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Examining New York City's Severe Storm Planning; A Look at the US Economy; Vatican Not Accepting Credit Cards

Aired January 04, 2013 - 15:30   ET

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

ASHLEIGH BANFIELD, CNN ANCHOR: A state law actually written 34 years ago requires that the state's disaster preparedness commission meet twice a year and then regularly update the state's disaster plans.

A 2006 report found, quote, "It is not a question of whether a strong hurricane will hit New York City. It is just a question of when."

And joining me now is the author of that 2006 report, former U.S. state assemblyman Richard Brodsky. How convenient that you would be here at this very moment when we got a very small portion of that Sandy bill passed.

RICHARD BRODSKY, FORMER NEW YORK STATE ASSEMBLYMAN: It's a nice day for New York, but it's not nice enough.

BANFIELD: Not nice enough. We still have $51 billion left in aid to come to all these northeastern states.

BRODSKY: And a lot of that money is to help provide so that this doesn't happen again.

What's most distressing about the Washington debate is that the sum of the forces in power in the House of Representatives have chosen to call that "pork."

We've been warned as a nation in Philadelphia and Miami and Texas these kinds of storms are coming and, if governments don't prepare to mitigate the damage, it is just going to cost us a fortune more.

BANFIELD: Let me explain that to our viewers. Some of these criticisms that there's pork in the Sandy bill came from, let's say, an issue about future flooding issues and how to prevent future as opposed to relief which means what we need this moment.

And what you're saying is that you've been on this for a long time and you have asked and asked and asked and asked about future plans and how to prevent this disaster from happening and it gets ignored.

BRODSKY: We had billions of dollars of damage to our subway system. $50,000 worth of sand bags would have prevented that.

BANFIELD: $50,000 in sand bags?

BRODSKY: In front of the Brooklyn/Battery Tunnel.

BANFIELD: Would have prevented that?

BRODSKY: To the tunnel. That was used by Goldman Sachs. It put huge amounts of sand bags around its big building right on the river. They're fine.

The MTA right next to it with a tunnel didn't.

BANFIELD: I'm not going to ask you to do the math, but you a general idea if $50,000 worth of sand bags would have saved us how much money and ...

BRODSKY: Hundreds of millions of dollars.

BANFIELD: Hundreds of millions?

BRODSKY: And the point is that local governments around the nation, state governments need the help of the Congress to make sure that we don't see that happen again.

You may not like that, but to call it pork is offensive.

This is part of a nationwide wakeup call. Anybody who lives near the ocean ought to be worried about a Congress that views planning for mitigating disasters as pork.

BANFIELD: But you don't understand that, you know, congressional leaders and congressional members who are so upset about the spending and have no -- they feel like they have no power to rein it in will try to use anything possible.

BRODSKY: I sat in budget disputes. They're real. People have positions. They have ideologies. They're entitled.

BANFIELD: And it's a fair position to have.

BRODSKY: It's not fair to call it pork. You want to say we can't afford to plan for the next hurricane, the next disaster, say it. But don't give it a pejorative name because you don't want the responsibility of voting no.

BANFIELD: But let me ask you this. You had all these reports. Even in 2006, it wasn't a question of if, it was just when.

Why would anybody look at this and say, maybe not this year? Was it budgetary or something else?

BRODSKY: We're not so good at preparing. We're pretty good at responding. Bloomberg, Cuomo ...

BANFIELD: And it looks like we're good at prognosticating, too. You seem to have a lot of this ...

BRODSKY: There is not a lot of political sexiness in spending on sand bags or gates or the kinds of things that prevent damage. There's a lot more to be said when you cradle a hurt family and say, we're going to help you. That? We ought to be past that. And if anyone should be past that, it's conservative Republicans who keep telling us that the responsible thing to do is to be real, prepare and invest in the kinds of the things that save money.

BANFIELD: So, now, the governor, Andrew Cuomo, here in New York, is saying that he's his State of the State coming up Wednesday.

BRODSKY: He does.

BANFIELD: And he says that he's going to really start addressing this. What is -- what would you urge Andrew Cuomo to do first and foremost in New York state? It seems like he's taking this more seriously now.

BRODSKY: Obey the existing law would be a nice start.

BANFIELD: And, by the way, let me just clarify that. When I say it seems he is taking it -- it seems he, among all of the former New York governors, as well, he is taking it seriously.

BRODSKY: He is and good for him and he's a good governor, lovely, lovely.

The fact of the matter is we've had a law in place for 34 years that says you need a specific prevention plan. He should implement that.

It's good politics and politics is a good thing in America. I don't use that as a pejorative, but we have the laws. We need to have the commitment, the budgetary and executive commitment, to carry them out. That's what he should do.

BANFIELD: So, I have a quote from you here from the 2006 report. It says, "The existing plan fails to protect the life, safety and property of the city's residents."

What kind of streamlining needs to be done, first and foremost, to have the preparedness plan that we need? What do we need to coordinate?

BRODSKY: We don't need to coordinate as much as we need to commit the resources and the political energy to prevention as opposed to coming in on the white horse.

BANFIELD: But didn't part of your 2006 report say things like, well, we just need to coordinate what first-responders are going to do and what vulnerable communities are going to do and how we're going to have them on register? And that seems like it's not very expensive.

BRODSKY: There are plenty of things to do like that that are good and can be done and aren't expensive and weren't done.

But the big questions, what do you do to protect the tunnels so you don't have $500 million worth of damage?

BANFIELD: The big cost items. BRODSKY: Those things are where the focus ought to be. It wasn't. Let's move forward and try to do it better the next time.

BANFIELD: That seemed like a no-brainer to me. I was down on the Battery watching that water come in and I though, ugh, oh.

BRODSKY: It wasn't as though we didn't warn them.

BANFIELD: Richard Brodsky, it's nice to see you. Thanks for coming in.

BRODSKY: Nice to be with you.

BANFIELD: Appreciate it.

I hope it happens. I hope it works. We'll see.

The December jobs number is out. Unemployment remains steady. Sorry.

But out Ali Velshi says there is one thing holding back a full economic recovery. Wait for it. It's coming up next.

(COMMERCIAL BREAK)

ALI VELSHI, CNN CHIEF CORRESPONDENT: 2013 could be the year America's economy comes back, but broken government in Washington stands in the way.

I'm Ali Velshi. This is "Your Money." Jobs keep steady in December, that despite fiscal cliff dysfunction in Washington. Look for more cliffs in the months ahead and look for more overused metaphors from your elected officials.

But first, 155,000 net new jobs added in December. That's according to new numbers released today by the Labor Department.

The unemployment rate stayed steady at 7.8 percent in December. That's after the Labor Department revised November's rate up a notch.

Either way, it's more of the same, positive if otherwise sluggish job gains that we've been seeing for more than two years.

But, of the really positive signs in these latest numbers is the gains that were made in construction and manufacturing jobs, sectors that need to recover if America is going to prosper again.

Labor Secretary Hilda Solis told me more can be done.

(BEGIN VIDEO CLIP)

HILDA SOLIS, LABOR SECRETARY: The numbers continue to show good increase in different areas and sectors that have been really hard hit.

Construction, as you named, we added jobs there for the first time in a long time and we also saw manufacturing coming back. But we need to do more.

(END VIDEO CLIP)

VELSHI: Economist Tom Porcelli thinks the job outlook is good for 2013, but he says it will be slow going for the first half of 2013 because of Washington's dysfunction.

(BEGIN VIDEO CLIP)

TOM PORCELLLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS: H1 will look soft relative to H2 and the softness in the first half of the year is really a reflection of a lot of these issues that we have to deal with out of D.C., again, the debt ceiling, the sequester.

But, generally speaking, you're looking at a fairly reasonable outcome from a U.S. economic perspective in 2013.

(END VIDEO CLIP)

VELSHI: Now, all of this generally supports my idea that America could be headed for another economic boom fueled by energy production, low interest rates and a recovery in housing, that is, if partisan grid lock in Washington doesn't mess things up for us all in the coming months.

While Washington sort of averted a fiscal cliff this week, America still has a bunch of cliffs to look forward to in the coming months.

Democrats and Republicans are set to duke it out over the debt ceiling, spending cuts and then the budget. And just like the fiscal cliff, all those other cliffs will give birth to more tired and overused political metaphors. I will kick this can over to Christine Romans to explain.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Just like the yodeler in that "Cliff Hangers" game on "The Price Is Right," we did fall off a cliff, a metaphor cliff.

PRESIDENT BARACK OBAMA: Fiscal cliff.

SENATOR HARRY REID (D), MAJORITY LEADER: The fiscal cliff.

SENATOR JEFF SESSIONS (R), ALABAMA: Over the cliff.

UNIDENTIFIED MALE: The so-called fiscal cliff.

ROMANS: Or maybe not. Cue Julie Andrews in "The Sound of Music."

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It is more of a slope.

RICHARD QUEST, CNN INTERNATIONAL'S "QUEST MEANS BUSINESS": It's not a cliff. It's a slope. UNIDENTIFIED MALE: It's really kind of a slope.

ROMANS: Hill, cliff, slope, be honest. It felt more like this.

REPRESENTATIVE DENNIS KUCINICH (D), OHIO: This place is starting to have the feel of the movie "Groundhogs' Day."

ROMANS: At least the movie made you laugh. This was more like "The Hurt Locker."

JOHN AVLON, SENIOR POLITICAL COLUMNIST, "NEWSWEEK" AND THE DAILY BEAST: Congress set this time bomb. Now, they're scrambling to diffuse it.

ROMANS: In the end, the cliff, slope, bomb, Groundhog Day, call it what you will, it became a bill and a new metaphor.

UNIDENTIFIED MALE: Kick the can down the road.

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: That's just kicking the can down the road.

UNIDENTIFIED MALE: Kicking the can.

SENATOR RAND PAUL (R), KENTUCKY: Kicking the can.

REPRESENTATIVE MARSHA BLACKBURN (R), TENNESSEE: We are done with kicking this can down the road.

We grabbed that can and that can is called spending cuts.

ROMANS: But, hey, we're not blameless.

That's congressional malpractice.

VELSHI: Economic storm of our own making.

UNIDENTIFIED MALE: We are in detox from our fiscal cliff.

ROMANS: But the masters reside in the halls of Congress.

UNIDENTIFIED MALE: Like a bull in a China closet.

UNIDENTIFIED MALE: They're like salespeople who tell their customers they can have the $30,000 car.

UNIDENTIFIED MALE: We should look at those who have lit the candle.

REPRESENTATIVE DARRELL ISSA (R), CALIFORNIA: Like an airplane, did we climb over it? No.

ROMANS: So, now, can we please put the metaphors out to pasture?

REPRESENTATIVE LLOYD DOGGETT (D), TEXAS: We soon face the Valentine Day cliff and perhaps the April Fools' Day cliff. JENNIFER PSAKI, FORMER PRESS SECRETARY, OBAMA 2012 CAMPAIGN: What the president was saying is, I'm not going to play chicken with the debt limit.

ROMANS: I guess not.

(END VIDEOTAPE)

VELSHI: We'll cut through the metaphors and get into what's wrong with this country's budget process on "Your Money" this weekend, Saturday at 1:00, Sunday at 3:00 p.m. Eastern.

That's it for me. See you next week. I'm out.

(COMMERCIAL BREAK)

BANFIELD: This just in. I want you to take a look at some terrific pictures that are coming to us out of Florida. This looks like it's a funnel cloud in the making.

Apparently, these were very accidently captured. This was from a WPLG helicopter crew that was on their way to cover a different story altogether, a crime, actually, when they spotted this and started shooting out there windows.

But it's remarkable because you can see within seconds that small funnel turns into a longer funnel. And this is sort of the making of the funnel clouds that end up on the ground oftentimes.

Our Chad Myers is standing by live in the Severe Weather Center. I always marvel at how these things come together like this. Can you just walk me through this phenomenon?

CHAD MYERS, AMS METEOROLOGIST: Well, you know, this is south Florida. It's a hot day down there today, 80 degrees. The air is rising because it's so hot and the rise and spin almost like a dust devil out in the desert, but just kind of attached to the cloud up above.

And it's not a big event, but if you watch this long enough and we did in the weather office, planes are actually flying between the helicopter and the funnel because that really -- right there -- is the glide path to MIA, the glide path to the Miami airport.

So, that's where we are, kind of out by the Dolphin Mall, the Dolphin Expressway, right where Miami almost turns into the Everglades, literally. And then the "M" in "Miami," that small little piece of blue -- right there -- that was the storm there of the cloud rain shaft that was associated with it.

So, not a big deal, but you're going to have these things all day long. And I'll tell you what, if you get one of these over your house, it could, like, move around some of your lawn furniture and things like that. So, just kind of watch the skies, I guess, in South Dade and Miami for the rest of the day.

BANFIELD: Dumb question. MYERS: Go ahead.

BANFIELD: Ready? Dumb question.

MYERS: Yeah. Ready.

BANFIELD: If that funnel cloud ends up over water and touches down in water, does that become a waterspout and if it ends up over land and touches down on land it becomes a tornado?

MYERS: You've been paying attention. Very good.

BANFIELD: You're a good teacher. Thank you, Chad Myers.

I just think those pictures are remarkable to watch.

MYERS: They are. They're very cool.

BANFIELD: I can't tell from the chopper view whether it's over land or water, though. I don't know if you know. Do you?

MYERS: Yeah, it was just to the west of Dolphin Expressway, so had it touched down, it would have touched down in the Everglades. And it could have gotten a little bit of a white spin to it because it's kind of ...

BANFIELD: A little bit of both.

MYERS: Like the white tornado. Yeah.

BANFIELD: A little bit of both, right? Land and water.

OK, Chad Myers, thank you very much.

MYERS: Appreciate that.

BANFIELD: You're welcome.

So, the world's smallest state has a big business problem. The Vatican, that's the world's smallest state. It is no longer taking credit cards.

Meaning, if you're a tourist, you can't charge anything when you want to buy your keepsakes or when you want to visit the Sistine Chapel. It is a bit strange.

Why have banks lost faith in the Vatican? Let's turn to our CNN Belief Blog editor, Eric Marrapodi, who joins us from Washington.

Is the Vatican in trouble with the Italian government or did I misread this?

ERIC MARRAPODI, CNN BELIEF BLOG CO-EDITOR: No, you got it right, Ashleigh.

The Bank of Italy has stopped Deutsche Bank from running the Vatican's ATMs and all their credit card systems which means those five million tourists a year who head to the Vatican museum to see the Sistine Chapel or go to the book stores at the Saint Peter's Basilica, they won't be able to use their credit cards or their debit cards or take euros out of the ATMs because there's some concerns about the banking practices at the Vatican and some concerns that there might be some lax in oversight.

BANFIELD: Is it lax in oversight or is it something naughty?

MARRAPODI: Well, the concern here is that there might be something naughty, that they're not complying with standards for money- laundering protection and other financial crimes.

And there have been two reports in the last couple of years, one from an independent group and one from the Bank of Italy that said, hey, the Vatican banking practices are not up to snuff.

And one of the ways it got caught is, remember, the Vatican is the home to the Catholic Church which is an organization of over a billion people. And, so, when the Vatican Bank is moving money, they're often moving enormous sums of money. And one things that flagged this was a 20 million euro transaction.

Now, that may be an awful lot of change to you and I, Ashleigh, but for the Vatican, that's something that happens on a fairly regular basis that they're moving enormous sums of money between the churches around the world.

So, what happened was it got flagged. And the international protections were not in place to keep that money safe.

The pope said, hey, we're going to fix this. We're going to work with the regulators and get it right. But they're still not there yet and the Bank of Italy recently, on December 31st said, hey, as of January 1, no more credit card transactions, no debit card transactions until you get it right.

BANFIELD: Eric, I'm not sure. Some people say that this is just a blip. We're going to fix this and, you know, soon, it will all be smoothed over and we'll be back to business as usual and other people say, not so fast. This could end up in something even more serious.

Where do you weigh in on that?

MARRAPODI: Well, the Vatican has said, we're going to fix this. We're going to sort this out soon. That's the statement they told us today. They said it's just an issue of a contract expiring with a service provider.

I'm not sure that's the end of it and I'm not sure how quickly this is going to resolve itself there at the Vatican.

They're still going to be able to take euros and tourists who want to go and visit the Vatican will have plenty of options to go buy those pope bobble-heads outside of the Vatican City in the shops and stores in and around Rome that are so tightly -- you know, right next to the Vatican.

BANFIELD: On your next trip there ...

MARRAPODI: So, for tourists, this is not that big of a deal, I think. They're going to feel a little inconvenienced. Throw a couple of extra euros in the wallet.

But this is, again -- this speaks to the issues that the Vatican Bank has been having and getting that house in order which the pope has said is a priority and we'll see how quickly this gets resolved with the Bank of Italy.

BANFIELD: Eric Marrapodi, on your next trip there, will you get me one of those pope bobble-heads?

MARRAPODI: I have a John Paul II bobble-head at my house and I will get you a Benedict one, next time I go.

BANFIELD: That is a collector's item, my friend.

All right, Eric Marrapodi, good to see you. Thank you.

MARRAPODI: Thanks, Ashleigh.

BANFIELD: Another member of President Obama's cabinet is expected to say sayonara and his job is big, very important, the Treasury secretary, Timothy Geithner.

It's all coming just before the next fiscal cliff round. Our Wolf Blitzer's going to talk about replacement possibilities, right ahead.

(COMMERCIAL BREAK)

BANFIELD: OK, it has been a very busy week. If you can believe it, at the beginning of this week it was new year's and it seems like it was a month ago.

And then we had the fiscal cliff deal. You had to stay up very late in order to see that vote take place.

And then the big blow up, right, because after the fiscal cliff vote all of a sudden there was no package for Hurricane Sandy relief and Chris Christie went ballistic and Peter King went ballistic and then we all forgot about new year's.

Well, guess what? We're just minutes away from "The Situation Room" where we talk a whole lot more about these things and what's coming up in the next week. Wolf Blitzer's now with a preview.

I want to talk about Tim Geithner because that's another big thing looming. The treasury secretary, he's expected to leave in a few weeks and we've got more fiscal cliffs ahead.

So, give me an idea of what the White House is talking about in terms of a replacement. WOLF BLITZER, ANCHOR, "THE SITUATION ROOM": I think Jack Lew, the White House chief of staff, a former budget director not only under this president, but under President Clinton, a very smart guy, I think he's certainly got a chance, a serious chance. I'm sure he's on the very, very short list to be the next secretary of the treasury.

But there are other candidates out there, as well. But I think Jack Lew's got a really good chance because he's very close to the president, he's respected and he knows these issues. So, he's very substantive and he's got a lot of experience.

My suspicion is he'll be the treasury secretary. But you know what? In these kinds of areas, it's not done until it's done and I'm sure there are some other candidates that the president is considering, as well.

But they've got to make the decision -- my own gut tells me the president's going to start making announcements as early as Monday and Tuesday.

BANFIELD: Oh, OK. Well, back to experience and I may be conflating stories, but I thought I saw some research somewhere where Lack Lew has loads of experience but maybe not so much on Wall Street, not like Geithner. I mean that guy came from Wall Street.

BLITZER: He did work in the financial sector during the eight years of the Bush administration. He was the budget director during the Clinton administration. Then there were eight Republican years in the White House and he was -- he worked in that whole area over those years, so he's got some good experience in those areas.

He's got good connections with folks on Wall Street. He's respected I think pretty much across the board.

Doesn't have a high visibility, but you don't necessarily need a high visibility in terms of doing television interviews and stuff like that to be an effective treasury secretary.

Bob Rubin during the Clinton administration, a former chairman of Goldman Sachs, you know, he didn't really have a -- he wasn't out there in the media doing a lot. but he was pretty effective.

BANFIELD: Well, it's just three-and-a-half minutes until the big show, so I'll let you break off and get ready for your program and remind everybody that Wolf Blitzer's "Situation Room" is coming up next.

And we're back right after this break.

(COMMERCIAL BREAK)

BANFIELD: So, he just retired yesterday, but Congressman Barney Frank may be going back to the Capitol, believe it or not.

Yeah, he's hoping to return not to the House, but instead to the Senate. On MSNBC today, Frank revealed that he now wants to fill John Kerry's spot if Kerry becomes secretary of state.

(BEGIN VIDEO CLIP)

BARNEY FRANK, FORMER MASSACHUSETTS CONGRESSMAN: A month ago -- no, a few weeks ago, in fact, I said I wasn't interested. It was kind of like you're about to graduate and they said you've got to go to summer school.

But the deal -- that deal now means that February, March and April are among the most important months in American financial ...

UNIDENTIFIED MALE: So, you'd consider it?

FRANK: If I -- yes, in fact, you know, I'm not going to be coy. It's not anything I've ever been good at.

I told the governor that I would now like, frankly, to do that because I would like to be a part of that.

It's only a three-month period. I wouldn't want to do anything more. I don't want to run again.

(END VIDEO CLIP)

BANFIELD: And you just know Wolf Blitzer's going to talk about that and "The Situation Room" starts now.

BLITZER: Ashleigh, thanks very much.