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Selling Health Care Overhaul; Man With a Mission; Full Speed Ahead for Ford; Book Chronicles Lehman's Fall; Corruption Arrests in NY, NJ

Aired July 23, 2009 - 11:00   ET

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

TONY HARRIS, CNN ANCHOR: And good morning, everyone. It is Thursday, July 23rd, and here are the faces of the stories driving the headlines today in the CNN NEWSROOM.

President Obama is taking his arguments for health reform to middle America, while back in the nation's capital, those on either side of the issue are holding back-to-back news conference.

Former Lehman Brothers executive Lawrence McDonald, he was on the inside at the financial giant. Now he is talking to us about the company's colossal failure of common sense.

And Jordan Thomas, a young man with an insatiable desire to help other amputees, we will show you how his foundation is lifting some young patients up and giving them hope.

Good morning, everyone. I'm Tony Harris. And you are in the CNN NEWSROOM.

It is the hot issue dominating debate in Washington and across much of the nation, and health care reform is our big story again today. We are all over it, yes, once again. We expect to hear from Republican and Democratic lawmakers over the next two hours.

We will have reports from correspondents on Capitol Hill and at the White House. Brianna Keilar explains the plans already on the table and what they mean for you. And Suzanne Malveaux on President Obama's health reform road trip today and his prime-time pitch last night.

Suzanne, let's begin with you.

Now, according to the ratings -- a heck of a place to start; right? -- the audience was smaller for this news conference than for recent news conferences, but I would think it was still the wider audience the president was looking for to make his case.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, certainly, Tony. A prime-time audience. He really wanted to expand it beyond the 24-hour cable coverage that sometimes we hear the president complaining about, but it is interesting that those numbers dipped a little bit.

There's a fear and a concern of overexposure, that perhaps people are going to start tuning him out, but that has not yet happened. White House aides very confident that he has the personality, the appeal and the message to reach the American people, putting a lot of political capital behind this, Tony. That's what we saw last night; it's what we're seeing today.

The reason why the stakes are so high right now is because this is the first initial test of this president, whether or not he can move forward on his agenda. And it will really indicate whether or not he is going to get much else done in pushing forward some of his policies.

Take a listen.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Absolutely it's my job. I'm the president. And I think this has to get done.

MALVEAUX (voice-over): Mr. Obama threw down the gauntlet.

OBAMA: I'm not going to sign a bill that, for example, adds to our deficit. I won't sign a bill that doesn't reduce health care inflation.

MALVEAUX: But he did say he supported limiting tax deductions for wealthy Americans and imposing a surtax for those making more than $1 million a year, efforts to raise money to cover America's uninsured.

OBAMA: The plan that has been -- that I put forward and that what we're seeing in Congress would cover, the estimates are, at least 97 percent to 98 percent of Americans.

MALVEAUX: He also praised Republicans for their idea to create an independent panel of medical experts to advise Congress on how to cut medical costs. And he called on Americans and their doctors not to indulge in unnecessary and wasteful medical treatments.

OBAMA: Why would we want to pay for things that don't work, that aren't making us healthier?

MALVEAUX: At the same time, Mr. Obama tried to reassure Americans that despite the billions in federal bailout dollars, he was being responsible with taxpayers' money.

OBAMA: The debt and the deficit are deep concerns of mine. I am very worried about federal spending.

(END VIDEOTAPE)

HARRIS: OK, Suzanne. The president is traveling to Cleveland today to talk more about health care. What message can we expect to hear from the White House? And we're also curious as to why Cleveland is the choice.

MALVEAUX: Sure, Tony. One of the things he's going to talk about is that it is worth it to do something right now. That it's better to do something than nothing, and that is what he is pushing for with Congress. He's also going to tell the American people that this is ultimately going to help your lives.

So, if you're worried about you've lost your home, you've lost your job, you premiums are going up, that all of this is connected. It all fits together. If you don't deal with the high rising cost of Medicare and Medicaid expenses, health care expenses, then none of these aspects of your life are going to necessarily improve, that they are all linked together. That's the message that you're going to hear from the president.

And secondly, the reason that he's going to this Cleveland Clinic is it really is a model for what he wants to see across the country, and that is a place that doesn't necessarily compensate the doctors for the number of treatments per se, or medications, or tests, or things like that, which a lot of people believe are unnecessary, but how people are cared for, whether or not they actually get better, whether they get well. And he's going to take a look at the way they've streamlined their medical records, that they're electronic. These are ways that he believes we'll be able to save money throughout the rest of the country.

So, just highlighting that as a practical way of displaying and arguing, making his case for health care reform.

HARRIS: All right, Suzanne.

Our White House correspondent Suzanne Malveaux for us.

Good to see you, Suzanne. Thank you.

And of course we want to focus in now on the health reform plans lawmakers are already working on. Like most people, you're probably wondering what the plans mean for you and the future of your medical care.

Congressional correspondent Brianna Keilar takes a look.

(BEGIN VIDEOTAPE)

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Here's what Democrats say their insurance overhaul would do for you. Insurance companies could not deny you coverage for a pre-existing condition, and you would be required to purchase health insurance or pay a fine.

Can't afford insurance? The government would chip in. And in most cases, so would your employer.

So, how much would you pay? House Democrats say they will cap your health care costs.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: There will be an annual limit on out-of-pocket expenses and no lifetime limits on care. There will be no more co-pays or deductibles for preventive care that can catch devastating illnesses in time. KEILAR: If you don't get insurance through your employer, some in Congress want to change how you buy it on the individual market by creating a central clearing house. It's also called a gateway or an exchange where you could buy insurance after comparing different plans.

Many Democrats in the House and Senate want a government-run insurance plan included among those options, insisting private insurers won't lower their prices without the competition, but Republicans say it will drive private insurers out of business.

SEN. LAMAR ALEXANDER (R), TENNESSEE: You have a very good risk of losing your health care and ending up -- if you're poor, your only option is a failed government program that none of us would join and we could possibly avoid.

KEILAR: But Democrats and President Obama say if you like the private coverage you have now, you can keep it.

OBAMA: If anyone says otherwise, they are either trying to mislead you or don't have their facts straight.

(END VIDEOTAPE)

HARRIS: All right. Brianna Keilar is joining us live from Capitol Hill.

And Brianna, look, we're on standby because we understand that we're going to be hearing from lawmakers possibly at any moment, and we understand there may be at least one senator who is talking about where we are in this process right now. Is that correct?

KEILAR: Yes. We are waiting for that, Tony. And just to give you -- well, this is Senator Dick Durbin right now.

HARRIS: Why don't we listen in?

KEILAR: Let's listen to that.

HARRIS: OK.

SEN. DICK DURBIN (D), ILLINOIS: The Finance Committee goes into a markup and then is given to the majority leader to blend with the health bill, and then bring to floor count (ph) the days. And either we're going to go into overtime, which is always a possibility, or have to face the prospect of doing it after August.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Really? You think it's possible that you'll stick around until you get it done?

DURBIN: Well, I'm going to leave that really to Senator Baucus and Senator Reid. I mean, our goal is to get this done and get it done right. And I hope that the Finance Committee efforts will bear some fruit soon.

OK? BASH: Can I just ask you one more question, Senator?

Did the president do enough last night to give you all specifics? I mean, everybody here is sort of toying with lots of ideas, particularly on the issue of how to pay for this reform. And there seems to be some concern that he's not being aggressive or specific enough in saying what he wants.

DURBIN: You know, it's hard for the president to write the bill. I mean, it's our responsibility, the House and the Senate, to write the bill.

The president can help us when we run into obstacles and problems. He stated, I think, clearly, that he does not favor the idea of taxing the individual benefits. That was an issue that was raised last week. But, you know, we, with his help and with his guidance when it gets to tough parts, it's our job to write these bills.

OK?

BASH: Thank you, sir. Thanks for stopping, Senator.

HARRIS: OK, Brianna. You still with us?

Senator Dick Durbin there, talking about where we stand right now.

And Brianna, it sounds like we're at this place now where the senator is hoping that we can get some blending going on here between the two competing bills right now. And maybe that's the wrong way to phrase it, "competing bills." We have got what's going on in the Finance Committee, and we also have what's going on, the work going on, in the Health Committee. And what we heard Senator Durbin say there is that he's hoping that the work can move forward to blending those two bills.

KEILAR: Well, the Health Committee is already done with their bill. They have voted it on a party line vote out of committee.

That's why we're keeping an eye on the Senate Finance Committee, Tony. And that's why you saw Dana Bash there asking questions of Senator Durbin.

He is the number two Democrat in the Senate. He counts the votes, so he has an idea of where things stand. And he hinted yesterday for the first time that this may not go through, that there may not be a vote in the Senate before the August recess.

HARRIS: Got you.

KEILAR: So, but what you have here in all of those reporters -- I want to tell you, they're outside of a room where some Democrats are briefing other Democrats. What is this about? Well, you know, Tony, we're keeping an eye on this group of six Democrats and Republicans on the Senate Finance Committee where we think maybe the best chance for a bipartisan compromise on health care reform.

We've been keeping an eye on their talks. They have been having these almost every day. And in that room that Dana was standing outside of, Democrats in that smaller group of six were briefing other Democrats on the committee to say where negotiations are going.

And we have heard from the chief of that committee, Max Baucus. He's told President Obama that they're making progress on their proposal, Tony, but at the same time, it is slow going, and they have missed self-imposed deadlines by weeks now.

HARRIS: Wow. OK.

And one more quick one here. Let's turn to the House for just a moment.

It seems as though progress has really slowed on the House side. I'm wondering if the president's speech last night and his news conference, did the speech, did the comments kick the negotiations into new gear?

KEILAR: Well, certainly what you can say about the reaction to the speech. I think House Speaker Nancy Pelosi is probably happy about what she heard. It sounded like President Obama endorsing a compromise that she is forging ahead on, which is, when you have to pay for this, Tony, how do you do it through taxes? And the proposal is to tax couples who make more than $1 million.

HARRIS: Right.

KEILAR: So, you can see really a tax on wealthy people. And he seemed to endorse that last night.

But you've also seen and heard, as we've been talking, Tony, in the last couple of days about Democratic leaders who wanted President Obama to really talk more specifics, get things moving. It may have left things wanting for them.

HARRIS: OK. On Capitol Hill for us, Brianna Keilar.

Boy, the action is happening on your beat today. Brianna, we appreciate it. Thank you.

Lots to cover with health care these next two hours. Let's see if we can set the menu a bit for you here.

Republican leaders hold an 11:45 Eastern news conference prior to the Health Care Solutions Group hearing on reform.

At noon, pre-existing health conditions. We will talk with a patient dealing with that.

Plus, a representative of the insurance industry right here in NEWSROOM.

At 12:15 Eastern, Senate Democrats go before the microphones to talk about health care costs.

And at 2:10 Eastern, we are taking you live to Ohio for President Obama's town hall meeting on health care.

Now, when it comes to health care reform, what are you willing to give up? We started, oh, asking this question a couple of days ago at our blog, and I've got to tell you, frankly, we are going to ride this one because you've been smart and on point. And the conversation just keeps growing.

So, we are getting hundreds of comments from you, and we want more. Just go to our blog, CNN.com/Tony. Leave us a comment and we'll share some of them on the program coming up this hour or next hour, right here in the CNN NEWSROOM.

A young man with a mission. He lost his legs in a boating accident. Now Jordan Thomas is fighting a health care battle from a golf course.

It's a story you won't want to miss.

(COMMERCIAL BREAK)

(WEATHER REPORT)

(COMMERCIAL BREAK)

HARRIS: All right. Massachusetts Senator John Kerry right now talking to reporters after being briefed on where things stand on health care reform.

(JOINED IN PROGRESS)

SEN. JOHN KERRY (D), MASSACHUSETTS: Because it bends there cost curve and it's fairer.

QUESTION: But the employees might have to pay more themselves.

KERRY: You have competition in the marketplace as a result of this, and that marketplace competition will tend to encourage a company to have a plan that's efficient and below that cost, where it might (AUDIO GAP). And as a result, you're going to be efficiency into the system and create competition so people have more choice. If you were to go after the individual, you don't get any of those benefits of the system.

HARRIS: OK. That's -- boy, sorry about the picture there. But, as you know, Senator Kerry has proposed taxing health insurance companies. Not sure where the debate is on that particular proposal.

Again, this is all happening now, and we're trying to get as many views on health care reform. It's happening right now live on Capitol Hill, and whenever we get an opportunity to bring the comments of a Republican senator, a Democratic senator, whoever is talking about health care reform, any of the lawmakers, we will get that on as quickly as we can. A young man's personal battle now for health care dollars illustrates the issue on Capitol Hill that is playing out even as we speak. Jordan Thomas lost his legs in an accident and learned about the hundreds of thousands who aren't getting the level of prosthetics they need in the United States.

Brooke Baldwin has this "Impact Your World" story.

(BEGIN VIDEOTAPE)

BROOKE BALDWIN, CNN CORRESPONDENT (voice-over): Jordan Thomas plays a serious golf game. It's par for the course for this talented athlete who spent his childhood excelling at sports. Even on family vacations Jordan would show off his fishing skills.

But four years ago in the Florida Keys, the family's annual boating trip went terribly wrong. Just hours after these photos were taken, Jordan jumped in the ocean to test the waters.

JORDAN THOMAS, DOUBLE AMPUTEE: The wake pushed me behind the boat, and I remember just hearing -- being underneath the boat and hearing the motor go, and I knew immediately what had happened. I looked down and my black fins were gone, and all I saw was just red, just everywhere.

BALDWIN: The boat's propeller's slashing Jordan's legs. His parents, both doctors, had to act fast. They were five miles from shore.

DR. VIC THOMAS, JORDAN'S FATHER: He had a lot of bleeding, of course. And we had to work quickly to control that and...

BALDWIN (on camera): So perhaps if you didn't have that experience as doctors, knowing how to stop the bleeding, or lessen the bleeding, perhaps you would have lost him.

V. THOMAS: Yes. I think so.

J. THOMAS: In an instant, I was a bilateral limb (ph) amputee.

BALDWIN (voice-over): Jordan spent the next two weeks in a Miami hospital undergoing multiple surgeries. But while recovering, he visited a wing where children who had also lost limbs were being treated, but their families couldn't afford expensive prosthetics.

J. THOMAS: I found out that a lot of insurance companies put a $5,000 cap on your legs. And like I said, mine are $22,000. So, 17,000 grand, what do you do?

BALDWIN: At only 16, with his family's help, he started The Jordan Thomas Foundation, helping disadvantaged kids get the prosthetics they need.

J. THOMAS: I decided that I wanted to make something positive out of this negative, horrible event. BALDWIN: The foundation has since raised $350,000 which pays for prosthetics for three children. One of them, 6-year-old Noah Parton. Doctors had to amputate Noah's right leg when he was just 3 weeks old because of a condition stemming from a heart defect. His parents' primary insurance funded his first prosthetic leg, but it had no knee.

NANCY PARTON, NOAH'S MOTHER: Just a standard leg. It doesn't do anything.

BALDWIN (on camera): So it doesn't bend.

PARTON: It don't do nothing.

BALDWIN (voice-over): That became difficult as Noah learned to walk. And since Noah was a growing boy, he needed more frequent upgrades that insurance just didn't cover.

PARTON: If the time limit isn't enough between, like, when he needs one foot to another one, they don't want to pay for it.

BALDWIN: So Jordan's foundation did.

(on camera): You like the knee?

NOAH PARTON, AMPUTEE: Yes.

BALDWIN: How does it work? Just like that?

N. PARTON: Yes. And you can do this. Watch.

BALDWIN: Wow.

(voice-over): This issue has garnered national attention. In May, New Jersey Congressman Robert Andrews introduced the Prosthetics and Orthotices Parity Bill.

REP. ROBERT ANDREWS (D), NEW JERSEY: What I think they ought to cover is the same percentage of the cost that they would for a knee operation or a heart operation. You know, if you've got a deductible of $500, and they pay the rest, that's what they should do for prosthetic devices.

BALDWIN: As for Jordan, the only time you'll ever hear him mention the word "handicap" is on the golf course. These days, through his foundation, he is driving home the message that anything is possible.

J. THOMAS: Helping these kids and seeing that, it just motivates you to just -- you just want to get more money from people, and you want to help more people and just have that insatiable desire to keep helping people. So, it's a good thing.

(END VIDEOTAPE)

HARRIS: Yes, it's a good thing. Boy, we love that story and we love that young man. I don't know where we find these stories, Brooke, but I'm glad we found him. I'm glad you were able to share his story with us.

Look, and the reality here is, he is actually getting some recognition, some high praise for what he's doing, isn't he?

BALDWIN: He is. Two awards I want to tell you about.

This past spring, he won the International Youth in Philanthropy Award. But this pretty prestigious award that he's about to receive it in Minneapolis next month, it is the National Courage Award, Tony. And he had some pretty stiff competition, beating out Muhammad Ali and Michael J. Fox to get this thing.

He's 20 years old, keep in mind.

HARRIS: Sensational.

BALDWIN: Twenty.

HARRIS: Brooke, appreciate it. Good to see you. It's been a while.

BALDWIN: I know. Hello.

HARRIS: Yes, hello. And thanks for that story.

BALDWIN: Thanks.

HARRIS: We appreciate it.

If you'd like to learn more about Jordan Thomas and his foundation's efforts to help underprivileged children receive the prosthetics they so desperately need, visit our "Impact Your World" page. That's at CNN.com/impact.

(COMMERCIAL BREAK)

HARRIS: Firefighters in the San Francisco area battling a warehouse fire this morning. Some pretty dramatic pictures to show you here.

The fire is in an industrial park at Columbus Salami Warehouse in south San Francisco. Maybe we'll get a better view of the fire.

Authorities say everyone got out OK before the flames spread. Earlier this morning, television stations were putting out the word to parents not to bring their kids to a daycare center about a half-mile from the fire. About 100 firefighters are on the job.

A former insider at a global financial firm reveals all about its colossal collapse. He is taking us inside what he calls one of the most mysterious places on Wall Street.

(COMMERCIAL BREAK) HARRIS: Boy oh boy. Talk about a turnaround. You know, at this time last year, Ford announced its biggest quarterly loss in company history, and now the automaker says it is making money. What?

Susan Lisovicz is at the New York Stock Exchange with details.

Tell the tale here, Susan.

SUSAN LISOVICZ, CNN BUSINESS CORRESPONDENT: Not only making money, making a lot of money, Tony.

Ford made $2.3 billion in the second quarter. That's a three- month period, of course. It compares to a nearly $9 billion loss the year earlier.

Why is that? Well, a lot of companies are doing this. It's reducing its costs, whether it's reducing the headcount, whether it is reducing its legacy costs with its pension costs.

But even taking out the -- those debt reductions, profits still beat estimates. And, of course, Ford is the only one of the Big Three to not file for bankruptcy, the only one not to take any money from TARP. And it says its unit -- its North American unit will be profitable in a year and a half. Ford shares right now are up 9.5 percent.

And check out the Big Board.

HARRIS: Whoa, what is going on now?

LISOVICZ: Well, we got a positive report on existing home sales at 10:00, and the Dow shot up, and it's over 9,000 for the first time since early January. The Nasdaq, meanwhile, on track for its 12th consecutive rally. I mean, we're going back to 1996 at this point...

HARRIS: Right, right.

LISOVICZ: ... when the economy was in a whole lot better shape, I might add -- Tony.

HARRIS: Yes, good point. You know, we talk a lot, Susan, about automakers, and when we do, we talk about how much they're burning through. Is Ford still burning through more money than it's making?

LISOVICZ: Well, I mean, it did burn through cash, but it made money in the second quarter, made a lot of it. But burned through $1 billion. That is better than the nearly $4 billion that it burned through in the previous quarter. It also, Ford, has more than $20 billion in cash on hand. And, of course, that cash helped it avoid taking a government handout, the only one -- it bears repeating -- of the Big Three to do so.

Tony, back to you.

HARRIS: All right, Susan, stay with me here. You know, let's do this. Let's take a closer look at what led to the financial mess we're in and we're talking about for so long right now.

Joining us live from New York, boy, I am happy to have Lawrence McDonald on the program with us. He is a former vice president of failed investment bank Lehman Brothers. He reveals what happened in his new book titled, "The Colossal Failure," "A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers."

And, if you would, boy, let's get started here. Why was Lehman allowed to fail, and if you would, tell us at what cost to the economy? And I'm thinking about how much money, how many jobs?

LAWRENCE MCDONALD, AUTHOR, "A COLOSSAL FAILURE OF COMMON SENSE": Well, you know, Tony, first of all, thanks for having me.

HARRIS: We're happy to have you.

MCDONALD: And, you know, I -- we really wrote this book to expose the few that hurt so many. I mean, so many people have been hurt by this financial crisis, so many people at Lehman Brothers. I read the other day that since Lehman failed, close to 2.5 million jobs have been lost. People have had their credit lines slashed on their credit cards.

And I just wanted to -- the reason we wrote this book is to really bring the reader deep, deep inside Wall Street. You know, I had a front-row seat in the largest bankruptcy in the history of our country, bigger than Enron, WorldComm, Adelphia combined. And this book really brings the reader right into that front-row seat.

HARRIS: And, you know, "A Colossal Failure of Common Sense," you know, you look at a title like that, you think, oh, come on, this is hype, this is a title to sell books. But you believe you've got the goods to back this claim up, don't you?

MCDONALD: I tell you, I sat down with 150 to 160 people at the highest levels to the lowest levels all throughout the firm. And I witnessed so much passion. There were so many -- the one point I want to make is there were so many wonderful people in the firm that really tried to stop the madness and tried to hedge the firm from the exposures that the management was moving forth on.

And you know, it all emanates, all the problems emulate from one of the most mysterious places on Earth, just like you said, that 31st floor at Lehman Brothers. This really never should have happened.

HARRIS: Hey, Susan, jump in here.

LISOVICZ: Hi, Lawrence. You know, there is a great deal discussed about these government bailouts. But when Lehman failed, there was a line in the sand in terms of what happened to the economy. It was already technically in recession, but that's when credit seized up, layoffs shot up. Would you say it would have ultimately been cheaper to throw some TARP at Lehman, it would have been less costly to us all?

MCDONALD: It really was, you know, schizophrenic, you know, risk management at the time because when you let Lehman fail, that makes the AIG bailout and the Merrill Lynch bailout and all the other bailouts after them, GM included, so much more expensive. And, you know, one of the -- not many people realize this. But there was a meeting back in the spring of 2008 between former Treasury Secretary Hank Paulson and Dick Fuld, and a lot of people in the press thought it was a warm and fuzzy meeting.

But my research shows me that these two men really weren't getting along in the meeting. Dick Fuld at one time lectured the Treasury secretary and said something along the lines of, you know, I've been in my seat a lot longer than you were at yours at Goldman Sachs. Don't tell me how to do my job. I'll do things at my speed.

I mean, this is -- there were real tensions here, and this is a real tragedy. It really should never have happened.

HARRIS: Whoa, whoa, whoa, whoa, let me pick up on that point. Lawrence, did then-Treasury Secretary Paulson -- let me ask it this way -- a former Goldman top exec, allow his rival, Lehman, to fail? And let me cast it this way -- because of personal dislike? Because of competition?

MCDONALD: Well, you know, they were really -- what I call it, it was a "moral hazard" moment. They were trying to make a stand and make a point, and I think they massively misjudged the systemic risk. And that's one of the things I want to make a point going forward is that, you know, in the top of the market in 2007, you had all of these big, big commercial banks, investment banks, and they had all these credit derivatives, all these crazy financial products. And there was so much risk in the system.

But on the other side of the coin, on the government side, you had really the bureaucratization of risk management, where you had, you know, the FDIC, the SEC, you know, the FSA over in Europe, you had the comptroller of the currency, you had the Office of Thrift Supervision. All these organizations were completely uncoordinated.

And it's just a complete tragedy, and I want to reach out to President Obama if he's listening. And going forward, you know, we have to have coordination of risk management at our government at the highest level. There has to be one or two people that coordinate all these government agencies to watch over Wall Street.

HARRIS: Right. And Susan, take the last one here.

LISOVICZ: Yes, but Lawrence, I mean, you know, one of the things that is coming out, as well, now that we have a little bit of time passing, there's another book actually might be a great companion piece to yours by the former economics -- "Wall Street Journal" economics reporter saying that there was a plan to save Lehman by a bunch of investment banks here on Wall Street, that it failed in the 11th hour, that Bernanke then thought it was up to the Fed to save Lehman. Paulson wouldn't sign on.

And you know, one of the things that has to be said is that there was just this incredible rivalry. Goldman and Lehman were at each other's throats 24 hours a day, seven days a week. I mean, do you think that there was some of that personal animosity that ultimately ended up with Lehman failing when so many others had been saved when they were on the brink?

MCDONALD: There's no question. I mean, it makes no sense to have Lehman fail and then bail out everybody else. And you know, Secretary Paulson has made many statements in the public that, you know, he tried to do everything he could, and I just don't buy it.

I mean, two weeks before Lehman failed, they asked to become a bank holding company. They were told no by the government and then, you know, a month or two later, Goldman Sachs and Morgan Stanley were allowed to become bank holding companies, which really saved those -- both of those companies. And it's really bizarre that you have Goldman Sachs stock today, which is probably $160 a share, and Lehman at zero. That doesn't add up.

HARRIS: Wow, terrific. Lawrence, thanks for the book. I can't wait to read through it. And Susan, as always, thank you again. You asked my questions so much better than I did and got the answer that I couldn't get. Terrific.

And Lawrence, thank you so much. Thank you, both.

MCDONALD: Nice -- thanks, Tony. Thanks, Susan. Bye-bye.

HARRIS: Mayors and rabbis arrested in a federal corruption and money-laundering investigation. The case unfolding right now in New Jersey. Our Deborah Feyerick is en route to Newark for an upcoming news conference, and she joins us by phone.

Deb, boy, what more can you tell us? What have you learned about this case?

DEBORAH FEYERICK, CNN CORRESPONDENT (via telephone): Well, you know, Tony, we've been driving out to New Jersey reading through the criminal complaints, hundreds of pages for about 30 defendants. One in particular quite interesting, that of the mayor of Hoboken. In the weeks before he was elected in a runoff election, he met with a cooperating witness for the government, somebody posing as a real estate developer.

And one of his associates accepted thousands of dollars in cash from this real estate developer working for the government. There were conversations that were exchanged, all of it tape recorded, with the developer saying, you know, you've got to remember me. You've got to expedite my zoning.

And then the Hoboken mayor saying, quote, "When I'm sworn in on July 1st, we break down the world into three categories. The people who were with us, that's you guys. There's the people who climbed onboard in the runoff. They can get in line. And then there are the people who were against us the whole way. They get ground into powder."

All of this recorded by the FBI and other officials here as they were investigating this public corruption. One thing that's interesting is that apparently, this whole investigation began when the government was looking into a group of rabbis in Monmouth County, a totally separate investigation involving money laundering, but because of the overlaps, they were able to get to a number of politicians, Republicans, Democrats, local leaders, state leaders and New Jersey assemblymen. So, all of those politicians being processed and going to appear in court later this afternoon -- Tony.

HARRIS: Wow. Yes, appearing -- court appearances set to start at about 2:00 p.m. Eastern time. And Deb, correct me if I'm wrong here. A news conference -- I know you're on your way -- to begin, what, maybe at the top of the hour?

FEYERICK: It looks like the press conference has now been moved to about 12:30. So, but we're here now. We just arrived a couple of minutes ago, reading through all these criminal complaints, and they certainly make some interesting reading, all the allegations against these particular politicians.

HARRIS: OK, Deb, we'll see you next hour. Deb Feyerick for us in New Jersey.

You know, when it comes to health care reform, nearly a dozen different proposals are floating around the nation's capital. How to cut through the hearsay and see the details of each plan.

(COMMERCIAL BREAK)

HARRIS: Our Arwa Damon has just completed a CNN exclusive interview with Angelina Jolie, goodwill ambassador for the United Nations high commissioner for refugees. In this portion of the interview, Jolie talks to Arwa about the need to help refugees in the Middle East.

(BEGIN VIDEO CLIP)

ANGELINA JOLIE, GOODWILL AMBASSADOR, UNITED NATIONS: This region of the world, the stability of this region is important to all of us. There are still 3 million people, displaced innocent families. We have still many young men and women from our country who are fighting every day. There are many men and women from all countries who have lost their lives.

And this is a time to try to make some positive change. And, so, we have -- this is -- in working in Cambodia and other areas of the world that I work in, it's so often you find that these countries years on have all these little problems because it was this moment that wasn't given enough attention. It was this moment that we didn't have enough support, that they didn't have the right education. And so, this is the moment.

(END VIDEO CLIP)

HARRIS: OK. And you can hear more of this interview with Angelina Jolie in the 1:00 Eastern hour in the CNN NEWSROOM with Kyra Phillips. (COMMERCIAL BREAK)

HARRIS: Look, so many different health care plans are being floated in Congress, which one would be best for you? Josh Levs has a way that can help you compare the plans for yourself. I've got to tell you something, we're getting so many comments about this to you, Josh, at your Twitter account...

JOSH LEVS, CNN CORRESPONDENT: Are you looking at my Twitter again?

HARRIS: ... you've got 15 different accounts, and to our blog: Help us cut through all of the noise in the various plans. And you found a way to help folks do that.

LEVS: Yes, and it's really tongue-twisting because there are so many different plans out there, and most people can't even name five of them or even pronounce some of the committees that are putting them together. but now there's a great Web site that is doing it for you.

Let's zoom in. Kaiser Family Foundation is a private research group, policy research, that follows health care issues. They've created this comparison. And I'll just give you a basic idea here. Every time you see a white box, it's another type of plan that's being floated in Congress.

You can pick any two. Like I picked, for example, the Senate Health Committee, which we hear a lot about, and one from Senator Tom Coburn, who was on our show yesterday, Tony. And then I said, OK, you can compare them any which way you want. So, I said, let's compare them overall and their approach to fixing the issue. Boom, it pulls this up, and it breaks down the differences on any aspect that I chose.

Now, this is all really cool, but there's one more thing that you can do, which is go straight to CNNmoney.com, and we do it for you right here. We have a side-by-side comparison at CNNmoney.com. Just click on health, and we can get some of the basic there's for you, too, Tony. We've got a little bit going right there.

HARRIS: That is awesome, sir, thank you. See you next hour.

The first part of CNN's documentary "BLACK IN AMERICA 2" with Soledad O'Brien aired last night. IReporters from coast to coast are weighing in.

(BEGIN VIDEO CLIP)

OMEKONGO DIBINGA, CNN IREPORTER: I was truly inspired watching CNN's "BLACK IN AMERICA" this evening. It is great to see black people at so many different levels economically as well as professionally who just want to do something great and who just want to serve.

And more of our young people need to see that. I'm out here every day trying to save the minds of these young people. and I strongly believe what they see is what they will be. So, by putting out images of images of people like Mr. Rice (ph) and Dr. Perry (ph), that's truly inspirational as well as motivational.

EGBERTO WILLIES, CNN IREPORTER: Soledad O'Brien, thank you. For a change, we were presented with a view of blacks in America not just from a fatalistic view, but from a positive view. We had some lower- income blacks, we had middle-income blacks, we and high-income blacks all in one report. You didn't leave us with a taste in our mouth that there was a group of people that always needed help. You showed all the views.

(END VIDEO CLIP)

HARRIS: OK. The second part of "BLACK IN AMERICA 2," "Today's Pioneers," airs tonight at 8:00 Eastern only on CNN.

And our "BLACK IN AMERICA" coverage continues with the high school where failure is not an option.

(BEGIN VIDEO CLIP)

STEVE PERRY, PRINCIPAL, CAPITAL PREP: We have a school that is designed to send children to college. If we don't send children to college, we're not doing our job.

(END VIDEO CLIP)

HARRIS: How the school took a would-be dropout and turned her into a college-bound scholar.

(COMMERCIAL BREAK)

HARRIS: And coming up in the CNN NEWSROOM, we are expecting a news conference next hour on a major arrest in a corruption and money- laundering probe in New Jersey. Rabbis and a couple of mayors among those arrested this morning.

Also, if you change jobs and change health insurers or if you have no health insurance, will a pre-existing condition be a problem with you? We will talk with someone going through that right now and an insurance insider.

Stay with us right here in the CNN NEWSROOM.

Improving the odds for young African-Americans through education. That is the goal of a Connecticut prep school. In "BLACK IN AMERICA 2," our Soledad O'Brien introduces us to a student who was on her way to becoming a high school dropout. Now, she is working her way toward college.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Come on, sweetie. After you finish, it's all set for you.

SOLEDAD O'BRIEN, CNN SPECIAL CORRESPONDENT (voice-over): It's Tuesday morning, and 18-year-old Glorious Menefee is starting her day.

GLORIOUS MENEFEE, SENIOR, CAPITAL PREP: My blazer's in my locker.

O'BRIEN: A little before 7:00, a quick prayer...

MENEFEE: Dear Lord, I ask that your blessings (INAUDIBLE) blessing that you provided us.

UNIDENTIFIED FEMALE: Have a good day.

O'BRIEN: And a hug from mom.

MENEFEE: I want to succeed. I want to make it. At the end of the day, it's all about me and my goals and my success and what I want to make my life out to be.

Love you, Mom.

O'BRIEN: Glorious is a high school senior. A solid B student, she's a cheerleader, a peer tutor and plays on the lacrosse team here at Capital Preparatory Magnet School in Hartford, Connecticut.

PERRY: Good morning. Good morning. Good morning. Where's your coat, man? Tough guy. Good morning.

O'BRIEN: And every morning at 7:30 sharp, Principal Steve Perry is at Capitol Prep's front doors.

PERRY: What's up, chief?

O'BRIEN: He and Vice Principal Rich Boganski (ph) greet Glorious and the rest of the students as they arrive for class. Steve Perry founded the school four years ago.

PERRY: How we doing, sir?

O'BRIEN: He has the highest expectations of all his students. It's the Capital Prep way.

PERRY: Get those earrings out, please.

We have a school that is designed to send children to college. If we don't send children to college, we're not doing our job.

O'BRIEN (on camera): How many of your kids go to college?

PERRY: Well, 100 percent of our graduates go on to college.

O'BRIEN: One hundred percent?

PERRY: One hundred percent.

O'BRIEN: Every child who graduates?

PERRY: Every child who graduates from Capital Prep goes on, period.

O'BRIEN (voice-over): At one point, college was the last thing on Glorious Menefee's mind.

UNIDENTIFIED MALE: Negative 33...

O'BRIEN: By age 15, she was considering dropping out. Then she enrolled in Capital Prep.

MENEFEE: Before Capital Prep, my main focus was just getting out of the house, just getting my GED, getting an apartment, just going, just going, just going.

O'BRIEN: She wanted out from a home where her parents' addictions meant chaos.

MENEFEE: I joke around and say I have the best of both worlds, meaning I had a mom who was a drug user and a dad who was an alcoholic.

PERRY: I often say to children, you have to learn to play hurt. You want to sit? You want to cry? Then when you're done crying, guess what's going to happen?

Nothing. Nothing's going to change. But you and I can work on something that's going to change it.

O'BRIEN: Steve Perry and Glorious have been working toward this moment since Glorious first entered Capital Prep's doors: her first college interview.

PERRY: Talk about what you do well. Focus on the best that you have to offer.

MENEFEE: OK.

PERRY: Let them know you're a hard worker, which you are. Let them know you're a considerate person, which you are and that you're going to take very seriously your study of social work.

MENEFEE: OK.

O'BRIEN: Now it's all up to Glorious.

UNIDENTIFIED FEMALE: Glorious?

MENEFEE: Yes.

UNIDENTIFIED FEMALE: Ms. Jordan, (INAUDIBLE) University.

MENEFEE: Hi, how are you?

UNIDENTIFIED FEMALE: Nice to meet you.

MENEFEE: Nice to meet you, too.

UNIDENTIFIED FEMALE: Pleasure.

(END VIDEO CLIP)

HARRIS: Boy, you can see more of the challenges facing African Americans and meet the people using groundbreaking solutions to improve the black experience. "Today's Pioneers" the focus of the second part of our "BLACK IN AMERICA 2" event. That is tonight, 8:00 Eastern, 5:00 Pacific, right here on CNN.

(COMMERCIAL BREAK)

HARRIS: President Obama being blunt. He says a Cambridge, Massachusetts, police officer "acted stupidly" in arresting a Harvard professor. Prominent African-American Professor Henry Louis Gates was arrested last week at his home. Gates was handcuffed and taken into custody following a confrontation with police who responded to reports of a burglary at his home. Gates tells CNN he wants an apology.

(BEGIN VIDEO CLIP)

PROFESSOR HENRY LOUIS GATES, HARVARD UNIVERSITY; I would be prepared as a human being to forgive him. That would not deter me from using this as an educational opportunity for America. Because if this can happen to me in Harvard Square, this can happen to anybody in the United States. And I'm determined that it never happen to anybody again.

What it made me realize was how vulnerable all black men are, how vulnerable all people of color are and all poor people to capricious forces like a rogue policeman. And this man clearly was a rogue policeman.

(END VIDEO CLIP)

HARRIS: Wow. We will have President Obama's comments on this in the next hour.

Plus, we will hear comments made this morning by the arresting officer. Very interesting comments, I might add.