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American Morning
Accused Bomber in Training Video; Going After Goldman; Chicago Violence: National Guard Needed?; Ford $2.1 Billion First Quarter Profit
Aired April 27, 2010 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: Good morning to you. Glad you're with us on this AMERICAN MORNING on this Tuesday, April 27th.
I'm Kiran Chetry. We have John Roberts in Washington, D.C. this morning. Hey, John.
JOHN ROBERTS, CNN ANCHOR: Hey, good morning to you, Kiran. And here are the big stories we'll be telling you about coming up in the next 15 minutes in Most News in the Morning.
The accused Christmas Day underwear bomber showing up in a training video produced by al Qaeda, taking target practice, firing at the Jewish Star of David and discussing in Arabic plans to blow up an airplane.
The significance of this newly discovered video, just ahead.
CHETRY: And also, there were calls to deploy National Guard troops to the streets of Chicago to combat a deadly crime wave in the city, but will the military on the streets make things better or complicate an already deadly situation?
We're going to hear from both sides in the heated debate.
ROBERTS: Today, money talks. In less than an hour, the head Of Goldman Sachs, the most powerful and feared bank on Wall Street, will try and sell his story to Capitol Hill that his firm did not profit from the fall.
And, of course, the amFIX blog is up live and running. Join the conversation right now. We want to hear from you about what's in the news this morning. Just go to CNN.com/amFIX, and we'll be reading some of your comments, coming up in the next hour -- Kiran.
CHETRY: John, thanks.
We begin the hour with the suspect in the attempted Christmas Day underwear bombing. The suspect servicing in a training video produced by al Qaeda. The tape was obtained by ABC News and in it, you see Umar Abdulmutallab firing weapons and also speaking in Arabic, discussing his plans to attack a plane saying, quote, "God said those who punish you must be punished."
Now, Barbara Starr is live at the Pentagon this morning with more on all of this.
And, Barbara, as we -- as you've been reporting, Abdulmutallab is said to be cooperating with federal investigators. When you bring the video into play -- why would that be considered significant at this point?
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, it's another data point really for investigators and for the U.S. military, for the intelligence community about al Qaeda in Yemen, al Qaeda in the Arabian Peninsula. U.S. officials do believe this is Abdulmutallab. They can't say exactly when and where the tape was made, but it underscores what they believe is that he engaged in al Qaeda training. And his affiliation with al Qaeda in Yemen is very central for U.S. officials because it was up to Abdulmutallab who basically at, their behest, reached out and touched the United States with that attempted Christmas Day bombing.
That puts the al Qaeda in Yemen, the people behind him apparently front and center because if they can reach out and do something inside the United States, this is not a far away distant threat. This is something of great concern. That's why the tape is important. That's why it brings him back to the attention of U.S. investigators -- Kiran.
CHETRY: Also, when you talk about the discovery of the videotapes, how will it impact Abdulmutallab's case?
STARR: Well, as you say, by all accounts, it appears, for the last several months now, he has been cooperating to some extent. I don't know that we know how much.
So, the tape may not make that much of a difference but it does underscore and gives some credence to what U.S. officials believe his activities were prior to that Christmas Day attack -- Kiran.
CHETRY: All right. As you said, more data to work with as they get to the bottom of this case. Barbara Starr for us this morning -- thanks so much.
Also developing this morning: former dictator, Manuel Noriega, appearing in the courtroom in Paris facing charges of money laundering. Noriega spent two decades in U.S. custody for drug trafficking before he was cleared for extradition yesterday. The French government claims Noriega laundered some $3 million in drug money. He could face another 10 years behind bars if convicted in France -- John.
ROBERTS: Big story here in Washington this morning, Kiran. Everyone has to answer to someone, even the so-called "masters of the universe."
This morning, bigwigs from Goldman Sachs, the fastest and most powerful investment bank, will testify on Capitol Hill and deny that they ran a crooked casino that positioned itself to make a fortune while so many ended up out on the streets.
Our chief business correspondent, Ali Velshi, is live for us inside the hearing room where it's going to take place.
And, you know, as your colleague Christine Romans likes to say, Ali, they're going to be firing up the grill on Capitol Hill today.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: They are going to be firing up the grill. Most of the heat might be on this side of the grill though. This is where the senators on this committee are going to be sitting. This is where their attention is going to be focused.
There will be three panels. One of them -- two of them will be loaded with Goldman Sachs executives. The last one will be just the CEO of Goldman Sachs, Lloyd Blankfein.
Now, the questions coming from there are going to be: what role, if any, did you all have in the collapse of the financial system, in the financial meltdown? The fact is, I don't know what kind of answers we're going to get from these folks, senior Goldman Sachs executives -- including the only one person named in that SEC charge against Goldman Sachs. John, that's a separate issue, by wait. These committee hearings have been going on for a long time.
But Fabrice Tourre, who is the 31-year-old vice president, whose e-mails the SEC cited in their charge, saying the world is going to collapse and Fabulous Fab, that referring to himself, is the only one going to be left standing.
Here's what the committee said in their press release. They said they are going to use Goldman Sachs as a case study to determine the role of investment banks -- that means not just Goldman Sachs but its counterparts on Wall Street -- in the financial meltdown. Did they bet against the mortgages getting paid? And if they did bet against them, did they have any impact on creating this crisis?
If you took a cynical view, John, you'd say that this -- we are about six months away from mid-term elections and in some cases, the senators want to be seen as being really tough. They want to channel the energy and anger of American people.
If you don't want to be cynical, you can say, these folks have to actually answer for what their role was. If they're not guilty of anything, let them come out and say it.
The bottom line though, right now, is I think you're to have a lot more fire on that side of the grill as Christine would say than on this side of the grill. But we may be surprised. And if anything comes out of this side, that's going to be interesting. I'll be right here to cover it.
ROBERTS: We got a preview of Goldman CEO Lloyd Blankfein's testimony today, Ali, in which he said, quote, "We didn't have a massive short against the housing market. We certainly did not bet against our clients." I assume that's a statement that the senator is not going to take at face value.
Whoops! And we lost Ali there somehow. He's gone. He'll be back though.
We got special coverage of the Goldman Sachs hearing beginning at 9:00 Eastern right here on CNN. We'll also be covering them on CNN.com if you can't make it to a television set.
And I promise, we'll find Ali Velshi -- Kiran.
CHETRY: Probably some of those testifying today wish that happens later on today. Whoop -- and we're gone.
All right, John. Thanks so much.
We'll let's check in with Rob Marciano right now. He has a look at the forecast for us.
We just have to hold tight. Today is Tuesday. But by the weekend, things should be looking up around the country?
ROB MARCIANO, AMS METEOROLOGIST: Yes. And you know, today -- Tuesday afternoon grilling on Capitol Hill. Good weather to break out the grill. Why not? After the rain yesterday, it looks to be a little more tranquil today, a spritz or two in the morning, that should be about it.
Here's the radar showing you the rain across the Northeast. It's beginning to move out. So, sprinkles or showers in New York -- that is it. It's mostly out in Long Island and through Connecticut and eastern parts of New England.
But look at Upstate New York, a little white there on the radar scope. Syracuse to Watertown, up the I-81 corridor, Tug Hill Plateau, might get several inches of snow across the Adirondacks and the Green Mountains. Breezy also behind this storm. So, that will maybe slow down some air travel.
And a weak -- a weak storm moving across the Tennessee valley in mid-south, some cool showers and maybe a thunderstorm. But a stronger storm, Kiran, across the Pacific Northwest. That's bringing them some wind and rain, and we'll probably set up shop or maybe some severe weather come Thursday and Friday in the plains.
That's the latest from here. We'll talk again in about 30, 40 minutes.
CHETRY: Sounds good. Thanks, Rob.
MARCIANO: See you.
CHETRY: Well, curving violence in Chicago. A lot of people are wondering what to do about the growing problem of 113 murders this year alone, gangs and drug violence. Now, some are saying the National Guard on the streets of Chicago is the best solution. We'll debate it -- coming up.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the Most News in the Morning. Ten minutes past the hour right now.
There has been strong reaction in Chicago to a proposal by two state lawmakers who want National Guard troops brought into the city to help deal with this surge of deadly violence. There have been, so far, in 2010, 113 murders in the city of Chicago.
Illinois State Representative LaShawn Ford is one of the lawmakers calling for the guard to come help them. He joins us from Springfield this morning.
And also with us, from Chicago, is Mark S. Allen, a long-time community organizer in the city and also editor of the "South Street Journal."
Thanks to both of you for being with us this morning.
UNIDENTIFIED MALE: Thank you so much.
CHETRY: Clearly, there is a big problem going on right now on the streets of Chicago.
Representative Ford, how would the National Guard help? How do you envision their presence if, indeed, they are -- they do come to the city?
REP. LASHAWN FORD, ILLINOIS STATE HOUSE: Well, in a respectful way, we would like for them to meet with Jody Weis and sit down and come up with a plan that they can assist him in securing the streets and not take over. We don't want them to come in the community with tanks and guns, and taking away the rights of people. And I know Jody Weis said that the National Guard will take away all the rights of people and they don't have to follow any laws and any rules, but that's not true. Everyone must follow the Constitution. And if we really want --
CHETRY: Just so people understand, you're referring to the Chicago police superintendent, Jody Weis, who does not believe that National Guard is the answer, right? He believes that the answer is really cracking down on guns, getting the guns off the street.
FORD: And, you know, we can't -- I mean, guns are a problem. We need to talk about more gun laws. I will continue to support legislation that will make it tougher to own guns for criminals, but what we want to do is talk about securing the border so that guns are not brought into the communities.
CHETRY: Let me bring in Mark here.
Mark S. Allen, I want to ask you -- you've been in the city for a long time, obviously. And you know some of the challenges right now of quelling the violence there. What's your reaction to the possibility of the National Guard possibly being called in?
MARK S. ALLEN, CHICAGO COMMUNITY ORGANIZER: Well, I think that some of our leadership, that's the best they can do. But that's not the best that could be done. I think we got to think outside the box and we got to respond to this situation for what it is.
What's facing Chicago, unlike what Mayor Daley said, is the number one issue being guns, that's not true. The number one issue facing Chicago this summer is a desperate economic situation. And we keep trying to throw more law enforcement on top of a desperate economic situation.
And I think we need to think outside the box because we've already proven, Kiran, that in Chicago, we've thrown more police on top of the situation before. That didn't stop Chicago from still becoming the murder capital of the world.
So, I think that we got to think economically, and instead of using state and federal dollars to bring in more law enforcement, why not use those state and federal dollars to hire some mentors for these young people to get them back connected to the community? Why not hire some peace patrols so people can have safe passage to and from?
There's a lot more things we can do on the front side to have the kind of vision to keep our people alive, versus having the kind of vision and lack of vision to help our people perish. So, I think we got to come outside the box, but realize, in the streets of Chicago is a desperate economic situation that people are willing to die over to try to make ends meet. And just adding more law enforcement, again, is not going to resolve this economic problem.
CHETRY: Representative Ford, one of the things that Mark S. Allen has talked about and some of the others in the community, including local pastors as well, saying that, right now, the sad fact is that, for young people and for adults, is drug, drug dealing and gangs are really the only way to make a living, which they are then using to support their families.
Is more being done to tackle that aspect of this?
FORD: Yes. And, you know, I think Mark Allen is absolutely correct. But I think that we cannot be tunnel vision. We have to know that we have to work on all angles. We have to work on the economic angle and we have to realize that in order to help people do better, there must be law and order.
And so, we want to invest in a community and so that people feel good about coming in and bringing jobs in these communities.
CHETRY: Right.
FORD: So, not only do we have to fight -- yes?
CHETRY: No. I was just going to say, you know, to Mark, the thing is -- I mean, how are you going to convince businesses to come to a place where you're looking at murder rates being come comparable to the number of people killed in the war in Iraq? You know, it's a situation where, I mean, the clear and hold strategy I guess that the military even uses -- I mean, in this case, wouldn't more help making the streets safe to begin with and then going from there work?
ALLEN: Well, one is -- people that have an economic answer, first of all, wouldn't be in the desperate situation that they are in to even want to be fighting over. I'm simply saying to you is that when poor people beg for jobs at a Walmart, instead of saying, "Let me get you off the streets and let you work," you got leaders with an income saying, sorry, the income ain't good enough for you. So, they turn around and send you back into the very negative elements that you're trying to survive in terms of lifting you up.
I'm simply saying there are thousands of our people who would not be in negative elements. They would not be tearing up communities if they had a legal place to work. We got to stop letting the gang, drug, and illegal street economy becoming the number one employer of our young people. So, if we want to stop them from going into this negative element, then let's not add more police. You won't be confronting the police if you are using empty lots this summer to have green jobs.
You wouldn't be fighting the police and being anti-social if you were going to work every day, being a mentor, reclaim people social consciousness (ph). If people had a working job to go to, then they would not be in this illegal environment, and then, we got to stop blaming everything on the gang situation. Everything is not gang- related. If you walk these streets long enough, you'll know that there are a whole lot of people who are not involved in no kind of gang. They just got their backs up against the wall. We have to think outside the box, how do we not spend more money again?
We put more money on top of it and let's stop people from saying, I'll shoot that to police. I'll shoot -- anybody starting to make a living. Let's solve an economic problem with an economic solution. People want to work, because unfortunately, you got people like Larry Hoover and Jeff Ford who send people down to the gang and say, don't hurt people, but every time you label some gang, you never see the successes.
But the bottom line is this, people want to work. And if we keep let the illegal elements employ them, then we're not using the right kind of vision that I know we can do. So, we try to see the killing (ph), help people live and put him to work because we can do this. You try to tell me we can't use those modals to let these young people use these empty lots that are just vacant, sometimes being used for illegal things and not for community guarding to put people to work.
CHETRY: Let me let Representative Ford jump in there and go ahead.
FORD: You know what happens, what law does, it provides deterrent. It let's people know that they shouldn't do bad things. It controls an environment. And so I think we need to also not always be focused on the criminals. We need to make sure that taxpayers are protected, that their property values are protected so that they don't lose the value in their investment. Some people, a home is all they have.
When you have this disorder in a community and you have businesses that have disorder around it, it devalues it. So, we cannot be tunnel vision. We have to look at every angle. We have to protect the taxpayers that's trying to have strong businesses so that they can provide jobs. We have to protect the homeowners so that they can be all that they can be so that they can provide jobs for people. My office sends out job leads at least 60 pages a day every day, and there are jobs. We have to, as a community, realize that sometimes we may not get the job that we want but there are jobs out there.
We have to settle down and, say, I'm going to start somewhere and I'm going to get a job. Everyone should be out looking for a job if you are unemployed. Jobs do not knock on your door.
CHETRY: Well, obviously --
FORD: And so, it's available, and I know it's difficult. We just have to realize that we cannot be afraid to work with the police. We cannot look at the police as if they're going to take away our rights, because we, as citizens won't allow that to happen, but what we do want is for our kids to be in safe environments. We want senior citizens who have paved the way for us to have that. So, I look forward.
CHETRY: I want to thank both of you, Marcus Allen as well as Lashawn Ford, the Illinois State House. Obviously, a lot of challenges and a lot of people working hard to try to find an answer for this problem. Thanks so much for joining us this morning.
ALLEN: Thank you so much.
FORD: Thank you.
CHETRY: John.
ROBERTS: Coming up now at 19 minutes after the hour, will Israel launch an attack against Iran's nuclear facilities. The Israeli Ambassador to the United States, Michael Oren, coming right up.
And Goldman Sachs VP, Fabrice Tourre, at the center of the scandal. Was he the mastermind? What e-mails to his girlfriend might reveal? Christine Romans got that. Coming up next. Don't go away.
(COMMERCIAL BREAK)
ROBERTS: Twenty-one-and-a-half minutes after the hour. Just in an impressive turnaround for Ford, the automaker reporting first quarter profits of $2.1 billion compared that to a year ago when the company reported a loss of $1.4 billion. The surge in profit sustains to strong sales of new products around the world. Ford was the only one of the big three U.S. automakers to decline a federal bailout.
Christine Romans "Minding your Business" this morning. She joins us now and all eyes on Capitol Hill today as executives from Goldman Sachs get questioned.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: That's right.
ROBERTS: And I would think rather pointedly today.
ROMANS: I know, and the CEO, Goldman Sachs, Lloyd Blankfein, but also you're going to hear from a trader, a trader name Fabrice Tourre who we have several e-mails of his, one provided by the SEC, others provided by Goldman Sachs that sort of give you a window into the personality of this now 31-year-old trader, at the time, a 28, 29- year-old trader, John, who was creating some of these products at the central of this controversy.
On investment products, he writes to a girlfriend, he says, this is the type of thing which you invent telling yourself, well, what if we created a thing which has no purpose, which is absolutely conceptual, and highly theoretical and which nobody knows how to price. It's a little like Frankenstein turning against its inventor, he says, when this product that he created was worth $100 one day and then $93 the next day and kept losing value.
On the U.S. subprime mortgage market, he quotes actually a boss and says, "hey, my boss says that that business is totally dead and the poor little subprime borrowers will not last long. That, of course, means that the investments that he had created were getting lower and lower in value.
And then, on the way to Belgium, apparently, where he is going to meet this girlfriend, he says, he writes to her, just made it to the country of your favorite clients, Belgians. I've managed to sell a few advocate bonds to widows and orphans that I ran into in the airport.
You know, he is probably clearly joking here, but the assumption here at the way it looks at least is that he was a little flip about some of these things he was creating and how he was pushing off. He also talks, John, about in some of these e-mails about a bit of a moral conflict, that he is creating this stuff that he doesn't even know exactly how to price, that he doesn't know -- he calls them monstrosities.
That he doesn't know what the ultimate implications could be, but he justifies it himself by saying he is helping the American consumer have better access to capital and leverage because of what he is doing here in the stratosphere with high financial engineering. He's on pay-leave (ph) right now from Goldman Sachs as he will be up there today. He graduated from Stanford. He's one of, you know, a math whiz who went to Wall Street and now has found himself the center of the scandal.
ROBERTS: He's pocketed a whole lot of money along the way as well. OK. So, that's one case, but the permanent subcommittee on investigations chairman, Carl Levin says, hey, there is a lot more out there as well. What does the committee really have?
ROMANS: We're looking and waiting to see if they have some kind of smoking gun here. I mean, he says there's another big shoe to drop for Goldman Sachs that we are going to see that Goldman Sachs did not do and behave the way that they are saying that they did. Goldman Sachs says that they, John, did not have a big short on the housing markets, that they simply were creating products for their clients, and they were also taking the other side of some of those products when they had to.
We're going to get a really good look in here today about how Wall Street works. And can Carl Levin and his committee prove that Goldman did something wrong or is this the way Wall Street works?
ROBERTS: Well, if it's just way Wall Street works, it's going to be a wakeup call for a lot of people. Christine Romans for us this morning.
ROMANS: Sure.
ROBERTS: Christine, thanks so much.
Israel launched an attack against Iran's nuclear facilities. The Israeli Ambassador to the United States, Michael Oren, coming right up. Twenty-five and a half minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the Most News in the Morning. Twenty- eight minutes past the hour. Top stories a couple minutes away. First now, an AM Original. Something you'll see only on AMERICAN MORNING. When Dr. Linda Galloway learned that she needed surgery to save her vision, she scheduled a procedure immediately with her ophthalmologist. And what an eye opener it turned out to be when the hospital bill arrived. Here's senior medical correspondent, Elizabeth Cohen, with part two of her series "Prescription for Waste."
(BEGIN VIDEOTAPE)
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: And you recently had an experience when you were in the hospital that really blew your mind?
UNIDENTIFIED FEMALE: When I got out of the hospital and got the bill, yes, I definitely had an alarming experience. I received my bill and noticed some items that were totally inflated. Forceps, 25 gauge disposable, $863.20.
COHEN: What went through your mind?
UNIDENTIFIED FEMALE: I was outraged. I told them, I said, listen, I'm a physician. This is an instrument that you're going to throw away. And I encountered a very arrogant young man from the billing department who basically said, when you sign consent for the procedure, you allowed us to charge you anything we wanted to.
COHEN: And so you then went on the internet to see what it would cost to get a pair of forceps from a medical supply company?
UNIDENTIFIED FEMALE: Yes, I did.
COHEN: OK. So let's -- come and show me what you found.
UNIDENTIFIED FEMALE: A forceps similar to the one I had, $192.
COHEN: You paid $863 --
UNIDENTIFIED FEMALE: Right.
COHEN: But you can go buy it from a medical supply company for $192.
UNIDENTIFIED FEMALE: Yes, yes, that's very troubling.
COHEN: What I'm going to do is go to the American Hospital Association, and I'm going to ask them, please explain this markup to me.
UNIDENTIFIED FEMALE: I thoroughly agree with that.
COHEN: So, the markup on this forceps was more than four times what it would cost to just get it from a medical supply company. Why four times? Because people want to know why.
RICHARD UMBOENSTOCK, PRESIDENT, AMERICAN HOSPITAL ASSOCIATION: I think everybody understands the notion that when you buy something, let's say like a steak and you want to have a really nice steak dinner at home, it's a lot less expensive to prepare it and enjoy it at home than it is out in a restaurant.
COHEN: If they want to charge you $863 for a disposable piece of equipment, they can do it.
UMBOENSTOCK: The hospital has to bring if more money than it spends or it won't be there for the next patient.
(END VIDEOTAPE)
CHETRY: So you hear the explanations. It still doesn't sound right, though. What's the solution? Patients can't really buy their own supplies themselves, right?
COHEN: It is interesting, Kiran, because Dr. Galloway proposed just that. She said I can go to the same medical supply company that the hospital went to and I can buy those forceps for $200 and keep them in their sterile packaging and give them to the hospital.
Now, hospitals of course won't let you do that. They say there are quality control issues. But I've heard other patients say that as well, for example, diabetics who have been giving themselves insulin all their lives. When they are in the hospital they have to use what the hospital gives them. And of course the hospital marks it up as we've seen sometimes 400 percent.
CHETRY: And that's the micro. The macro is what he was saying, that they mark it up so they can continue to afford to make money and make ends meet somewhere else so they can continue operating. Tough situation, though, when you are the person paying out of pocket, for sure.
Elizabeth, great series by the way. Thanks so much.
COHEN: Thanks.
CHETRY: And tomorrow, we will be talking more about why we can't regulate what hospitals charge, or why we can't here in America. It seems they have doing it some places, one state has been doing it for 30 years. The result, a savings of $40 billion. So could that be the way to help across America, our health care crisis? Tomorrow, an "A.M." original only on "AMERICAN MORNING." John?
ROBERTS: Coming up now, talk of this morning top stories. Accused Christmas day bomber Umar Farouk Abdullahmutallab has surfaced in a training video produced by Al Qaeda. The tape was attainted by ABC News and shows the suspected underwear bomber in Yemen firing on targets that include a Star of David and discussing his impending attack on a U.S. airliner in Arabic.
CHETRY: Former Panamanian dictator Manuel Noriega appearing in a courtroom in Paris this morning facing charges of money laundering. The French government claims he laundered some $3 million in drug money. He could face another ten years behind bars if convicted in France.
ROBERTS: And they were forced to break out the umbrellas inside Ukraine's parliament. Check this out -- protesters hurled eggs and set off smoke bombs earlier today. They are upset over an agreement that allows Russia to extend its lease of a key naval base right there.
And despite all the chaos officials still tried to push ahead with their business as if nothing was taking place.
As President Obama makes a new push for peace in the Middle East, concern is growing about the threat that Iran poses in the region and what Israel is prepared to do about it. Iran, expected to be a major topic when Israeli Defense Minister Ehud Barak and Defense Secretary Robert Gates meets later at the Pentagon.
Joining us to talk more about this and the peace process, Michael Oren, who was Israel's ambassador to the United States. Great to see you this morning.
AMBASSADOR MICHAEL OREN, ISRAELI AMBASSADOR TO THE U.S.: Good morning, John. How are you?
ROBERTS: As this meeting takes place between your defense minister and the defense secretary, there is growing concern that Israel may act unilaterally to take out Iran's nuclear facilities? Are you prepared to go to war with Iran if necessary?
OREN: John, we are committed to the sanctions program. The president has said repeatedly he is determined to prevent Iran from acquiring nuclear weapons. A nuclear Iran can pass on nuclear military capabilities to terrorist organizations that will trigger a nuclear arms race in the Middle East. We understand and we appreciate that the United States is leading an international consensus on sanctions against Iran. We are committed to that process. We are now watching as a fourth U.N. resolution will be passed that will provide an umbrella for biting sanctions against that regime.
ROBERTS: But Mr. Ambassador, if that process will not get the desired result, is Israel prepared to act unilaterally to take out Iran's nuclear facilities?
OREN: Israel has a right to defend itself. We have a particular memory of a time 65 years ago when Jews didn't have a right to defend themselves and we remember what happened.
But the fact of the matter is, again, we are committed to these sanctions, seeing how they work, getting them up and running and imposing them on this regime in order to deter Iran from making nuclear weapons.
ROBERTS: Vice President Joe Biden said the other day that if Israel were to act and strikeout at Iran, he expects that your government would inform the administration, would inform the White House of what's to happen. Is he correct in saying that?
OREN: John, the United States is a great friend of the state of Israel. We have an unbreakable alliance. That alliance has been reiterated by just about every member of the administration in the last week, the president, secretary of state, national security adviser, they have all reiterated the unshakeable bonds between our two countries.
We are deeply in communication about the Iranian issue. There is no daylight between Israel and the United States on security issues.
ROBERTS: Do you believe that Iran currently represents an existential threat against the state of Israel?
OREN: I think Iran poses a mortal and serious threat not just against Israel but many Middle Eastern nations and world security in general.
The people of this country, if Iran gets a bomb, a great number of countries in the world, many of them unstable, failed regimes, terrorist groups, will get access to military nuclear technology, and Iran is providing missiles to terrorists.
ROBERTS: There are some suggestions by analysts that the United States may not be able to stop Iran from acquiring a nuclear weapon, if, indeed, that is what it is seeking. If the United States allows Iran to get the bomb, is that acceptable to Israel?
OREN: I think the administration has repeated that it is determined to prevent Iran from getting that nuclear weapon.
ROBERTS: But how far, Mr. Ambassador, do you let this threat go before Israel, as it did in 1981 with the nuclear reactor in Iraq, saying we can't take this anymore, we have to do something about it?
OREN: Again, we are committed to the sanctions, John. We are going to see how they work. We have every confidence that president Obama is going to lead this effort internationally.
The international community is far more united in recognizing the need to stop Iran from acquiring nuclear weapons through sanctions. And Iran is internally divided, something that wasn't the case a year ago.
ROBERTS: Let's talk about what's going on between Syria and Lebanon and Iran's possible role in it. Your president Shimon Peres insists that Syria has transferred skud missiles to Hezbollah in Lebanon. Your Prime Minister Netanyahu says that Iran is trying to provoke a conflict between Israel and Syria. How close to potential war are you in the Middle East?
OREN: We have no intention of attacking Lebanon, Syria, or anybody else in the Middle East. The fact of the matter is the Syrians are providing missiles to Hezbollah in Lebanon. We are focused on these skuds because they are very big. They have a one ton payload. It could take a chemical payload.
ROBERTS: We saw these in the first Iraq war.
OREN: And it has a range that can hit any city in the state of Israel.
But that shouldn't obscure the fact that the Iranians and Syrians have provided as many as 60,000 rockets to Hezbollah, all of them aimed at Israeli cities, towns, farms that are quite deadly. And that this poses a threat to the people of Israel and the people of Lebanon and also neighboring states. It's a dire threat.
ROBERTS: Are we heading for another conflict in the Middle East?
OREN: I think the Obama administration has made it clear to the Syrians that this is unacceptable behavior. They have summoned the Syrian diplomat to warn them. We are confident that the American, Obama administration understands this danger and has made its concern to the Syrian government.
ROBERTS: Ambassador Michael Oren, thanks, great to see you.
OREN: Thank you.
ROBERTS: Goldman Sachs, is the lawsuit the tip of the iceberg? How the company is accused of using homes like this one to help clients to make millions. That story is coming right up.
It's 39 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the Most News in the Morning. His company under fire and accused of fraud. Goldman Sachs CEO Lloyd Blankfein is going to be heading to Capitol Hill today where he will testify.
And some of his opening remarks will be released. We know he will argue that his company did not mislead investors and also did not bet against the housing market. Allan Chernoff is minding your business this morning and joins us with a breakdown of what this is all about.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Good morning, Kiran.
The fact is the fraud charge against Goldman, that is only the tip of the iceberg, an iceberg that is the mortgage securities market. Too much gambling in this market caused the financial system to crash and then sink.
And who threw the life line to that financial system? Of course, the taxpayer.
But our story begins at Jack's house.
(BEGIN VIDEOTAPE)
CHERNOFF: This is the house Jack bought, Jack Booken, 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 Monmonth County Hall of Records.
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 $1 billion.
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 to the gambling table without telling IKB.
JOHN COFFEE, COLUMBIA UNIVERSITY BUSINESS SCHOOL: The 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 said IKB was a big bill. But they are not considered a victim in King County, Washington. They bought one of the 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 SYSTEM: We did have to scale back the operating of the library system and look more carefully at all things we are doing.
(END VIDEOTAPE)
CHERNOFF: Suing IKB, the very company that the SEC says was a victim of Foldman Sachs. The county is also suing Moody's and Standard and Poors. Those rating agencies told King County it's bet on mortgages with TRIPLE-A safe.
What about Jack's house? It failed to generate any bidders at yesterday's foreclosure auction, so it goes back to the foreclosing bank, which is another German firm, Deutsche Bank.
And the big gamblers in this whole mortgage market, IKB lost so much that German taxpayers had to bail it out. And here in the U.S., the mortgage meltdown forced American taxpayers to shell out bailout money for the nation's biggest banks, including $10 billion for Goldman Sachs, which it has since repaid. Kiran?
CHETRY: That's just astounding to see it broken down like that, I mean, it's just a quaint notion these days that you save up enough money, you have 20 percent down and you get a mortgage from your local bank to buy a home?
CHERNOFF: That's really the core of what happened over here. That caused the whole problem, the fact that so many U.S. homeowners dove in and bought homes they couldn't afford. The mortgage brokers pushed it on them and then those mortgages were just sold off into securities.
And the Wall Street firms, investment firms all over the world were buying, selling, these trading needs and then the market just crashed. Kiran, a sad story and we've all paid for it.
CHETRY: I know and then you see it boil down to one house and one homeowner. Amazing, Allan, thanks so much.
Well, still ahead, we're going to check in with Rob Marciano. He's going to give us a look at the forecast. Cooler temperatures and scattered showers, though and a big system, heading into one part of the country.
Rob breaks it down for us, coming up. 46 minutes past the hour.
(COMMERCIAL BREAK)
ROBERTS: All right. Oh my goodness. That will wake you up this morning. New York City, a look out over Central Park and the reservoir up there on the top of your screen. It's cloudy right now at 49 degrees. Later on today, showers with a high of just 55.
Our Rob Marciano is checking the extreme weather across the country today and he's in Atlanta. Hey, Rob, what are we looking at?
ROB MARCIANO, AMS METEOROLOGIST: Oh yes, a couple of those showers in New York but that should be about it this morning and then, we're done. But it's going to be kind of breezy and cool. A little weak system rolling across the Tennessee Valley right now and that is not going to bring severe weather. But it may bring a couple of thunderstorms in some spots.
Areas to watch out for today if you are traveling: New York City metros mostly because of wind, leftover morning showers. In D.C., you're pretty much done with the rain.
Boston, up through Upstate New York -- hey, check out upstate New York, lots of white showing up on the radar scope. That means, snow, I mean, the west snow albeit almost in Maine now, but nonetheless, winter storm warnings have been posted for the Adirondacks and the green and white mountains of New Hampshire and Vermont. So here in we're not done yet with winter are we?
All right, well, this little system rolling across the Tennessee and Ohio Valley, not a big deal. It's moving pretty quickly. No severe weather expected. But some showers from Knoxville down through Atlanta up to Covington and Cincinnati possible.
But the next system about to come through into the planes from the Pacific Northwest, a stormy potential for Thursday and Friday; we'll watch the possibility for another severe weather setup come the end of the week. John, back up to you.
ROBERTS: Rob thanks so much. All right, we'll see you again a little bit later on.
MARCIANO: Ok.
ROBERTS: Sanjay Gupta, our own resident triathlon doc, if you want to call him that and six AM viewers are training for the New York City triathlon. How are the workouts going? What are the biggest issues and obstacles? The doc joins us next to tell us in an update how things are going. Stay with us.
(COMMERCIAL BREAK)
CHETRY: Welcome back to The Most News in the Morning. It's 54 minutes past the hour right now, time for your "A.M. House Call", stories about your health.
In just three months, our own Sanjay Gupta and six AMERICAN MORNING viewers will be competing in the Nautica, New York City Triathlon. So we thought we would check in with two of the members of the Fit Nation team who have been training for the past four months to get ready for the race.
(BEGIN VIDEOTAPE)
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Getting ready for the challenge, Dean Hannon worked out hard, too hard. He strained his calf.
DEAN HANNON, FIT NATION PARTICIPANT: Yes. I'm nervous because I'm seven, almost eight weeks behind. I have to gun it. I am going to have to do a six-mile run after I do a 24-mile bike after I do a mile swim. I feel like I can't do that now.
GUPTA: But he is drawing strength from his family.
HANNON: I have very high standards for myself because my dad has been a runner for years. He has run 13 marathons. My brother has run one but he is in amazing shape. So I have to be that way too.
If you are a Hannon, you got to be in shape. That's the way it goes.
I have rehabbed. That chapter is done. It is time to train. It is time to get in shape, you know. Like, my focus is on July.
GUPTA: Linda Fisher-Lewis is also focused on July.
LINDA FISHER-LEWIS, FIT NATION PARTICIPANT: I think a lot of people have put faith in me that I am going to do this. And it would be hard for me to let them down.
GUPTA: But her trainer, Richard Earl, says she has no reason to be concerned.
RICHARD EARLE, TRIATHLON TRAINER: She will cross the finish line or somebody will have to club her over the head with a two-by-four you know. And that would -- all that would probably do is just slow her down.
GUPTA: When I first met Linda back in January, her biggest fear, not the 25-mile bike ride or the six-mile run.
(on camera): Are you apprehensive about this?
FISHER-LEWIS: I'm very apprehensive about the Hudson.
GUPTA (voice-over): But now, she says it is time. That's her biggest adversary.
FISHER-LEWIS: The race is three, four hours long. Eventually, I'm going to be needing to be working out for three or four hours. And I am just finding there is not that much time in the day.
GUPTA: But her old worry still remains.
FISHER-LEWIS: I am still apprehensive about swimming in the Hudson.
GUPTA: For both Dean and Linda, apprehension and fear are slowly melting, giving way to determination and focus.
(on camera): I want to see you at the finish line.
HANNON: Yes, sir.
FISHER-LEWIS: Getting to the finish line is a big deal. I could be carrying my bike or dragging a leg or something, I think I will end up finishing. HANNON: Am I in? I think I'm in.
GUPTA: Dr. Sanjay Gupta, CNN, reporting.
(COMMERCIAL BREAK)
ROBERTS: "The Simpsons" showing animation solidarity with the creators of "South Park". During the opening credit this week, Bart stuck up for his cartoon cousins, sort of, writing on the school chalk board, "South Park, we would stand beside you if we weren't so scared."
That's of course a reference to the controversy around "South Park's" recent episodes dealing with the Muslim Prophet Mohammed and the threats from a radical group toward the show's creators, Trey Parker and Matt Stone. So it continues.
Continue the conversation on today's stories, go to our blog at cnn.com/amfix. The news continues here on CNN -- Kiran.
CHETRY: That's right. We will see you back here tomorrow, John. Meantime, "CNN NEWSROOM" with Kyra Phillips starts now.
