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Goldman Sachs Charged With Fraud; Eruption Disruption; Attacks in Afghanistan
Aired April 16, 2010 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: Top of the hour in the CNN NEWSROOM, where anything can happen and usually does.
I'm Tony Harris. Here are some of the real people behind today's biggest stories.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I don't want the plane going down. You know, it's really dangerous.
UNIDENTIFIED MALE: We just wait. We are pawns. We are nature's pawns.
UNIDENTIFIED FEMALE: I want to go home. I just want to go home now. I'm fed up.
(END VIDEO CLIP)
HARRIS: Go home. Gritty volcanic ash spreads across Europe, turning much of the continent into a no-fly zone.
Plus this --
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I truly believe that who you want at the moment of your death, it should not be defined by blood relation.
(END VIDEO CLIP)
HARRIS: President Obama dramatically expands the rights of same- sex couples. Hospitals will no longer be able to deny visitation by a domestic partner when the patient requests visiting rights.
Boy, let's begin here with big trouble for a big investment firm. Goldman Sachs is charged with fraud in connection with its subprime mortgages.
Let's get right to our Senior Correspondent Allan Chernoff. Allan is in New York.
And Allan, you talk about a shot across the bow, the U.S. government not going after a small bit player on Wall Street, but the biggest, the baddest player on the block, the gilded Goldman Sachs. ALLAN CHERNOFF, CNN SR. CORRESPONDENT: That's right. Goldman Sachs, no question, is the most envied firm on Wall Street.
And this morning, right now, we've got Goldman charged with fraud by the Securities and Exchange Commission. Here's what's going on.
Goldman Sachs, back in 2007, put together an investment betting on the health of the housing market. Remember, that was about when the housing market was just beginning to totter a little bit. So, Goldman Sachs put together a bunch of big investors. They were buying into an investment that was tracking a group of mortgages, a pool of mortgages in subprime mortgages, not your high-quality mortgages.
OK? You've got that on the one hand.
Now, on the other hand, Goldman Sachs also was dealing with a giant hedge fund, Paulson & Company. And Paulson was betting against the housing market, shorting. That's what it's called on Wall Street, shorting these mortgage securities.
All right. Now, that's OK. The problem is this: Goldman told the first group of investors, hey, a third party is putting together these mortgages into which you're going to be investing. But, in fact, the SEC says Paulson & Company, the group betting against the housing market, was actually picking some of the actual mortgage securities that the first group was essentially investing in.
So there's the conflict over there. The SEC says, hey, that is fraud. No good.
HARRIS: Well, the SEC essentially saying here, Goldman, you know what? You were double dealing?
CHERNOFF: Yes. Yes, no question about it. That's basically what the SEC charges come down to here.
And you're allowed to deal with players on both sides of the market. That's OK. You can be a market maker. You can say, hey, OK, you guys think housing is OK, you think housing is collapsing, that's fine.
The problem here is that the first group of investors, who, by the way, lost a lot of money, the first group of investors were told, hey, the mortgage securities are being picked by an independent third party. No conflicts.
HARRIS: Oh, I see, Allan. And yes, so the investors -- wow, OK. Got you.
Allan Chernoff in New York for us. What a story.
Did you want to add something, Allan?
CHERNOFF: And by the way, Tony, those investors, they lost a billion bucks. The hedge fund betting against the housing market made a billion. HARRIS: Holy mackerel. What a story.
Allan, appreciate it.
CHERNOFF: Real money.
HARRIS: Yes, a billion dollars, that's real money.
Now to the volcanic eruption being felt literally around the world right now.
Some 17,000 flights grounded. Drifting ash from a volcano in Iceland is to be blame for it all. It's forced the shutdown of airports across much of Europe. Hundreds of thousands of passengers stranded for a second day.
I spoke with singer Candi Statin last hour. She's stuck in London.
(BEGIN VIDEO CLIP)
CANDI STATON, SINGER: Every day they push it back. They say we can get you -- we're getting in the air tomorrow at 1:00. And then the next time you hear it, it's like, we just don't know when you'll get back up in the air. So we're all grounded.
HARRIS: And you getting a little frustrated?
STATON: At first I did, but I'm starting to enjoy just being on the ground.
HARRIS: Yes. Yes. OK.
So your band is with you. Everyone is with you and the hotel is treating you well? They're not trying to move you out because they've got other people coming in, are they?
STATON: We had a little problem last night.
HARRIS: You did?
STATON: I was kind of worried, because I was supposed to check out today. But then people started crowding in because the airports were just completely closed down. And so I had to rush downstairs and try to get a room for the next couple of days. And I was able to do so.
(END VIDEO CLIP)
HARRIS: So, many travelers right here in the United States are being affected. The Air Transport Association says American carriers operate about 340 flights to and from Europe each day. A third of those flights were canceled yesterday. More cancellations happening right now.
The volcanic ash is creating a costly headache not only for businesses, airlines and tourists, but also for the U.S. military.
For that angle, we turn to our Pentagon Correspondent Barbara Starr.
And Barbara, what kind of impact is the volcano having on U.S. military operations?
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, you know, Tony, just like civilian commercial air operations, Europe is a major hub for the U.S. military -- cargo, refueling, troop flights going in and out of Europe, on their way back and forth to Afghanistan and Iraq.
Let's go to the map right now. Let me show you a couple of places that are shut down.
In Britain, in the U.K., the Royal Air Force bases at Lakenheath and Mildenhall shut down. And, of course, that now means that U.S. Air Force F-15 fighters, tankers, refuelers, not flying. They are grounded.
Spangdahlem in Germany, shut down. Cargo flights not moving in and out of there to the war zone.
Ramstein, however, is the one that may be getting the most attention right now because the flights of the wounded troops coming from Afghanistan and Iraq come to Ramstein, where they are then transferred to the Army hospital at Landstuhl medical care. Ramstein is shut down, so the wounded cannot come there.
What we now know is the U.S. military has shifted, Tony, those flights down to Rota, Spain, down south. The MedEvac crews are now basing out of Spain, flying over to Afghanistan and Iraq to pick up the wounded. And instead of taking them to Germany, they are bringing them right back here to Washington, to Andrews Air Force Base.
That's a long-haul flight. It involves refueling in many cases, but they're going ahead and they're getting them out of the war zone and bringing them here, notifying their families of this change.
The military says it's coping. You know, basically they're going the southern routes across Europe like everybody else. But the impact does go on -- Tony.
HARRIS: Yes, it sounds like it.
All right. Barbara Starr at the Pentagon for us.
Appreciate it. Boy, look at those pictures. Barbara, thank you.
And let's now get to the source of the problem. We're talking about hazardous ash erupting from a volcano in Iceland. Man, the pictures are dramatic.
Gary Tuchman is right near ground zero. When we say right near ground zero, we mean right near ground zero.
Are you on the western slope of that volcano, Gary?
GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: Western slope, Tony. We're pretty much as close as we're allowed to get.
This is the mountain that's the source of all these worldwide travel problems. This is where the volcano is.
And behind me, this is the mud, the ice balls, the rocks, and the floodwaters that have come as a result of the volcano. Because what's happened is, when the volcano erupted, it was underneath a glacier and it caused floods.
Now, there's no magma or lava here. What we have are the floods on these farm lands. Fortunately, it's not that extensive just yet. This is not an overly populated area.
It's also a situation where they've had lots of roads that have been destroyed, but no people have been killed, nobody has been hurt. That's the irony of the situation, Tony. We're seeing so much suffering and people stranded.
When we left John F. Kennedy last night to fly into Reykjavik, people couldn't get to London and they couldn't get to Paris, but they could get to Reykjavik, because Reykjavik is 75 miles to the west of here. The wind's blowing to the east, and the wind's blowing very strongly, I might add.
Right now the temperature is 35 Fahrenheit, with winds that are about 35 miles per hour. So you can imagine it's quite cold right now. People are stranded all over the world, but here, life is fairly normal, except for these floodwaters.
I hope you can see that waterfall behind me. The reason I'm pointing that out to you, that's not from the volcano. That's always been here.
And the reason I mention the waterfall is if you watch the show "The Amazing Race," a couple years back they had "The Amazing Race" in Iceland, and they had to go to that waterfall. So that waterfall was famous from "The Amazing Race." Now it's famous because it's connected to the mountain that had this volcano that is causing problems all over the world -- Tony.
HARRIS: Hey, so, Gary, I see people walking around behind you. Are you getting some -- are these locals or tourists trying to take pictures? What's going on?
TUCHMAN: Come here for a second, if you don't mind.
HARRIS: Yes. Way to go.
TUCHMAN: Tony, that timing. Let's find out exactly.
Come here. Come here. Where are you from?
UNIDENTIFIED FEMALE: I'm from Iceland. TUCHMAN: Turn around this way.
You're from Iceland?
UNIDENTIFIED FEMALE: I'm from Reykjavik.
TUCHMAN: Reykjavik. Reykjavik, of course, is the capital of Iceland.
I want you to explain to our viewers on CNN all over the world -- are you nervous right now to talk to me?
UNIDENTIFIED FEMALE: No, not really.
TUCHMAN: OK. Good. That's amazing.
I'm just explaining that, isn't it amazing how this is causing problems all over the world, but here in Iceland, things are fairly normal, right?
UNIDENTIFIED FEMALE: Well, I'm actually here trying to figure out for another newspaper what is going on here.
TUCHMAN: So you're a journalist?
UNIDENTIFIED FEMALE: I'm a journalist.
TUCHMAN: No wonder she's not nervous. She's a journalist, not a tourist.
Well, thanks for talking to us. People are pretty calm in Iceland about this.
UNIDENTIFIED FEMALE: Very calm. I think it's mainly the farmers around here who might be worried about their farm and all -- animals, their horses, their sheep.
TUCHMAN: And that's the issue, the livestock, the farm.
Thanks for talking to us. Good luck with your newspaper, OK?
But tourists, Tony, have been coming by, too, not just from Iceland, but from France, from Denmark, from Sweden. They want to see what's going on right here.
HARRIS: Oh, that's terrific stuff.
Hey, look, we say all the time anything can happen here in the NEWSROOM, and it usually does. That's a great moment. And, you know, we're looking for real people, and everyone around the world knows journalists aren't real people.
Gary, appreciate it. Thank you. See you next time. All right.
We have got our eye on Afghanistan. Boy, more fighting, more attacks, more deaths. We will take you live to Kabul in just a moment.
First, though, our "Random Moment" in 90 seconds.
(COMMERCIAL BREAK)
HARRIS: Boy, what a show. Things a cat would never consider, a Friday "Random Moment."
A gentleman in Auburn, California, is putting dogs on treadmills. Let's face it, honestly, some pooches are really as fat as people.
It's a good way to exercise your pet, especially when the weather is pretty bad. Just don't try this with your cat. That brings us to a "Random Moment" flashback.
Everybody needs a shower after exercising, right? A Japanese company is marketing an automated doggy bath -- shampoo, rinse, and fluffy dry.
All right. Wait for it. Wait for it.
Again, not recommended for cats. We do, however, recommend our "Random Moment of the Day."
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HARRIS: All right. Turning our attention now to Afghanistan.
More attacks every day, it seems. Three people killed yesterday in a suicide bombing in Kandahar. To the north, four German soldiers and three Afghan policemen were killed in heavy fighting.
Today, President Obama is meeting with his national security team about the strategy in Afghanistan and Pakistan.
CNN's Atia Abawi joining us now from Kabul.
And Atia, let's start with these recent blasts. What do they mean, if anything, in the broad scheme of U.S. strategy there?
ATIA ABAWI, CNN INTERNATIONAL CORRESPONDENT: Well, Tony, one thing is clear, these two strong blasts that rocked the city of Kandahar yesterday, the biggest one coming in the evening time actually injuring three Americans as well, killing three Afghan security guards, also injuring a man from Britain and South Africa, also a Nepalese security guard. This is a sign that the fight in Kandahar is going to be a big fight.
This is the spiritual home of the Taliban. This was the capital for the Taliban. This is an area where Mullah Omar, himself, Osama bin Laden, lived during the Taliban regime. They're not going to go down without a big fight.
This is going to be a bit different from the fighting that we've seen in the past. This is going to be a political way that the NATO forces want to fight this. They want to go to the people of Kandahar and get them to actually push the Taliban out of the area. But the question really remains, will the Taliban actually go for the diplomacy? And many people think that they won't -- Tony.
HARRIS: Atia, maybe you can remind us again. It's really vital information here, I think. Why is Kandahar so important to the war effort there in Afghanistan?
You were just there with President Karzai and General McChrystal. How are they approaching the situation in Kandahar?
ABAWI: Well, it's going to be a big push. What happened when I went with General McChrystal and President Hamid Karzai, himself, what was interesting about this is he went to Ashura, which is a council meeting. He invited the leaders of different tribal groups throughout the south and central Afghanistan, trying to get their support, trying to find a way to see what they need in helping them push the Taliban out of Kandahar.
President Karzai, himself, reaching out to the Taliban, calling them his brothers, saying that they should come towards the government and they can make a change in Afghanistan together. But it should be noted that President Karzai said that doesn't include the terrorists, that doesn't include the Taliban, who are killing innocent civilians, that are launching attacks like the ones that we saw yesterday.
What they want to do is go from district to district to talk to these tribal leaders, to ask them exactly how they want the NATO forces to help. This isn't something like we saw just a couple of months ago in Helmand Province, where there was a big D-Day, that there were air assaults into Marjah, where they were fighting the Taliban, pushing them out, hoping to secure and hold the area.
This is different. They want the help of the Afghan people. They think that by getting the Afghan people involved, it can make a bigger difference.
And truth be told, Tony, this is Afghanistan. This is the land of the Afghans. The Afghans themselves know their land. They know their people. And they also know how to talk to the Taliban.
The reason the Taliban have had success in the last eight years is when you talk to the average Afghan, they see these men who speak their language, who look like them, talking to them. And although they are responsible for the majority of civilian casualties, the foreign forces are still very foreign to the Afghan people. They see them coming in, in uniforms, see them coming in with helmets, and that actually scares a lot of these villagers.
And they see them as aliens to the country. So this is a way for President Karzai and the top NATO commander, General Stanley McChrystal, to make their way forward in Afghanistan with the help of the Afghans themselves -- Tony.
HARRIS: That's a really good reset for us. All right. Atia Abawi for us in Kabul, Afghanistan.
Atia, good to see you. Thank you.
Is government prayer unconstitutional? A new court ruling that reaches from the White House all the way to a higher power.
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HARRIS: Let's get you caught up on our top stories right now.
Hundreds of thousands of Americans who ran out of federal unemployment benefits can now reapply. Last night, President Obama signed a bill to extend payments through June 2nd. The payments will be retroactive for those who lost benefits.
The chairman of a Senate panel says federal regulators -- listen to this -- ignored mounting problems at Washington Mutual as the bank collapsed. It was the largest-ever U.S. bank failure. Senator Carl Levin says the main regulator, the Office of Thrift Supervision, was a watchdog with no bite.
Charges have been dropped against nine American missionaries accused of trying to kidnap children from Haiti after the January earthquake. That's according to the office of an Idaho senator. The group's leader is still jailed in Haiti.
Another check of top stories coming your way in 20 minutes.
A new fight over religion. A judge says a federal statute authorizing the National Day of Prayer is unconstitutional.
CNN's Ines Ferre is in new York.
Ines, what was the judge's thinking on this?
INES FERRE, CNN CORRESPONDENT: Well, Tony, the judge, in her ruling, Federal Judge Barbara Crabb, said that the National Day of Prayer "... goes beyond mere acknowledgement of religion because its sole purpose is to encourage all citizens to engage in prayer." And she goes on to say that, "The government has taken sides on a matter that has to be left to individual conscience."
Now, there's been strong reactions from both sides on this issue. Americans United for Separation of Church and State says, "This decision is a tremendous victory," adding that, "Congress has no business telling Americans when or how to pray."
And, also, you've got the group the National Day of Prayer Task Force which is urging the Obama administration to appeal the decision, saying, "This is a concerted effort by a small but determined number of people who have tried to prohibit all preferences to the creator in the public square, whether it be the Ten Commandments, the Pledge of Allegiance, or the simple act of corporate prayer. This is unconscionable for a free society."
So, both sides really feeling very strongly about this issue.
HARRIS: Yes. Well, wait a minute here, Ines. This day has been around for decades. So it's not a new concept we're talking about here.
FERRE: It's not a new concept. The date was made official in 1952, signed into law by President Harry Truman. Reverend Billy Graham helped to introduce the idea of an annual day of prayer. And you'll recall that during that time, also, there was a big fear in the U.S. of communism.
Now, under the law, the president would assign one day other than a Sunday as a day when Americans can turn to God in prayer, in meditation, at churches, in groups, and as individuals. In '88, President Reagan amended it to say that it would be the first Thursday of May.
HARRIS: And what happens now? Where does -- do we know where the administration stands on this?
FERRE: Well, yes. The ruling says that the injunction won't take effect until the appeals process is exhausted. And the Obama administration tweeted about it yesterday, and they said that the president intends to recognize this year's National Day of Prayer on May 6th -- Tony.
HARRIS: OK. Ines, appreciate it. Thank you. See you a little later in the hour with what's hot.
We want to certainly hear from you on this issue. What do you think the country -- do you think the country should have a government-sponsored National Day of Prayer, or maybe you think it's unconstitutional?
If you would, just go to my blog, CNN.com/Tony, leave me a comment. And we'll share some of them on the air a little later in the program.
Tough lessons in school districts across the country. Systems forced to cut back because of tight budgets.
One of the latest is St. Louis, Missouri. Last night, officials announced plans to shut down six schools and cut almost 500 jobs. The school system is facing a $58 million budget deficit. There could be more cuts in the future, including some low-performing schools.
(BEGIN VIDEO CLIP)
KELVIN ADAMS, ST. LOUIS SCHOOL SUPERINTENDENT: We have some schools that are challenged for a number of reasons. The communities are not as supportive as they need to be. Some of the academic persons in the building are not as strong as they need to be. And so we need to make some changes.
UNIDENTIFIED MALE: And it's eight superintendents since I've been vice president of this union. It's just been an incredible roller-coaster ride. But we're not done yet. And we've always been part of the solution, not the problem.
UNIDENTIFIED FEMALE: A sad state of affairs because a lot of my students, my son, a fifth-grader, are going to miss out on a great opportunity. And I'm really sad and hurt for those teachers and staff members that are going to be losing out, as well as the community.
(END VIDEO CLIP)
HARRIS: You know, I've got to tell you, parents in Hawaii have ended a week of sit-ins to protest teacher furloughs. This is an iReport video from the demonstration in the governor's office.
The parents vow to continue to push for an end to the 17 furlough days. And the days off mean Hawaii has the shortest school year in the nation.
And tune in this weekend for CNN's special report, "Fixing America's Schools." A town hall moderated by Don Lemon, it features Education Secretary Arne Duncan and an audience of parents, students and teachers. "Fixing America's Schools," Saturday at 7:00 p.m. Eastern, right here on CNN.
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HARRIS: OK. CNN, your source for money news, of course.
Let's get you to CNNMoney.com.
The lead story at CNNMoney.com, it's all about Goldman Sachs and the SEC charging investor fraud. It's a big story. And we've been following it for you in the last couple of hours, right here in the CNN NEWSROOM.
Let's get you to the New York Stock Exchange.
Wow, this is a big down day. Stocks are down big-time. I wonder if it's some kind of reaction to the SEC going after Goldman Sachs.
As you can see, the Dow is down big time, 135. The Nasdaq, at last check, was down 38 points as well.
We're following these numbers. Boy, it could be a big day. A big selling day already. Can you imagine?
We've been telling you about this massive no-fly zone across much of Europe. Here's the culprit -- man -- thick hazardous ash from a volcano in Iceland drifting slowly across the continent, forcing the cancellation of some 17,000 flights.
Many major airports shut down. Here's a look at London's Heathrow, the usually bustling airport, now virtually deserted. Airline travelers are scrambling to find alternative transportation.
Our Atika Shubert reports from London.
(BEGIN VIDEOTAPE) ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: Here at the EuroStar Terminal in London, it's all about the queue. People are lining up hoping to get train tickets to replace those flights they're missing. Unfortunately, all the EuroStar trains today are booked, and there is only limited availability for train tickets tomorrow.
People are really just trying to get as close as they can to their destinations. It could all be pretty chaotic, except the people really are saying we're all in this together, we're just trying to get to our destinations. And there really is a lot of cooperation on the ground.
Here's what some passengers told us about how they're trying to get back home.
UNIDENTIFIED MALE: I'm trying to get a EuroStar ticket to go to Paris and go to friends there. And hopefully -- well, we are trying to organize a car from Paris to go to Milan.
SHUBERT: Now, instead of going Glasgow to Berlin, you're going --
UNIDENTIFIED FEMALE: Glasgow, London, Brussels, Cologne, Berlin.
SHUBERT: Wow.
So this is an emergency. You have to get to Brussels?
UNIDENTIFIED MALE: We do, yes. It's urgent. I've got a lot of people to save, and there's only one man for the job. He was busy, so I'm going.
SHUBERT: How are you hoping to get to Brussels?
UNIDENTIFIED MALE: Well, we walked across London to start with. So if we -- we're thinking if we can't get there, we'll walk or we'll swim.
UNIDENTIFIED MALE: There are rumors that the Euro train is booked for today and tomorrow. Maybe possible Sunday. But for us, we will see when we can get it, and then stay and enjoy London.
SHUBERT: What do you think about the way this is being handled, all the travel problems? Are you OK with it or do you think --
UNIDENTIFIED FEMALE: I just think safety comes first. And I really do feel if it's in the best interest of everyone to be safe, then they've taken the very right decision, as far as I'm concerned.
SHUBERT: Now, the EuroStar says passengers who are trying to get train tickets, it's best for them to check, actually, on the Web site instead of coming here directly, because, otherwise, it would just be too chaotic here. So, for those passengers who are trying, check the Web site first. With any luck, there will be tickets available.
Atika Shubert, CNN, London. (END VIDEOTAPE)
HARRIS: Well, you're going to need a little luck, Chad Myers. And there's no way to predict when the skies are going to clear. Come on.
CHAD MYERS, AMS METEOROLOGIST: There's not, because these little things that look like pumice balls are flying up there, floating up there. Now, they are falling out eventually. They do settle, but these ash plumes, these pieces of ash, this is very, very small.
I mean, we've blown this up to make it look -- people are joking here -- "What, is that your brain on drugs?" No. It's just one piece of ash.
HARRIS: Some people around here, right?
MYERS: They're having -- it's already Friday for some people.
So this is going up into the sky. And you can't get this into your jet engine or else it stalls the engine for a couple of reasons. You can actually get obsidian made, which is that glass that you heard about, the volcanic glass, remember in fifth grade you heard about how a volcano can make glass when it hits the water or whatever it does, however it makes it. It's a slow cool. Well, that can actually do that with that. And then it coagulates and penetrates into the back of the jet and then you get that glass on the back of the jet and literally the jet clogs itself to death. And you don't want to do that.
HARRIS: Yes.
MYERS: But, hey, I have something new that I just found in the past 15 minutes.
HARRIS: OK.
MYERS: Flightradar24.com. There aren't that many paths into this website right now, so you have to be patient. But every little blue spot is where there is an airport or a transponder. There should be all kinds of yellow planes all over here, all over northern Europe. Not. The only planes that we find coming out of Orley (ph). A couple of planes have made it out of Orley, which is surprising because a lot of other places are still a little bit closed. And then all the way here, through here, no planes here, planes here.
HARRIS: Yes.
MYERS: So this is the closed area. Here's the open area. And it's going to be one long weekend for some people.
And, Tony, you have to think about, I just got this e-mailed to me, that there are some Boston Marathon competitors coming out of Africa through Europe.
HARRIS: Oh, get out of here. Yes. MYERS: Can't get to the Boston Marathon right now. They are stuck in Europe. And they are some of the main runners for the Boston Marathon.
HARRIS: Oh, yes.
MYERS: We'll have to see if they can get here if this air space clears up.
HARRIS: Maybe an American can win this year.
MYERS: Easy.
HARRIS: Easy, easy, pump the brakes.
All right, Chad, have a great weekend.
MYERS: All right.
HARRIS: Hospitals will no longer be able to deny visitation rights to gay and lesbian partners. The heartbreaking story that prompted President Obama to act.
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HARRIS: OK. President Obama moves to end discrimination in hospital visitation rights for same-sex couples. He's ordered a rule change for all hospitals that receive federal funds. He said the current relatives only policy means gay and lesbian Americans are often barred from the bedsides of their partners, "unable to be there for the person they love and unable to act as a legal surrogate if their partner is incapacitated."
The president's action was sparked by the case of a couple kept apart as one died from an aneurysm. Janice Langbehn spoke with CNN's Anderson Cooper.
(BEGIN VIDEO CLIP)
ANDERSON COOPER, CNN ANCHOR: Tell us a little bit about what happened to you. You and your kids were with your partner in Florida. You were there for a cruise, for a trip. Lisa collapsed and she was taken to the hospital. I mean, how did they say that you weren't allowed to see her?
JANICE LANGBEHN, DENIED VISITATION RIGHTS: My partner collapsed. And when she got to the hospital, which was about 3:00, 3:30 Florida time, social worker Garnett Frederick (ph) came out and told me, quote, "you're in an anti-gay city and state and won't get to see your partner nor know of her condition." And then turned to walk away. And I said, but wait a minute, I have a power of attorney. So he came back and gave me his fax number. And within 20 minutes of him telling me that, they had our legal documents.
COOPER: So, wait a minute, you had -- you --
LANGBEHN: But I continued to wait.
COOPER: You had the legal documents need? You had advanced directives? You had a power of attorney?
LANGBEHN: I did, yes.
COOPER: And yet they still wouldn't let you see her?
LANGBEHN: Because I had -- because I had -- yes, because I have multiple sclerosis, so we were planning for anything like this. And it didn't matter to this hospital.
COOPER: They finally did let you see her briefly, but only when they were reading her, her last rights, is that -- is that right?
LANGBEHN: Yes. A chaplain came to me and I said, I need a priest immediately. And I didn't want the children to see her for the first time that way, because I didn't know what I would see. And so just I went back to do the last rights. And she must have had some amount of consciousness, because she was actually restrained to the bed at that point. Though not verbal or conscious.
And then they -- after the five-minute ceremony, brought me back out and I continued to wait another -- with the kids, another five hours. And it wasn't until her sister showed up from Jacksonville that then I was allowed in to have access to my partner of 17 years.
(END VIDEO CLIP)
HARRIS: Wow. OK. Today CNN Quick Vote question and vote. What do you think of President Obama's order to allow hospital visitation rights to gay and lesbian partners? Eighty-six percent, that's a pretty wide margin here, agree with it. Fourteen percent do not.
You know, it is a prison scheme that took the IRS for a literal ride. We promised you this story yesterday, but because of breaking news, we couldn't get it on the air. You'll have it this hour unless, of course, we get more breaking news.
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HARRIS: OK. Let's get you caught up on top stories now.
The Securities and Exchange Commission has charged Wall Street mega bank Goldman Sachs, really an investment house, isn't it, with defrauding investors in the sale of securities tied to subprime mortgages. Goldman shares tumbled 10 percent in mid morning trading on the SEC charge.
Want to see what's happening on Wall Street. Oh, steep sell-off right now. The Dow is down 166 points. That's a pretty strong reaction, isn't it?
Former Los Angeles Police Chief Daryl Gates has died. He was in charge during the 1992 riots that followed the acquittal of four white police officers in the beating of black motorist Rodney King. Gates retired amid widespread criticism of how his department handled the riots.
Devastation, desperation everywhere you look in western China rocked by a powerful earthquake on Wednesday. Hundreds are dead, many more injured. We take you to the earthquake zone.
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HARRIS: Thousands of hungry survivors of Wednesday's magnitude 6.9 earthquake in western China are still exposed to extremely cold weather. No food. No shelter. At least 790 people were killed. Our John Vause was one of the first reporters on the scene. He reports now from Qinghai province.
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JOHN VAUSE, CNN CORRESPONDENT (voice over): How do you rebuild when all you have left is this? But this is life now. Families living out in the open with overnight temperatures below freezing. Two days after the quake, the search for survivors seems less urgent. Here, they're looking for a woman. Her husband and child already found dead.
(on camera): These rescuers have been digging here for the last hour or so. There was a faint hope that maybe this woman would be alive. But now she, too, is just another fatality of this earthquake.
(voice-over): As the bodies are hauled away, the death toll ticks higher. Ten people once lived here. Six died, including the parents of these small children. Cared for now by their aunt and uncle.
"This is the most difficult time of my life," he says.
They all live under plastic sheeting with whatever they could salvage after their house was destroyed by the quake. "
I don't remember what happened," he says. "My mind went blank. I just ran outside."
In this mostly ethnic Tibetan area, the earthquake has laid bare what most already know, nearly everyone here is local to the Dalai Lama, considered an enemy of the state by Beijing, and they believe the death toll is much higher than official figures.
UNIDENTIFIED FEMALE: You know, lots of people died. There is nobody -- nobody home (ph).
VAUSE: And many say in the hours after the quake, Chinese soldiers did little to help.
"We had to get the monks to help dig out my wife," this man told me.
(on camera): But officials in Beijing deny that, saying soldiers and police did everything they could as quickly as they could to help as many people as possible. (voice-over): For me and Winja Baw (ph), on a tour of the rubble, promised to make life here good again. Given the history of ethnic tensions in this region, that may be a much bigger challenge than just rebuilding.
John Vause, CNN, Jiegu, western China.
(END VIDEOTAPE)
HARRIS: Saving money. It's a great idea, but how these days? Our Stephanie Elam is brainstorming over at "The Help Desk."
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STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Time now for "The Help Desk," where we get answers to your financial questions. Joining me this hour, Doug Flynn is a certified financial planner and founder of Flynn Zito Capital Management, and Rod Kurtz is executive editor of "AOL Small Business."
All right, gentlemen, thanks for being here.
ROD KURTZ, EXECUTIVE EDITOR, "AOL SMALL BUSINESS": Good to see you.
ELAM: First question is from Clint. And he says, as a practice I try to save at least $5 a day. For example, for a 31-day month, I put $155 into my savings account. What other methods can I use to save money directly from my paycheck?"
Doug, what do you say?
DOUG FLYNN, CERTIFIED FINANCIAL PLANNER: Well, it's great that he's saving that. I think one of the best things to do is every time you get a raise, what I love is take half of that for yourself to spend, because you earned it, but take the other half and try to notch up what you're saving. If you do that each time you get a raise, you'll be saving a lot more money as time goes on.
And the other thing is that this is after-tax money. So if you have a good cash build up now, three to six months, start looking at a 401(k) because you could put over $200 a month away and it will still only feel like $150 after taxes.
ELAM: So getting yourself -- just sort of tricking yourself into doing better. All right.
The next question I have is from Mike. And he says, "I'm 61 years old and my wife and I are retired. We own our home, cars and use two credit cards and pay them off monthly. We have $600,000 in an IRA and CDs. CD rates are bad right now and I'm looking for something with a better return than 3 percent. We have a very conservative lifestyle. Any suggestions?"
What do you say, Rod?
KURTZ: Well, congrats on retirement, Mike.
Yes, I mean, CD rates are pretty abysmal right now. And I think that, you know, you go much higher than that, you're not going to be conservative anymore. You look at different investments, even municipal bonds and corporate bonds. A little better rate of return in some cases, not taxable, but there is risks associated with it.
So in the case of CDs, one thing I like a laddering CDs, where you take a pool of money that you want to spend and you invest some of it in a one-year CD, two-year, three-year, four-year. It's almost like dollar cost averaging for CDs. And the great thing about that is each year you have return income coming in that you can then reinvest in another CD. So if they're sticking with that, if they want to stick with the conservative investment plan, that's one I would favor, yes.
ELAM: That's the way to go. Well, that is great. Thanks so much, gentlemen, for being here. Helping us out today.
KURTZ: Absolutely.
ELAM: "The Help Desk" is all about getting you answers. So send us an e-mail to CNNhelpdesk@CNN.com. We might just have the answer to your question right here next week. You can also pick up the latest issue of "Money" magazine. It's on newsstands now.
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HARRIS: Got to tell you, it is a tax season scam that earns millions of dollars for jailbirds.
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JONATHAN ELLSWORTH, FORMER ASST. STATE ATTORNEY: One of the main guys at one point is telling one of his cohorts that he's not going to do white collar -- street crime anymore because Uncle Sam's taking good care of him.
(END VIDEO CLIP)
HARRIS: Wow. Many bogus returns in the NEWSROOM.
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HARRIS: So let's understand this. Taxpayers already cover their room and board. Turns out the IRS is paying prisoners, too. Yes, paying prisoners. CNN's John Zarrella looks at a tax scheme that rakes in millions.
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JOHN ZARRELLA, CNN CORRESPONDENT (voice over): Just a routine search of a jail cell. Officer Mark Lindback didn't expect to find much.
SGT. MARK LINDBACK, MONROE COUNTY DETENTION CENTER: After the inmate has exited the cell, I went over, basically pulled up the mattress. He had some of the items under his mattress. He had additional items underneath the bunk.
ZARRELLA: The items, tax forms and address book with Social Security numbers, birth dates and cheat sheets for filling out returns. That was December of 2006. What Lindback had stumbled upon was a lucrative income tax fraud scheme run by inmates at the Monroe County Jail near Key West. Before they were busted, the inmates filed for more than $1 million in tax refunds involving half the jail population.
CAPT. PENNY PHELPS, MONROE COUNTY DETENTION CENTER: But what they would do is go to other inmates and suggest to an inmate, I can get you $4,500 in a tax return. It will cost you $500.
ZARRELLA: In some cases, with the help of friends and family, the prisoners would fill out the 1040 EZ short form, then attach a 4852 form with the names of businesses that didn't exist and income they never earned. The 4852 is a substitute used when an employer doesn't provide a W-2. The initial investigation was handled by county prosecutor Jon Ellsworth. Phone calls were recorded.
JONATHAN ELLSWORTH, FORMER ASST. STATE ATTORNEY: One of the main guys at one point is telling one of his cohorts that he's not going to do white collar -- street crime anymore because Uncle Sam's taking good care of him.
ZARRELLA: Before they were caught and the jail started intercepting incoming checks, the inmates collected, Ellsworth says, at least $100,000 from the IRS. One inmate had checks sent to his brother's house.
(on camera): Dozens of checks were going to one address?
ELLSWORTH: Yes.
ZARRELLA: And that didn't raise any red flags with the IRS?
ELLSWORTH: Apparently not. I mean
ZARRELLA (voice-over): By 2007, Ellsworth turned over boxes of evidence to the IRS. Case closed, right? Not so fast.
RICK ROTH, FORMER MONROE COUNTY SHERIFF: And they said, well, we're working on it. We're investigating. We can't take your investigation and prosecute from your investigation. We have to do our own investigation.
ZARRELLA: Earlier this year, nearly three and a half years after the scheme was busted, federal indictments were finally brought against a couple of the ring leaders and family members. Why so long? The IRS wouldn't say.
(on camera): Now, don't think this inmate get rich quick scheme started here at the Monroe County Detention Center. Oh, no. Authorities tell us it's been going on for decades at state and federal prisons all across the country.
PHELPS: One of the inmates that I interviewed said that he had learned of it when he was in a federal prison.
ZARRELLA (voice-over): In a statement, the IRS told CNN that it has programs to combat this. But the IRS said, quote, "it is not a simple process, particularly considering the fact that some inmates are entitled to tax refunds and that the prison population is not static." According to congressional testimony, in 2004, more than 4,000 bogus refunds were issued to prisoners for almost $15 million. But the IRS blocked more than $53 million in false claims.
ROTH: The system has a flaw that needs to be fixed. And it should be easy enough to fix by changing a form or changing the submission.
ZARRELLA: And while the IRS is now prosecuting the Monroe jail case, guess what some inmates are still doing, filing fraudulent returns and still getting checks.
UNIDENTIFIED MALE: I think we have one here that came in that was for about $5,000.
ZARRELLA (on camera): There it is.
UNIDENTIFIED MALE: Yes, it's about $5,000.
ZARRELLA: So this is an IRS check --
UNIDENTIFIED MALE: Right.
ZARRELLA: That was -- that was sent to --
UNIDENTIFIED MALE: This inmate here.
ZARRELLA: That inmate.
UNIDENTIFIED MALE: Right.
ZARRELLA: For $5,920.
UNIDENTIFIED MALE: Exactly.
ZARRELLA: It was intercepted.
(voice-over): At least here, the checks end up in the hands of the FBI.
John Zarrella, CNN, Key West, Florida.
(END VIDEOTAPE)
HARRIS: And still to come, a controversial ruling on National Prayer Day. You've been letting us know how you feel in no uncertain terms. Your thoughts after a quick break.
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HARRIS: Last hour we asked, do you think the country should have a government-sponsored National Day of Prayer or do you think it's unconstitutional? Here's what you're saying to us.
From Chris, "I am a Christian and like the idea. The problem with trying to remove the National Day of Prayer is that if it does happen, will it stop there?"
Tim writes, "I think as long as a specific religion is not mentioned, it is constitutional. It is an optional day of observance that you could observe or ignore."
And from Alan. "Having the government endorse the National Day of Prayer is in direct conflict with the First Amendment. The judge got it right as the laws are written."
We want to keep the confrontation going if we can. Just leave us a comment at CNN.com/tony. I'm hustling here because I cannot wait to hear the take of our chief business correspondent on the Goldman Sachs news today. You don't want to miss this. CNN NEWSROOM continues right now with Ali Velshi.
