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Fed Up With the Feds; Passengers Stuck, No Place to Go; Goldman Sachs Case: Guilty as Charged?; Volcano Ash Effect on Humans; Going Undercover to End Hate Networking; The X-Y-Z of It: Understanding the Case Against Goldman
Aired April 19, 2010 - 13:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CNN ANCHOR: Its 2:00 p.m. on the East Coast, 11:00 a.m. on the West Coast. Here's what I've got on "The Rundown."
That massive cloud of volcano ash. It can stop flights, it can stop business, it can stop people in their tracks. It can't stop social networking, and I'll prove it to you.
Plus, we'll look at the dark side of social networking, hate networking. There's been a surge in hate-filled Web sites recently, an enormous surge. Why is it happening? We'll show you.
And Goldman Sachs under Uncle Sam's microscope along with ours. We break down the government's fraud case and find out if anything good will come out of it for the country, for Wall Street and for you. Plus, I've got some thoughts to share about this in my "X-Y-Z."
But we're talking about fury and frustration by the people, of the people toward their government. A big rally in Washington, D.C. today, listen in.
(BEGIN VIDEO CLIP)
SKIP CORYELL, MARCH ORGANIZER: Is God pro Second Amendment? I think he is.
REP. PAUL BROUN (R), GEORGIA: We must declare war against oppression and against socialism. And you are the people to do that.
ERICH "MAD DOG" MULLER, RADIO PERSONALITY: It isn't left versus right, black versus white, conservative versus liberal. It isn't any of that. It is us versus them.
DICK HELLER: Do we want a communist running America and disarming us?
AUDIENCE: No!
HELLER: No!
Do we want Tiananmen Square and more Wacos and more Kent State University events in our country?
AUDIENCE: No! HELLER: What do we want? We want freedom! Freedom!
(END VIDEO CLIP)
VELSHI: Joining me from Washington is Michael Dimock. He's with the Pew Research Center. They've conducted this study that shows that, really, four out of five Americans are in some way frustrated or angry with the government.
Michael, it doesn't really -- your research doesn't really play to what we just heard. Most people are not really, really mad, and talking about threats of communism or takeovers or socialism or oppression. It's mostly got to do with the effectiveness of the federal government.
MICHAEL DIMOCK, PEW RESEARCH CENTER: Yes, I think that's true. What we're finding is that the vast majority of Americans are expressing frustration with the political process and the political system. But the real anger is a minority. It's a growing minority.
It's probably larger than it was a decade ago who really feel intensely angry with the government. But it is a minority. And it is about effectiveness, but it really is about the political process, is where people are feeling the most angry, the kind of "us versus them" comment that that one speaker made.
You know, we asked people, what's the real problem? Do you think that members have good -- members of Congress have good intentions but the political system is broken, or can the political system work but the members are the problem? And people say the members are the problem.
VELSHI: Right.
DIMOCK: They think that people in Congress right now don't listen, don't care, are selfish, are partisan, and are not paying attention to the government's needs. And while we have been through cycles of distrust in government before, the levels of frustration with the political process, Congress and the parties in particular, really is off the scale right now.
VELSHI: Yes. It does. So your research indicates that people think that elected officials only care about their careers or are influenced by special interests, or are unwilling to compromise and are out of touch.
Here's something interesting. It also speaks about less government, people thinking government is ineffective, so wanting less in their lives, with one key exception. There is one area where people want greater regulation, and it's got to do with financial services.
DIMOCK: Right. Financial regulation is still popular. By about two to one, people support regulating the financial markets. It reflects the fact that while government is seen as having a negative effect right now, big banks and financial institutions are also seen as having a negative effect right now, and it's the same people who are unhappy with both of those institutions, to a large extent.
And so when you get into a situation of regulating the markets, ,people feel like something needs to be done. But they're very skeptical that the current political actors are going to be able to do it well. So that while you have some people who oppose regulation for ideological reasons, you have a bunch of other people who are just skeptical that the political process is going to get us anywhere positive.
VELSHI: So our polling here, CNN/Opinion Research polling, parallels this, this idea that the current crop of actors is the problem. I guess my concern is, do you think people think this through, and that if they throw as many of the bums out as they can in November, do we have some idea that the new bums are going to be better than the old bums?
DIMOCK: Right. I don't know. I mean, we've seen these kind of cycle before, but, again, it feels more intense. At least this poll suggests it may be more intense now than it was.
Even in 1992 and 1994, when a lot of incumbents lost seats, or really had to resign because of strong anti-incumbent sentiment, that may be even more extreme now. And I don't know whether people look back to those periods and feel like they get better representation after kicking "the bums out," but that is a question they may be facing this year.
VELSHI: Yes, in fairness, throwing the bums out wasn't the language in your survey.
DIMOCK: Right.
VELSHI: Here is something interesting. So people do think that it's people more than the institutions. Yet, they are dissatisfied with a lot of large institutions.
We talked about this a moment ago. Large corporations, banks, financial institutions, the news media does a little bit better, but not by much. And the entertainment industry, just a smidgen better than that. Labor unions also getting a bad rap.
So, it almost sounds like a caveman mentality. I don't want anything out there that's organized. I want to gather my own, grow my own vegetables and take care of my own family myself.
DIMOCK: Well, I don't know if I would say quite caveman, but I do think it does reflect the stress people are under right now. And there are doubts about institutions' ability to deal with these problems.
You know, the financial crash in 2008 had a huge impact on the way the public looks at institutions of all sorts. They really saw a failure in the system to deal with those problems, to prevent those kinds of problems. And I think from a lot of people's perspective, no effort to try to prevent them. And also, there was a lot of skepticism about the solutions that government came up with. The public never was fully persuaded that the approach that was taken to the bank bailouts, as they ended up being called, really was the way to handle the situation. And people were -- a lot of people were angry about what was seen as a handout to big companies, and people getting large bonuses, of course, while the rest of us were suffering.
VELSHI: Yes.
DIMOCK: So the whole process around that bank bailout really led to maybe the lowest point of confidence, because Democrats, Republicans and Independents all lost faith in government at that moment, and other institutions. Now, the election of Obama brought some Democrats back. They feel a little bit better today than they did back in 2008. But, of course, it's made Republicans and conservatives even more frustrated and downbeat about government. And that's where we are today.
VELSHI: Let's bring David Gergen back into the conversation. He's CNN's senior political analyst.
David, one of the things that this administration can capitalize on is that, as Michael was just telling us, two to one, Americans continue to support -- the one area of regulation they continue to support is financial regulation. So, as much as they don't trust the effectiveness of government, they are willing to let government regulate financial institutions. And events of the last few days have played into the White House's efforts to do so.
DAVID GERGEN, CNN SR. POLITICAL ANALYST: Absolutely, Ali. I'm glad we have satellite back.
To go back to the fundamentals, Americans don't like large institutions running their lives. They want -- that's what freedom is all about. You know, I'll make up my own mind, thank you very much.
And what's happening here on the banks is the banks are now seen as big, you know, and rigging the game. The Goldman Sachs' story, the narrative so far in the Goldman Sachs' story -- we'll have to wait and see what more facts come out -- seems to play into that. And so Americans, even they don't like the government very much, they want the government to tame Wall Street.
And that's why the president has an opening is very likely to get legislation. That's why he's going to New York on Thursday to push this, because he knows this is the area where he has an opening, and he's likely to get legislation very soon.
VELSHI: Now, here's something else interesting, David. As I drove across the country on the CNN Express over the last couple of years, one thing we learned is, as people got more frustrated with the banks and with Wall Street and with corporate America and with government, they almost -- they coalesced around their local community. And that is actually played out in one of our polls, a CNN/Opinion Research poll, which indicates that the federal government is the least trusted of three levels of government.
The state government is trusted by 33 percent. Local government, by 52 percent. So 52 percent of our responsibilities said you can trust local government always or most of the time. That means everybody is not anti every kind of government.
GERGEN: No, that's right. People tend to be more trusting of their neighbors, of people who live near them, of people they can actually see. When they go into a downtown office, they can actually see somebody on the other side of a table or of a desk, and that makes a big difference in your trust level.
Whereas Washington seems far away, and that's one of the things the Tea Party folks are saying is, nobody in Washington listens to us. You know, we make all these noises, we elected Scott Brown in Massachusetts, and look what happened. People in Washington didn't listen because it seems remote.
And frankly, the Internet doesn't solve that problem. If anything, we are dealing with more and more people sort of remotely. And it's that sense of neighborliness, the sense of intimacy, the sense of trust, that you can trust your neighbor, which is very powerful in America. People just don't trust faraway, powerful institutions they think are not going to be respectful of them.
VELSHI: In your opinion, David, can any of this be turned around? Can people's opinions be changed by November, or are our incumbents in trouble?
GERGEN: Well, Ali, what we've seen -- I don't think it can be turned around very easily. And I think incumbents are in trouble. We have seen it can be turned around.
One of the most important examples in our lifetime is the U.S. military. After Vietnam, the U.S. military was trashed, it was not respected, and they worked very, very hard through becoming effective, becoming efficient, knowing how to respond to the press, knowing how to -- you know, the military turned itself inside out. And today is perhaps -- is one of the two most respected institutions in the country, along with doctors.
So it is possible to win back trust. You have to work very hard at it.
VELSHI: All right, Gentlemen. What a great conversation.
David Gergen, CNN senior political analyst. Michael Dimock is the associate director of research at Pew.
Thanks, Gentlemen, for being with us. Great conversation.
GERGEN: Thank you.
VELSHI: Important day, April 19th, Patriots Day. And a lot of people not trusting government right now. All right. In other stories we're following very closely, disruptions are still being caused by volcano ash. Passengers stranded across the world. They're using social media to try and find a way home.
We'll talk about that when we get back.
(COMMERCIAL BREAK)
VELSHI: Still cancelled. Those are the words passengers who are trying to catch European flights are hearing for another day as that volcano in Iceland continues to boil over.
We are hearing again that some countries might start opening air space tomorrow. Germany is now giving Lufthansa permission to fly 50 planes back home with about 15,000 people on board.
It's been five days since a massive cloud of volcanic ash you can see here closed down airports across European space. Again, the volcano is still erupting. The ash isn't as dense as it was this past weekend.
Here's Flight Tracker. You can see, it looks like about -- you can expect about 8,000 to 9,000 flights to take off today from European air space. On a typical Monday, you would have about 28,000 flights. So that's a lot emptier than you would expect it to look.
Meanwhile, passengers are getting restless. Take a listen to this.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: The soonest I could get out of Germany would be Tuesday or Wednesday. So right now, we're trying to get to Stuttgart.
UNIDENTIFIED FEMALE: We had a ferry booked at 4:00 a.m. this morning, but our last train made five connections and the very last one we missed by a minute. So that meant that we missed our ferry.
UNIDENTIFIED MALE: It's a bit frustrating. We've been standing in queues for hours, and then to get to the end of the queue, to be told that there's nothing available, and there's no planes, no trains, or nothing, so that's frustrating.
UNIDENTIFIED MALE: I tried to phone and of course couldn't through at all. This was yesterday. Tried on the Internet, and all they were offering were flights at the end of the week, over $11,000 for a one-way flight.
(END VIDEO CLIP)
VELSHI: That is frustrating.
Errol Barnett has been monitoring the social media scene from people who have been getting out there and trying either to give advice to people or find solutions to their problems. He joins us now.
Errol, what's going on. I mean, does social media help these folks? I mean, either they're getting on their plane or they aren't.
ERROL BARNETT, CNN CORRESPONDENT: Well, no one is getting on a plane at the moment. So the choice is either wait at the hotel, at the airport, or try and figure something out.
VELSHI: Right.
BARNETT: And what people are doing is they're using social networks now to network their way home. We have some examples of this for you.
VELSHI: OK.
BARNETT: People are sending tweets and they're using the hashtag "Get me home," or hashtag "Ride share." I think we have some video for this. And they are saying where they're headed because of cancelled flights and if they have room in their vehicles.
VELSHI: Wow!
(CROSSTALK)
BARNETT: This individual is using roadsharing.com. So he's trying to get from Milan to London. He says he has a space in his car, and people network that way.
VELSHI: Wow.
BARNETT: We're also seeing Facebook groups pop up. This: "When Volcanoes Erupt: A Survival Guide."
And, of course, necessity is the mother of all invention. The man who created this himself is stuck in England right now with his pregnant wife, no less. And so this is now a posting ground for people to say where they're headed.
VELSHI: OK.
BARNETT: In fact, we connected via webcam with Tod Brilliant next to his pregnant wife to hear a bit more about their travel troubles.
(BEGIN VIDEO CLIP)
TOD BRILLIANT, STRANDED IN ENGLAND: We're in Stratford-upon- Avon, smack dab in the middle of England, where Shakespeare was born and died. And a group of neighbors here on Percy Street have been amazing.
They've given us their homes, four different homes so far in our short stay. So we're in a good shape. We're in good shape compared to a lot of people that are out there.
Andi (ph), my wife, is 32 weeks pregnant. So she is the one doing -- with the discomfort.
(END VIDEO CLIP)
VELSHI: Wow. And we just actually heard in the White House briefing, Robert Gibbs was saying about 40,000 Americans, by the way, in England are affected by this.
BARNETT: One of tens of thousands.
VELSHI: But that's very interesting. I mean, it is interesting how people are sharing that information. I wouldn't have necessarily known that that's how you could do it. But yes, you might get yourself a ride from Milan to London.
BARNETT: Well, in fact, we also found another blogger who was supposed to fly back to New York City last week from Berlin. Flight cancelled, so he thought, let me head south, where the ash isn't as thick.
VELSHI: Right. Right. Try and get a flight somewhere else.
BARNETT: Take a train south and see what I can do. He sent tweets out as he was on the train to get some local advice, saying, should he fly, should he try to take a train or not?
We connected with him over the phone in between bridges. Here's what he's going through right now.
(BEGIN AUDIO CLIP)
MICAH SIFRY, STRANDED TRAVELER: Saturday morning, realizing that the airport was closed in Zurich, I turned to Twitter for help, and I asked my followers. I have a lot of people who followed me, luckily, but I asked people, and some people said push on, get as far south as you could, as fast as you can. And others said stay put.
(END AUDIO CLIP)
BARNETT: There are many Web sites helping, too, some U.S.-based Web sites, airbedandb.com (ph) is helping Americans help stranded travelers who are in the U.S. right now.
(CROSSTALK)
VELSHI: For some place to stay, right, because a lot of these issues -- great idea, because there are some of us who I think who are stranded would like to be doing something. So at least some people of these people are moving, they're headed towards a direction, getting information, but they feel like they're getting somewhere. Others I think will be content just to wait it out and wait until the stuff starts flying.
Good to see you.
BARNETT: Yes. Trying to forget about this horrific event from one single volcano. VELSHI: Unbelievable. Well, keep us posted. Thanks, Errol. Good to see you.
BARNETT: Sure.
VELSHI: Errol Barnett.
All right. The Goldman Sachs battle with the SEC. Did Goldman break the law as the Securities and Exchange Commission has charged? And if it did, here's a question I'm getting a lot of -- exactly who is the victim here?
Just a few questions that I'm going to ask the dean of the Drexel University Law School right after this.
(COMMERCIAL BREAK)
VELSHI: All right. On Friday, the Securities and Exchange Commission charged Goldman Sachs with one civil charge of fraud for apparently benefiting one client at the expense of another.
I'm joined now by Roger Dennis. He's a professor of law at Drexel University to talk a little bit more about this.
Professor, thank you for being with us.
PROF. ROGER DENNIS, EARLE MACK SCHOOL OF LAW, DREXEL UNIVERSITY: Thanks for having me.
VELSHI: Professor, one of the questions I'm getting as people try and parse through this -- this is complicated for people who don't follow either law or finance -- who is the victim in this? Apparently, Goldman allegedly did something that would have benefited one client at the expense of other clients, all of whom are fantastically rich people or companies.
Where's the victim in this crime?
DENNIS: So, in this case, it was the purchasers of the portfolio that Goldman put together. They just happened to be sophisticated investors. For example, a major European bank.
Now, of course, those banks have investors, as well, ordinary people, pension funds and the like. So they're the ones who actually are holding the bag at the end when the value of the investor in the portfolios goes down.
VELSHI: OK. That's important for people to realize. And, in fact, many people may be surprised they have Goldman Sachs in their 401(k)s or their IRAs, if they've got an S&P 500 portfolio or a Dow portfolio.
But here's another question I get. One party in this transaction bet -- placed a financial bet that people were going to default on their mortgages, and that was how it was going to go. And the other party, the investors that were done out, bet the other direction. Even if Goldman had been forthcoming, as the SEC alleges it wasn't, one party would have won and one party would have lost in this thing.
DENNIS: Well, I think it's maybe a little bit more complicated than that. The investors in the portfolio that Goldman put together had been promised that the adviser to the fund who is picking the loans to put in the fund had their interest at heart. And, in fact, as the SEC alleges, that wasn't true, that there was another party, Paulson, who was going to short the fund. In other words, bet that it would go down in value.
And that's this essence of a conflict of interest. So the purchasers of the portfolio thought they had an honest broker picking their loans to buy, and, in fact, they didn't have a disinterested, honest broker. They had an interested honest broker who had their interest not at heart.
VELSHI: So the issue here, the legal question that the SEC is going to have to prove, is that Goldman did not disclose adequately what it should have. It had material information that it did not disclose to investors. Not that they set up these funds, not that Paulson, the hedge fund, was designing the fund. It's that they didn't tell people who were investing everything that was behind it.
DENNIS: Exactly.
VELSHI: Let's talk about the SEC side of this.
This is a civil charge, not a criminal charge. This is an SEC that missed the Madoff incident, that's trying to come back with more teeth. And boy, have they picked a big one. You can be sure that both Paulson -- well, Paulson is not named in this, but Goldman Sachs is going to defend itself. It said it would.
Is this likely to carry on and not get settled?
DENNIS: Well, it's a fact case. And none of us at this point know all of the facts, and certainly we don't know the factual defense that Goldman is going to make. But it's a very important matter. And believe it or don't, Goldman's reputation is their biggest asset, so they do have an incentive to defend the matter.
VELSHI: All right. Well, we're going to follow this very closely, and we're going to find out -- as you said, there will be more facts. The longer this goes on, the more facts we are likely to find out.
One of the reasons these things get settled in the past is because companies don't really want their dirty laundry aired. If Goldman wants to give itself a vigorous defense, we'll find out more.
DENNIS: That's certainly true.
VELSHI: All right. Professor, good to talk to you. Thank you for being with us. DENNIS: Thanks.
VELSHI: Professor Roger Dennis is with Drexel University. He's at the law school there.
I want to bring you up to speed with a report that we have not yet confirmed, but The Associated Press is reporting that Lexus -- or Toyota -- is announcing a complete recall of the 2010 model GX 460 SUV. This is the one that was tested by "Consumer Reports," and found to have a risk of sliding out and rolling over.
"Consumer Reports" came out with a "do not buy" warning on this. Toyota then said it tested the GX 460s and was able to emulate the result that "Consumer Reports" found. As a result now we are hearing from The Associated Press, we are trying to confirm this ourselves, that Lexus GX 460s, the 2010 newly redesigned model, will be recalled.
We're going to stay on that. Our team is on this story, trying to get you the information that we can. We'll get it to you as soon as we have it.
OK. When we come back, one place in America that doesn't want history to repeat itself when it comes to the recession. What are they doing about it? They're going back in time. And we could actually learn something from them.
We'll tell you about that when we come back.
(COMMERCIAL BREAK)
VELSHI: All right. History is repeating itself in Kansas. But for people there, it's actually a good thing. They're calling their old struggles to stage -- they're calling on their old struggles to stage a new beginning.
CNN's Tom Foreman went to Wichita to see how they are "Building Up America."
(BEGIN VIDEOTAPE)
TOM FOREMAN, CNN CORRESPONDENT (voice-over): Out at the tourist attraction called Old Cowtown, amid the cannon and guns, Kansans are reenacting some of the battles from their state's historic past. But their present struggle is for the future.
(on camera): Do you see a lot of people around here worrying about the economy right now?
RACHEL HUNT, OLD COWTOWN MUSEUM: Yes.
GREGORY HUNT, OLD COWTOWN MUSEUM: Yes. My friends, some of them don't know where their next check is coming from.
HUNT: I'm in the automotive industry, and we've seen a big downturn. And everybody is worried about it.
(MUSIC)
FOREMAN (voice-over): Worried, but like that famous Kansan Dorothy in "The Wizard of Oz," not sitting still. Smack in the middle of the country, Kansas has historically rolled out wheat, cattle, transportation and aviation products worth billions.
NOAH WRIGHT, OZ WINERY: Yellow Brick Road, it's a blend of Chardonnay and vignon (ph).
FOREMAN: So, to build up, many here have turned to past success for inspiration and a competitive edge.
That's what Noah Wright did.
WRIGHT: Kansas, before prohibition, was the third largest grape- producing state in the nation.
UNIDENTIFIED FEMALE: This wine is not too sweet, not too dry.
FOREMAN: Just years ago, he had an idea to combine the stat state's little-known wine-making past with its fame as Dorothy's home, and Oz Winery has been booming ever since, despite the recession.
WRIGHT: Since we've opened we have grown every year, and we don't know if we would be 10 times more than that or if we would just be the same level. You know? We just don't know if it's affecting us yet. We have no way to tell.
FOREMAN: Such efforts by thousands of small businesses have helped produce an unemployment rate well below the national average. A housing market on the rebound and a population, if not entirely upbeat, at least hopeful.
(on camera): That classic American tune, "Home on the Range," was written in Kansas almost 140 years ago. And since that time, it's become a lot more than just the state song. For many people here, it is a measure of commitment. Their commitment to always build up whenever times turn down.
DINA BISNETTE, SMALL BUSINESS OWNER: The people here still have the same mentality. Whatever happens to us, we're going to manage. We're going to make do.
(END VIDEOTAPE)
VELSHI: CNN will continue to go across the country, finding other people who are building up America.
Let's take a look at some of the top stories we're covering this hour at CNN.
Today marks 15 years since the devastating Oklahoma City bombing that killed 168 people, 19 of them were children. Bomber Timothy McVeigh was executed in 2001.
North of Baghdad, the two top leaders of the group al Qaeda in Iraq have been killed. Abu al-Masri and Abu al-Baghdadi died in a joint assault by U.S. and Iraqi forces. A top American commander says the deaths are potentially the most significant blow to al Qaeda in Iraq since the beginning of the insurgency.
And several former Blackwater executives are charged with cover- ups and weapons violations. Past President Gary Jackson and four others formally in senior management were indicted Friday for allegedly stockpiling weapons and filing false documents that covered up gifts given to the king of Jordan. The security company has since changed its name. It became the target of widespread outrage after its contractors were involved in a 2007 shooting in Baghdad that left 17 civilians dead.
We know what volcanic ash can do to a plane's engines, Chad has told us about that. But what about when you breathe that stuff in? Chad says it comes down at some point. We're going to talk about it, when we go "Off the Radar."
(COMMERCIAL BREAK)
VELSHI: We're going "Off the Radar" with Chad Myers. He has been talking to us long before we had travel problems because of this volcanic ash that's flying over Europe. I've been meaning to get to him all the time about if this ash, which he is standing in front of, is bad for airplane engines, how is it for us when this thing gets down close to the ground?
CHAD MYERS, AMS METEOROLOGIST: Well, this very small, particle- like stuff, this dust, can get in the periphery, the very outer edges of your lungs and it can actually stay there. And some of this ash is made of silica. If you ever make grout and you pour the grout in the bucket and you put the water in, they say do not breathe this stuff because it's silica. It can lead to silicosis, it's a long disease, and eventually it could lead to lung cancer.
This is spreading around the earth now. And not in big particles like you would think of like a black-lung coalminer, like my grandfather was, that spend hours in the coal mine after they broke out all the coal and then they're breathing that in, but just enough. How many times do you have to breathe a day? You're breathing in pieces and pieces and now some spots those pieces are flying into Atlantic Canada toward Newfoundland.
What we had over the past couple of days is a very large eruption. It went up 40,000, 50,000 feet in the sky. That's when it started to affect plane travel, right? But now it's settling back down where we live, and now it is going to become more of a health problem. And maybe all those 3M M95 masks that we bought for the swine flu --
VELSHI: H1N1.
MYERS: Yes, H1N1, now we'll get to those use, finally, that I have sitting on my shelf.
VELSHI: So a lot of it coming down to earth, a lot of it is over the ocean and little bit of it is starting to touch North America on that side right behind you, but it is a concern. It's a real thing. It's not just air that dissipates, it's actual particles. So it's worth thinking about.
MYERS: Correct, correct. A difficult map to see, but you can kind of tell the difference between the water and land. Everywhere that you see the red here, that's where there is particle ash particle -- anywhere between 20,000 feet and down to the surface. And that's what we're worried about now for basically us breathing it.
VELSHI: All right.
MYERS: People of Europe, actually, are going to be in it a long time.
VELSHI: It's going to be a big issue for them.
All right, Chad, thanks very much. Chad, going "Off the Radar" with us, telling us about the danger of that ash to your health.
Social media is the medium of choice these days for all sorts of people. Some of them happen to be members of hard-core hate groups, and as these guys try to collect Facebook friends, a cyber foe is actually watching them. We're going to go undercover next.
(COMMERCIAL BREAK)
VELSHI: The Internet has been a boon to hate groups. It's the perfect place for them to spread their twisted messages, to recruit and sometimes to plot. And while they used to sneak around the darkest corners of the web, these days, they've seized on social media just like the rest of us. CNN'S Casey Wian logged on with some of the folks hunting hate online, he joins us now from Los Angeles.
What did you find, Casey?
CASEY WIAN, CNN CORRESPONDENT: Well, Ali, we recently spent the day with a man who spends most of his time hunting online racists and potential terrorists. He's an undercover warrior in the battle against hate in social media.
(BEGIN VIDEOTAPE)
WIAN (voice-over): This looks like a typical office, where one employee spends most of his days on social networking sites like Facebook. His friends include, Adolf German, Duce Mussolini, and Aryan Butcher.
RICK EATON, SENIOR RESEARCHER, SIMON WIESENTHAL CENTER: I have racist -- quote, "racist friends" all over the world.
WIAN: But Rick Eaton has the full blessing of his employer because he's hunting online racists and potential terrorists for the Simon Wiesenthal Center, an international Jewish human rights organization. He also infiltrates groups undercover, so he's asked us not to show all of his face. EATON: The only way to really find the material is get down in the mud with these people, and join their group. You don't have to be, you know, rah, rah, let's go off and blow up an airplane, but you do have to get in there and make comments occasionally.
WIAN: The Wiesenthal Center has identified more than 11,000 hate groups on the Internet, a 15 percent increase from last year. The growth, it says, is fueled by social media.
RABBI ABRAHAM COOPER, SIMON WIESENTHAL CENTER: Extremists of all stripes, in all cultures, are streaming to Facebook and similar social networking, with a neighborhood of 400 million separate users, and growing. That is an environment, a climate that allows extremists to do a hit-and-run, maybe use it for a day to do a propaganda hit against their enemies.
WIAN: When Eaton identifies a site, he notifies federal authorities and the operator of the social network. He said Facebook in particular is quick to shut down offenders, but they often pop up again under another name.
(on camera): For someone like me, if I have a Facebook page, it may suggest I become friends with people I went to high school or college with or co-workers. But if you're a racist living in California, let's say, they may suggest that you should become friends with another racist group in Michigan or South Africa.
EATON: Without a doubt. It makes it so easy. And it really has eclipsed the rest of the Internet, because it doesn't take much work.
WIAN (voice-over): That's why they say it can work as a recruiting tool for potential terrorists.
COOPER: What worries me the most today is the lone wolf mentality, someone who's going to have "the guts or the courage" to step over the line. The next individual or small cell that's ready to change history.
WIAN (on camera): Given what you've seen online and in social media, do you think it's inevitable that that's going to happen?
COOPER: It is inevitable.
(END VIDEOTAPE)
VELSHI: What are groups -- go ahead.
WIAN: Go ahead. I was just going to say, the center asks that Internet users who encounter what they consider may dangerous content online, they can contact the Wiesenthal Center. We've got an URL here or e-mail address, iReport -- the letter i-r-e-p-o-r-t@w-e-I-s-e-n-t- h-a-l.com. Or they can also contact law enforcement offices.
VELSHI: All right, we've got that on the screen for you.
What are groups like Facebook -- how do they combat this? WIAN: Well, Facebook says it takes these cases very, very seriously. Now, of course, there are free speech issues, but there are also content guidelines and user restrictions that any Facebook user signs when they first join. So Facebook acts very aggressively when they encounter these sites.
Now, just on Friday, there was a site dedicated to Osama bin Laden. Now, we have no way of telling if it was actually connected to Osama bin Laden, but it had been up on Facebook for about two weeks. And in that short period of time, had already generated a thousand friends.
We came across it last week. Facebook, on Friday, shut it down, Ali.
VELSHI: Casey, thanks very much for joining us on this very interesting topic.
All right, three words -- Betty White naked.
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VELSHI: Before the break, I told you Betty White naked. What I forgot to say was Betty White had a hot dog named after her that has no relish or mustard on it. It will be called a naked dog. It was -- it was named after her at Pink's, which is a Southern California staple.
So it's a hot dog that was actually naked, not Betty White. But I got you to stay to the other side of the commercial, didn't I?
All right, let me check out some of our top stories now on CNN.
There's some movement in the skies of Europe, despite the volcanic ash cloud. Officials say about 8,700 flights have taken place in European air space today. A normal Monday would involve about 28,000 flights. At one point, the Icelandic volcano appeared to stop erupting, but apparently that is not the case.
In New York, a 19-year-old man has been convicted of manslaughter as a hate crime in the killing of an Ecuadorian immigrant. Jeffry Conroy was one of seven teenagers implicated in the stabbing death in 2008. Four other defendants have pleaded guilty to hate crime-related charges; two others are awaiting trial.
And the Supreme Court is hearing a case involving employee privacy rights in the workplace. At issue, how far can your boss go in monitoring your text messages? The high court agreed to hear the appeal of a police officer fired for sending private, explicit text messages on his official pager.
All right, Ed Henry. There he is, standing by. He's taking a trip to L.A., and he's talking about a trip to Wall Street. We're going to talk about all of that with him on the other side of this break for "The Ed Henry Segment."
Stay with us.
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VELSHI: All right, every day at this time or usually a few minutes earlier, we go to Ed Henry, he's our chief White House correspondent, and he's there right in front of the White House. The president -- we're playing L.A. music, because the president is heading out to L.A. -- Ed.
ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right. You're going hear the helicopters going in just a moment. Marine One will be heading out to Andrews Air Force Base. The president going out to L.A. to do some fundraising for Barbara Boxer, the democratic senator maybe in a little bit of political trouble, as well as the fundraiser for the Democratic National Committee.
What's interesting about this, the president really sort of starting to step that up. We're going to see obviously a lot more of that between now and November.
He didn't do a lot of it in the first year. Obviously, the economy a big deal, spent a lot of time on health care. But in this second year, he's going to really have to turn to the politics a bit more, because democrats need his help, frankly, especially after some of those tough health care votes that they cast.
And you mentioned I'm going to be gone, I'm actually going to be staying here. I'm going -- will be going to Wall Street, though, Thursday. So you're half right.
VELSHI: Oh, you are? The president is going to be on Wall Street. He's talking about financial reform. He's trying to push his financial reform agenda.
HENRY: It's interesting, because he's kind of going into the belly of the beast there. He has been picking on Wall Street for months now. You remember him going after fat cats and bonuses at the banks, and a lot of people on Wall Street haven't liked some of the rhetoric coming out of this White House.
But we have seen in the last couple days the republicans put on the defensive a little bit. You've got people like Senator Mitch McConnell, who was kind of grilled about this by Candy Crowley yesterday, meeting recently with hedge fund managers on Wall Street. It's appearing, and the White House is really pushing this line, that republicans are trying to slow down this Wall Street reform. And -- after some of their meetings with some of the titans on Wall Street. That puts them a little bit on the defensive, and the president is really trying to sort of expose that political weakness right now.
You know, Robert Gibbs just wrapped up the briefing and he was saying there that basically, come this fall, we're coming up on the second anniversary of Lehman Brothers, all those other disasters and there's still no rules of the road. And this is one of those things that really angers the American people, gets them fired up about broken government, when they see such a big economical calamity, and yet the democrats and the republicans appear they have done very little to change those rules of the road.
So you can bet the president is jumping on that, Ali.
VELSHI: Interesting. We were talking earlier about a Pew research survey that indicated that despite the fact that Americans are tired of government, they're tired of their elected officials, they're tired of regulation, the one thing they do support two to one is regulation of the financial industry.
Here's another thing, Ed. Earlier at that White House briefing, we dipped in, because the vice president came out. We never really know what they're going to say, sometimes the president will come out or the vice president. He was making a pretty big announcement about the capture and killing of two very significant al Qaeda leaders.
HENRY: Yes, and I think what's significant about this is that, you know, when you talk to White House aides behind the scenes, in public, there's not a lot talked about Iraq from this White House compared to the past White House, where President Bush was so invested in that war. This president opposed the war in Iraq, ran against it as a candidate, and he really has kind of outsourced to the vice president. Vice President Biden is his lead on the Iraq issue, has made several trips over there, you recall. And so, that's why they put him out there on those things.
And even though they don't talk about it that much publicly, in private, there's still this -- you know, and public over there, there is still this big war going on. A lot of lives at risk. And these al Qaeda leaders being killed, could be a big development, Ali.
VELSHI: All right, Ed, so you're not moving anywhere. You're not going to L.A. You're going to New York late in the week.
HENRY: I wanted to go to L.A., because I understand Betty White lives out there and I wanted to talk to her about this hot dog deal. Because it was kind of a misleading tease.
VELSHI: That was a little misleading.
(AUDIO CLIP, "THANK YOU FOR BEING A FRIEND (THE GOLDEN GIRLS THEME SONG)")
VELSHI: Perfect way to end our discussion with Ed Henry. Thank you for being my friend.
Ed Henry who will be with us all week, no matter where he is, even if he is in New York. Ed, thanks. Good to see you.
As you probably know, I'm not just the anchor of the show, I'm also the network's chief business correspondent. And you've probably been flooded with news about Goldman Sachs and the fraud charges that company is facing from the SEC. I want to put it in perspective in the simplest terms possible and put the nature of the charges in context.
If you're confused about all of this, I'll clear it up for you when I come back in my "X-Y-Z."
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VELSHI: Now it's time for "The X-Y-Z of It."
In addition to being with you every weekday from 1:00 p.m. to 3:00 p.m. Eastern, I'm also CNN's chief business correspondent. So, as you can imagine, I've been busy ever since the government charged Goldman Sachs with fraud. And I've spent about half the time understanding what Goldman allegedly did and the other half trying to find ways to explain it. Here is my simplest take.
Back before the subprime mortgage crisis really hit and long before the recession, Goldman Sachs set up an investment for a big client, allowing that client to place a big bet that millions of subprime borrowers would default on their mortgages. In hindsight, that was a pretty good bet.
So the SEC Says Goldman let that client, a company named Paulson, pick and choose which bundles of mortgages it wanted to bet against. Surprise, surprise, Paulson picked the ones most likely to fail.
Now in the world of finance, when you bet against something, someone needs to take the other side of that bet. Goldman, which is in the business of finding both sides, did sell the other side of the bet to investors who thought that most risky homeowners wouldn't default.
The problem is, Goldman allegedly didn't disclose that a bundle of that -- that bundle of mortgages that the second group of investors was buying was the worst of the worst, and that Goldman's client, Paulson, not only bet against that basket, but actually set that basket of funds up.
Now, a lot of people have been mad at Goldman Sachs for some time for basically betting against America, but that's not the issue here. The issue here is whether the smartest firm on Wall Street bet against its own clients for the benefit of another client.
It's my sense that we're just beginning with this story. If Goldman decides to fight this charge, which it says it will, we'll learn more, especially about Goldman Vice President Fabrice Tourre, who refers to himself in allegedly incriminating e-mails as "Fabulous Fab", and most importantly whether Fabulous Fab's bosses allegedly knew what he was up to.
The SEC, which is still smarting from having missed the Madoff scandal despite warnings, is also investigating other firms to see how widespread this thing sort of thing was. We'll find some bad actors in this play.
For those of you who are happy that we finally got someone in the top reaches of Wall Street to blame, don't get too excited. This didn't cause the recession. And whether or not Goldman Sachs did or didn't do what it's accused of, wouldn't really have made a difference to you. It does speak to having the government better understand what is actually going on in real-time on Wall Street, and what could actually lead to better financial regulation. We'll be talking a lot more about that in the coming days and weeks.
That's my "X-Y-Z." Here is "RICK'S LIST."
