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Pushing Geithner; U.S. Threatens to Knock Down North Korean Missile

Aired March 19, 2009 - 15:00   ET

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

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I do think that you have to keep a larger, you know, keep a larger perspective on the issue.

RICK SANCHEZ, CNN ANCHOR (voice-over): That is Laura Ling talking to me exclusively. And now she's being held captive by North Korea. Here's her last tweet: "Lauraling. Missing home."

The U.S. threatens to knock down a North Korean missile. Is this the Obama test V.P. Biden warned about?

REP. ERIC CANTOR (R-VA), HOUSE MINORITY WHIP: The American people don't want to, nor should they need to put up with bonus dollars being taken.

SANCHEZ: The same politicians who are now screaming about the AIG bonuses were singing a completely different tune months ago. And we have their statements.

Which politicians took the money, $5 billion worth, from Wall Street, while Wall Street had rules and regulations change to make them billions? We want to know.

And is this a wedding or a baseball brawl? Maybe both. We're getting answers for you, because it's national conversation time right now.

(END VIDEOTAPE)

SANCHEZ: And we do have breaking news. Hello again, everybody. I'm Rick Sanchez. Want to remind you that Ali Velshi has just finished doing an interview with Treasury Secretary Timothy Geithner. He's the guy in the hot seat, so you're going to want to hear what Ali has found out.

But before we do anything else, let me tell this, this bill has passed the full House, surprisingly so. It's a bill that essentially goes after this $165 million in bonuses, but not by asking them to give it back, rather by just taxing almost all of it, something like 90 percent.

Democrats were the ones who proposed it. They were for it. Republicans seemed to be stammering about it. But now it seems like both sides have agreed. The numbers are 328-93. So, it's passed by wide margins. I want you to listen now. I want you to listen to some of the conversations that were going on today, heated discussions, I might add, as this bill was being debated.

(BEGIN VIDEO CLIP)

REP. GARY PETERS (D), MICHIGAN: Million-dollar bonuses to the very people who drove our economy to the brinks of collapse is simply unacceptable.

REP. LEE TERRY (R), NEBRASKA: But let's look at the facts here. This language that specifically allows the bonuses was written into this stimulus, and the righteous indignation of my colleagues and friends on the Democrat side now demagoguing what they voted for and put in.

REP. CHARLES RANGEL (D-NY), HOUSE WAYS AND MEANS COMMITTEE CHAIRMAN: We didn't think it was controversial. We didn't think it was a Democratic idea or a Republican idea. We thought you felt the frustration of your constituents in saying, stop the thievery at taxpayers' expense.

(END VIDEO CLIP)

SANCHEZ: Wayne Slater is with "The Dallas Morning News." He's joining us now to talk about the politics of this.

Look, a lot of our viewers are already chiming -- in fact, I'm going to show you something. I'm going to go to my Twitter board right now, because people are already chiming in. Interestingly enough, a lot of viewers are wise enough to look at this and say, you know, this may not be a good idea "unless Congress wants AIG to go bankrupt. How stupid can Congress be?"

It's interesting to figure out these times what's good, what's bad, what's in, what's out. What say you about this bill that has now been passed by Congress to get the money back, good or bad, Wayne?

WAYNE SLATER, AUTHOR, "THE ARCHITECT: KARL ROVE AND THE MASTER PLAN FOR ABSOLUTE POWER": Well, it's amazing. I don't know if it's good or bad or not.

Clearly, there's a crowd on the lawn with pitchforks and politicians, both Republicans and Democrats, have figured that out. I think maybe a better approach might have been to give these guys the money, but to make them stand in the welfare line with everybody else to get it, and then give them the money in food stamps, so that they have to go down to the Piggly Wiggly, like everybody else on welfare, to spend it.

This is a firestorm, where although the division we just saw between Republicans and Democrats still exist to some extent. Clearly, lots of Republicans who were the loudest complaining about this were on the side now of saying, we have got to do something about the fire that's been started. SANCHEZ: Politically, I don't know if the president's position on this is courageous or foolish. But he seems to be saying, guys, there's a much bigger picture you have got to be looking at out there. It can't just all just be about this one company and these $165 million, which seems like a lot of money, until you compare it to the $4 trillion that we may end up spending to save all these banks.

Let me let you hear what the president had to say yesterday when he talked to reporters.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The fact that these guys are looking for bonuses having run down AIG begs the question of why were they making that much beforehand when nobody was criticizing them? Everybody thought they know what they were doing.

That kind of culture has to change.

(END VIDEO CLIP)

SANCHEZ: He's talking about systematic and institutionalized greed, which he says has been taking place, not just on Wall Street, but in political circles for the last 10 or 12 years. Is he right?

SLATER: Of course he's right. This is not a Democrat or Republican, conservative or liberal thing. This is a cultural problem that existed under the Bush administration, exists now under the Obama administration.

And, so, it's very natural, I think, for the politicians to respond, recognizing there's this populist uproar now among the rest -- most of us out here, who are worried about our jobs, our businesses, our 401(k)s, to try to do something about it by dealing with something we understand.

And that's these unconscionable bonuses to the very companies that are getting our tax money. I think Obama is right in saying -- and that's really the test of leadership here. Can he steer us in another direction and say, OK, OK, we understand. Everybody's pointing fingers. Everybody's mad. But let's look at the much bigger picture here if we're going to solve it.

And that's where we have got to go.

SANCHEZ: It's a bold approach. You know what else he's got to do? I want to bring Ali Velshi into this discussion.

He just talked to Obama's guy in the crosshairs. There's no question that the biggest target right now in this administration is a young man named Timothy Geithner. He's the head of Treasury. Ali Velshi had a chance to talk to him today.

What does he tell you, and does he recognize that he really is the guy who's being the big fat target right now, Ali? VELSHI: Yes. Actually, before we started our conversation, he was saying that, in the last few weeks, since he's been in office, the last two months, his eyebrows are going gray.

He definitely realizes how much of an effort this is. He's working about 15-hour days. And he says that even the calls for his resignation he's taking in stride. He said it comes with the territory.

He did say...

(CROSSTALK)

SANCHEZ: I have got to ask you, I have got to ask you...

VELSHI: Yes.

SANCHEZ: ... did you ask him whether he feels like he truly screwed up in not being more transparent about letting people know that this $165 million was out there...

VELSHI: Yes.

SANCHEZ: ... and that we were going to just have to eat it one way or another, rather than having it suddenly appear?

VELSHI: He says that he first found out on March 10 that they were contractually obligated to send these bonuses out by March 12. And he said he got on the phone with Ed Liddy, the CEO of AIG, and said very clearly he did not agree with that, he did not think it was right, but that their lawyers and AIG's lawyers both confirmed that there was a contract and that it might be more expensive to get out of that contract than not to.

So, he has said that any other money that goes out from the government at this point is going to have some real strings attached to it. And he expressed the same frustration we have heard from everybody about the fact that these bonuses would have gone out to this group of people.

SANCHEZ: I know you have got to put this story together, and I want to let you go. I'm just going to ask you one more question reporter to reporter.

VELSHI: Sure.

SANCHEZ: What's the headline in the interview you did with Timothy Geithner? What is the big scoop here?

VELSHI: Well, you know, on two levels. One is obviously, this AIG stuff is a big deal. We have known that they -- that Treasury had some involvement in that clause that was written in that allowed AIG to continue to pay out this money. And he did say that it was somebody from Treasury who did talk to Chris Dodd's staff on the Banking Committee. The other thing is, though, is he didn't dispute the argument from Ben Bernanke, that if things work, and he thinks they are working, that we will end this recession in 2009 and we will be into in recovery in 2010. So, he did sound an optimistic note for a guy who spends his entire day dealing with, you know, one crisis after another.

SANCHEZ: Ali Velshi, good job, as usual. Thanks so much for bringing us that, hot off the press, as they say. We will be looking at you a little bit later.

Wayne, let me bring you back in for one final question. As we look at this situation right now, most people are pointing fingers. A lot of people are being accusative. But is there anything in this whole thing that's really blameless, going right from Barack Obama, who, by the way, took money himself from AIG, to a lot of these senators and congressmen who over the last 10 years, as we will detail, took $5 billion at least -- well, let me rephrase that.

Five billion dollars was given to -- for political influence. That doesn't mean they took it. A lot went to lobbyists, but you know what I mean.

SLATER: Rick, you put your finger on the central issue here in a very mature way.

The truth is, nobody's blameless here. Both sides are pointing. Everybody's pointing to somebody else. Somebody broke the lamp. The kids have scattered. The dog's under the coach. The cat's who knows where. The truth is, the Bush administration was responsible in part for the problems that were inherited by the Obama administration.

Republicans and Democrats alike in Congress were a part of this game and shouldn't be shocked, shocked that there was gambling in the room. But it's on Obama's watch now to fix it.

SANCHEZ: Shocked, shocked that there was gambling in the room. I love that expression.

Wayne Slater, great to have you. Good to see you again, my friend.

SLATER: Good to see you.

(BEGIN VIDEO CLIP)

SEN. CHRISTOPHER DODD (D), CONNECTICUT: I apologize if I had some confusion about whether or not we wrote it exactly. But I didn't write it at my own behest. I was being sought out and asked to modify this, with the alternative, quite candidly, being losing the amendment itself.

(END VIDEO CLIP)

SANCHEZ: This is a big part of this story. Senator Chris Dodd changes his story. This is a CNN investigation revealing who is saying not me, not me, and not me today on this AIG clause. Oh, how this story has shifted.

And two Republican lawmakers are hammering Treasury Secretary Tim Geithner, as we just discussed with Ali Velshi. They're going after him in the form of a resolution, though, officially on the record. I'm going to be talking to one of them right here, and he's going to take us through his intent. Stay there.

(BEGIN AUDIO CLIP)

SANCHEZ: Hey, this is Rick Sanchez. Thanks for calling.

CALLER: Hey, Rick, this is David from Duluth, Georgia.

We should all embrace the concept of pay it forward and start making a difference in people's lives for the better. Let's do away with greed and start helping one another. We are all our brother's keeper.

Thank you.

(END AUDIO CLIP)

(COMMERCIAL BREAK)

SANCHEZ: It's interesting. A lot of folks are getting in on this conversation that we have been having. I want you to see what we got on MySpace -- pardon me -- Facebook.

Johnny, take us over there, if you would.

Francis is watching. She says: "Obama, Dodd, Geithner should be questioned by Congress next."

So, obviously, there's a lot of names being named, even by some of our viewers who are watching this newscast.

Right now, I want you to see something that we have been talking about. We mentioned a little while ago about who's going after Treasury Secretary Timothy Geithner, one of those who's proposed something called a resolution of inquiry, which basically stands for what it says. It's, you're going, trying to get information from someone. And that's what they want to do.

One of the persons who is sponsoring this measure is Congressman LaTourette. I want you to listen to what he had to say about Tim Geithner.

(BEGIN VIDEO CLIP)

REP. STEVEN LATOURETTE (R), OHIO: Ross Perot, when he ran for president in 1992, he talked about the giant sucking sound. Well, today, there's another giant sucking sound going on in Washington, D.C., and that's the tightening of sphincters on both ends of Pennsylvania Avenue, as people are having to explain who put into the stimulus bill this provision of law.

(END VIDEO CLIP)

SANCHEZ: And here we go again.

Thad McCotter is joining us now, Republican from Michigan. He, too, is sponsoring this measure, co-sponsoring, I should say.

Congressman, thanks so much for being with us, sir. We appreciate it.

REP. THADDEUS MCCOTTER (R), MICHIGAN: Thanks for having me.

No one has ever accused Congressman LaTourette of being William Wordsworth.

(LAUGHTER)

SANCHEZ: Yes. Yes. I don't even think I want to quote what we just said. We will leave it at that.

What do you want to know with this measure? What do you want it to do? What is it about -- what do you want from Geithner?

MCCOTTER: I think, in many ways, it's in fairness to Secretary Geithner that we're acting.

I am not calling for his resignation. I think that would be premature and unjust. Secretary Geithner has not been accused of any malfeasance.

SANCHEZ: Right.

MCCOTTER: What we want to do is get to the resolution of America's great whodunit. Who was in the room that put this orphan amendment approving and protecting the AIG bonuses into the stimulus bill?

SANCHEZ: Do you think that -- this is an important question I want to ask you. Do you think that Timothy Geithner may have done this either, A, as an oversight, or, B, he knew it was there, but he thought it would be a political spitball, so he didn't want it out there?

MCCOTTER: Well, first, we don't know that Secretary Geithner was the one who demanded that it be put in. That's part of the reason for a resolution of inquiry. I don't want to jump to conclusions.

But what we do know from the testimony of Mr. Liddy yesterday is, AIG was very worried that, absent these retention bonuses, they would lose -- quote, unquote -- "talent" that could then cause a collapse of what they're thing to do, which is a slow wind -- unwinding of AIG.

So, when you start to think about this as a matter of deliberate policy, you know that these bonuses are coming, you don't want the public to be outraged, but you also don't want Congress to stop them, lose the talent, and have a crisis at AIG again. So, it does make sense why it would be put in. What we can figure out, though -- we have a motive -- is who was the culprit.

SANCHEZ: Ed Liddy said yesterday to you and everyone else, look, the most important thing here is saving the economy. And we may have to take this as a loss to do that.

In fact, I think we have -- do we have that sound, Roger? Let's play it.

(BEGIN VIDEO CLIP)

EDWARD LIDDY, CEO, AMERICAN INTERNATIONAL GROUP: Payments were made to employees in the Financial Products unit that caused many of AIG's problems, and Americans are asking quite simply why pay these people anything at all.

Here's why. I'm trying desperately to prevent an uncontrolled collapse of that business. This is the only way to improve AIG's ability to pay taxpayers back quickly and completely and the only way to avoid a systemic shock to the economy that the U.S. government help was meant to relieve.

(END VIDEO CLIP)

SANCHEZ: So, here's the money question to you. Given what you just heard him say, and given that there's another $250 billion or so that's got to be given out in TARP funds, are you angry enough about this thing, or might you get angry enough about this thing that you and other Republicans will decide, you know what, we're not giving this administration another penny?

MCCOTTER: Well, I was the first member of Congress to oppose the Wall Street bailout, because I thought it was bad to act out of anger or in a crisis. That's usually when you get bad legislation.

As for Mr. Liddy, the problem is, he is a good man who made a bad decision. But he didn't make this alone. And we want to know who in conjunction that he made this with. In the end, his job is to restore not simply liquidity or viability to AIG, which I don't believe is possible.

It's to restore the people's confidence in these failed institutions. That is what we need to come in the recession, and this decision actually was counterproductive to doing that.

(CROSSTALK)

SANCHEZ: Congressman, failed is the key word here. So, let me come back at you with this, sir, respectively. Would you be willing to let the American banking system fail, as Mr. Liddy seems to be implying, and the president as well, by the way, that will happen if we don't back this thing now, especially since we're already halfway in?

MCCOTTER: No. That's why constructive solutions have been put forward, to get rid of the zombie banks that are insolvent. It's not a problem with liquidity. It's insolvency. You can take them, take the healthy parts of the bank, let them operate, wall off their -- quote, unquote -- "toxic assets," do debt-for-equity swaps. There are a lot of ways to resolve this without it leading to more chaos in people's economic lives.

But to simply continue to pump them up and hope that the market catches up to them, we think that that's a bad decision to make and it's unfair to the American taxpayers.

SANCHEZ: Thad McCotter, Congressman, thank you so much, sir, for taking time to take us through this and take the tough questions.

MCCOTTER: Thank you.

(BEGIN VIDEO CLIP)

LAURA LING, JOURNALIST: Hi, Rick. That was the second homicide that I had visited in just a matter of...

(END VIDEO CLIP)

SANCHEZ: Watch this. If you watch us regularly, like many of you do, you probably know that I talked to journalist Laura Ling just last week. She took us through the drug violence in Mexico. She was speaking to me from South Korea at the time.

Now she's been taken into custody by North Koreans. We are trying to hook up with her, get as much information as we possibly can. And we will update that story.

Also, look at this: Police bust a wedding party. Punches are thrown. Guests end up being Tased. This is wild, 13 arrests, 13 officers now suspended. And it's not for what you might think. We're going to take you through this as well.

Stay with us.

(BEGIN AUDIO CLIP)

SANCHEZ: Hey, this is Rick Sanchez. Thanks for calling.

CALLER: Hey, Rick, this is Jack in no place, New York.

And in regard to AIG, if they are giving out awards for incompetence and malfeasance, can I get in line? I promise I won't take more than a million. See you. Bye.

(END AUDIO CLIP)

(COMMERCIAL BREAK)

SANCHEZ: All right, a couple of things that we're following for you, including the board there, so that I can talk to you about what people are saying.

Let's go over here, first of all, to MySpace. Ready? I will tell you, we did this story yesterday. And it's gotten so much traction from you. It was that investigative piece done by CNN's investigative correspondent, Drew Griffin.

"Chris Dodd is just like my 12-year-old daughter, denies everything until backed into a corner, then explains to me why she did it."

And then let's flip it, Johnny. Let's go to the Twitter board, if we can. See if I can pick that up. You can see what is there at the bottom. It says: "I think not. The GOP sees a crack in Obama's armor, and they're going in for the kill. Good luck."

And there's this. As the verbal brawl in Congress over who's a communist and who let whom get that bonus continues, there is a real honest-to-goodness brawl to show you today that resulted in the arrest of a Houston Astros baseball player. Pitcher Brandon Backe was one of 13 people arrested last fall. There he is.

And now we're hearing the same number of police officers have been disciplined in this brawl investigation. Here's the video. It surfaced the night of the brawl. You can see police. They're using Tasers on one guest, no problem there, apparently. Police say the officers followed the rules on the use of force.

But nine of the officers are now drawing suspensions, ranging from two to seven days, for not filing the proper paperwork. Look at this. Four more have been reprimanded. Police are blaming much of the fracas, by the way, on belligerent drunkenness. At a wedding? Belligerent drunkenness.

We will leave it there.

Well, it is not belligerent drunkenness, but perhaps a case of amnesia, that has senators and House members denying they had anything to do with the stimulus bill clause that protected those fat AIG bonuses. This is CNN's special investigation that we first brought you yesterday right here -- when I come back, a new and important development in this story.

(BEGIN AUDIO CLIP)

SANCHEZ: Hey, this is Rick Sanchez. Thanks for calling.

CALLER: Hey, Rick, this is Alexander from New York.

This is the first day for me to be unemployed after being 15 years an NIH federally funded social scientist. I did research on recovery from drug and alcohol abuse.

I'm going to go from making a fair amount of money to $400 a week, which is less than I was making in a day. And I'm going to pay taxes on that. And millions of people who are much less fortunate than I am are also paying taxes on their unemployment so-called benefits.

So, the thought that these tax dollars could have gone or it still may be going to individuals who are making over $100,000 a month, and got benefits that totaled just at AIG $160 million is absolutely outrageous.

We need to do something. And I want to thank you for your show, because you're really contributing to making this something that the government has to pay attention to.

Thanks a lot. Bye.

(END AUDIO CLIP)

(COMMERCIAL BREAK)

SANCHEZ: All right. Thank you very much. I appreciate that.

There is no story that we did yesterday that got more reaction from you than this one. Here are the graphics that Drew Griffin used yesterday to illustrate how tough it is to find out which politician actually inserted that clause, that AIG clause that allowed them, the AIG execs, to keep their bonuses at our expense -- "not me, not me, not me, not me," the words of the day yesterday.

But guess who you don't see in that group? The Senate Banking Committee chairman. That's Chris Dodd of Connecticut. He seemed befuddled by our questions yesterday.

Here now, CNN's senior congressional correspondent, Dana Bash, with more on this clause mystery.

(BEGIN VIDEOTAPE)

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT (voice-over): All this outrage about AIG's bonuses, from the White House...

OBAMA: People are right to be angry. I'm angry.

BASH: .. to Capitol Hill.

SEN. MAX BAUCUS (D), MONTANA: The country is angry. Individual Americans are angry. I am angry.

BASH: Yet, Congress passed a bill last month that the president signed into law allowing AIG to keep its bonuses. And, for days, no one would fess up about who was responsible for a mysterious loophole that let that happen.

But CNN solved the mystery. It was the Obama Treasury Department and Senator Chris Dodd. Here's what happened. Last month's massive stimulus bill included a Dodd measure to strictly limit executive bonuses, but slipped inside at the last minute, an exemption for bonuses agreed to on or before February 11, 2009.

That allowed AIG to go ahead with its controversial bonuses. Just yesterday, Dodd adamantly denied to CNN that he was responsible for the exemption.

DODD: When I left the Senate, it was not in there. So, when I wrote the language, there was no such language like that. I can't point a finger at someone who offered the change at all.

BASH: But, today, an official at the Treasury Department flatly contradicted Dodd, telling CNN his office did know, and that it was Obama Treasury officials who pressed him to make the change, because they worried that his measure to limit executive bonuses in preexisting contracts like AIG's would face a legal challenge.

When CNN took that information to Dodd, he reversed course and admitted he did make the change.

BASH (on camera): You did agree to modify this to put that clause in?

DODD: The alternative was losing, in my view, the entire section on executive excessive compensation. Given the choice -- this is not an uncommon occurrence here -- I agreed to a modification in the legislation, reluctantly. I wasn't negotiating with myself here. I wasn't changing my own amendment. I was changing the amendment because others were insisting upon it.

BASH (voice-over): Dodd insisted he made the change at the behest of the administration, but admitted he was wrong in initially denying his role.

(on camera): You were very adamant yesterday -- very adamant -- that you didn't know how this change got in there, and now you are saying that you -- that your staff did work with the administration --

DODD: Going back and looking at it, obviously I apologize.

(END VIDEO CLIP)

SANCHEZ: Ok, how about this. What will $5 billion buy you? If you are big business, it could get you the repeal of a whole lot of pesky regulations. That's right. Politicians, you know, the same ones who are so outraged now, we've been telling you about this throughout the week, they may not have been so outraged before. We've got the proof. Oh, and we now have some of the statements as well. Made months ago by some of the very same members of Congress who are outraged right now about specifically paying out these AIG bonuses. There's some hypocrisy involved in this. That's why we're going to let you see it for yourself. Stay with us, we'll be right back.

(BEGIN AUDIO CLIP)

SANCHEZ: Hey, this is Rick Sanchez. Thanks for calling.

UNIDENTIFIED FEMALE: Hey, Rick, this is Sally from Ann Arbor, Michigan. AIG's failed executives are getting rewarded for bad decisions and receiving millions of dollars of taxpayer money in bonuses. Where the heck is my bonus? I try and fail at many things. My failures are huge and my blunders are spectacular. I deserve millions, too. At the very least, just forgive all my student loans. That would be a trade in equal value. I'm waiting.

(END AUDIO CLIP)

(COMMERCIAL BREAK)

SANCHEZ: Welcome back. I'm Rick Sanchez here in the world headquarters of CNN. A little bit of viewer feedback for you right now. Let's go straight to twitter if you could. Veritaz, she's watching she says Rick, please stay on Laura Ling's story. Your voice will keep her safe. We will, we promise.

Now let's go over to Myspace, if we can, Johnny. This is interesting, this is what this viewer said about AIG. "Just let AIG sink. And you don't have to worry about any bonus. How hard is that to do?" Let me tell you something, what many economists and the president of the United States and the fed and the Treasury Department all say is, if we do that, it could lead to worldwide economic collapse. That is what they say. We'll keep looking and digging for you.

Now I want to share with you something else. It's extremely important for every citizen of the United States to understand, because sometimes, as my mom used to say, you've got to take a step back before you take two steps forward. Look at this graphic I want to show you right now and study it well, my friends. This is important. $5 billion, again, $5 billion. That's how much money was given for political influence by these big Wall Street banks, between 1998 and 2008.

By the way, 55 percent went to Republicans, 45 percent went to Democrats, and they got stuff like that, Glass-Steagall repealed and some of the other measures that we're going to be talking about. I want to bring Robert Weissman into this. He is with a taxpayer watchdog organization. Robert, thanks for being with us.

ROBERT WEISSMAN, DIRECTOR, ESSENTIAL ACTION: Thanks for having me on.

SANCHEZ: This is what's important. I think our viewers, we're going to commit ourselves to this but we've got to do it together. From 1998 to 2008, $5 billion was given for political influence. Something like $3 billion was given to lobbyists alone. And then much of the money went to these political campaigns, for a lot of these same Congressmen who are now giving speeches on the floor saying how outraged they are about what happened on Wall Street. There's a certain hypocrisy in this. But we want you to tell us, what did they get? What disappeared during those 10 years that may have had a heck of a lot to do with that money?

WEISSMAN: They received a series of rollbacks of regulations that controlled the way the financial sector had worked in the past. They received a gift from the regulatory agency to not enforce the existing laws. They had Congress agree not to impose new laws to control what they were going to do.

SANCHEZ: Let's make our viewers and ourselves smart. Because I didn't know any of this just about a month ago, until I started looking into this with this story. Glass-Steagall, the commodities modernization act. These are some of the things that they passed. By the way, did it really need modernizing?

WEISSMAN: No. The old way actually was pretty good, and I sure hope we go back to the old ways. The commodities futures modernization act was a law that prohibited the executive agencies from regulating financial derivatives. What's the problem with AIG? They made all these crazy wild speculative bets hoping to get really fast high returns. It's a completely unregulated business. Part of the problem is, we don't know what they own. They don't know what they own. They don't know what they owe to whom and they didn't set aside any money against the risk of collapse. They didn't have to, because there's no regulation.

SANCHEZ: I hate to sound so damn simplistic about this, but I think it's important for all of us to get this. Money, billions of dollars went from these corporations who were, now we know, extremely greedy, and in some cases even more than that, illegal, maybe not illegal. But certainly doing things that were questionable. And they ended up changing laws that made them rich, right?

WEISSMAN: It's exactly as simple as that. It was the best investment they made, $5 billion, still a big sum in Washington, D.C. over a 10-year period. They got a huge return that enabled them a free hand to go wild. They made, you know, super high profits when the going was good. Now they've collapsed their own institutions, their own industry, and unfortunately the real economy for the rest of us.

SANCHEZ: Can you name names, by the way? Can you name any names?

WEISSMAN: Well, I'll tell you, if you look at a lot of these things, it goes back to the Clinton administration. A lot of the key figures at the time were fed chair Alan Greenspan, then secretary of the Treasury Robert Rubin and Larry Summers, the deputy Treasury secretary went on to be Treasury secretary and is now President Obama's chief economic aide.

SANCHEZ: I recall another name though, there's a fellow who was at the time pushing for a lot of this. He was a member of the -- one of the chairs of the committee. Phil Graham of Texas was one of the guys who pushed the most for this. How did he fare with all of this?

WEISSMAN: Well of course he left Congress and he got a job with UBS, the Swiss banking firm. He's done ok. He stands by it. He says he didn't do anything wrong.

SANCHEZ: I'll tell you, we thank you for being with us. This is illustrative information. We're going to stay on top of this type of thing. Because nowadays as we follow this story and we hear so many people being outraged in all circles, including journalists and people in my field, when you dig a little deep, you find out that the finger points right back at, well, a lot of us. Politicians, journalists, members of Congress, all of them, right? WEISSMAN: That's true. But I really think there are perpetrators and it's Wall Street and the politicians. Folks can get all the details if they want by looking at our website wallstreetwatch.org.

SANCHEZ: We'll do that. Thanks so much Robert for being with us.

WEISSMAN: Thank you very much.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Hi, Rick. That was the second homicide that I had visited in just a matter of a couple of hours.

(END VIDEO CLIP)

SANCHEZ: North Korean authorities have seized a pair of U.S. journalists. One of them was featured on this show just last week, Laura Ling. That story's ahead, an update.

And lawmakers are screaming about the AIG bonuses. But have they always been so opposed to the very thing that they're now screaming about? Again, important question that we all need to understand. I'm checking the records.

(COMMERCIAL BREAK)

SANCHEZ: Welcome back. I'm Rick Sanchez here in the world headquarters of CNN. Let's go over here, if we can, to Facebook. Let's go to Dan Janus there. He kind of looks like Tony from the "Sopranos," doesn't he? Look at his picture. A little bit, right? He says, "Hey, Rick, after Dodd's confession and Liddy's testimony, maybe it would be a good idea to set up a confessional in Washington, have to admit transparency has become a bit clouded." My thanks to you, Dan.

Let's talk about this, the knives, they are out for Timothy Geithner as earlier said. He's the president's Treasury chief, alias new whipping boy for the GOP and even some Democrats. Rightly or wrongly, Geithner's getting slammed for allowing AIG to honor its bonus payment to its workers while getting government bailout money. Congressman Connie Mack is demanding that Geithner resign. Minority leader John Boehner says he's on thin ice. Senator Richard Shelby asked why didn't Geithner just block the payment to the employees. Recall now that the original T.A.R.P. deal was inspired by President Bush back in November to help feed starving banks. So what were some of these new outraged politicians saying back then about honoring contracts and paying workers with government money, that they're so outraged about now? Let's go back in time, shall we?

Senator Shelby, last summer: "It should be up to the board of directors of a private corporation to set the compensation of an executive. It shouldn't be Congress' role." House minority whip Eric Cantor. Back then was against "the federal government being able to set salaries across the board." Mitch McConnell who now says he's quote, appalled by the AIG bonuses was saying just last month that he didn't want "the government to take over these businesses and start telling them everything about what they can do." So you, as a viewer, are left to ask, how can they be saying something was ok back then, but outrageously not ok now? Congressman, senators, you have the floor.

(COMMERCIAL BREAK)

SANCHEZ: Here's the political news story of the day. It happened within the last hour. Congress has voted to go ahead and make these traders give back the $165 million. But they're doing it in a very interesting way. They're going to tax them the money back. That's right. Something like 90 percent of that $165 million is what they intend on taxing. This was an interesting debate that took place on the floor of the House today. We want you to listen to the debate going back and forth. We've prepared this just for you. Here it is.

(BEGIN VIDEO CLIP)

PETERS: Million dollar bonuses to the very people who drove our economy to the brinks of collapse is simply unacceptable.

TERRY: Let's look at the facts here. This language that specifically allows the bonuses was written into the stimulus, and the righteous indignation of my colleagues and friends on the Democrats' side now demo gauging what they voted for and put in.

REP. SANDER LEVIN, (D) MICHIGAN: The head of AIG has suggested returning the bonuses. They should. And if they don't, we're taking action. We have the authority under the tax code not to punish, but to protect the taxpayers of the United States of America.

REP. DEVIN NUNES, (R) CALIFORNIA: I want to know who's responsible for including this in the stimulus package authorizing these bonuses. We need to know if it's Senator Dodd, if it's Secretary Geithner, or President Obama. Who knew, and who knew when?

REP. ARTHUR DAVIS, (D) ALABAMA: Here we go again. This Congress is finally doing the right thing in a timely fashion, recovering ill- gotten gains. What do the American people do? They turn on the television and they hear this term once again into a partisan controversy. An effort to deflect became onto the other party instead of celebrating the fact that we have a chance to do something together as an institution.

REP. DAN BURTON, (R) INDIANA: This should never have happened. These bonuses should never have happened. Now you're trying to do something that's of questionable constitutionality to cover up a big mistake. I don't know why you just don't own up to it.

REP. CAROLYN MALONEY, (D) NEW YORK: On Sunday night the bonuses were sent. On Thursday, we are on the floor correcting this, and returning the money to the American taxpayer.

REP. PHIL GINGREY, (R) GEORGIA: They want to say that we're going to, to the American people that we're going to make everything all right, by getting back with a 90 percent tax this $175 million. But what they don't say, Mr. Speaker, is how they're going to get back the $170 billion that was given to AIG in the first place, a thousand times these bonuses.

RANGEL: We didn't think it was controversial. We didn't think it was a Democratic idea, a Republican idea. We thought you felt the frustration of your constituents in saying stop the thievery at taxpayers' expense.

(END VIDEO CLIP)

SANCHEZ: That's good TV. Me and my staff watched this for several hours. More Americans should watch Congress when they're doing their jobs as they did today. By the way, the Senate still has to take on this bill now. We tried to reach out to leadership. As far as we know, they haven't scheduled the actually vote on this or the discussion just yet.

This is the story that has us being extremely introspective today. The last television interview with Laura Ling was right here on this show last Friday. We now understand she's been taken into custody by North Korean officials. There is a lot to this mystery. We're getting down to it. Stay with us, we'll be right back.

(COMMERCIAL BREAK)

SANCHEZ: Big story we've been following all day. Welcome back I'm Rick Sanchez here in the world headquarters of CNN. Serious saber rattling going on right now between the United States and North Korea. Secretive communist countries answer to joint military exercise going on between the United States and South Korea. Here it is. Test firing a powerful new missile, one that reportedly could come close enough to the United States mainland to make our military at least concerned today. North Korea says the upcoming test relates to the launching of a communications satellite. But the U.S. says such a missile would carry a nuclear warhead and any test would violate UN Security Council resolutions. And they want the North Koreans to know that.

The Associated Press is reporting, this may be the most important part of this story, that American military commanders are now openly talking about shooting the North Korean missile out of the sky if need be. Shooting it out of the sky if need be. Coinciding with all of this by the way, news that hits especially close to home for us and for many of you as well. This time last week, I think you might recall, we were talking live with Laura Ling, there she is. She was in Seoul, South Korea, though we were careful not to reveal too much about where she was at the time. I didn't want to say too much about her location, because she was about to enter or be near a dangerous place. Now, we know just how dangerous.

This morning, we learned that the reporter for Current TV has been taken into custody. According to the South Korean News Agency, Laura Ling, on the right side of your screen and her producer, Una Lee have been detained by North Korean authorities. How prophetic is Ling's last entry on her twitter account which we monitor. Two words say so much, missing home, Laura Ling. It's important to note here, there are conflicting accounts as to whether the two journalists were actually in North Korea when they were grabbed or did North Korean guards actually walk into China, a sovereign territory, to detain them for taking pictures of their country from across the border. That is an important distinction and one CNN is following for you. As we speak, we'll bring you information on this story as it comes in.

There's another story that we're following for you today that's important to all of us. The market has been on a bump lately, surprisingly so. What has caused it and what's going on today? We'll tell you as we head down to what Susan Lisovicz loves to call "the witching hour."

(COMMERCIAL BREAK)

SANCHEZ: Let's go to Myspace real quick and find out what's going on in the viewers' minds. "That gave me chills just hearing that she was being held by the North Koreans. Terrible place to be." We make a commitment we'll follow that story for you. By the way, something you don't see every day, this is an underwater volcano. Look at this. Some of the most amazing pictures of the day. This is blowing off steam, ash and a whole lot of smoke. This is off the coast of Tonga, it's an island in the South Pacific between Australia and Tahiti. It is the aptly named ring of fire. Get this, smoke plumes reached 15 to 25,000 feet in the sky. Quite a sight.

And now there's a tsunami warning off of Tonga coast. A major earthquake magnitude 7.9 struck there last hour. The Hawaiian Coast Guard could feel the effects of this, but the Pacific Tsunami Warning Center doesn't believe it poses a danger to the Hawaiian island chain. Nonetheless, unbelievable pictures and it gives me an excuse to say Tonga. Which is something Susan Lisovicz by the way has never worn. She's joining us now to bring us the very latest on what's going on.

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Heaven forbid.

SANCHEZ: What's going on now?

LISOVICZ: Well, it's one step forward, one step back. We had a nice rally yesterday and stocks have basically erased those gains. But one thing to really look out for Rick, a big jump today in oil prices. Crude jumped three bucks today over $51 a barrel. That's the highest we've seen this year. Some inflation concerns out there because the Federal Reserve is printing money, so while the big concern is economic slowness right now, at the end of the road there are consequences of that and it could be inflation and you're starting to see oil prices creep up.

SANCHEZ: Is there anything to this report that's been out there for quite some time that some of the big guys in the oil business are saying, man, we can't wait to be able to start producing more. And not just producing more pardon me, but actually using the oil that we have in reserve?

LISOVICZ: Yes, I mean I think that you're going to see, OPEC is cutting back and that's another thing that's driving oil prices higher and they'll be making some money off of that Rick.

SANCHEZ: That's a story you and I are going to be talking about in the future. Thanks so much. Wolf Blitzer standing by now, he's got "THE SITUATION ROOM" -- Wolf?

WOLF BLITZER, CNN ANCHOR: Thank you.