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Obama Unveils New Financial Regulatory Agencies, New Oversight For Non-Banking Entities

Aired June 17, 2009 - 14:00   ET

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

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: I think the president's trying to walk a fine line between saying, look, our financial regulatory system is outdated, it's creaky, it's old and it needs to be fixed. But not sending the message that he wants to crush the idea of invention and making money. And you can see from the bottom, right corner of your screen, the market is not reacting poorly to the president's message. Because first of all, it was expected, everybody knows we have been in a financial regulatory system that hasn't work.

Look, we have about a dozen financial regulation agencies in this country. They don't speak is to each other. They can't sense trends. They couldn't see this coming. Here is a bit of what the president is now proposing, in the biggest overhaul of financial regulation since the Great Depression, in fact, since many of these agencies were first created.

First of all, he wants to give the Federal Reserve the authority to supervise nonbank financial firms. That means investment banks. It means, typically, insurance companies. Things like AIG. The whole issue with AIG in that one little department that caused so much of the problem is that they weren't falling under normal regulation methods. So, he wants to give the Federal Reserve the authority to supervise non-bank financial firms. The government wants the authority to break up firms that are getting too big to fail, as soon as they start getting into trouble, so they can divide them into smaller companies. That's going to be controversial.

Complex securities like credit default swaps, like securitized mortgages, and other derivatives, the government wants to regulate them and wants it to be very clear how they are regulated so that companies can't go jurisdiction shopping. They can't decide they want to call their particular financial product, this, so that this agency will regulate it.

It wants to create a new consumer financial protection agency, which looks at, just as we heard the president saying, looks at mortgages, and credit cards and other consumer financial products to see whether consumers are getting the information that they need and have the protections they need; wants to create a council of regulators, out of almost a dozen different regulatory agencies, so that the heads of those agencies are coordinating and talking to each other.

And, and this is important, Kyra, the government wants to create a system where worldwide regulatory standards increase together, so that you don't have a system where the U.S. is putting all these new standards into place and new regulations into place, and companies say I am going to a different country because they don't have those sorts of regulations. It wants everybody, it wants to coordinate with other countries to try and make sure that everybody is raising their standards to - basically a standard level. So you don't have companies moving around the world to dodge rules and regulations.

The president did really keep a level tone about this. So it doesn't sound like he is bringing the hammer down on Wall Street. But, he says, our system needs to be updated, Kyra.

KYRA PHILLIPS, CNN ANCHOR: Appreciate it, Ali. Hey, you a Lakers fan?

VELSHI: I am.

PHILLIPS: Is it worth a $2-million party?

VELSHI: I don't know. In this day and age, you have to deal very carefully with when you are going to spend $2 million. Not sure about that.

PHILLIPS: I totally agree. We are looking at live pictures now from our affiliate, KTLA. If you live in Los Angeles, or you have lived in Los Angeles, you know the Lakers. It's a huge part of the pulse of that city.

The financial crisis has been especially painful there in the state of California. It is actually facing a $24-billion budget shortfall. That's creating a controversy surrounding this parade and this party honoring the NBA Champion LA Lakers. The estimated cost, like I mentioned, between 1 million and 2 million bucks; now even though private donors are picking up some of the tab. Should LA be having this party when money is so tight? Tweet us at KyraCNN. We'll put your thoughts on the air later this hour.

Now, eye on Iran and another day of fierce divisions that have officially now accuse the West, and especially the U.S., of exploiting. Supporters of defeated candidate Mir Hossein Mousavi are back on the streets despite threats and arrests and reports of occasional violence. Authorities now pledge to investigate the reports of those beatings at Tehran University. They are also warning bloggers and Tweeters to purge any and all reports that create tension, or else.

If you were with us last hour, you may have heard my phone conversation with a California professor who is researching a book in Tehran. At one point, we clearly heard the gunfire in the background.

(BEGIN VIDEO CLIP)

PHILLIPS: I tell you what, I am hearing this continuous gunfire. It is making me really nervous. Do you feel you are in danger at all?

UNIDENTIFIED MALE: Quite frankly, at nights, yes. I mean, at night Tehran becomes an alternate city. This becomes a different kind of city. Again, this is why I keep in the house at night.

(END VIDEO CLIP)

PHILLIPS: Well, I'll tell you what, we are going to try and reestablish contact with Babak Rahimi (ph), sometime this hour. As you may know, Iran is barring foreign journalists from street reporting. So we don't know who was doing the shooting, or why. But our Reza Sayah is with me now on the phone from somewhere in Tehran.

Reza, what do you know at this point?

REZA SAYAH, CNN INT'L. CORRESPONENT: Well, I can't confirm hearing any shooting. We have been here for the past few nights. You have heard what appeared to be some shots last night. It certainly is not widespread. We can confirm that every night at about 10:00 p.m., we hear a lot of people coming out on their balconies, sticking their heads out the window and yelling, "God is great!" This is organized by the so-called Green Movement, the supporters of Mir Hossein Mousavi. Another way that their protesting this controversial vote. On Friday, again, they had a rally today; thousands turning up in the major city square. Obviously, we are banned from going there; the ban being handed down by the Iranian government yesterday.

We have been very inventive. Trying to be, at least, sending a lot of eyes and ears, to see the rally. They said lots of people turned out and their trademark has been these silent marches. It appears to be their strategy to avoid clashes with police. They are basically staying silent. Some of them are putting tape on their mouth, their slogans are on their posters. Their peace signs are in the air. Perhaps that's why we haven't seen any widespread clashes like we have seen in previous days, Kyra.

PHILLIPS: Reza, obviously, this is a tremendous challenge for you, who I know wants to be out there talking to the people, and getting that sit down with Mousavi. When you are actually communicating with folks that are going back and forth, do they have to take extra precautions, as they bring you information, as you try to work sources? I mean, kind of put it in perspective - without putting anybody in danger, of course - how tough this has been for you.

SAYAH: It's very difficult. Of course, they have to take precautions. We are certainly concerned about their safety. We tell them not to do anything dangerous. We tell them not to take any cameras out there. They do have some cell phones. We have been getting some pictures through those cell phones. But we basically use them as our eyes and ears. We vet them. We make sure we trust them. They have been very good in picking up the phone and calling us and delivering the information and then we convey it to you.

We should also note that whenever a rally happens, including the one today, the cell phones are out. There is no service. Again, that's part of the Iranian government's apparent crackdown on this. We have had several web sites down. There is no messaging, there is no texting. Again, like I said, whenever there is rallies, the cell phones are out. So, a host of challenges. It is difficult circumstances but we are trying to make the best of it, to get some important information at a crucial time here in Iran.

PHILLIPS: Reza Sayah, appreciate it.

Iranians on line are still a vital source of words and pictures, as we've been telling. As we are bringing them in, we are trying to do it as much as possible. CNN's Errol Barnett, is our point man, right now, at the International Desk.

Errol, what more have you been able to come across since we last talked?

ERROL BARNETT, CNN INTERNATIONAL: Well, in the last few minutes, Kyra, we have some images uploaded to iReport.com, from someone who is in the country on Friday, when elections took place. In fact, the images they uploaded were from Saturday when it seemed that the demonstrations, after results were announced that Ahmadinejad had won, and that Mousavi had not, this is what the scene in the streets of Tehran looked like. You can see the mass of people, the anger that seems as though they have.

We actually have the individuals who have sent this iReport to us, on the line. But as with iReporter and many others, they do not want to be identified. Because his family is still back in Tehran, his brother, and the rest of his family. But we do have him on the line joining us now from Texas.

If you can hear me, I would just like you to describe to me the mood in Tehran when you left on Saturday and snapped these images?

UNIDENTIFIED MALE: Well, actually, I left early Saturday, so, right after the election. The mood before Saturday was incredible, as far the people participating in the elections. Because I got from what I was hearing, it was never like this before in the other elections. I wasn't there, of course.

BARNETT: People are saying this kind of demonstrations out in public are unprecedented. You are still in contact with your brother and your family in Tehran. What are you hearing from them? When is the last time you have spoken with them? What's taking place?

UNIDENTIFIED MALE: I talked to them this morning. They say it is basically chaos. A few minutes ago, an unconfirmed report that I heard, it is unconfirmed, that government has declared this demonstrations illegal. And they have threatened people -- if they arrest anybody, they will end up in jail and even be executed. So, of course, as I said, this is unconfirmed. This is the news I am hearing over and over again unfortunately.

BARNETT: I can't imagine how worried you must be with your family so far away. Your brother actually has participated in these pro Mousavi rallies. What does he think will happen? What outcome does he expect from these demonstrations?

UNIDENTIFIED MALE: Well, at the end of it, basically, I mean, what he thinks, of course, or what I think, obviously, is irrelevant, because the government showed in the TV demonstration that they had and the candidates basically were facing each other. Everybody saw that basically the government is --

BARNETT: Finally, I just want to make sure I get this from you. What do you think is important that all of us understand, who are outside of Tehran, know about what is happening inside the country right now?

UNIDENTIFIED MALE: It is really important, see, with the people that are all in the street, also whatever was happening in all of the cities, all green, all for Mousavi. People heard all the lies from the present -- Ahmadinejad. The people's intelligence were really insulted. That's why they are all in the streets and they were demonstrating.

BARNETT: OK, and we're seeing more of that. I want to thank you for talking to us.

Kyra, that's someone sending an iReport from Tehran. They are in Texas now, still worried about their family back home, as these demonstrations continue.

PHILLIPS: Errol, thanks so much.

Well, remember the revolution, I mean, Iran's Islamic revolution? And the U.S. hostage crisis of 1979? Is the current upheaval an anti- revolution? I'll ask a former hostage.

(COMMERCIAL BREAK)

PHILLIPS: Live pictures now, from Los Angeles. Should the city being hosting a million-dollar plus celebration while more than 2000 teachers are facing lay-offs, and more than 12 percent of the city is already unemployed? We are debating it. That party comes in the midst of a statewide budget crunch as well. This week California missed the deadline to resolve a huge budget shortfall. CNN's Jessica Yellin shows us how potential cuts will face those who need help most.

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN CORRESPONDENT (voice-over): Howard Wolfberg has Alzheimer's. He recently took his dog out for a walk and got lost for 25 hours.

(On camera): And he was just wandering in the streets of the city?

TOBY WOLFBERG, HUSBAND HAS ALZHEIMER'S: Yes.

YELLIN: In the city?

WOLFBERG: He ended up on a lawn in Westwood.

YELLIN (voice-over): Now, the only time his wife, Toby, can leave his side is when she drops him off here at Santa Monica's Wise & Healthy Aging Center.

WOLFBERG: I can't tell you how incredibly helpful -- for both of us. He's a wander. So, I am constantly with him.

YELLIN: This facility provides daytime supervision for 60 elderly clients. About half suffer from Alzheimer's. But now it faces devastating budget cuts. With California out of money, Governor Schwarzenegger's proposed changes would slash 10 percent of this center's funding. The state already cut more than 15 percent last year. Many of these seniors would be turned away.

GRACE CHENG BRAUN, PRES., WISE & HEALTHY AGING CTR.: There would be no one to look after them. We will be finding people who will literally die at home and it may be days or weeks before anyone would even know.

YELLIN: And this is just one story. Across the state, the governor proposes eliminating nearly $500,000 in programs affecting seniors, including significant funding for Alzheimer's care and research.

GOV. ARNOLD SCHWARZENEGGER (R), CA.: I know the kind of people it affects.

YELLIN: And he does. California's First Lady Maria Shriver is a champion of Alzheimer's programs. She even made and HBO documentary to raise awareness.

MARIA SCHRIVER, FIRST LADY, CALIFORNIA: I'm a child of Alzheimer's.

YELLIN: In a statement to CNN, Shriver's spokesman says the governor, nor the first lady, like any of these cuts, but the governor has to make difficult decisions. Shriver will continue to be a leading voice on the issue.

That may be little solace to these patients and their families.

(On camera): The state legislature has not approved the government's cuts. In fact, the Democrats have some very different ideas. So, there will be heavy negotiating ahead and there is no resolution in sight. Jessica Yellin, CNN, Los Angeles.

(END VIDEOTAPE)

PHILLIPS: The Senate Finance Committee is having trouble hashing out a bill on health care reform. Two Democratic source tell CNN, there are so many problems the committee probably won't get to vote on the measure until after July Fourth recess. A lot of Dems wanted it before the full Senate by then, so they would have all of July to debate the issues. The committee's main hurdles, those sources say, big costs and little GOP support.

Let's take a look at the numbers real quickly. Dow industrials, up 46 points. Checking in on Wall Street throughout the afternoon.

New rules could be coming to Wall Street. President Obama proposed sweeping changes to the nation's financial system in the last hour. His goal, to prevent another meltdown. Critics say there is a crucial element missing from the plan. Susan Lisovicz is at the New York Stock Exchange with more.

Susan, President Obama's proposal, 85 pages. What could possibly be missing?

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Well, it is all in the details within those 85 pages, Kyra.

There are some complaints, at least in my parts, here, about this new consumer financial protection agency, kudos overall. Much needed so it is getting applause for that, but what it is missing, according to some of the critics, that I have spoken to, is it is protecting borrowers. So, you know, to protect against mortgage fraud, we have seen that, credit card abuse, we've certainly seen that. That is all good.

But it is status quo for investors. And there are millions of us who are investors. We are saving for retirement, for our first home, for our kids' education. Reportedly, this consumer protection, financial protection commission was originally envisioned to oversea investments such as mutual funds, for instance. But ultimately, that authority was scrapped, Kyra. So the Securities and Exchange Commission will continue to oversee the financial industry.

PHILLIPS: All right. So that leaves the SEC to look out for the little guy, but isn't that the agency that failed to catch Bernie Madoff, and that scandal, in addition to everything else that was created as a part of the domino effect?

LISOVICZ: Bingo. And that is why there is criticism. Yes, and the SEC, remember, was warned repeatedly about Bernie Madoff. The last check on that, an estimated $65 billion in losses. Also, the SEC also missed the Robert Alan Stanford scandal, the losses there a mere $8 to $9 billion. Conflicts of interest in research, cheating in the mutual fund industry. Things like late trading and market timing. These are things that came under the SEC's domain and it was missed.

Now, having said that, Mary Schapiro was named the chair of the SEC earlier this year. She has vowed to take a more active role. In fact there was an advisory panel that sent a letter to the SEC last week, listing what many would consider long overdue reforms, such as providing a prospectus before selling a fund. A prospectus is just a fancy word for a brochure describing the aspects of the fund, and disclosing fund fees, in dollar terms on the statements.

We will continue to monitor it, Kyra.

PHILLIPS: We will keep checking in with you. Thanks, Susan.

LISOVICZ: You're welcome.

PHILLIPS: Just who is in charge? A lot of folks are asking that question right now. They want to know, where in the heck all those billions of dollars in stimulus money are going? One sender in particular has a laundry list of what he calls wasteful spending. Here's CNN's Deborah Feyerick.

(BEGIN VIDEOTAPE)

DEBORAH FEYERICK, CNN CORRESPONDENT (voice-over): Retiree Antoinetta Santopadre got a stimulus check in the mail worth $250. Actually, the check was for her dad. The problem is, he has been dead for 35 years.

ANTOINETTA SANTOPADRE, RETIREE: I was really upset when I got the check, because what are they doing with our money? Where is it going? Who is in charge?

FEYERICK: You hear those questions a lot lately. Oklahoma Senator Tom Coburn coming out with a report slamming the nearly $800- billion stimulus package, which he voted against, saying many millions are being spent on projects that are either wasteful, or create too few jobs.

SEN. TOM COBURN, (R) OKLAHOMA: For every good project, there is one that is not. That's the problem with rushing a bill through the way we did and not doing our job to make sure the money gets spent appropriately.

FEYERICK: Among the projects the senator criticizes, a $1 billion to build a coal based power plant in Illinois, that the Department of Energy rejected as outdated. Millions spent to rebuild little-used bridges which Coburn calls not high-priority. And $3 million to build a wildlife tunnel underneath a Florida highway, where over 60 species have been killed by cars.

Tom Schatz is with a taxpayer watchdog group that tracks government spending

TOM SCHATZ, CITIZENS AGAINST GOVERNMENT WASTE: The way the stimulus is written is that only certain projects qualify. It doesn't mean they are the most important, or the best. It is just written in a way that shoves the money the door, just to get something done.

FEYERICK: The White House dismissed Coburn's report saying out of 20,000 approved projects it has shut down revealed to be wasteful.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: There are a number of entries throughout this report that are just simply wrong. This president has taken historic steps to ensure that there is adequate transparency and that this money is spent the way it is intended to be used.

FEYERICK: As for Santopadre's unexpected $250 windfall?

SANTOPADRE: I want to frame it. And I want my kids to have that just in case they suffer again. If they want it, they have to come, and then they have to give me some kind of explanation.

FEYERICK (On camera): The White House released a detailed analysis of where projects stand, including the proposed coal plant. The stimulus money to be used for construction only if the plant passes a number of reviews. As for that so-called turtle tunnel, it is still under consideration. Deborah Feyerick, CNN, New York. PHILLIPS: Attorney General Eric Holder says, it is time to punish those who hate. He is calling for a new federal hate crimes law. And that push comes as gay biased killings reach a nearly 10- year high.

(COMMERCIAL BREAK)

PHILLIPS: Summer heat. And it is not even summer yet; it is a sizzler today in parts of Texas and Oklahoma, and the deep South, including here, Chad Myers.

(WEATHER FORECAST)

PHILLIPS: Well, they're far from home, but Iranian-Americans in Los Angeles, and other U.S. cities, are closely following the stunning events in Tehran.

(COMMERCIAL BREAK)

PHILLIPS: Live picks now once again from Los Angeles there on the double-decker bus. Well, the NBA champs -- we'll bring you the scene from the celebration throughout the show. The fans are cheering on the Lakers for their championship. But, here is the problem critics say that the city should not be hosting a $1 million plus party. Private donors are picking up the majority of the tab.

It leads to the question when teachers are getting laid off, that state is in a huge budget deficit, unemployment is high, what's the deal? Should this be going on? Should city pride still trump what's happening there economically? We're going to talk about it more later in the CNN Newsroom.

Iranian-Americans in LA may not be in the mood to celebrate the Lakers' victory, but they have zeroed in on the dramatic events playing out in Tehran, and for most, there is a personal connection. CNN's Kara Finnstrom reports.

(BEGIN VIDEOTAPE)

SAMIRA AZAPIRA: These regularly closed people attack men and women, young and old.

KARA FINNSTROM: In Los Angeles, Ariane Azapira and her daughter Simira devour unconfirmed snippets from Twitter and Facebook looking for information about relatives and friends in Iran.

ARIANE AZAPIRA, IRANIAN EXPATRIATE: It is really painful right now because I see that how -- they are trying hard, you know, for us to hear their voices.

FINNSTROM: Ariane left Iran shortly before the 1979 revolution, and now runs a Los Angeles hat shop. She has protested against the Islamic republic for 30 years. Still an Iranian citizen, Ariane did not vote in the recent presidential election, because she wants more radical change -- a completely new regime. Her daughter relates to Iran's protesting and believes that candidate Mir-Hossein Mousavi may be a first step.

SAMIRA AZAPIRA, IRANIAN AMERICAN: He is promising freedom of religion, more freedom. He even mentioned that he wanted women to be able to walk aroundnd without wearing their head scarves.

FINNSTROM: Differences of opinion echo throughout Los Angeles, sparking impassioned debate and protests of the election's outcome. Southern California has the largest population of Iranian-Americans in the country, more than 1 million strong. On these streets in Westwood, Farsi replaces English. Here in the heart of Persian town, an Iranian bookstore, widely believed to be the largest outside of Iran. Activist BIJAN KHALILI owns this haven for Iranian expatriates. He says regardless of personal politics, all Persians should support those that never left.

BIJAN KHALILI, BOOKSTORE OWNER: What we should do -- we should help them by demonstrating here and sending e-mails to United States authorities and European authorities.

FINNSTROM: Across town at Iranian radio station KRIN, a Doctor Farhang Holakouee devotes his two-hour show to emotional questions about Iran's fate.

DR. FARHANG HOLAKOUEE, IRANIAN RADIO SHOW HOST: What's happening to Iranian community and particularly to youth that right now they are in the street. And, what's going to happen next?

FINNSTROM: The Azapira family worries about relatives. One cousin instant messaged that government-hired forces terrorized a neighbor.

S. AZAPIRA: They broke into the home and tied his hands and feet.

FINNSTROM: Internet buzz, radio talk, protests in the street -- life lines linking LA's Persian neighborhoods to the people of Iran. Kara Finnstrom, for CNN Los Angeles.

(END VIDEOTAPE)

PHILLIPS: As you have seen for days now, Iranian Americans have been taking to the streets here in the US making their voices heard about events in Tehran. Protests are playing out in LA, Houston, San Francisco, Miami, and a number of other cities. Not all the protesters are anti-government, by the way. New media, old threat. Iran's revolutionary guard is warning very heavy penalties await Iranians who blog, tweet, or unload reports of post election turmoil, but cybernews is still coming in. And so, that's where we turn to CNN's Errol Barnett at the international desk.

Errol, what more are you following now?

ERROL BARNETT, CNN INTERNATIONAL: Well, Kyra, we are hearing more of the fear you just mentioned, especially from young people in Tehran. Let me show you a video that was unloaded to IReport.com. It's been viewed thousands of time, and the person who uploaded it says, I don't want to be identified but I do want people to see what's taken place.

This is at Tehran University, where cannot confirm but he says that hundreds of students in an effort to damper demonstrations were attacked by police and it appears from the video, you can see charred remains of a dormitory building. If you come back here to the screen, I can show you some images he send in from this event. You can see a charred motorcycle, people on the streets.

There is broken glass, holes in walls, bookcases that have been tipped over as well. So, whatever took plays at Tehran University -- you see blood here on the floor -- a difficult situation. But, we are also looking at other media outlets. This video uploaded a short while ago from today's rally in Tehran -- of a pro-Mousavi rally. And the individual said -- you can hear him over the audio saying, wow look at the amount of people. All of these demonstrations, despite not having a permit to do so really, stepping up and speaking against the government.

Now, I want to move kind of away from Tehran, the capital of Iran and get you hundreds of miles further south to a city called Shiraz. The consistent theme we are seeing is that these demonstrations are taking plays at universities, on campuses. You can see here massive young people moving down Mulasad (ph) street in Shiraz. Many young people organizing. Green is the banner color. And, we also want to point out the opposition leader here, Mousavi, is using and has been using social networking sites himself.

I can show you his Facebook page. Before the election, he had about just under 30,000 supporters -- now, that's almost doubled. The most recent document uploaded to his page just a short while ago is actually discounting -- it's in Farsi, we've had it translated -- discounting the Ahmadinejad rallies from earlier saying there is no way they could have had the number of people that have showed up. They go through mathematical calucalations as well.

All of this, the locals in Iran is being blocked. Text messaging is being blocked. Many of these young people worry about retribution for what they are doing so they are telling us, do not use my full name. They are worried. We want to make sure we are keeping an eye on this and we;re bringing it to you. We are also watching Iranian television, all the sites as well, Kyra. So, this is continuing to develop and unfold on line even though they are clamping down on use of the web.

PHILLIPS: Appreciate it, Errol.

No one knows how this will end, but it's already clear that Iran's unique style of government is facing its biggest test since it came to power in 1979. We all remember the takeover of the US embassy and the hostage cris that lasted 444 days. Is the world now witnessing another Iranian revolution? Let's ask a man on the front lines of the last one. Kevin Hermening was a 20-year-old Marine when he and dozens of his fellow Americans were taken hostage on November 4th, 1979. He is now a financial planner in Wausau, Wisconsin.

Kevin, I guess when you see what's going on right now in Iran and you look back to 1979 and you were a part of that revolution, what are you initial thoughts? What stands out to you? Do you see similarities? Are you having memories from 30 years ago?

KEVIN HERMENING, FORMER HOSTAGE IN IRAN: Well, I was there after the revolution had already taken plays and the Ayatollah was fully entrenched, though the taking of the embassy was the start of the past 30 year theocracy in which they have been able to impose restrictions on freedom of speech and the ability to gather and criticize their government or create and form their own government.

And, I think what we may be witnessing and we can all hope that it is the case, is the beginning of the end of that theocracy, where the average person in Iran, many of whom -- large percentages of whom support the American Democratic experiment, if you will, and western values of choosing their own leaders are perhaps going to be able to once again, or for the first time really exert their freedom in that very strange part of the world.

PHILLIPS: And I tell you, I have been asking everybody this that has been involved in one way or another. And, you were involved in the revolution or shortly there after. You were there in the country during that time. Would you describe this revolution?

As you can see, we are joining Kevin via Skype there. I'm not quite sure -- I think we might have lost the connection. We have him back. Kevin, do we have you back?

HERMENING: I am able to hear you again, yes. I am not sure what your last question was.

PHILLIPS: That's okay. I've got you now. Let me tell you what the question was, Kevin, if you don't mind. Actually, I am going to take it a step further here. As you talk about the past and you mention looking at things now and the fact that they can gather and that they can protest the government and they are getting their message out, you know, when you were there, shortly after the revolution started in '79, how did information get out? There was no sech thing such thing as Twitter or cell phone video or i-reports?

HERMENING: Well, all of the information and news that we received was heavily filtered and censored by the Iranians. And the Mulas and the Iranian government they also filtered what was sent out from the hostages. We were able to communicate with our families very infrequently. In some cases, some of the hostages were not able to communicate with their families at all during the 14 1/2 months.

But, I will say to you that the technologies that are here today, I don't believe it is possible for a government which is so dispotic is able to put the technology genie back in the bottle. And so, we're going to probably see the end of the theocracy. We can olnly hope organizations like the Foundation for Democracy in Iran are trying to put forth the idea that our administration here in the US today, really should be stepping up and not taking sides but simply saying, let the people exert their free will and become participants in its own government. PHILLIPS: You have been very vocal about this. We've been looking at pictures of you with all the various Presidents since you were there in Iran during the revolution and you coming back and the parade of your return there in your Marine uniform. Do you see another revolution taking place here?

HERMENING: Well, I hope that the revolution is as fast as can possibly be expected and also as bloodless as can be expected. Let's face it. When a country tries to bring about Democratic reform, when a country tries to completely change its stripes, if you will, as a populist is trying to do in Iran these days, whether it's Mousavi or some other leader in Iran who may rise up to bring about Democratic change, which we can only hope is the case for the Iranian people, it is oftentimes stressful, bloody, and can take a while.

And, we are all excited and watching closely the ability of the Iranian people to step forward and change their lives for the future and for the better.

PHILLIPS: Kevin, if you don't mind, hang on because you might have a question for my next guest as well. If you don't, it's okay. But, I just want to keep you in this conversation if you don't mind. We have been talking to Kevin Hermening, who actually was a US Marine sent in to the embassy there during the hostage crisis in the 1979 revolution in Iran. Joing me now on the phone once again, we want to bring back UCSD Professor Babak Rahmi. Joing me on the phone once again from Tehran.

You may remember we were talking to him in the last hour as gun shots were going off in the background. He is actually there writing a book about what is taking place in Tehran. He has been talking about the cyber revolution for years. Now, he is living it, he's experiencing it. Babak, has it calmed down or are you still hearing gunfire?

BABAK RAHMI, UNIV. OF CALIFORNIA-SAN DIEGO: It has calmed down. It definetly has, again, it is almost like a fire cracker. It goes off, explodes and then suddenly, there is a silence afterwards. The silence is right now being felt. But, I can assure you, there will be another one tomorrow at 10:00 at night.

PHILLIPS: Go ahead. I'm sorry.

RAHMI: That was one point, just all over Tehran, you will here the shouts -- slogans again.

PHILLIPS: I don't know, were you able to hear my interview there with Kevin who was in Tehran during the '79 revolution?

RAHMI: Yes. Actually, his statue is right now outside of the former US embassy in Tehran.

PHILLIPS: Is it really?

RAHMI: Yes, a very bad statue, I might say.

HERMENING: They called it the den of spies while we were there -- the den of spies while we were in captivity.

RAHMI: Right. They call it the den of spies.

PHILLIPS: The den of spies. Kevin, do you by chance have a question for Babak Rahimi, as he is there now 30 years later experiencing in many ways what you experienced 30 years ago?

HERMENING: A lot of the protesters who have already been arrested are in Evin prison where we spent some time. I would just say that our heart and our prayers go out to you and your family and your friends in Iran as you try to bring about free and Democratic change in a country that's not accustomed to it.

PHILLIPS: Babak, can you respond to that? Kevin talking about the prisons there where people are being held for the same type of protesting that took place 30 years ago?

RAHMI: Yes, definitely. Look, the history of imprisonment of a number of Iranians is not something new. It has been hapening for the last 30 years. Except that now the revolution is eating its own children. That's a famous statement. Most of the people that -- especailly, the oppositional leaders were original revolutionaries. They were actually the ones that very much actually believed in taking hostages -- taking over the former embassy. Now, they have completely turned around.

They believe that Iran should head towards democracy. Now, some of them are actually in prison. The former vice president Mister Abtahi, as far as I know, he is in prison right now. So things have dramatically changed since 30 years ago. We just don't know what's going to happen from a year from now or two years from now.

Professor Babak Rahimi there, teaches at UCSC working on a book happens to be in Tehran while this is going on. Also, Kevin Hermening, he was the 20-year-old Marine that was there -- sent in after that revolution in '79 to protect Americans. Interesting perspective, gentlemen. I thank you so much. Kevin, we will stay in touch. Babak, also, we would love to stay in touch with you as you are covering what's happening there. Thank you.

Attorney General Eric Holder says it is time to punish those who hate. He is call for a new federal hate crime law. The push comes as gay-biased killings reach a near ten-year high.

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PHILLIPS: Pushing forward after announcing his financial reform plan, President Obama getting ready to grant some benefits to same-sex partners of federal employees. He is scheduled to sign a memorandum just a few hours from now. The White House says that the move will provide some health care benefits and among them, same-sex partners can be added to the long-term care insurance program. The President's decision stops short of full health coverage.

A troubling concern for gays and lesbians across the US. A new report says that guy-biased related killings jumped from 28 percent to 29 percent. That's the highest in nearly a decade. Overall, the number of victims who reported bias related violence was up two percent. Attorney General Eric Holder says that hate crimes of any kind should not be tolerated and is pushing for new federal laws to punish the offenders. Holder had this to say in his speech in Washington.

(BEGIN VIDEOTAPE)

ERIC HOLDER, U.S. ATTORNEY GENERAL: I testified in support of stronger federal hate crimes legislation when I was Deputy Attorney General almost ten years ago. Friends, that's far too long to wait, too long to wait for the authority to prosecute offenses motivated by a person's gender, disability, sexual orientation, too long to wait for the tools necessary to staunch the rising tide of biased-related violence directed at the Latino community. Put simply, too long to wait for justice.

The time has come for Congress to finish its work on this critically important legislation and we look forward to working with members on both sides of the aisle to achieve that goal.

(END VIDEOTAPE)

PHILLIPS: Pushing for tougher laws, Holder pointed to recent shootings around the country in which a museum guard, an abortion provider, and a soldier at a recruit center were killed in apparent hate crimes.

He kills and tortures dogs and spends a couple years in the pen. He allegedly kills and mutilates 19 cats, and flirts with more than a century in the (inaudible). Well, he gets hammered, gets in his Bentley, plows over someone's dad and kills him. 30 days in jail. The math and the morality just don't compute? Stand by. Kyra is getting ready to vent.

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PHILLIPS: All right, as always, Team Sanchez back there working on the next hour of the CNN NEWSROOM. Rich, what do you have going?

RICK SANCHEZ, CNN ANCHOR: We've got a couple of students that we're going to be talking to, one is for Ahmadinejad and the other one is for Mousavi. We are also going to be making contact with one of our Twitterers, somebody on social media who is in Tehran and is going to give us the lowdown on what's going on there right now. We are also going to bring you the very latest on Sammy Sosa. Here's something that really comes as no surprise to anyone following baseball. But still, there's a story there. Sammy Sosa, according to "The New York Times" was actually juicing, he was on steroids, back in 2003. One other story we are going to be touching on, one of the senators, one of the most ardent critics of President Clinton over Monica Lewinsky, who said he should resign, that he should step down, a guy who has been a part of the movement that is for pro marriage. Guess what? He is embroiled in a real serious marriage scandal himself today that may have some very serious repercussions. We are going to detail that for you and bring you up to date on all that. PHILLIPS: Thanks, Rick.

PHILLIPS: Well, without the deal, he could have gotten 15 years. With it, he got 30 days. So, yeah, for Donte Stallworth pleading guilty to DUI manslaughter makes sense. What doesn't make sense to me is he could be back on the field for the Cleveland Browns this fall. Thirty days in jail, career intact, while his victims family is anything but. A 15-year-old girl is left without a dad, folks, and I understand the family is OK with the plea deal. They don't want to go through a trial. But still, explain to me how Mario Reyes's life is only worth 30 days behind bars while Michael Vick got 23 months, served 19 for torturing and killing dogs. His career with the Falcons, anyway, done. And then Tyler Weinman could spend the rest of his life behind bars, a 158-year-old sentence, if he is convicted of killing and mutilating cats. Somebody needs to take a hard look at sentencing guidelines in this country, folks.

(COMMERCIAL BREAK)

PHILLIPS: All right, live pictures right now coming to you from Los Angeles, California. We asked you earlier, what do you think about the expensive celebration that is going on right now for the NBA champions, the L.A. Lakers? Here's some of your tweets.

Megabee writes, "$2 million is a drop in the bucket compared to the deficit. The boost in morale for LA is worth it."

The_Director writes, "Make the players and the organization pay for the parade. At least show the state some respect and understanding."

And this tweeter writes, "I can't believe the California government is allowing this parade. Again, it proves California's mixed-up priorities against its own people."

Woodyrich writes, "We didn't give up the Obama inauguration parties that went on for a week and the economy was in the tank. Why not celebrate the Lakers?"

Nipez writes, "I think $2 million for the parade is just outrageous. How many hungry people could they have fed in LA for that?"

And finally, Ramya1 writes, "In tough times, sometimes we need to party. Party now, pay later?

Thanks for all your tweets. Sure appreciate it. We will be back here tomorrow. Have a great rest of your afternoon. Rick Sanchez takes it from here.

SANCHEZ: Is Iran trying to stop the truth on CNN and on the Internet from getting out? We are connecting you to Tehran our own way.

Who would dress as his dead mother to collect her government checks? This guy. Sosa, say it ain't so, busted for steroids.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: He bulked up way too fast and too quick.

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SANCHEZ: It's official, the former Catholic Church priest gets hitched. Speaking of getting hitched, he is pro marriage, pro family values and a promise keeper.

(BEGIN VIDEO CLIP)

REP. JOHN ENSIGN (R), NEVADA: Last year, I had an affair.

(END VIDEO CLIP)

SANCHEZ: He is a U.S. senator in a marriage scandal that could derail any run for the White House. Your national conversation for Wednesday, June 17th, 2009, begins right now.

And hello again, everybody. I'm Rick Sanchez with the next generation of news. This is a conversation. This isn't a speech. And it is your turn to get involved. And how much more involved is this? I am going to be showing you pictures here of the Iranian government and what it is doing to make sure that you don't see what it doesn't want you to see.