to be our next shot at seeing some severe weather and it could get rough by Thursday and Friday. All right. If you're traveling New York City metros, Boston, D.C., rain and wind that's left over there. A high of 58 degrees expected in New York and 66 degrees in Atlanta.
That's a nice day for baseball in some spots. We'll run that down mostly Tuesday, and there might be a couple of --
CHETRY: Yes, at least --
MARCIANO: (INAUDIBLE).
CHETRY: There you go. You couldn't be happier as a Yankees fan. I don't know. The president is a White Sox fan. Thanks, Rob.
MARCIANO: All right.
CHETRY: And we're going to check in with John right now as well. He is live in Washington today where, boy, all eyes are going to be on the capital as a lot of the CEOs of Goldman Sachs, some of the other executives out there testifying today.
ROBERTS: There's going to be a lot happening on Capitol Hill today, no question about that. The Goldman hearings, expecting, as we said, the "Fabulous Fab" Fabrice Tourre, the person who is at the heart of the SEC lawsuit to testify as well.
What's going on with the financial reform bill? There was a vote yesterday, a cloture vote. The Democrats failed in trying to cloture vote. Was it all political theater? And where does it all go from here? And then, another little side to all of this, Senator Lindsey Graham who had been working with the White House on some legislation, now saying he's going to stop cooperating with them because Senator Harry Reid wants to push immigration ahead of the energy bill. So a lot going on here in Washington this day. All of which we'll cover on the Most News in the Morning.
And still ahead as well, in the near term, the oil spill in the Gulf of Mexico now. All of those thousands of barrels of oil that are leaking from the ocean floor now closing in on land. We'll take a look at efforts to stop the flow of crude coming up.
Ten minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the Most News in the Morning. Thirteen minutes past the hour right now.
From the Florida panhandle to the swamp lands of Louisiana, they're bracing for a disaster along the gulf coast this weekend. Thousands of gallons of crude oil are still pouring from an oil rig that exploded and sank last week. Now crews are trying to use that robotic submarine to shut off an underwater well. That process is still happening. If you take a look at the aerial picture courtesy of NASA, you can see the spill covering more than 1,800 square miles. It's larger than the state of Rhode Island and all of that oil could reach shore in the next few days.
Our Brian Todd spoke to David Kennedy of the National Oceanic and Atmospheric Administration about some of the challenges ahead.
(BEGIN VIDEOTAPE)
BRIAN TODD, CNN CORRESPONDENT: What's going on right now, they've got submersibles, four of them down here by the blow-out preventer and they want to start to mitigate that by, I guess, drilling down here and activating the blow-out preventer right here with these submersibles. How does that work?
DAVID KENNEDY, NATIONAL OCEANIC AND ATMOSPHERIC ADMIN.: Essentially what they're trying to do is pinch the pipe to shut off the flow. And for whatever reason, given maybe the kind of accident it was, the preventer didn't immediately kick in. So that's what they're trying to activate now. Go back and activate it.
TODD: And the idea that they're working on, if that doesn't work to bring in another rig, to drill a relief well down here, how does that work? They have to come down diagonally into the pipe and that takes a little longer, does it not?
KENNEDY: If this were to be the route that they have to go, and I think this probably could have been stated, they're looking at weeks certainly, if not longer, to drill that well.
(END VIDEOTAPE)
CHETRY: Obviously, worst case scenario in that situation. Hopefully it will be able to find a way to get down there quicker and get that clogged up.
Meanwhile, Chicago's Mayor Daley warns that an idea to put National Guard troops in the city to stop violence in Chicago is just a Band-Aid to a solution that could have dangerous consequences.
Daley has not yet ruled it out, though. The city has been plagued by crime. Already, there've been 113 murders this year, and a group of Illinois lawmakers recently proposed the idea of getting the National Guard in there.
The last time the federal troops took to the streets was back in 1968, after deadly riots that followed the assassination of Dr. Martin Luther King. And we're going to be talking a little bit later about that. Mark Salano (ph), long time community organizer, is going to be weighing in on that, as well as one of the local assemblymen who proposed the idea. They're saying, look, we have a huge problem with drugs and gangs and local police just are not able to handle it right now.
So it's a very, very a tense situation in Chicago.
ROBERTS: Yes. It's a serious, serious problem there. When you look at it in contrast with a place like New York City, which, Kiran, has such great success in recent years, more than the past decade, really, in -- in lowering the crime rate. For there to be such an explosion of it in Chicago that you'd have to consider pulling in the National Guard, that -- that really is troubling.
CHETRY: It certainly is. And of course we're going to talk more about that, as well as the situation with the oil spill.
But also coming up on the Most News in the Morning, Goldman Sachs facing fraud charges, how the company's accused of using homes like this one to help make clients millions of dollars.
(COMMERCIAL BREAK)
ROBERTS: Nineteen minutes after the hour. We're back with the Most News in the Morning.
And new this morning, it's another sign of these technological times, the floppy disk -- the old floppy disk, is dead. Sony says it will no longer make the 3 1/2 inch disk. Modern computers' huge hard drives, online backup and USB jump drives had killed demand. Woe the floppy disk.
General Motors' next generation engine program will create 1,600 jobs in North America. The automaker expected to outline a plan today to invest $890 million in upgrades to five of its plants across the continent.
GM has already put $1.5 billion into factories in the United States and Canada since emerging from bankruptcy last July -- Kiran.
CHETRY: Some good news, a bit of a turnaround for -- for American car makers. So we're happy about that.
Well his company's under fire and accused of fraud. The top boss of Goldman Sachs, CEO Lloyd Blankfein, heads to Capitol Hill today where he will testify this afternoon, and his opening remarks have already been released and we know that he will argue that his company did not mislead investors and did not bet against the housing market.
Our Allan Chernoff is "Minding Your Business" this morning, and Allan joins us now with a breakdown of what this is really all about today.
Hey, Allan. ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Good morning to you.
Well, the fact is the fraud charge against Goldman Sachs is only the tip of an iceberg, an iceberg that is the mortgage securities market. Too much gambling on this market caused the financial system to crash and then sink, and who threw the lifeline to that financial system? You know it, the U.S. taxpayer.
But our story begins at Jack's house.
(BEGIN VIDEOTAPE)
CHERNOFF (voice-over): This is the house Jack bought, Jack Booket (ph), an Aberdeen, New Jersey heating repairman. Jack fell behind on his mortgage, so far behind that he lost the house to a foreclosure.
On Monday, it was put up for auction at the Monmouth County Hall of Records.
JOHN PAULSON, HEDGE FUND MANAGER: Thank you for inviting me to appear today.
CHERNOFF: This is hedge fund manager John Paulson. He bet that Jack and thousands of other Americans would not be able to pay their mortgages.
Paulson bet right and made a billion dollars.
This is Goldman Sachs, the nation's most prestigious investment firm. Goldman Sachs set up the bet for John Paulson. Jack's house was one of the cards, and Goldman Sachs was supposed to be shuffling the deck.
German bank IKB bet that Jack and thousands of other homeowners could pay their mortgages. IKB bet wrong and lost $150 million.
This is the U.S. Securities and Exchange Commission. It says Goldman Sachs committed fraud by letting Paulson pick the cards at the gambling table without telling IKB.
JOHN COFFEE, COLUMBIA UNIVERSITY BUSINESS SCHOOL: Allegations against Goldman Sachs are that they sort of loaded the dice, stacked the deck by designing a portfolio that was weaker than average.
CHERNOFF: The SEC says IKB was a victim, but IKB is not considered a victim in King County, Washington, home to Seattle. King County bought one of investments IKB was selling. It lost more than $20 million.
And these are King County's libraries, also victims of that losing bet.
BILL PTACEK, DIRECTOR, KING COUNTY LIBRARY SYSTEMS: We did have to scale back the operation of the library system and -- and to look more carefully at all of the things that we're doing. (END VIDEOTAPE)
CHERNOFF: King County is suing IKB, the very company that the SEC says was a victim of Goldman Sachs. The county is also suing credit rating agency Standard & Poor's and Moody's. They told King County the bet on mortgages was AAA safe.
And now, what about Jack's house? Well, actually, it failed to get any bidders at Monday's foreclosure auction, it goes back to the foreclosing bank, which is another German bank, Deutsche Bank.
And the big gamblers in this mortgage market? Well, IKB lost so much that German taxpayers has to bail it out. And, here in the U.S., the mortgage meltdown forced American taxpayers to provide the nation's biggest banks with bailout funds, including $10 billion for Goldman Sachs, which it has since repaid -- Kiran.
CHETRY: That's a fascinating breakdown because you linked it all the way back to one house, and you realize, you know, these -- these millions of dollars that just seemed to be made overnight, they don't -- that money doesn't come from thin air.
And, as you saw in King County, people may not even have a library open because of this.
CHERNOFF: Absolutely. It is thousands and thousands of U.S. homeowners at the basis of all of this, and the fact that so many of them were unable to pay their mortgages, that really is the core, the ground zero of this crisis that took down the financial system.
CHETRY: Eye-opening. Very -- very, very good this morning. Thanks, Allan.
Well, still to come on the Most News in the Morning, the online site Craigslist. We all know about it. It's in hot water once again, this time accused of making millions from adult advertising.
But others say, wait a minute, wasn't Craigslist just doing exactly what Attorneys General across the nation wanted them to do? We're going to talk about it.
Twenty-four minutes after the hour.
(COMMERCIAL BREAK)
ROBERTS: Twenty-seven minutes now after the hour.
As President Obama tries to get the stalled Middle East peace talks back on track, there is growing concern that Israel may be ready to act on its own to deal with the nuclear threat from Iran. Are the winds of war blowing again in the Middle East?
Barbara Starr, live at the Pentagon for us this morning. Good morning, Barbara. Big meeting today.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Absolutely, John. Israeli Defense Minister Ehud Barak will be here at the Pentagon in just a few hours to meet with Defense Secretary Robert Gates. And here, today, style will be substance at the Pentagon. Barak's scheduled to hold a joint press conference with Secretary Gates here, and that is something that doesn't happen very often.
So what does it all mean? What it means, according to Gates' aide, is Defense Secretary Gates wants to demonstrate a warm, friendly, very good relationship between the U.S. military and the Israeli military.
Relations may be strained on the political side with the Middle East peace discussions and all of that, but Gates is sending the message to Israel today that, military to military, everything is fine, and he wants to have that very public picture, standing next to Barack, talking about the way ahead, John.
ROBERTS: At the same time, though, Barbara, there are a lot of discussions going to take place, I would assume, between the Defense Minister and the Defense Secretary over Israel and its posture towards Iran.
STARR: Yes, absolutely. You know, behind the scenes, that really is the front and center issue between the two militaries.
It was a couple of weeks ago that Vice President Joe Biden said that the U.S. did not anticipate Israel would unilaterally strike at Iran's nuclear targets.
But, look, fundamentally, that's the big concern. That's the point of discussion.
You'll recall that Gates wrote a classified memo to the White House saying that the Obama administration wasn't even ready to really deal with Iran' nuclear programs diplomatically, militarily, that decisions needed to be made about all of that. What Gates wants to make sure is that Israel hasn't made its own decision to go ahead.
So, again, you're going to see this warm, friendly relationship. Behind the scenes, it is Iran that is the number one issue between the two militaries right now -- John.
ROBERTS: And Admiral Mike Mullen said the other day that he thought that a unilateral strike by Israel on Iran would have grave consequences to the entire region.
STARR: Well, both Admiral Mullen and General David Petraeus have both publicly and privately spoken about this.
There's a lot of concern right now about all types of destabilization erupting in the Middle East, either through the Middle East peace process, destabilizing security in the region, or any kind of strike against Iran by Israel. A lot of concern that, no matter what, this will spill over into the entire region and just make things more complicated and more dire -- John. ROBERTS: And we'll have -- we'll have an opportunity to talk with the Israeli ambassador to the United States, Ambassador Michael Oren, about all of this, Barbara, in about two hours time. So, we'll stay with you throughout the morning.
Barbara Starr at the Pentagon -- thanks so much.
Crossing the half hour now -- and our top stories this Tuesday morning.
Goldman Sachs bigwigs are preparing for a hostile hearing on Capitol Hill today. They are accused of a plan to pocket billions of dollars from the housing collapse at the expense of their clients. In opening remarks already released, CEO Lloyd Blankfein will say that his firm did not bet against the housing market and its own clients.
A videotape has surfaced showing suspected Christmas Day bomber Umar Farouk Abdulmutallab training in Yemen with al Qaeda. The tape obtained by ABC News shows the Nigerian native speaking in Arabic about his impending attack and shooting at targets that include a Jewish Star of David and a flag labeled United Nations. Abdulmutallab is accused of trying to blow up a Detroit-bound plane last December with a bomb that was hidden in his underwear.
And this month's deadly explosion at the Upper Big Branch in West Virginia will be the focus of a Senate hearing this afternoon. The nation's top mine safety officials are expected to face tough questions about what can be done to improve the health and safety of our nation's miners. Twenty-nine miners were killed in what was the worst mine disaster in four decades -- Kiran.
CHETRY: John, thanks.
Well, tens of millions of people advertise on Craigslist and law enforcement officials say that it could also be a gateway for crime and illegal activity. Well, about this time last year, the Web site announced that its erotic services section was going away after some pressure and also after police say a masseuse was murdered by a Boston medical student that she met on Craigslist.
Well, the Web site is in hot water yet again, this time for reportedly making $36 million off of the controversial adult ads which critics say are blatant solicitations for sex.
Joining me now is Connecticut attorney general, Richard Blumenthal, who is urging Craigslist to purge the ad. And Nick Thompson, senior editor of "Wired" magazine, and you also, Nick, just so we let people know, have been communicating and asking some questions of the CEO of Craigslist, Jim Buckmaster, who wrote back to you. So, we'll have more on that.
But, first, I want to start with you, Attorney General Blumenthal. You had on the show last year around this time, when you called for them to purge those erotic services section, which they did and then they also talked about using credit card transactions as a way to sort of police it and in some ways to discourage people that might be doing bad things from getting on their site. Now, we find that they brought in $36 million.
What do you want from the company at this point?
RICHARD BLUMENTHAL, CONNECTICUT ATTORNEY GENERAL: What we want is for Craigslist really to follow and respect its own terms of service, and we expect to hold them accountable to terms of service that they give to the world, represent to the world, that they will follow, which prohibits this kind of illegal activity. They can use screening technology to block these kinds of prostitution ads, technology that screens out the kind of code words or buzz words that are often used.
And $36 million in revenue from these ads is triple what they made last year. So, clearly, the trend is in the wrong direction. There is technology that would enable them to verify the names and addresses of people who are doing these ads.
And, in a larger sense, we also want, I think, changes or at least considering changes in the Communications Decency Act that gives them such broad immunity as an online service provider. They have been running in effect an online red light district.
CHETRY: All right. Let me ask about that, Nick. I want to ask Nick about it, first of all, because they did eliminate the erotic services part of the Web site and make this adult forum, which, technically, some, like Attorney General Blumenthal, are saying all they did was just switch it around to a different place. They're still, in some ways, trafficking in prostitution.
NICHOLAS THOMPSON, "WIRED" MAGAZINE: There's no question that there are a lot of people who are sort of covertly advertising for prostitution in Craigslist. They don't say prostitution. They say masseuse in your area or something like that.
I think Attorney General Blumenthal gets a lot of credit for what he did last year. What happened last year is Craigslist put up all these different restrictions. They made it much harder for people to put these kinds of ads up. They have humans review every ad. They knock out things with dirty pictures. They did a lot of very good things.
However, I think, this year the anger at Craigslist is a little misplaced. A, they've gotten a lot better, and B, it's true they're getting money. They got $36 million, which isn't that much for a gigantic corporation with this much traffic as they got.
The reason they've gotten all of the money is because Attorney General Blumenthal and others said they should start getting credit card information and start charging for these sites so that people would be registered and they could be easier to track down offenders. So --
CHETRY: All right. Let me ask you about that, Attorney General Blumenthal, in this letter or this e-mail change between Jim Buckmaster, CEO of Craigslist, and Nick Thompson. Jim Buckmaster wrote, in summary -- if anything, I believe that Craigslist deserves to be singled out for praise not scorn. We're cautiously optimistic that A.G. Blumenthal and any others of like mind will eventually acknowledge this, perhaps when the elections are over -- suggesting that part of this is politically motivated, but also that they've gone far and away to err on the side of caution than some of the other Web sites, backpage.com, and some of the other classified.
BLUMENTHAL: And we are pursuing some of the other Web sites that are equally culpable, perhaps, for the same kinds of practices. But the point is, Craigslist is bigger, much more powerful. And the other aspect of this, much darker side, is human trafficking and child exploitation, which craigslist also should be held accountable for stopping.
And whether they deserve credit or not, I happen to believe they deserve some credit for taking steps in the right direction, there is much more to be done. Craigslist can provide an example by following these terms of service that it represents to the world it will follow.
And so, in the future, going forward, $36 million is a lot of money considering that the total profits or revenues were $122 million. So, in effect, one-third of all of these revenues going to Craigslist are coming from these ads for illicit activities that it has the technology to stop.
CHETRY: Well, and, Nick, I want to ask you about that. Because Attorney General Blumenthal said that twice, that Craigslist technically could stop this. They could block this. They could not allow certain people to advertise.
Is that true? Or is it more difficult than that?
THOMPSON: It's actually quite difficult. Do you have all -- Craigslist has only 30 employees, right? It's this tiny corporation. And what they do is they've created a platform in which people sort of publish whatever they want. They could cut the adult services section -- things would probably pop up in other places. But they may not.
And the other thing is, remember, adult services, it's not like people are saying, we're trafficking humans --
CHETRY: No, no, no. I know. But this "New York Times" article says that the organizations that oppose human trafficking say that this site, Craigslist, remains the biggest online hub for selling women against their will. So, I mean, if the focus on Craigslist, it's because of its reach.
THOMPSON: Yes.
CHETRY: And could they stop it if they wanted to?
THOMPSON: I think there are probably several other steps they could do that would make it even harder. I think some of the ones that Attorney General Blumenthal is proposing, like scanning certain things for keywords would be a big help.
But what they do right now is every ad that's posted in this category is reviewed by another human. So, you have somebody looking at it. So, that's a pretty good review. They probably could do more.
I think, one other point on their profiteering, it's true. They did make that money. It's true that it's a big percentage of their revenue. Craigslist is the least capitalistic company I have ever seen.
Their CEO is, you know, is not using this money to go and ride jets. He talks about how he's good water pressure at home, that's all he needs. Really, it's quite an interesting company, and I don't think -- that criticism is a little misguided.
CHETRY: All right. And one other question, from this e-mail from Buckmaster of Craigslist, Attorney General Blumenthal -- he says that this backpage.com Web site, he says that overnight that when they decided to conform to some of those strict guidelines and require the credit authorizations, this other site doubled their overall traffic the day they replaced erotic services with adult services and manually reviewed services.
So, are some of these other sites turning out to be as big of a problem as Craigslist in terms of that?
BLUMENTHAL: And that's why we are pursuing those other sites and we expect that we will take action. And we're considering very specific steps regarding Backpage, other measures that may pertain to Craigslist as well.
But the point is that we can put a man on the moon. We screen out these kinds of ads. And it may be a little bit more difficult, a little more r costly, but if it stops human trafficking and child exploitation, well worth it. And Craigslist has a moral obligation, if not a legal one, to take these steps.
And we need to consider changing the Communications Decency Act because of the very broad immunity, much broader than you have as a TV station or that a publication has, like a newspaper. And that kind of change ought to at least be considered.
CHETRY: All right. Well, Attorney General Richard Blumenthal, always great to speak to you. Thanks so much.
And, Nick Thompson, great to get your expertise and point of view as well, and great you got a response from Jim Buckmaster.
THOMPSON: Thank you very much, Kiran.
CHETRY: Thanks.
Thirty-nine minutes past the hour -- John.
ROBERTS: Coming up next on the Most News in the Morning: an unexpected hero comes to the rescue of Hollywood's iconic sign. That story is coming up next.
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CHETRY: Welcome back to the Most News in the Morning. Forty- two minutes past the hour right -- a look at some of the other stories we're following today.
Actor Randy Quaid and his wife were arrested for skipping court hearings on felony fraud charges stemming from unpaid hotel bills. The couple spent three hours in jail before posting a bail of $100,000 each. A California judge cited previous no-shows and also, Quaid bringing his Golden Globe into the courtroom as, quote, "disrespectful."
And a Hollywood ending for the famous Hollywood sign. Playboy founder Hugh Hefner donating the final $900,000 needed to protect the landmark and the land near the sign from development. The $12.5 million raised will be used to purchase the land and to make it part of a nearby park, that way, of course, it wouldn't be raised taken down.
Hefner calls the Hollywood sign Hollywood's Eiffel Tower. So, doing his part there to save it.
ROBERTS: First, Alice Cooper, then Hugh Hefner coming to the rescue of the Hollywood sign.
Pittsburgh Steelers quarterback Ben Roethlisberger says he will not appeal the six-game suspension imposed by the NFL fl for violating the league's personal conduct policy. He also apologized yesterday for letting his teammates and fans down.
Last month, a woman claimed that she was sexually assaulted by Roethlisberger at the Georgia bar. Prosecutors didn't charge Roethlisberger because they could not prove that a crime had been committed.
Coming up now on 44 minutes after the hour. Rob Marciano has got this morning's travel forecast right after the break.
CHETRY: Also coming up in 10 minutes, can cleavage really cause earthquakes? Jeanne Moos with the reaction to an Islamic cleric's warning.
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ROBERTS: It's not quite the city of blinding lights, but there will definitely be a lot of heat on Capitol Hill today with the Goldman hearings and investigation getting under way today. For those of you heading into work this morning, 55 degrees and partly cloudy right now.
Later on today, 62 degrees with sun and some clouds, but a whole lot better today than it was yesterday where rain was abundant here and put a real damper, Kiran, on the Fisher House Annual Fundraising Golf Tournament just in terms of the play but still managed to raise money $625,000 to help our wounded warriors. That was a great day for everybody.
CHETRY: That is nice, and you played what, nine holes or 18 or what?
ROBERTS: We go get up 15-and-a-half --
CHETRY: Wow.
ROBERTS: Halfway through 16 before the lightning warnings went off.
CHETRY: There you go, not too bad. You, guys, are brave to get out there in that weather. It was not pleasant yesterday at all.
ROBERTS: It's just a little sloppy, that's all.
CHETRY: Yes. Forty-seven minutes past the hour. Could we look forward to a better day today? Rob Marciano in Extreme Weather Center for us this morning. Hey, Rob.
ROB MARCIANO, AMS METEOROLOGIST: Hey, yes, slightly better, Kiran, as we're looking at rain across parts of the northeast. New York starting to see showers dissipate and move off towards the east up towards Long Island, New Haven, Hartford, getting up to Norwich (ph), Rhode Island and to Boston. A little bit farther north we're seeing some white on the radar.
I already changed the legend (ph) over to spring time severe weather, but I should keep the white on the left and that means snow across parts of upstate New York, and winter storm warnings posted especially for the higher terrain of the Adirondacks and the green mountains could see six to 12 inches of snow across parts of Northern New England and upstate New York.
And no snow at some of the major airport with leftover rain and wind across New York and Boston and that will cause some travel delays and the winding things down in D.C. as well, but then the next system gets hot on the heels there and that will head up in the mid-Atlantic later on today, and a stronger storm across parts of the pacific northwest that will lead to more severe weather probably Thursday and Friday into the plain.
I want to show you some of this video. This came into the "CNN NEWSROOM" yesterday afternoon. New video from tornadovideos.net. This is the Yazoo City Tornado, the wedge tornado kind of wrapped in rain at one point a mile and three-quarters wide. And an updated storm survey shows that this thing was on the ground for 149 miles across the state of Mississippi.
Unbelievable how long this thing was on the ground, and obviously, we had devastating results because of that. May be the longest tornado track in the history of Mississippi, still got to dig a little bit deeper on that, but more importantly, Kiran, we got another storm system that will probably trigger more severe weather come Thursday and Friday.
So, we'll be talking about that. Back up to New York.
CHETRY: This is what we get around spring time, but boy, that could have been one for the history books, amazing. Rob, thanks so much.
We had a lot of comments coming into our live blog this morning. Most of you pretty fired up and weighing in about Goldman Sachs executives who will be testifying on the Hill today. Robin Simms starts things off to us writing that the Goldman situation and our economic collapse in general was caused by individuals such as the Goldman executives that place their single focus only on greed and profit but place no importance on patriotism or decency.
Also Sergeant writes in saying, amazing. We grill Wall Street when they lose money, and we grill them when they make us money.
And Jerry suggesting that perhaps the senator should question themselves, why not investigate the senators on the finance committee to see if they profited from many of those fancy derivatives. And we'd love to hear from you as well. Join the conversation right now, CNN.com/AMFix -- John.
ROBERTS: This morning's top stories just minutes away now, including more on grilling Goldman Sachs, bringing accountability to Wall Street. We're going to bring in Aly Velshi who's on Capitol Hill this morning and speak with Senator Claire McCaskill who'll be on the panel today about how to stop big banks from putting people's retirements and savings and jeopardy ever again.
CHETRY: Also at 25 after, prescription for waste, outrageous hospital overcharges, billing whatever they want hoping insurance will pay and that you won't look at the bill.
ROBERTS: And at 50 minutes after the hour, bad habits that could turn 20 into the new 30. How smoking and drinking and eating whatever you want can literally take away the prime of your life. Those stories and more headed your way beginning at the top of the hour in nine minutes' time.
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CHETRY: Welcome back to the Most News in the Morning. Six minutes until the top of the hour right now. We're checking in with Jeanne Moos. An Iranian cleric recently suggested in modest women cause a chain reaction that then ends with earthquakes. So, yesterday, a Purdue University student put her cleavage and those of many others to the test of what she calls a bogus science. Here's Jeanne.
(BEGIN VIDEOTAPE)
JEANNE MOOS, CNN CORRESPONDENT (voice-over): Exposing cleavage in the name of science.
UNIDENTIFIED FEMALE: I don't have cleavage, though, so I think I'm going to duct tape. MOOS: There's a name for this behavior.
UNIDENTIFIED MALE: Boob quake! Boob quake! Boob quake!
MOOS: Little did an Iranian cleric know how his words would rattle some women, when he suggested that women who dress provocatively tempt people into promiscuity which increases earthquakes which brings us to Purdue University student and self- described nerdy geek, Jennifer McWright (ph).
MOOS (on-camera): What would you estimate the magnitude of your cleavage to be today?
UNIDENTIFIED FEMALE: Maybe like a seven or something.
MOOS (voice-over): Jennifer dreamed up boob quake on her blog as a joke declaring Monday, Boobquake Day. From Purdue to Washington, D.C., women showed a bit more decolletage than usual.
UNIDENTIFIED FEMALE: We're out here showing that if dressing immodestly causes earthquakes, we want to see some evidence.
MOOS: Jennifer is compiling data.
MOOS (on-camera): So, you'll be checking for seismic activity related to the showing of cleavage.
UNIDENTIFIED FEMALE: Yes, we'll compare it with past seismic activity. Hopefully, we don't destroy the world.
MOOS (voice-over): Seems like they might. We and the press sure treated it like earth-shaking news, outnumbering the actually boob quakers. A handful of Jennifer's surrounded her in show of support during our Skype interview.
MOOS (on-camera): Can you see me? I'm feeling overdressed.
MOOS (voice-over): There were boob quake T-shirts to the earth move for you, I survived boobquake 2010. There was a song.
Talk about getting rocked.
MOOS (on-camera): Breaking news, an earthquake struck Taiwan Monday morning at the magnitude of 6.5. It caused buildings to sway but no major damage. This is not a joke. There really was an earthquake Monday in Taiwan.
MOOS (voice-over): But was this responsible for the seismic activity?
UNIDENTIFIED FEMALE: Like some boys have told me I've rocked their world, but I don't think so.
MOOS: But just to be safe, be beware of what you wear.
UNIDENTIFIED FEMALE: Thank you. MOOS: No, thank you and watch where you point that web cam.
Jeanne Moos, CNN --
(LAUGHING)
MOOS: New York.
(END VIDEOTAPE)
CHETRY: There you go. Just stick with me, John, you'll be in no danger of running into an earthquake. Can't say the same for everyone else.
ROBERTS: Sounds like a great idea.
Tough stories coming your way right after the break. Stay with us.
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