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American Morning
Burning the Midnight Oil; Suing Over an Adoption; Dow Takes a Nosedive; Wall Street Profits, Main Street Suffering; Prescription for Waste
Aired April 28, 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 on this Wednesday. It's April 28th. Glad you're with us on this AMERICAN MORNING. I'm Kiran Chetry.
JOHN ROBERTS, CNN ANCHOR: Good morning to you. I'm John Roberts. Thanks so much for being with us.
Here are the big stories we'll tell you about coming up in the next 15 minutes.
The Coast Guard may set a massive oil slick on fire today. It's 40 miles wide and threatening the Gulf Coast right now. Burning it may be the only way to beat it.
But is that solution worse than doing nothing at all? A live update from Louisiana is just ahead.
CHETRY: A Virginia family who adopted from Russia says their son was given a clean bill of health by the adoption agency, but since they came home, they say they've been living a nightmare. Our Alina Cho tells us what happened and why they're now suing the agency.
ROBERTS: And it got bleeping ugly. In a rare show of unity on Capitol Hill, both sides took shots at Goldman Sachs executives and read vulgar internal e-mails that we're allegedly a how-to guide for selling junk. After the hearing, the man in charge of Goldman spoke with our Christine Romans.
(BEGIN VIDEO CLIP)
LLOYD BLANKFEIN, CEO, GOLDMAN SACHS: There has been a huge trauma to this country related to the economic collapse and financial institutions played a big role in that, and we share -- we share some of that burden.
CHRISTINE ROMANS, CNN CORRESPONDENT: My point is like, it looks like profit growth, not growing the economy. When did that change?
BLANKFEIN: Well, I don't know that it's changed. I don't think it's changed. I think we still will survive only by putting our clients first and the interests of the broader community first.
(END VIDEO CLIP)
ROBERTS: Insisted they did nothing wrong in the economic meltdown.
And, of course, the amFIX blog is up and running this morning. Join the live conversation going on 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 read some of your comments this hour.
CHETRY: Well, if you can't beat it, burn it. That could be the Coast Guard's only hope to try to stop a 40-mile-wide, 80-mile- long oil slick from washing ashore on the Gulf Coast. Officials have been burning the midnight oil, wrestling with the fact they may have no choice but to set portions of the slick on fire today.
ROBERTS: The huge spill is now within 20 miles -- just 20 miles of the coastline. It's threatening birds, oyster beds, miles of beaches. The Coast Guard, British Petroleum, and the owner of the rig are all deploying nearly 50 vessels to help contain and try to clean up the spill.
Our Reynolds Wolf is live for us this morning down in the Mississippi Delta in Venice, Louisiana.
And, Reynolds, what about this idea of setting it on fire?
REYNOLDS WOLF, AMS METEOROLOGIST: Yes, a pretty interesting idea. What they plan on using, John, is actually a bit of teamwork. What they're going to do is to handle this oil slick, which is about 93 miles from where we stand at this point, about 5,000 feet below the surface. The water where it's hemorrhaging this oil, the way they figure about handling is by actually using fire, as you mentioned.
Now, the question is: how are they going to do it? They're not going out there in a boat and just getting a lit match and throwing it out there. What they're doing is they're borrowing from the state of Texas about 1,000 feet of something that they call a fireproof boom.
Now, what that happens to be, it's almost like a floating fence, a barrier with actually take part of that oil, of course, some of the heaviest of it, some of the heaviest crude, and actually pull it away and then just set that small piece on fire, try to knock out as much as they can as that oil continues to come up.
Believe it or not, the latest estimate was about 1,000 gallons per day comes out of the sea floor.
CHETRY: Most of us, of course, remember the tragedy of the Exxon Valdez back in 1993. How does this spill compare in size and scope to that?
WOLF: That's a great question. Well, you know, yesterday, the size of the spill was anywhere from, say, 30 miles to 40 miles. That number changed overnight. And I'll tell you, it continues to change moment by moment, second by second, as it continues to come up.
But in comparison, say, back in 1989, the Exxon Valdez, if you were to take that oil spill and you're going to put that on parts of the nation, just for the sake of scale, it would stretch from Maine southward to Virginia. So, again, this is much smaller, but it does continue to grow.
ROBERTS: So, we all know that that is just an incredibly rich fishery. You got the offshore fishery, you've got snapper, you've got redfish, you've got drum, you've got billfish out there, as well as tuna. And then you got the inshore fishery where you got the shrimp fishing, oyster beds. And then there's all of those very, very sensitive estuaries coming off the Mississippi River.
If that slick gets close, it's going to do a huge amount of damage. You flew above it yesterday. What did you see in terms of offshore marine life?
WOLF: Well, I'll tell you, offshore, we didn't see much other than just some birds, but we've been told that there was actually a pod of five whales that have actually been through part of the area. I didn't see them yesterday. Just from where we happen to stand, where we flew over yesterday, we flew over parts of the Delta National Marine Sanctuary which is just towards the south. And there's one area that is about 20 miles -- extreme southern tip of the state -- 20 miles from that oil slick, which is, of course, one of the things they're trying hard to protect as well as the rest of the Gulf Coast.
CHETRY: All right. Well --
WOLF: But, again, the sight -- the sight from high above was pretty interesting. At times, it was very difficult to see because of the angle of the sun coming in. But at times, we could get closer, a little bit drop-down to about 500 feet at times, and you could see it plain as day, very thick oil in some places that they're going to have to skim off. But the other things, the rainbow sheen, much of that will actually disperse just with the sun's radiant energy. That will actually just burn off naturally, and that is some good news.
CHETRY: Yes. Reynolds Wolf following all this for us -- thanks so much.
It's right. Exxon Valdez, 1989, 1993, and that was 10.8 million gallons of crude oil, can you imagine?
ROBERTS: Yes.
CHETRY: Still considered the largest and most disastrous ecological situation.
ROBERTS: That was huge. It was just terrible.
Winds are picking up in that area. They were talking about, is it going to push the oil ashore? And if it does, when?
Let's get the latest from Rob Marciano. He's at the weather center.
Hey, Rob.
ROB MARCIANO, AMS METEOROLOGIST: Good morning, guys.
A complicated situation -- you've got currents that are closer to shore that go one way, currents that are further away from shore that go another way, and then you've got the wind kind of steering the very surface of those waters.
So, here's a look at where the wind flow is right now -- a cool breeze out of the north-northwest. So, that's kind of kept it to offshore, if not pushed it a little bit down to the south and east.
Give you some perspective, the actual spill is right at the mouth of the Mississippi River and that's pretty much where there's an intersection of two different currents going two different ways. The main current well offshore is this loop current that kind of heads towards Florida. So, if the spill gets that far south, it would go towards Florida. But winds at the surface, later this week, are actually going to be going against that from the southeast towards the northwest, and that would bring it closer to the Louisiana shoreline where there is a current that goes from east to west.
So, we're at the whims of many variables here, and we're watching it very closely. Right now, no threat to land. But any -- we push it further to the south, we got problems. We push it further to the west, we got problems. And so, any solution including lighting it, we'll take at this point.
We'll talk more about the weather situation in about 40 minutes -- John and Kiran.
CHETRY: All right. Rob, thanks so much.
Well, now to some new developments in the freshly signed Arizona immigration bill, which allows police to check the status of those they believe are in the country illegally. It's something that Homeland Security Secretary Janet Napolitano says deeply concerns her and she warns against redirecting resources needed to hunt down dangerous immigrants, and the Justice Department may actually challenge the law in court.
Attorney General Eric Holder says he doesn't like what he sees so far.
(BEGIN VIDEO CLIP)
ERIC HOLDER, U.S. ATTORNEY GENERAL: I think that that law is an unfortunate one. I think that it is, I fear, subject to potential abuse. And I'm very concerned about the wedge that it could draw between communities that law enforcement is supposed to serve and those of us in law enforcement. The Justice Department, along with the department -- along with DHS, is looking at the law to decide exactly how we are going to react to it. We are considering all possibilities, including the possibility of a court challenge.
REPORTER: Do you think it's clearly an unconstitutional measure?
HOLDER: Well, as I say, we are reviewing the law right now. We have a group that has been together over the past few days to examine exactly what our reaction is going to be to it. So, that review is under way.
(END VIDEO CLIP)
CHETRY: Well, the new immigration law drew protests in Arizona. A Census Bureau figure show about a quarter of the population in the state is of Hispanic descent.
ROBERTS: Dangerous situation unfolding right now on the streets just outside of Bangkok in Thailand as police fight back thousands of anti-government protesters with live ammunition. The State Department is warning American travelers to stay away from the area. The crowds in Thailand are hoping to bring down a government they say is illegitimate and undemocratic -- accusations the prime minister calls unfounded.
Since protests began last month, more than two dozen people died.
CHETRY: Well, still ahead, the story of a Virginia family who adopted a little boy from Russia, and they were assured by the adoption agency that he was perfectly healthy. They came to find a very, very different situation. And now, they're suing.
Alina Cho with one family's heartbreaking story.
Nine minutes after the hour.
(COMMERCIAL BREAK)
(MUSIC PLAYING)
ROBERTS: The story of a Tennessee woman who returned her adopted son to Russia, saying that he was too much to handle, placed Russian adoptions firmly in the spotlight. This morning -- an equally heart-wrenching and controversial case.
CHETRY: Yes. A Virginia family also adopted their son from Russia. They alleged the adoption agency they used told them that he was healthy but actually, he's severely ill and violent. The couple is now suing.
Alina Cho has their story.
(BEGIN VIDEOTAPE)
ALINA CHO, CNN CORRESPONDENT (voice-over): The Harshaw home in Virginia is a little quieter these days. Roman, now 8, was sent away to an institution a little more than two weeks ago, where he's getting help for his violent behavior.
JULIE HARSHAW, SUING ADOPTION AGENCY: I felt like the worst mom in the world, and how could I let my baby go there, and go to sleep every night without us and without us tucking him in. And -- you know, it was really hard. And it still is.
CHO: The Harshaws adopted Roman from Russia six years ago. He arrived looking picture-perfect. But soon after, Roman began acting out.
CHIP HARSHAW, SUING ADOPTION AGENCY: He can be hugging you and telling you "I love you" one second and then the next second, he is completely lost it in a rage.
CHO: The Harshaws say Roman once tried to smash a two-by-four over their daughter Grace's head. Another time, he almost drowned her in the pool.
Older brother Daniel is so distraught, he asked his parents for counseling.
J. HARSHAW: To hear your 11-year-old say he'd like to see a psychiatrist because of the stress that's in your house is really hard to hear.
CHO: Roman is also a danger to himself. Most recently, pulling out three of his own teeth. The diagnosis from several doctors: fetal alcohol syndrome.
C. HARSHAW: It's irreversible, incorrectable, and it's a lifelong thing. And it has taken a huge toll on us.
CHO: In a lawsuit filed against adoption agency Bethany Christian Services, the Harshaws allege they were lied to about Roman's health and need financial help to care for his special needs. They say Bethany misled them, telling them a Russian doctor based in New York traveled to the orphanage for a face-to-face visit.
(on camera): You were assured that Dr. D. went to Russia, went to Roman's orphanage and examined Roman.
J. HARSHAW: Correct.
CHO: What were you told about that?
J. HARSHAW: That exactly what they said, that he was healthy and on target.
CHO (voice-over): But in a deposition, Dr. D., Michael Dubrovsky, admitted he never went to the orphanage and doesn't even practice medicine in the U.S. In court documents, an employee of the adoption agency acknowledged she had told the family the Dr. Dubrovsky would visit the children in Russia and review their medical records.
(on camera): Had you known what you now know, you would not have gone through with this adoption. And yet you --
J. HARSHAW: We love him.
C. HARSHAW: Yes. So, what do you do? We are -- we are in the worst possible situation, but the bottom line is that we love Roman. He's not a broken toy that you can return to the store.
UNIDENTIFIED KID: Alligator!
(LAUGHTER)
CHO: So, Roman is getting help at this inpatient facility about 90 minutes away from home. Bethany Christian Services disputes most of the Harshaws' claims and says it provided counseling, extensive documentation, opportunities to consult with physician, and medical records to the family.
Adoption specialist, Jane Aronson, says fetal alcohol syndrome is common in Russian orphans, and the Harshaws should have known the risks before they brought Roman home.
DR. JANE ARONSON, INTERNATIONAL ADOPTION SPECIALIST: Every country is well known for what the challenges are and the style of care for children.
CHO: So, you're saying you should know a lot, if you don't, do your homework.
ARONSON: Exactly. I think everyone needs to do their homework.
CHO: The Harshaws say they're not giving up on the case or on their son.
What's your great hope for Roman?
UNIDENTIFIED FEMALE: That we can find a place that he will be as happy as he can be and as safe as he can be. We don't know what the future holds, but we want him to be a part of our family no matter what.
(END VIDEOTAPE)
CHO (on-camera): The adoption agency is seeking a gag order which would bar the Harshaws from talking to the media. CNN has just filed a motion this morning in court to fight that gag order, guys.
A judge is expected to rule later today. What's interesting is that adoption specialists will say, you know, it's entirely possible the adoption agency, Bethany Christian Services, did everything right, followed the rules, tried their best, and yet, there was a breakdown possibly on the other side of the world.
And she said, in essence, we're dealing with a system thousands of miles away where there's little availability of information and a real resistance to transparency. And so, you know, it's a really tough situation. The family, they said they would not have gone through with the adoption. At the same time, they love him and they don't want to give him up.
CHETRY: It's a tough situation. I mean, everybody's lives are shattered and changed forever no matter what happen. You got to feel for the poor kid as well who has no idea, you know, why this is happening.
CHO: You got to feel for Roman the most and he's really got a tough life ahead.
ROBERTS: Yes. You got to give them credit that they're trying to find a way to make his life as good as it could possibly be.
CHO: That's right.
ROBERTS: Alina Cho this morning, thanks so much.
The CEO of Goldman Sachs, Lloyd Blankfein's day of reckoning, grilled when they fire the barbeque at the senate yesterday on Capitol Hill. Christine Romans talked with Blankfein post hearing. His reaction to everything, coming up next. Seventeen minutes after the hour.
(COMMERCIAL BREAK)
ROBERTS: Just when things were starting to look up, well, now, they're looking down again. Worries about Europe's debt crisis weighing down Wall Street, the Dow nosedive 213 points yesterday. One notable exception to the freefall, Goldman Sachs, which actually saw it stock closed higher by a dollar yesterday.
CHETRY: Yes, even though Goldman Sachs executives were right there on the hot seat getting grilled for more than ten hours yesterday by the Senate, Christine Romans was there for the hearing. She had a chance to also speak with CEO of the company, Lloyd Blankfein, and she joins us now. Hey, Christine. How ironic they're stock up one dollar?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: I know.
CHETRY: Everything else went down.
ROMANS: Mostly because the feeling was while it was incredibly thrilling, yes, ten hours of congressional testimony was thrilling, it really was. I mean, it was the showdown between Senator Carl Levin and the executives at Goldman Sachs capped off by Lloyd Blankfein, but the way Wall Street really looked at it is it was the same kinds of charges that they had heard before, and they didn't see anything in there that was going to be truly very damaging other than what we already know for Goldman Sachs, and that's why the stock closed up.
But I talked to Lloyd Blankfein after that testimony, and, you know, I asked him, I said, look, why is it that you're doing so well as the rest of the country is suffering so much? And basically, he said, that the banks doing very well and Goldman Sachs doing well is good for you.
(BEGIN VIDEO CLIP)
ROMANS: Just explain to my audience why is it that Goldman Sachs and Wall Street are making so much money and Main Street is suffering? That's the bottom line that people don't understand. LLOYD BLANKFEIN, GOLDMAN CEO: Well, I don't know across Wall Street, but part of what Wall Street does is it helps to raise capital for new enterprises, it helps to finance activities in the early stages of economic growth where new initiatives are being taken, financing is starting up again, people are moving into riskier assets on the investing side.
Those are activities that Wall Street tends to be involved in, all of which are good for the recovery. It just -- it just so happens that that represents the earliest stages of the recovery. I will tell you, Wall Street cannot profit unless Main Street profits.
(END VIDEO CLIP)
ROMANS: So, he says it's in his best interest and in the best interest of Wall Street and the banks for Main Street to follow along. But the things that he's talking about there, raising money, raising capital, you'll hear him talk a lot about the capital markets, those are the traditional things that these investment banks do. They have long been held as the things that help drive the global economy. But that's not what he's being criticized for. What they're being criticized for is financial engineering and excessive trading that doesn't help Main Street.
In fact, the question is does it really hurt Main Street and not those other activities that he is saying eventually will be good for America.
ROBERTS: All right. Christine Romans this morning. Great interview, Christine. Way to go.
ROMANS: Thanks.
CHETRY: Yes, and also joining us in a couple minute, we're going to be speaking with Senator Carl Levin. You heard him with some of the right language he was actually just quoting some of the e-mails, the grilling that he gave the CEO and executives at Goldman Sachs. Was anything accomplished in yesterday's hearing? We're going to talk to the senator about it. Twenty-three minutes past the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the Most News in the Morning. Twenty- six minutes past the hour. Your top stories four minutes away. First, though, an "AM Original" something you'll only see on AMERICAN MORNING.
ROBERTS: A question for you, would you spend your hard-earned money in a store that charges triple their cost for everything they sell? You probably wouldn't dream of it, but every day, thousands of Americans do just that when they check into a hospital.
CHETRY: Hospitals in this country on average charge 180 percent above the cost for their services except in Maryland. That's where we find senior medical correspondent Elizabeth Cohen with part three of "Prescription for Waste." (BEGIN VIDEOTAPE)
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: I'm here at Johns Hopkins Hospital in Baltimore, Maryland. Now, let's say that they brought someone in here who just had a heart attack. It costs a certain amount of money to treat that person, the drugs, the nurses, all of that. Now Hopkins, like other hospitals, on top of that charges a profit margin, a mark-up, if you will.
And now to talk about these mark-ups, I'm here with Professor Gerard Anderson. Now, tell me, how much of a mark-up does Hopkins and other hospitals in Maryland charge?
GERARD ANDERSON, PROFESSOR: Twenty-one percent.
COHEN: Twenty-one percent. Now, other hospitals and other states in the country, do they also charge a 21 percent mark-up?
ANDERSON: No. It's only Maryland and other states the mark-ups are much higher.
COHEN: Much higher. OK. I'm going to take a tour of states around Maryland to see how much it costs there to have a heart attack.
Now I've just crossed the line into Delaware where they mark up prices by 85 percent. And remember in Maryland, they only mark up prices by 21 percent, but wait, it gets even worse. Just across the line into Pennsylvania, and they have a 277 percent mark-up. This heart attack is getting very expensive, but wait, we still have one more state to go.
In New Jersey, hospitals hike their prices higher than any other state in the country, 326 percent. I wanted to understand why hospitals mark up their prices this way. So, I've come here to ask the president of the American Hospital Association.
Nationally, mark-ups are 180 percent, we're told. That just seems to most consumers like a huge mark-up.
RICHARD UMBDENSTOCK, PRESIDENT, AMERICAN HOSPITAL ASSOCIATION: You'll find mark-ups in every walk of life, and it depends upon the variables. The cost of providing that particular service and the factor of how much do you actually in fact then get paid.
COHEN: Other states right next to Maryland charge so much more than what they charge in Maryland.
UMBDENSTOCK: Everyone doesn't have the same type of payment system that Maryland has.
COHEN: So, Professor Anderson, how does Maryland keep its mark- up so low?
ANDERSON: Well, there is the state government, and they establish the rates for each hospital in Maryland. COHEN: So, Maryland takes care of patients more inexpensively. So, let's not forget about the patient here. Does that hurt our patient that Maryland is spending less money on him?
ANDERSON: No. In fact, the quality of care at Johns Hopkins, the quality of care in the hospitals in Maryland is all quite good.
(END VIDEOTAPE)
CHETRY: So, if the state of Maryland can do that, they can tell their hospitals how much they can charge over cost, can every state do that?
COHEN: You know, Kiran, it's interesting, other states decided to experiment in the1970s and 1980s and said, let's do what Maryland's doing, let's set prices by the state government. And you know what? They tried it and then they went right back to doing it the way that they used to do it. The hospitals didn't make that much money, didn't make as much money when the state set the prices, and hospitals said, let's go back to the other way.
ROBERTS: Yes. That was a pretty incredible mark-up that you pointed out in New Jersey, 326 percent. Do New Jersey's hospitals usually get paid all the extra charges they ask for?
COHEN: You know what, John, they usually don't. They usually don't get everything that they ask for, but they certainly get considerably more than what hospitals get in Maryland. Now, I'd love to be able to tell you this is what hospitals get in New Jersey or any other state. I can't because the negotiations that hospitals do with insurance companies, those are all secret. So, we don't know exactly how much they get paid.
ROBERTS: Elizabeth Cohen this morning with her "Prescription for Waste". Elizabeth, thanks so much.
And tomorrow on "AMERICAN MORNING," a medical clinic where a bold experiment is panning out. Doctors are happier, patients and bottom lines are healthier. Elizabeth profiles what could be the prototype for health care of the future. It's another "A.M. Original" tomorrow only on "AMERICAN MORNING."
CHETRY: It's 30 minutes past the hour. Time for a look at this morning's the top stories.
A 40-mile by 80-mile-wide oil slick is now within 20 miles of Louisiana's shore. The Coast Guard is considering setting it on fire as a last resort. Robotic subs that went down, a mile down to try to shut off the leaking valve where the oil rig exploded last week failed to do that, and 40,000 gallons of crude still pouring into the ocean every day.
And officials are now considering a controlled burn, possibly today, in an attempt to eliminate as much as 90 percent of the slick before it reaches the coastline. ROBERTS: The Justice Department may sue the state of Arizona over a new law that allows police to check the status of those they believe are in the country illegally.
Attorney General Eric Holder says the bill could pit law enforcement against those they are supposed to protect. Meantime, Homeland Security Secretary Janet Napolitano calls the southern border "as secure as it has ever been" and warns against redirecting federal dollars used to hunt down dangerous immigrants.
CHETRY: A reflection of Main Street's anger coming out on Capitol Hill, senators slamming Goldman Sachs' executives for their alleged role in the worst recession since the Great Depression.
(BEGIN VIDEO CLIP)
(BEGIN VIDEO CLIP)
SEN. CARL LEVIN, (D) MICHIGAN, CHAIRMAN, SUBCOMMITTEE ON INVESTIGATIONS: June 22 is the date of this e-mail. "Boy, that timber wolf was one (EXPLETIVE DELETED) deal. How much of that (EXPLETIVE DELETED) deal did you sell to your clients after June 22, 2007?
UNIDENTIFIED MALE: Mr. Chairman, I don't know the answer to that, but the price would have reflected levels that they wanted to invest.
LEVIN: But they don't know -- you didn't tell them it was a (EXPLETIVE DELETED) deal.
UNIDENTIFIED MALE: I didn't say that.
LEVIN: No. Who did? Your people internally. You knew it was a (EXPLETIVE DELETED) deal, and that's what your e-mails show.
(END VIDEO CLIP)
CHETRY: Well, the traders all denied over and over again that they were part of the problem that caused the financial meltdown.
ROBERTS: Joining us now live from the Russell rotunda on Capitol Hill, you just heard him, the chairman of the subcommittee, Senator Carl Levin. He's promised to keep it clean for us this morning. Senator, great to see you.
LEVIN: Good morning.
ROBERTS: So the Goldman Sachs executives were accused over and over again yesterday of greed, but it's not necessarily a crime to be greedy. Do you think, after everything you heard yesterday, they actually did something illegal or were they just playing fast and loose within the rules?
LEVIN: Well, I think what they did was wrong in a number of ways. But the one that we focused on is this inherent conflict of interest which exists when you as an investment bank, which Goldman bank was an investment bank, put together a deal to sell these financial securities to a pension fund, let's say, and at the same time you're on the other side of the deal, you're betting against the deal, you're investing against the deal, Goldman's own money, selling what their own people describe as "crap" or "junk" to people on the outside.
There's an inherent conflict of interest. You can't do both.
ROBERTS: So was it wrong morally and ethically or was it illegal?
LEVIN: I don't know that it's illegal under current law. I think it's clearly wrong and should be illegal if it's not now illegal. These kinds of conflicts of interest have to be addressed. And they have to be addressed in the bill we're trying to get to the floor right now.
We have language, Senator Merkley and I, will which will create prohibitions against these kinds of conflicts of interest. You can't be on both sides. You either have to serve your customer, your client, or you're going to serve yourself.
CHETRY: You know, you, as well as other senators on both sides of the aisle, have already determined that you felt Goldman Sachs executives were wrong, inappropriate, however you want to put it, whether it was illegal or immoral, you guys seemed to have already decided.
In that ten-and-a-half hours, was there anything they could have said that could have changed your mind about them yesterday? Did you get what you wanted out of that hearing?
LEVIN: What they could have been is a lot more forthcoming. There are a lot of questions they didn't want to answer at all.
What I would have loved to have heard is some sense that there's a conflict between what they're doing for themselves and their own -- feathering their own nest, putting money in their own pocket, voting against -- not voting, but investing against their own securities at the same time that they're selling these to pension funds.
I would have liked them to have said, you know, there is a conflict of interest here. We will separate these two functions. We're either going to be a bank or we're going to be a hedge fund, but we can't be blurring those two functions.
And if they would have shown some sensitivity to that conflict, serving themselves or serving your client, if they would have shown that, I would have felt a lot better. But they didn't.
ROBERTS: So, senator, you said you don't necessarily think what they did was illegal, but it was inherently wrong. So that brings up the question of it wasn't illegal but you think it was wrong, where's Congress been in all of this? You were many of many Democrats who voted to repeal the Glass- Steagall act at the turn of the last decade. Do you bear some responsibility of allowing these firms to run fast in the landscape of the financial services industry?
LEVIN: I think Congress has its share of responsibility, of course. I think there was a mistake when that act was repealed. How it was repealed is not particularly relevant. It was a mistake when it was repealed.
We can correct that by putting in a more modern version of Glass- Steagall. Things have been done which requires some modifications in it. But keeping the basic point of Glass-Steagall that you've either got to be out for yourself like a hedge fund or serving a client, like what a commercial bank should be doing, one or the other. And so -- go on.
CHETRY: I was just going to say one of our e-mailers wrote on our blog today, and this is a sentiment we've seen a lot of people weighing in about, "Senate hearings look more like a witch-hunt than an attempt to find someone to blame when it falls on all of us. I'm not say what Goldman did was right, but greed is what caused this for all of us."
He said Goldman didn't do anything different than the very senators themselves, which is to look out for number one. I'm just wondering, is Goldman an easy villain in a much larger problem in our nation?
LEVIN: Well, they're clearly part of the problem. What makes them unique is that they made a very big bet against the housing market at the same time they were packaging securities, these toxic, bad mortgage, and selling them to pension funds and so forth.
So they have a unique position also because they not only did that, they bet against the product they were selling and made a lot of money betting against them.
And there they are somewhat unique. Their size, the fact that they were betting against the thing that they were selling to their clients, and selling something to their client which involved a conflict of interest. That combination made them unique.
We spent a lot of time on the investigation. This has been going on now for 16 months. We thought they were probably the best example, just like we did with Enron. We showed that Enron had done something very wrong.
So what our subcommittee does is focus on case histories which illustrate a bigger problem. But they were not alone, but they were somewhat unique.
ROBERTS: Senator, we asked this question of Senator Dodd last hour, talking about the financial reform legislation, that back when Glass-Steagall was appealed, he said we got all this advice it was the right thing to do, we took it on faith and voted for the repeal. Now in hindsight it was the wrong thing to do.
How can voters be assured this financial reform bill is the right thing to do and you're not just making a second mistake?
LEVIN: By studying what we're doing, by weighing in with us, by giving us their advice and after reading it and after studying what the problems are.
We obviously are listening to people who will be impacted by it, listening to the public, listening to experts, and doing the best job that we can. And that's what our role is, to do the best job we can after investigations which we now have done very thoroughly here.
We've had four hearings. And this upstream problem began when the toxic mortgages were created. We used as an example Washington Mutual Bank. We showed what they had done. It was very wrong. They knew there were high default rates in these kind of mortgages which they were issuing.
Nonetheless, they kept signing up people to those mortgages with these "liar loans," as they were called, with these teaser interest rates. There was high default rates. They kept making them, making them, packaging them up in securities.
Then those securities were shipped to wall street, further securitized them, diced them and sliced them into these synthetic products. That means they spread this poison much more widely.
We had a hearing on the so-called credit rating agencies, the conflict of interest that exists with them when they're being paid by the very people whose financial instruments they are rating. That is wrong. There's an inherent conflict.
CHETRY: Everything you're saying is right, and we see that now. But, I mean, all of that has been under the noses of our regulatory agencies that are already in place to sort of flag that, the SEC as well as others. So what happened?
LEVIN: What happened is that one of the regulatory agencies, the one that was supposed to handle certain kinds of banks, did not do their job. We had a hearing on that, a failure of the regulatory agencies.
And as a matter of fact, the Office of Thrift Supervision, OTS, would be eliminated under the pending bill that is hopefully going to be able to get to the floor of the Senate if we can overcome a Republican filibuster, because the OTS, that agency that was supposed to look at thrift, did not do its job.
We did a long investigation. We picked on that agency because of the failure of the kinds that we saw with the Washington Mutual Bank, the largest bank failure in history. And part of the problem was that our regulatory agency saw the problem but did nothing about it.
So this bill will handle that as well. There's a lot of pieces to this bill. There's a lot of pieces to this puzzle. It's not just all what one bank on Wall Street did.
ROBERTS: All right. Well, we'll keep on watching the process there on Capitol Hill. I'm sure it's going to be another vote today. Senator Carl Levin, thanks for joining us this morning. Good to see you.
LEVIN: Thank you.
ROBERTS: Deb Feyerick is in Cleveland this morning for our series "Building up America." She'll tell us how a mountain biker turned a big idea into a viable small business.
It's 40 minutes after the hour.
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CHETRY: Just in to CNN now. The Coast Guard saying it will perform a partial controlled burn sometime this morning to try to stop that 40-mile-by-80-mile-long oil slick from washing ashore on the Gulf coast.
It's a huge spill that we've been covering. It's now within 20 miles of the coastline. It's been threatening birds, oyster beds, many, many various species of sea life, fish, and the beaches, of course.
And they were attempting before this to try to get one of those robotic submarines down there to somehow turn off that valve and prevent the oil from spilling out of the well a mile below. That's been unsuccessful.
And so now it looks like the Coast Guard will at least partially do a controlled burn to try to burn off some of that oil. John?
ROBERTS: Our "Building up America" series has profiled small business owners across the country who are succeeding in hard economic times. This morning we're in Cleveland where CNN's Deb Feyerick shows us the degree of difficulty for one man turning a dream into a reality.
(BEGIN VIDEOTAPE)
DEBORAH FEYERICK, CNN CORRESPONDENT: Hard to believe, but not long ago this indoor mountain bike park was a rundown, abandoned warehouse.
UNIDENTIFIED MALE: My heart really thought it would work, and I was prepared to lose it all.
FEYERICK: Ray Peitros spent his entire life savings and maxed out his credit cards to build a dream.
UNIDENTIFIED MALE: I've been broke before. I might be broke again.
FEYERICK: Then, just as the recession hit, Ray met Jennifer Thomas, another Cleveland native determined to raise her kids here. Thomas runs Civic Innovation Lab, helping first-time entrepreneurs turn big ideas into viable small businesses.
JENNIFER THOMAS, CIVIC INNOVATION LAB: We saw Ray's as adventure sports as an economic driver.
FEYERICK (on camera): When you talk about an economic driver, what do you mean?
THOMAS: We're looking for a place like Ray's to fill hotel beds, to fill restaurants, to get people from out of state into our state.
FEYERICK (voice-over): The Innovation Lab gave Ray a $30,000 grant which he used, among other things, to add heaters and computerize his business.
RAY PIETRO, RAY'S MOUNTAIN BIKE PARK: Some routers and we got some other computers.
FEYERICK: Perhaps more valuable, they hooked Ray up with a mentor.
BERNIE MORENO, BUSINESSMAN: He had that burning passion.
FEYERICK: Bernie Moreno helped Ray get the grant and helped him avoid the mistakes he made at turning a fledgling Cleveland Mercedes- Benz dealership into a $100-million business.
Ray's is now the largest indoor mountain bike park in the nation.
(on camera): And it's not just riders; advertisers, too. Virtually everything here is sponsored. It's a small investment with a really big payoff. And what you see here at a warehouse in Cleveland goes viral on YouTube.
MORENO: I think Cleveland's in this process of reinventing itself as really a place for entrepreneurs. If you can take a thousand Rays, we can be one of the greatest cities in the country.
FEYERICK: This bike park was Ray's dream. Now he's making dreams for riders and rider wannabes come true.
All right, my fantasy, but for everyone else here, it's their reality.
Deborah Feyerick, CNN, Cleveland, Ohio.
(END VIDEOTAPE)
CHETRY: See, I believed the first second, I mean, that's why we like that. I feel like she could have done it.
ROBERTS: Yes, it's (INAUDIBLE). I thought it was her, you know.
CHETRY: And if you're landing in a foam pit, that takes away some of the fear. ROBERTS: I missed that edit in there somewhere.
CHETRY: Good stuff, Deb.
All right, well, high winds on the East Coast equal travel delays, unfortunately. Rob Marciano is coming along to tell us where it could be worst today.
Forty-six minutes past the hour.
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ROBERTS: Good morning, Des Moines, where it's a perfect, cloudy 45 degrees; later on today 73 degrees and lots of sunshine. See that building right in the center (INAUDIBLE).
CHETRY: There it is. And I have to correct you --
ROBERTS: That's a great state.
CHETRY: It's Des Moines.
ROBERTS: It's Des Moines. There you go.
CHETRY: Ok, all right. Our Rob Marciano joins us this morning. Nice shot of Des Moines there.
ROBERTS: I can't wait to get back there in 2012 for the primaries.
CHETRY: What is it, a chop house?
ROBERTS: These caucuses, 801 Chop House.
CHETRY: It's some steak.
ROBERTS: It's not a free advertisement. It's just a statement; it's a great place to get a steak.
CHETRY: There you go.
ROB MARCIANO, AMS METEOROLOGIST: I want to see what comes down the plate though later on this year.
Good morning guys. Hey listen, a chilly day to start things off across the northeast; temps in the 30s and 40s, and starting to recover now.
I mean, this time of year the sun comes up a little earlier and it's pretty strong so things warm up quickly unless it's snowing. And it's been doing that across parts of upstate New York and Vermont now for a day and a half. And it's still coming down here on the radar scope.
Check it out. There are some dense, white reflections here all the way down to the Massachusetts border. We still have winter storm warnings that are posted. Check out some of these numbers. And in many cases the flowers have already bloomed.
Nashville, Vermont, 20 inches of snow; places in upstate New York, 15.5; Cambridge, Vermont seeing almost a foot as well.
All right, we'll see this for another six hours or so. Beautiful day across much of the southeast, but windy conditions -- damaging winds yesterday across the Nevada/California border, some power outages in Reno and snow still falling at the higher elevations where it will be in the 30s and 40s. It's 50 for a high in Salt Lake City; it'll be 74 in Denver; 60 degrees in New York and 83 in Dallas.
Good news for the south, only moderate levels of pollen expected today. We're starting to see the trees bloom a little bit farther to the north where it's expected to be hot, so other people suffering except for the south. John and Kiran, back to you.
ROBERTS: Rob thanks so much.
MARCIANO: See you guys.
ROBERTS: And if the weather cooperates, people in central Florida will have a chance to see the International Space Station pass overhead tonight in 12 hours' time, about 8:45 Eastern. The floating space lab will pass over the state.
CHETRY: It will look just like that.
ROBERTS: It will look just like that. Can we use that for Santa Claus?
CHETRY: Yes, we did.
ROBERTS: Except we just change it to reindeer-drawn sleigh. It will approach from the southwest moving northeast. The pass will take about five minutes' time. Forecasters say the space station will be directly overhead, 220 miles up and should be easy to see because the setting sun will make it glow.
CHETRY: That's pretty cool. Hopefully they'll get some video of it. We'll able to show it tomorrow, neat.
Still ahead, Bret Michaels, famous singer of Poison, suffering a setback after a brain hemorrhage. We're going to get an update on his condition coming up.
Fifty-two minutes past the hour.
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ROBERTS: Four and a half minutes now to the top of the hour. Time for this morning's "AM House Call", stories about your health.
New evidence shows getting a heart scan while looking at traditional risk factors for the disease is better at preventing heart attacks. A study found that the scans which look for calcium deposits in the arteries are better at sorting those in medium risk and high- risk groups. Now, the scans are expensive, though, and rarely are they covered by insurance. They also have radiation exposure similar to getting two mammograms.
So a couple things to consider but they say when you do these scans in conjunction with looking for traditional risk factors, they get a much better idea at who's at risk for a heart attack.
CHETRY: You know, some people thought it was maybe just a myth but they say if you eat a lot of spicy food, maybe it will help your metabolism; peppers, metabolism boosting benefits for weight loss. Well, there may be some truth to that because there's some revealing news for all those who can't tolerate the heat.
There was a recent study of the non-spicy version of capsaicin -- that's what's found in the hot peppers -- and that also significantly increased fat oxidation plus pushing the body for more fat as fuel. And it doesn't give you a license to indulge because researchers say the benefits only come from also sticking to a low-calorie diet.
That's the same stuff in pepper spray.
ROBERTS: Yes. So this sort of idea and don't be eating pepper spray either -- that's a bad idea. A combination of going on a low- calorie diet for a while, take this pill. Is it readily available do you think?
CHETRY: I think you can get it in a lot of health food stores they have because some people who have arthritis pain also use capsaicin.
ROBERTS: So it revs up the thermogenic properties of your brain, heats you up a little bit and you burn more fat.
CHETRY: There you go.
ROBERTS: I need a short (INAUDIBLE) in my work.
Tests show that former Poison front man Bret Michaels has suffered a setback while recovering from a brain hemorrhage. The statement on the singer's official Web site says the bleeding in his brain has caused a lack of sodium throughout his body and that can lead to seizures. Doctors say he remains in critical but stable condition.
Questions about what caused all this because he had an appendectomy, right?
CHETRY: Yes, he had -- he has type I diabetes, juvenile type diabetes that he's had for a long time. Sanjay said he didn't think it had to do with that. But then apparently this aneurysm caused him to have low levels of sodium or potassium.
ROBERTS: He also -- remember at the Tony Awards last year whacked his head really hard when he got hit by that piece of background.
CHETRY: The stage came down and hit him.
ROBERTS: Knocked him back. I wonder if that has something to do with it.
Well, 57 minutes after the hour. We'll be right back.
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CHETRY: That's going to do it for us. Glad you were with us. We'll see you back here tomorrow.
You can continue the conversation on today's stories by heading to our blog, cnn.com/amfix.
ROBERTS: The news continues, though, here on CNN with Kyra Phillips in the "CNN NEWSROOM". Good morning, Kyra.
