Return to Transcripts main page
In the Arena
Trump's Real Worth; Budget Bias?
Aired April 18, 2011 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELIOT SPITZER, CNN ANCHOR: Good evening. I'm Eliot Spitzer. Welcome to the program.
Our top story in a moment. But first, the big questions we're drilling down on tonight. Media bias. It's all in the eye of the beholder. I'll talk to a guy who says that I, me, Eliot Spitzer, am guilty of it. Imagine that. Well, I'm going to show him just how wrong he is.
And Facebook. They're tracking your every move, along with Google and god knows who else. E.D. Hill will be here to show you how your private information can be used against you and the ultimate weapon to protect yourself.
And then a river of blood in Misrata. Thousands fight to flee Moammar Gadhafi's guns but he's got them surrounded. And tonight a barrage of bombs threaten the last escape route for the rebels. Can NATO stop the bloodshed?
But we start tonight with a challenge for Donald Trump. He's been talking for weeks now about how much he wants to see President Obama's birth certificate. He wants proof, though I think we've already seen it, but anyway he wants proof that the president was born in this country.
Well, Donald, I want to see your financial records. Let me explain.
On CNN's "STATE OF THE UNION" program yesterday, Candy Crowley asked the Donald why he would be a better candidate for president than, say, Mitt Romney. I want you to listen to what Trump said.
(BEGIN VIDEO CLIP)
CANDY CROWLEY, HOST, CNN'S STATE OF THE UNION: Why would Republicans prefer you than, say, Mitt Romney -- over Mitt Romney?
DONALD TRUMP, ENTREPRENEUR: Well, I'm a much bigger businessman. I have a much, much bigger net work. I mean my net worth is many, many, many times Mitt Romney.
(END OF VIDEO CLIP)
SPITZER: So let me see if I have this right. Donald Trump would make a better president than Mitt Romney because he has more money. He's richer. Put the shaky logic of that aside, here's the problem.
It appears that Donald Trump may not have as much money as he wants you to think he has. So just how rich is Donald Trump and where's the proof of any of it?
Here to help us wade through this are Floyd Norris, chief financial correspondent for the "New York Times", and Amir Korangy, publisher of the New York real estate magazine, "The Real Deal."
And in the full interest full disclosure, you should know my family is in the real estate business here in New York.
All right, guys. Thank you for joining us on this sort of detective effort that we're undertaking.
Floyd, let me just start with you. There's probably nothing more iconic than the Trump casinos. I mean this is the glitz, the glamour, the beauty of it all. I don't know if that's their slogan or somebody else's. Does he own them?
FLOYD NORRIS, CHIEF FINANCIAL CORRESPONDENT, NEW YORK TIMES: No, he doesn't. And moreover his name is about to vanish from them.
SPITZER: Wait a minute. Wait a minute. All those big T-R-U-M-P at the top of the -- when you see it in Atlantic City, it's not going to be there anymore?
NORRIS: No apparently not. The -- his casinos have gone bankrupt three times.
SPITZER: Wait. Stop. Stop right there. Say, he's gone bankrupt -- his casinos have more often than the federal government?
NORRIS: Well, yes. I don't think it's gone bankrupt yet.
SPITZER: All right.
NORRIS: But in the first two times he was able to hold on to a substantial stake in the company, in large part because people believe that the name Trump was worth a lot. And of course he had to license the name to them. This time around the winner of the auction in bankruptcy who is trying to raise financing now and for all I know he won't succeed, but the winner plans to rename the casinos.
The name Trump will come off and I presume that means Trump will have no stake in them.
SPITZER: And so --
AMIR KORANGY, FOUNDER AND PUBLISHER, "THE REAL DEAL": As of now I believe he still has 10 percent stake in them. During the third bankruptcy, he still remains 10 percent --
SPITZER: But I just want to get this straight. You know, people need to get their arms on this. His casinos have been in bankruptcy three times. KORANGY: Three times. Yes. But he's a master at restructuring. I mean this is what he does. He managed to eliminate $1.2 billion in debt in that restructuring.
SPITZER: And so he is -- to give him credit --
KORANGY: And that's the real value.
SPITZER: But to give him credit in this, he's a master of walking into the bank and saying, you owe me so much money, we're partners. It's not that I owe you money, you've got to save me.
NORRIS: Well, you know, I don't know how much Donald Trump is worth. He certainly has conceded he has a penchant for exaggeration.
SPITZER: Right.
NORRIS: So whatever he says he's worth I would assume he's not worth at least close to that much because if he were I suspect he'd claim to be worth more. But I really don't know. Let me make that clear.
His empire is private. The public part of it was the casinos and we know what happened there. The rest of the empire we don't know.
SPITZER: OK. You just said something hugely important. Because these are all private companies -- we'll get to real estate in a moment. But the real estate was held in private companies that have no obligation to disclose anything. We just don't know.
NORRIS: No. We don't know.
KORANGY: But we do know that he's a privately held company and out of all the privately held companies in New York City he's always ranked number one. And to be that in New York City is saying a lot.
SPITZER: Ranked by whom about what?
UNIDENTIFIED MALE: Ranked by revenues in New York City.
SPITZER: OK.
(CROSSTALK)
KORANGY: By Crain's. By Crain's.
SPITZER: OK. By Crain's. But we'll get to this in a minute. And I don't mean to cast this person, I'm just the way because I -- you know, tweak my neck there. But as I did, you know, I think we have to cast some doubts on those numbers.
KORANGY: Sure.
SPITZER: We'll get to that in a minute. But casinos, though, were public and his -- the net worth he's got from that could be zero at this point. NORRIS: Well, he took money out of the casinos. He borrowed money and he took it out at one point or another. So the casinos were not a disastrous investment for him over time. The public that invested with him, there's no doubt that people who lent money to him, people who bought his stock, suffered losses.
SPITZER: The people who lent him money, the bond holders got reduced to zero in some of these bankruptcies or pennies on the dollar.
NORRIS: They certainly suffered large losses. The shareholders ended up with zero.
SPITZER: So it is kind of like the federal government. So maybe he's right to be president. He understands, you know, an overleveraged balance sheet with a lot of debt that somebody else is going to responsible for. So maybe he should be president is what I'm hearing here.
(CROSSTALK)
NORRIS: I don't plan to endorse him.
SPITZER: All right. Trust me this was not either.
All right. Let's get to the real estate. Put the casinos aside. How do we know he owns the real estate?
KORANGY: Well, we don't. I mean it's all --
SPITZER: Stop. We don't?
KORANGY: All of it is very murky. But we do know that he has the licensing agreements, which is the biggest part of his business. It's the largest part of his business. That's where he makes most of his money.
SPITZER: What does he license?
KORANGY: He licenses his name.
SPITZER: But wait a minute. I thought -- I though Floyd just said the casinos --
KORANGY: That's for the casinos.
SPITZER: The casinos were taking his name off the building.
KORANGY: That's only for the casinos.
(CROSSTALK)
SPITZER: Like I -- when --
KORANGY: At the end there are less than five or four casinos --
SPITZER: No, no, but wait. But wouldn't that be --
(CROSSTALK)
NORRIS: If you like to see buildings with the Trump on them, you can go around New York City and some other cities and see lots of buildings.
KORANGY: And those are -- he's getting licensing for all of those.
SPITZER: OK. Do we know how much -- but what you're saying is if his name is being licensed to the people who actually build them, he doesn't own those buildings.
KORANGY: Sure. He does develop -- he does help develop so he does get a development fee. He gets executive fees at these developments. He does get management fees because he wants the buildings that present his name to run in a certain sort of a way which is like --
SPITZER: Right. But what you're saying -- and I want folks to understand this.
KORANGY: Sure.
SPITZER: You're steep in real estate. Getting a fee as a percentage of the total revenue is certainly a very important revenue stream.
KORANGY: Sure.
SPITZER: But what you don't get from that fee necessarily, although you might negotiate for it, is the appreciation in value in the real estate that you don't own.
KORANGY: In terms of the equity, you're right.
SPITZER: That's right. And the real game in real estate over the years is to buy something in 1950 and watch it appreciate over the years. Am I right?
NORRIS: Well, that was a game. But you know a lot of real estate developers ended up losing large parts of their empire or perhaps going broke when real estate crumbled. That happened to Trump to some extent in the '90s. It doesn't seem to have happened this year and I think the reason for that probably was, and again I don't know.
The reason probably was that he simply did not have much equity invested in these deals so he had upside from the fees and if they blew up, he may have suffered some reputational damage but that was it.
SPITZER: But fees don't get you to a net worth of $4 billion. The underlying asset is what gets you to that $4 billion, right?
KORANGY: But he does own certain real estate in the city. So there's --
SPITZER: OK. Wait. Which buildings?
KORANGY: So the -- 40 Wall Street.
SPITZER: Let's take 40. Let's put something up here. The current valuation of 40 Wall, I mean we got this from New York City Web site, is that $173 million.
KORANGY: Sure.
SPITZER: OK. Now let me ask you a question. Do we know who actually owns that?
KORANGY: Well, it's Trump from what's been reported. I mean, no, there's --
SPITZER: Reported by whom? I mean --
(CROSSTALK)
SPITZER: I like Donald Trump. I really do. He's a nice guy.
KORANGY: According to ACRIS, which is the city --
SPITZER: Right.
KORANGY: So he's on the -- his name is on there.
SPITZER: Yes. But there's an LLP, I think, at least our records show that LLP that actually is the owner.
KORANGY: Which is probably 40 Wall.
SPITZER: Right. But we don't know who the equity owners. So here's it is. New Scandic Wall LLP -- LP, Limited Partners. We don't know who the owner -- equity investors there are.
KORANGY: No. I guess we don't.
SPITZER: It could be him, 100 percent it could be him, 2 percent?
KORANGY: It's really an unanswerable question because nobody knows what he owns and --
SPITZER: And we don't know -- to come back to Floyd's point -- how much debt there is on that building.
NORRIS: We don't know. We also don't know what his income is. Obviously he's made a lot of money off the TV show. He's certainly made money off licensing his name over the years.
There's a tradition, of course, the presidential candidates release their tax returns. And I really hope that Mr. Trump follows that tradition. SPITZER: OK. Hold on for one moment. Floyd and Amir, stay right here. We're going to continue this in just a moment. We're going to drill down and find out how much Donald Trump is really worth.
Now let's go to E.D. Hill to find out what she is working on tonight. E.D.?
E.D. HILL, CNN CONTRIBUTOR: Well, Eliot, before I had even noticed you had a haircut, people who are total strangers knew. That is if you go to the barber. And what else do I know? And how can you and others keep that information private?
That's coming up -- Eliot.
SPITZER: Looking forward to it. Especially how you know who my barber is.
Coming up, media bias in the budget battle. Why one conservative watchdog is slamming the press, this show included, for, quote, "hype and horror" about the budget debate. That story coming up in a few minutes.
(COMMERCIAL BREAK)
SPITZER: All right. Continuing our endeavor to find out how much Donald Trump is really worth. Floyd Morris, chief financial correspondent of the "New York Times," and Amir Korangy, publisher of the New York real estate magazine, "The Real Deal."
Amir, let's go back to 40 Wall.
KORANGY: Sure.
SPITZER: Which is a beautiful building. About 1.1 million square feet downtown in -- near iconic Wall Street.
KORANGY: Right on Wall Street.
SPITZER: Right on Wall Street. We said we got off the city Web site current valuation about $173 million. We don't know who owns it but how much debt is on that building?
KORANGY: There's about $168 million in debt.
SPITZER: Just so folks understand.
KORANGY: There's a lot of rehab.
SPITZER: Right. But wait, if he sold that building tomorrow for $173, he'd have to pay off the debt of $168?
KORANGY: That's right.
SPITZER: So the value he could take out would be $5?
KORANGY: Yes. If he sold it for that amount.
SPITZER: That's right. Which would be a nice bargain. Or maybe not. I don't know.
KORANGY: Sure.
SPITZER: A million square feet, I would think he would get more but what do I know. The -- having said that, it shows how complicated this is and he also paid a lot to renovate it.
KORANGY: He did. That was part of the loan. The part of the loan was going to renovate the building.
SPITZER: It might have cost more than that.
KORANGY: I don't think it would have cost more than that. I don't think --
SPITZER: A million -- $1.1. million?
KORANGY: When he had to, you know, redo the Central Park ice skating rink, the budget for that was $3 million. And he did it for the city at no cost. He did it --
SPITZER: That was putting -- I mean I don't mean to diminish it, he did a spectacular job. He turned on a water hose and created an ice rink.
(CROSSTALK)
KORANGY: The city wanted to charge the taxpayers $15 million. He did it for $750,000.
SPITZER: He did a superb job and all of us owe him a lot of debt for that. We've had kids there skating on that rink.
Floyd, let's go to Chicago. You have written about, I think, or have followed the Chicago -- the tallest -- the second tallest building in Chicago. He's building it right now. It was a big deal on his "Apprentice" show. He has -- let's put up this graphic. I think he has $770 million in debt on that building. Is this thing going to stay above water?
NORRIS: Well, the way he built that, he built it almost completely if not completely with borrowed money. Unfortunately perhaps for him, he guaranteed $40 million of those loans.
SPITZER: Which is not a big number compared to the total debt.
NORRIS: No, but it's certainly a big number -- it'd be a big number for me certainly anyway. And --
SPITZER: You know, might even be a big number for Mitt Romney if you listen to Donald Trump but not for the Donald.
NORRIS: Well, might be. In addition -- well, he was worried about it. He sued Deutsche Bank when they asked for the money. And he contended that he shouldn't have to pay it because in part there was a -- it was an act of god that caused the real estate crash and he should not suffer from that.
SPITZER: So I want to just understand the logic here. And all of the folks who have had trouble making a mortgage payment, anybody who is being foreclosed on, you call Donald Trump and say, Donald, I want your legal papers that said because there was a recession I don't have to pay, and see if the bank responds kindly to that argument.
What did the bank say?
NORRIS: Well, the bank wasn't enthused with it. I asked -- I asked Mr. Trump if he would take the same position with the people who had agreed to buy apartments in the building for prices that now seemed excessive.
SPITZER: What people would agree to pay rent to him?
NORRIS: And he said no, he wouldn't. They owed him the money.
SPITZER: But wait. Just so I understand. There's an act of god that affected him but nobody else?
NORRIS: Well, he had a contract that said he --
SPITZER: With god or with the bank?
NORRIS: With the bank that mentioned an act of god.
SPITZER: OK.
NORRIS: And his contract with apartment buyers did not mention an act of god, therefore he was clear.
SPITZER: Something else we should all remember as we go down the road. Put that clause in our contract.
KORANGY: Act of god meaning tornadoes, earthquakes but he included, you know, downturn as act of god as well.
SPITZER: OK --
KORANGY: But that was actually in his contract. But not the downturn part so he really had to have great lawyers.
SPITZER: But I want to be very serious about this for a minute. Here's the building. It is the second tallest building in Chicago. He builds stupendous buildings.
KORANGY: Right.
SPITZER: I think he had a great building. He really does. $770 million of debt, give or take. Is the value of that building greater or above or below the debt that he's carrying? NORRIS: I don't know. It certainly was well below it at the -- when the recession was at the lowest. Right now they are trying to sell the apartments. They are still trying to sell them.
And some I understand are selling. You know, trying to sell expensive apartments in most cities in this country now is not an easy thing to do. Whether or not how that is going to work out in the end, I don't have any idea.
SPITZER: OK. I want to come very, very quickly to the lineup of buildings along the west side of Manhattan. They are -- it's on Trump Boulevard. They're called Trump Place. The playground is Trump Playground. But every blade of grass has his name on it.
Does he own any of that?
KORANGY: Not anymore. That's a -- you know, he partnered up with the Chinese. He owned the land at a period and the Chinese partnered up with him to build it and throughout that process he owned about 30 percent but then the Chinese went ahead and sold it, and he sued them because he said that they sold it for too little and they should have sold it for a lot more.
SPITZER: Right.
KORANGY: So it was a big ordeal.
SPITZER: All right. Look. We're not going to solve this problem. I think what we have seen is that there are certain questions that are serious questions, but you know there are about everything I suppose.
Give us ballpark estimate. What do you think he's worth if you had to put a number on it. You're in the real estate business.
KORANGY: I would say probably around $2 billion.
SPITZER: $2 billion? That's real money.
KORANGY: Yes.
SPITZER: What do you think, Floyd?
NORRIS: I've got no idea what he's worth because we have no idea -- we have no idea what he owns.
SPITZER: Right.
NORRIS: And we have no idea what he's borrowed against it. So I don't see -- "Forbes" comes up with a number every year. I have no idea how they come up with that number.
SPITZER: All right. Let me say this. I'm with Floyd on this. I have absolutely no idea what he's worth. And I want this to be very clear. It's a fun topic to talk about. Almost make fun of the guy. I respect him. I like him. Disagree with everything he says about politics these days but this guy has built buildings, he's been good for New York City, and if there's a bit of bravado in there that also was what New York is all about.
Floyd and Amir, thank you for being here.
Donald Trump, here's my challenge to you. Right here in my hand President Obama's certification of live birth. We want you to show us your certification of net worth at least as good as this. We'll be right back.
(COMMERCIAL BREAK)
SPITZER: Brent Bozell is a self-described right-wing voice who takes on what he views as the liberal media bias. Through his Media Research Center and News Buster Web site, lately, my coverage of the budget and deficit reduction has been featured as bias. So I thought it would be fun and maybe insightful to bring him on and talk about what he sees as my one-sided coverage.
Brent, welcome to the show.
BRENT BOZELL, PRESIDENT, MEDIA RESEARCH CENTER: Eliot, how you doing?
SPITZER: Wonderful. Now look, one of the things you've said is that I and others as well -- but you know I'm a little sensitive here, tonight at least. You said that I have ignored the Democratic Party's responsibility in failing to pass a budget last year.
And you know arguing you're basically saying look, they didn't get their budget passed, they should be held accountable, and I've ignored that.
Well, let me just show you a snip here from an interview I did -- I don't know -- a couple of days ago. Take a look at this.
(BEGIN VIDEO CLIP)
SPITZER: The question I just got to ask you. This is the Democrats' fault. The president and the Democratic Congress didn't pass a budget last year when you should have.
Now explain to me why that decision was made? Because last year with the majority in both the Senate and the House of Representatives and Democratic president, that was the moment, one would have thought, when the Democratic Party would pass a budget reflecting all the ideological points you just made.
So what happened last year?
(END OF VIDEO CLIP)
SPITZER: All right, Brent. There's the proof. Exhibit one, as we lawyers would say. Didn't I get that right from your perspective?
BOZELL: Very right. The only problem is that it is just what you said. It's exhibit one. If we were playing lawyers here, Eliot Spitzer, what you would give me is the opportunity to rebut, bringing my producer on the show, and I would show you about 100, maybe 1,000 examples in the opposite direction.
SPITZER: Wait, wait, wait.
BOZELL: I'm not saying it's been not 100 percent liberal and zero conservative. I haven't said it's zero fair at all times. What we've said is it's overwhelming the bias, and you can't deny it, Eliot. You can't. And it's actually overwhelming on your side.
SPITZER: You used -- and look, I want you on the show because I want to have an open conversation about this. You win. I was reading your article. And you said that I, Eliot Spitzer, didn't make this point. It wasn't just with Bernie Sanders. I don't know if you recognized that. That was Senator Bernie Sanders, you know, independent, from Vermont.
I've asked that question to so many guests because the point is an important point that what got us here, it was last year. And you know, we don't need to get into that substantive issue right now. I've asked that of everybody. So at least look, you would have to concede I've been asking people that question. Is that fair?
BOZELL: I don't know how many times you've asked that question. I do know, but I do know and we have shown it is overwhelmingly you take -- how can you, Eliot, how can you in a straight face go on this show and tell me you don't have a bias? That's what you were hired to have.
SPITZER: Wait a minute. Wait. Wait. I don't have a bias. And here's the point I tell people. I have very strong views and I hold everybody accountable when we talk about the budget, we talk about foreign affairs, we hold everybody accountable.
Let me give another example of something that you said. You said that the -- that we have bought into the narrative -- that's your word, I believe -- of Barack Obama, President Obama, as the grown-up and that somehow we have embraced the notion that he's playing the grown-up and then members of Congress on the Republican side in particular are the kids.
Now you use the example of Gloria Borger. And I want to quote what you said in your article. You quote for saying politically what he's trying to do is be the grown-up. Now she said exactly what should have been said. He's trying to do that. She didn't say he is the grown-up. She didn't say we believe he's the grown-up.
That would have been editorial and bias. It wouldn't have been right or wrong or maybe it would have been right from her perspective. But what she said, he's trying to be the grown-up. Isn't that an accurate assessment of what's happened?
BOZELL: No. No. Because if she were being completely fair and comprehensibly honest.
SPITZER: Yes.
BOZELL: What she would point out is that this man has no currency whatsoever in this debate. This is the man --
SPITZER: Wait, wait, wait.
BOZELL: No, let me finish, Eliot. Eliot, let me finish.
SPITZER: I'm all ears.
BOZELL: This is man who two years ago pledged to the American people that he would cut the deficit by half. And now he's giving lectures on people growing up?
SPITZER: Wait a minute. Wait a minute. Wait a minute. I just want to follow the logic because what you just gave is a partisan ideological perspective. You're entitled to it. And I applaud you for it. I disagree with you but that's not the issue here.
What she said wasn't an ideological comment. What she did was make an observation about what he thinks. And now would you agree that with Gloria, the way that was phrased, a direct quote, he is trying to be the grown-up. Is that a fair statement?
BOZELL: No.
SPITZER: No?
BOZELL: No. No. If I were Gloria Borger and I were trying to be fair and comprehensive, I would say this is what he's saying and this is the reality.
My goodness, you all have such great fact checking when it comes to Republicans and conservatives.
SPITZER: Wait a minute.
BOZELL: Where's the fact checking on this man's record?
SPITZER: OK. All right. Look, I think and I stand by what Gloria said. What she said is an absolutely fair statement.
Let's move on. All right. Boy, that's number two. Number three, you said I creepily, creepily took advantage of a military wife in several days before the budget would have gone bust -- before the federal government would have had to shutdown by bringing Amy Tersigni on the show to describe to the public what she was feeling, and what would have happened to her in the absence of an agreement to authorize the federal government spending money.
What is conceivably wrong with saying to this wife of an officer who is over in Iraq who contacted us parenthetically, and said you can't imagine how terrible this is going to be for us. Why isn't that legitimate news reporting?
BOZELL: It's a scare tactic and you know it. SPITZER: No, no.
BOZELL: The truth is that the Republican leadership said that if they closed down -- if the government was closed down there would be legislation to protect the military. It's the same thing as Democrats saying that people weren't going to get their tax refunds when that wasn't true either.
SPITZER: Wait a minute. Wait a minute. We were very careful about what the bill would have done. But let me ask you this. Is it fair -- when Treasury Secretary Geithner says it will be a cataclysm or whatever words he used, I don't want to misquote him, to describe what will happen if we don't have an agreement. Is that scare mongering? Or is that --
BOZELL: It's scare mongering, Eliot.
SPITZER: So wait. Wait. So we shouldn't report what the Treasury secretary says?
BOZELL: If he's being dishonest you should say so. If the Congress had says -- had said that it is going to protect and defend the military, it has stated this, then any suggestion that military wives are going to be penalized, are going to be hurt, is scare mongering.
SPITZER: No. No.
BOZELL: Absolutely I stand by it.
SPITZER: Here's the problem. There was no bill to do that at that moment in time and we were having her report with precision and the mode of power. I agree with you, it was emotionally powerful to see someone who was going to be really affected by this. Not members of Congress who were going to be paid any way. We made that point.
But somebody whose husband was in Iraq, who was saying I can't pay my rent, I can't buy food for my kids because I'm not going to get the paycheck. And if you go back to what was going to happen to the spouses or to the families of the military, they were not going to get their full paychecks as of that point in time.
And I want to pursue the other issue, though. You don't think we --
BOZELL: You're stating something that is fundamentally not true.
SPITZER: What part?
BOZELL: The Congress said they were going to defend the military. They were going to defend them and make sure that they got everything they needed. The Congress said that. The leadership said that. And they would have done that.
SPITZER: Was -- was rent --
BOZELL: Can you think of anybody who would have voted against that?
SPITZER: Was there a bill at that time to do it?
BOZELL: There would have been.
SPITZER: There would have been. There would have been.
(LAUGHTER)
BOZELL: No, when they said --
(CROSSTALK)
BOZELL: Essential versus nonessential.
SPITZER: You know I have a question for you. Brent, I have a question for you.
BOZELL: Essential versus nonessential. And they said that the military fell under the auspices of essential.
SPITZER: When you were in grade school, and you didn't do your homework, did you ever go into the teacher and said I would have done it if a ball game hadn't been on TV last night? Was that a good excuse? What if, could have, should have.
Don't give me would have, could have, should have. Come on.
BOZELL: Let me ask you this. Let me ask you this, Mr. Prosecutor. Do you know the difference between essential and nonessential?
SPITZER: You know what? I don't think anybody in Washington does. And that's the problem.
BOZELL: They made it perfectly clear. They said military was essential.
SPITZER: No, but wait a minute. The question was when they are going to be paid.
I want to move on for a second. I want to get into some substance for a minute.
BOZELL: I stand by what I said.
SPITZER: All right. Look, I'm glad you do. It's always fun to disagree.
Look, you have on your Web site -- you're a big fan of Paul Ryan and his budget plan. And that's fine. We can disagree about that.
Here's the question I've got for you. And this is I think -- I don't know if you can see that, that is your Web site, you're saying send an e-mail to Paul Ryan, the chairman of the Budget Committee over in the House of Representatives. Tell him how proud you are of his budget plan.
Does it bother you at all that in order to make his numbers work, he assumes an unemployment rate of 3.5 percent in 2016? In order to make the revenue -- well, you might as well go to a Ouija board and say what's the unemployment going to be? Does that bother you?
BOZELL: Now here's my position. I'm bothered by any bill that comes out of Congress these days.
Look, here's my position. I haven't endorsed the Ryan bill as end all and be all. I think we can do even better. If you look at the Ryan bill, it takes 23 years to balance the budget. I think we can do even better than that. I think we can do even better than waiting 10 years and after 10 years you still have a $350 billion annual deficit. I think we can do better than that. I think you have to look at the numbers. I want to look at all these numbers.
Look what the CBO just came out with with this administration, with this man who said he will cut the deficit by half. He put up his budget projections. He called for $7.2 trillion over the next 12 years. The CBO just came back and said no, no, it's $9.5 trillion more.
SPITZER: Do you know how much additional debt Paul Ryan's bill adds to the taxpayers roll?
BOZELL: Ultimately --
SPITZER: Yes.
BOZELL: It cuts it by 6.2 trillion.
SPITZER: No, no, in the next decade, it's just about as much. So neither one of them -- look, you and I may agree on something. Neither one of them deals with the deficit in the short-term. Now we might disagree whether that's good or bad but I think you and I would agree --
BOZELL: I want to look at it. You know what I think we should do, Eliot?
SPITZER: What? What's that?
BOZELL: You know, I wish that (INAUDIBLE) here.
SPITZER: Yes.
BOZELL: I wish Republicans and Democrats, conservatives and liberals could put aside all biases for one minute and just agree on something.
SPITZER: What's that?
BOZELL: Let's put this entire federal government, every agency, every department, defense, every health agency you can think of, under means testing. Let's look at everything in the federal government and ask ourselves and after we review it, is it working and do we need to have it? And I bet you could cut half the waste out of this.
SPITZER: Brent, by means testing, do you mean does it work or do you mean that if you take Medicare, for instance, if you're wealthy or you get less?
BOZELL: Can you do better?
SPITZER: Can you do better?
BOZELL: Can you do better? Look, what we're doing right now, we're bankrupting this country. We've blown it. It's ruined.
SPITZER: OK. Well, look, let's not quite so cataclysmic. We're still the greatest nation on earth. We can agree on that. Come on, Brent, lighten up. It's only Monday.
All right.
BOZELL: That's OK.
SPITZER: All right, but I'm not biased.
All right. Brent Bozell, thanks for being here.
BOZELL: Thanks, Eliot.
SPITZER: All right. E.D., what's up next?
E.D. HILL, CNN CONTRIBUTOR: Well, it is only Monday but are you leaving on a vacation?
SPITZER: No.
HILL: Or are you pregnant? Did you lose your job? Before you tell anyone you know anything at all, all that information may have been shared with absolute strangers. We'll discuss how that happens. And if you grab a pen and paper, we'll give you two ways to protect yourself -- Eliot.
SPITZER: All right. We'll be right back. And my pen and paper are right here.
HILL: And nice haircut.
SPITZER: Well, thank you.
(COMMERCIAL BREAK)
HILL: We know that the Web sites we visit track what we buy and then sell that information to companies so they can target us for ads. Even the apps you download on your iPhone are tracked. When you check out a shoe site, the company sends out the information that you're buying shoes. And when you check out an employment Web site, companies may assume you're in need or looking for a job. So based on what you click, they make all sorts of judgments about you. Some are true. But did you really want every diaper company popping up ads on your shared work computer before anybody knows?
Well, here to talk about the scary state of personal privacy is Nicco Mele. He is a social media expert. And remember at the end, we're going to give two ways to keep much of your information private. So get that pen and paper. And here's the information that we want to share with you tonight.
You know, Nicco, I went shoe shopping. All of a sudden I click off the site. Don't want them. For the next four sites I visit totally unrelated to shoes, these ads keep following me. So I realize, wait a second, they bought this information. How much of that stuff is shared? When we click a site one time, how many times is that information sold?
NICCO MELE, SOCIAL MEDIA EXPERT: A stunning number of times. You know, last summer "The Wall Street Journal" did an incredible investigative report called what they know. They set up a dummy computer and they visited the top 50 most trafficked Web sites. Those 50 Web sites like CNN.com, "The New York Times," Amazon, those 50 Web sites put more than 3,000 tracking files on that dummy computer tracking a wide range of activity. Everything you do online is tracked and advertisers take that data, slice it and dice it and sell it in order to help target you and sell you better ads.
HILL: You know, my concern is -- and I realize these are free sites. We're getting information. I think a lot of folks don't really think about how much information they're sharing. But they're giving us free, you know, a free site to use. They always have that thing, you know, click here if you agree to our terms of, you know, usage or whatever it is. They're forever long. And we want to get on with our business. We click it. Is it -- should it be incumbent upon us to have to opt out of these things or should it be up to the company to have us opt into what we want to share?
MELE: These terms of service are crazy. Sometimes they go on for hundreds of pages.
HILL: Right.
MELE: And it's buried in the legalese exactly what they're going to do. The fact of the matter is on a lot of these Web sites you're getting a free service, in some cases a really great free service.
I love the photo sharing sites Flicker and I love Facebook. But there's a quid pro quo going on. I get to use this incredible service for free. They harvest all of my data and use it to sell ads. Ads that are targeted pretty tightly to me. In some ways it can improve the advertising experience. You get ads that make a lot more sense that might have to do with something you're seeking to purchase. But in other ways it's pretty terrifying. I think these terms of service, they're due for a major overhaul. It doesn't make any sense. It certainly doesn't serve the consumer, and it's about time we started figuring out how to talk to people in clear ways, in honest ways about what's happening when you use these web services.
HILL: And sometimes they're just wrong. And here's, I think, down the road problem we're going to be facing. My 6 year old got an advertisement for a credit card. My 18 year old got an advertisement for a mortgage. She can't afford Taco Bell let alone a house mortgage. Obviously, they get information and they don't use it properly. Whatever they extrapolate from it, they make wrong assumptions. This could be used against us if a company is deciding whether to lend us money and they can find out that we've been looking at help wanted Web sites. Even it's for a relative, they make an assumption that person needs a job. I'm not lending them money. Isn't that a real possibility?
MELE: Well, there's a lot of dangers here. I mean, I think if you look at the history of advertising, it took some time when a new medium came around like radio or television to figure out what was appropriate, what were like the code of ethics for online advertising. We need to figure out what the code of ethics are for online advertising. You look at, you know, when television advertising first started kind of the struggle to figure out television advertising to children and also the struggle over hard liquor being advertised on television.
You know, we're a long way from figuring out kind of the norms and what's appropriate and part of the challenges our culture is kind of shifting. Our attitudes towards privacy are changing pretty substantially and very dramatically generation to generation --
HILL: Oh, yes.
MELE: -- making it even harder to figure out what these kinds of -- you know, what's going to be appropriate and what's not.
HILL: I know. I've got teenagers. Every thought they utter goes onto, you know, Facebook or they tweet. I mean, I don't get it. Maybe I'm just an old fuddy duddy. I don't get the need to share every single thought that comes into your head with everybody else. But is there a point when sharing information that, you know, you haven't necessarily put on there that they extrapolated from your account and they then have sold, is there a point that that becomes illegal or is this all above board legally?
MELE: Right now, it's all above board legally. One of the things to watch for in these terms of service is if the terms of service withhold the right to serve your data to a third-party provider. That's when it gets really scary. You have these companies, third party providers amassing huge amounts of information across multiple Web sites and it can get pretty terrifying about how they manage that information --
HILL: Yes.
MELE: -- the extent to which they track it and save it.
HILL: You know, Senator Kerry and some others were on Capitol Hill a month or two ago and they were talking about whether or not this needs to be regulated. And just the threat of regulation forced a lot of these companies to start changing the ways that they made it easier or harder for you to opt out and what they did share and didn't share. You know, when some of the companies want to do business in China, they easily agree not to, you know, not to do certain things. It could be done here but it seems like instead of regulation which I'm not for, this could be a, you know, a public movement where we say we're going to have an opt out day. And we target one company to say, OK, we're not going to use it because if they aren't getting the -- you know, the traffic there, they can't use our information.
MELE: Yes. It's absurd in this day in age that I can't -- I can't decide what my preferences are, what I'm comfortable being having shared about me. And then have that shared across all these sites. How come I don't have my own privacy passport and these sites have to accept my terms of service? How come I have to accept their terms of service? These are really, you know, these are holdovers from an older age.
HILL: Well --
MELE: And a different way of thinking.
HILL: It is certainly changing. Nicco Mele, thank you very much for being with us.
MELE: My pleasure.
HILL: And I told everyone we'd tell you about two ways that you can get a lot of your information off. To opt out of google, their shared data collection, you go to tools.google.com/dlpage/gaoptout. It's up there -- I told you to get a pen and paper so write that down. Tools.google.com/dlpage/gaoptout. And then for Apple's iphone, be sure the apps you name it. Everything is on there. Your contact list. Go to 00. I guess it's oo.apple.com. So up there on the screen as well. Http, OK -- oo.apple.com. And hopefully that will help with at least a little bit of it.
We're going to take a quick timeout. Eliot is coming right back.
(COMMERCIAL BREAK)
SPITZER: They got away with it. We all know that. But we want to end that.
The financial crisis was avoidable. It was the result of human mistakes, misjudgments and misdeeds. Those are the conclusions of the FCIC, the Financial crisis Inquiry Commission. But despite their findings, no Wall Street executive has been prosecuted. The chairman of the FCIC is Phil Angelides. He joins us now from Sacramento.
Phil, thanks for coming on board.
PHIL ANGELIDES, CHAIRMAN, FINANCIAL CRISIS INQUIRY COMMISSION: Good to be with you, Eliot. Good to be with you again for so many years.
SPITZER: So many years. Full disclosure, we worked together when you were the treasurer of the state of California, I was the attorney general of New York. Let me ask you what -- distill it down to a couple of the critical conclusions that you reached after this huge inquiry, millions of pieces of paper, thick, thick document, give us the cliff notes version. What are the couple of things we have to know?
ANGELIDES: Well, here's the essence. The essence is you're right. Unlike the narrative that's spun out by a lot of people on Wall Street and in Washington, this was not as Lloyd Blankfein would say a hurricane that blew offshore. It wasn't an act of nature. This crisis was avoidable. It was caused by deliberate decisions, misjudgments, inaction by regulators and when you boil it down, Eliot, reckless conduct by major financial institutions and regulators who were asleep at the wheel.
This didn't need to happen. We didn't need to have 26 million Americans out of work, can't find full-time work, stop looking for work. We didn't need to have four million families lose their homes to foreclosure. And that number may rise as high as 13 million. This was an avoidable catastrophe and I'm not sure we've learned the lessons from this disaster.
SPITZER: Wow. I'm going to come back to whether or not we've learned the lessons in a moment. I want to ask you, Senator Levin came out with a report late last week with a Republican colleague, Senator Coburn. They joined sides. That was not in any way partisan. In fact, it was a bipartisan report. Your commission report had a dissenting report that, you know, there was sort of partisan wrangling in the course of your inquiry. What happened? Why was that?
ANGELIDES: Well, look, all I can speak for is the majority that adopted the report. We laid out a very factual narrative. Now in two months since our report was released, there hasn't been one challenge to the facts of what happened, what led us to crisis, the facts of the crisis. We felt very strongly that it was important to attribute responsibility and accountability and some of the members of the commission weren't willing to do that. But, for example, we saw that the Federal Reserve had all the information, the power they needed to stem the flow of toxic mortgages and we called them on it. We saw that the Federal Reserve Bank in New York didn't control the excesses of Citigroup and other big bank holding companies. And we also saw the pernicious growth of mortgage fraud as it worked its way up the chain. Loans were originated that were fraudulent. They were packaged and sent all around the world without proper disclosure.
SPITZER: Phil --
ANGELIDES: So we called it like we saw it.
SPITZER: Look, you are properly focusing on the major players there, the regulators, the Fed in particular, the investment banks. And, you know, does anybody watching the shows knows I've gone after those investment banks. I want to focus for a minute on the Fed. You talked about the Fed that was run out of Washington by Alan Greenspan, here in New York by Tim Geithner who is now the treasury secretary. If I hear what you're saying, you're saying they had the tools to stop what happened.
ANGELIDES: Absolutely. Let me just give you one example.
The Federal Reserve was the one entity that had the full authority to set mortgage lending standards in this country and starting in the late 1990s, they started to get widespread reports of egregious predatory lending practices. As you know, many attorney generals jumped into the fight in the early 2000s to stop unfair lending, pernicious lending practices and the Fed stopped them from doing that. So the Federal Reserve it was pushed by its staff. It adopted some rules in 2001 to control out of control subprime lending. They thought the rules would affect 38 percent of the loans that only affected one percent. It's not until 2006 that they even put down voluntary guidance and not until July 2008 that they actually adopt a rule saying you can't make a loan to a person who can't afford to pay that loan.
But, Eliot, here's even what I think is more disturbing. When we question Alan Greenspan about this, he said, well, you didn't need more regulation. What you needed was stronger law enforcement. So we went and looked at the records. And as it turned out, the Federal Reserve in the midst of all this terrible lending from 2000 to 2006 under Mr. Greenspan referred a whopping three unfair lending cases to the Department of Justice.
SPITZER: Phil --
ANGELIDES: A little bank -- a little bank in Carpentersville, Illinois. A little bank in Victorville, California, and the New York branch of Societe Generale. Nothing.
SPITZER: Look -- look, as anybody who's watching us knows I was an A.G. back then. They tried to shut us down when we tried to enforce the law. They didn't try to come in on our side.
The tougher question that I think we need to discuss now is we pretty well have our arms around what happened when we look backwards. The question is have we learned the lesson? Have you seen recently what Alan Greenspan has been saying about the effort to impose some rules on the financial services sector? What has he been saying and can we make sense out of it?
ANGELIDES: Well, he's saying a couple of things. He's saying first of all, the reason we have a slow economic recovery is too much government activism and he's decried the frenetic pace of new financial regulation. He recently said that the invisible hand, you know, the Adam Smith of free markets, let the markets do what they want, has worked well with rare exception. Of course, that rare exception being 27 million people out of work.
I mean, there's an active effort here to rewrite history. And the fact is this was a guy, Alan Greenspan, who had his hand on the steering wheels. He had his foot on the gas pedal as we were driven over the cliff and now he wants to give us driving lessons. But, Eliot, in the course of our inquiry, I saw very little self-reflection on Wall Street I think in no small part due to the fact that the American taxpayers --
SPITZER: OK, Phil --
ANGELIDES: Yes.
SPITZER: Time is running out. I got one question to you.
ANGELIDES: Yes.
SPITZER: You and I both know for years the whole mantra on Wall Street was self-regulation. We will regulate ourselves. I think it was bunk and gibberish it never worked. Did you ever see any evidence that anybody on Wall Street picked up the phone -- you have to give me a 10-second answer on this -- ever picked up the phone and called the Fed, the OCC, the OTF, any regulator and said we got a crisis coming or did they merely, as you say, put their foot on the pedal and lend, lend, lend and take us right over that cliff?
ANGELIDES: Look, well, the industry as a whole lend, lend, lend, take us over the cliff. There were some individuals who tried to speak up but they were dwarfed by just the sheer momentum of the big financial institutions who drove us toward this crisis.
SPITZER: All right. Phil Angelides, thank you for your hard work. A pleasure to be chatting with you.
ANGELIDES: Thank you.
SPITZER: We'll be right back.
(COMMERCIAL BREAK)
SPITZER: All right, E.D. Here's the tough question. Earlier in the show, I spoke to Brent Bozell who is, you know, self-described right wing, very conservative.
HILL: Yes.
SPITZER: He said that CNN, the whole network, was biased. He focused in on me for this conversation. Do you see it? Do you think we're biased? Do you think we try to play down the middle, give everybody a hard shot, a hard time? What do you think? You've been at FOX.
HILL: Right.
SPITZER: So you've seen a lot of different media vantage points.
HILL: I've seen the network that everyone says is right wing. I've been at the network now that everybody says is left wing. And what I see is that you have --
SPITZER: And you haven't been at MSNBC.
HILL: No.
SPITZER: That's the one --
HILL: I find that there's bias everywhere because --
SPITZER: What do you mean by that?
HILL: Well, you know, basically the truth to you is always going to be based on your upbringing on your past experiences. So you may not even realize you're being bias.
The key difference I think both at FOX and at CNN is that you take that, you know, the people who are openly bias, I am this or I am that, and you put them in prime time. And you declare that because I believe that that actually can lead to better conversations. You aren't putting on the pretense of I'm open-minded and fair. You're just saying, look, here's where I come at it from. I'm either conservative, I'm liberal, why am I wrong?
SPITZER: It seems to me bias is the wrong word to use. I'm ideological.
HILL: You used it first.
SPITZER: Well, that's why I asked that question.
I think anybody who watches this program knows I have an ideology and I'm very clear about what it is. I'm not partisan --
HILL: Really? I haven't noticed --
SPITZER: Well, you have to pay attention then when I'm talking. What I believe is that you give everybody a hard time. You push them to see if they know their facts, if their argument is coherent, if it's logical. Look, I respect a lot of people I disagree with, respect them more than people I agree with who don't know why they agree with me. And so I think the objective here is to push people to drill down on the facts. And at 20 seconds, that's all you get for your partisan view.
HILL: That's true. But you look at the role of government from a fundamentally different perspective than I do.
SPITZER: That's right. And that is what --
HILL: So that makes you one way of looking and me the other.
SPITZER: And that's what's supposed to come out in the conversation. And that's not bias. It's an ideology and that's good. And I think --
HILL: As long as you're up front.
SPITZER: As long as -- look, I never hide what I'm thinking, why I think it as long as their facts underneath it and the people we're talking with have those facts. I respect them, enjoy the conversation, and it helps everybody out there.
HILL: Well, I think you had a great conversation with Brent Bozell. SPITZER: We did. We had fun. All right. We laughed at the end.
All right. Thanks for joining us IN THE ARENA tonight. Good night from New York.
"PIERS MORGAN TONIGHT" starts right now.
