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12 Missing after Offshore Oil Rig Explosion; Who Will Obama Choose for Supreme Court?; Banking on Derivatives: Lawmakers Weigh Reform; FDA To Consider Regulating Sodium in Foods

Aired April 21, 2010 - 13:00   ET

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

FREDERICKA WHITFIELD, CNN ANCHOR: The CNN NEWSROOM continues right now -- I'm Fredericka Whitfield -- with Ali Velshi. Have a good day, Ali.

ALI VELSHI, CNN ANCHOR: Thanks, Fredericka. You have a great afternoon.

I'm Ali Velshi. I'm going to be with you for the next two hours today and every weekday. I'm going to take every important topic that we cover and break it down for you. I'll try and give you a level of detail that's going to help you put your world in context.

Let's get started. Here's what I've got on the rundown. A dozen workers are missing after an explosion on an oil rig in the Gulf of Mexico. I've been on an oil rig. I was even evacuated from one in an emergency. They're supposed to be some of the safest places on the planet. What went wrong here? Can it happen again?

Plus, the president is touching up a landmark speech he'll make on financial reform tomorrow. Today, the opposition to new laws to regulate Wall Street appears to be crumbling, but there is a major sticking point still. I'll talk to both sides in this battle. And I'll ask the question, should the feds just leave well enough alone?

Also, enough talk about Iceland's E-15 volcano and that ash cloud that it sent halfway across the world. It is time for action. Our Gary Tuchman, a man who fears nothing, is headed right into the volcano.

First, that news I was just telling you about. A frantic search is under way in the Gulf of Mexico for at least 12 people who are missing after an explosion. Look at that picture. An explosion rocked at offshore oil drilling platform. This is what it looked like. The blast sent a column of fire into the night sky. It happened about 50 miles southeast of Venice, Louisiana. Now, take a look at this dramatic U.S. Coast Guard helicopter rescue of one of the several workers who was injured.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (INAUDIBLE)

UNIDENTIFIED MALE: OK, we're taking a load.

UNIDENTIFIED MALE: Clear.

(END VIDEO CLIP)

VELSHI: There were 126 people on the rig at the time of the explosion. That's not uncommon. Most are believed to have escaped. Many were being brought to land on a work boat. And there is hope right now that the 12 who remain missing are in a life raft.

Now, this picture is of the deep-water horizon. This is the rig we are talking about. They are massive. It is owned by Transocean LTD, which builds itself as the world's largest offshore drilling contractor.

The rig is 396 feet long, 256 feet wide. It was built in 2001. It's designed to operate in water depths up to 18,000 feet.

Now, the Coast Guard says the rig was still burning this morning, tilting about 70 degrees and threatening to topple into the water.

We need to point out to you that major accidents of this sort on offshore oil rigs are rare.

These rigs are so far offshore that they have to be self sufficient. It can take time for rescuers to get there. The crews go through daily firefighting and evacuation drills, in some cases more than once a day. All the manned rigs have alarm and fire detection systems. There are trained firefighters on hand when other crews are involved in what you call hot work, the kind of work that might cause a fire. These rigs have emergency shutdown devices. They have redundancies. They've got water deluge systems. They've got portable chemical extinguishers, and they've got lifeboats.

Now, many of these safety regulations were put into place after some major disasters. Some of the deadliest include the Piper Alpha disaster that killed 167 people in the North Sea in 1988. A hundred and twenty-three people died in an accident off of Norway in 1989. And in 1982, off of Newfoundland, 84 people were killed when a rig sank.

We're going to have more on that a little later in the show.

It's one of the most important decisions any president can make. President Obama is in the process of making it. What is he looking for in the next Supreme Court justice? He talked about it today, and so will we.

(COMMERCIAL BREAK)

VELSHI: It's a critical decision for any president. Just hours ago President Obama met with Republican and Democratic leaders to talk about a replacement for retiring Supreme Court Justice John Paul Stevens. And of course, in talking to reporters afterwards, the issue of abortion came up. Listen to what he said.

(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I want somebody who is going to be interpreting our Constitution in the way that takes into account individual rights, and that includes women's rights. And that's going to be something that's very important to me, because I think part of what our core constitutional values promote is the notion that individuals are protected in their privacy and their bodily integrity, and women are not exempt from that.

(END VIDEO CLIP)

VELSHI: Now, there are several people on the president's short list of possibilities. Solicitor General Elena Kagan and federal appeals judges Diane Wood and Merrick Garland had an early edge. They've been considered before. But that list has been expanded.

Let's bring in Gloria Borger. She's our senior political correspondent in Washington. She is following this very closely.

Gloria, good to see you. Thanks for being with us.

GLORIA BORGER, CNN POLITICAL ANALYST: Good to see you, Ali.

VELSHI: So let's just talk about this for a second. There have been articles out there and commentators saying that this process is taking -- or at least this procthiappointments by President Obama have taken longer than normal. And that they're sort of -- they're more difficult to get through, because of the partisanship that we're seeing in Washington.

And there was some suggestion that some top candidates may not allow their names to be put forward because of that. So in other words, we may all pay the price for partisanship. I guess this is one of the decisions we really want the president to get right. Tell me what you know about this.

BORGER: Well, in terms -- we have to set the Supreme Court itself aside from judicial nominations. And there really is a problem here right now with a backlog of judicial nominations that are not going anywhere.

I mean, our viewers may not know this, but any senator can just take a look at a judicial nomination and put a hold on it, privately. You don't have to say why. You don't have to alert your colleagues as to why you're doing it. You can stop that nomination. Maybe you're mad at Barack Obama over something else. Maybe it's earmarks you're upset about. You can just hold it.

VELSHI: What does that do? When you put a hold on it, what does that mean?

BORGER: It stops it dead in its track. So right now you've got 22 judicial nominations that are stopped dead in their tracks in the United States Senate. At this point in George W. Bush's administration, there were just seven that were held up, just by comparison. And there are some senators, like Senator Claire McCaskill in Missouri went to the floor to say, "Look, we've got to shed some light on this. If you want to stop a judicial nomination, you have to tell us why. We need to break this logjam."

And this is a way for Senate Democrats to put Republicans on notice that they're not going to roll over on this. Even though they have a Supreme Court nominee coming up, they want to kind of clear the decks because they believe this is essentially unfair.

VELSHI: What -- where are we in this process? The president has been having what I've heard described as informal meetings...

BORGER: Yes.

VELSHI: ... with some people who might be candidates for this Supreme Court nomination.

BORGER: He is. He is. They've got a list of about ten. I've been told by White House sources that they're ahead of where they were when Judge Sotomayor was picked. And so they're re-interviewing people that they had already interviewed or vetted before. And so I think they are pretty far along in the process. I think sometime in May we'll probably get the name.

It's very clear that they're looking for somebody who can talk to Justice Kennedy, who's the swing vote on the court.

VELSHI: Right.

BORGER: I don't think -- I don't think they're looking for a huge fight. And by the way, Ali, I don't think Republicans are really asking for a huge fight here, either, right now.

VELSHI: What's a fight going to get them? I mean, bottom line is...

BORGER: Right.

VELSHI: The president is going to be able to, generally speaking, short of some kind of a scandal on the part of his nominee, get who he wants through?

BORGER: Right. Exactly. They don't even think -- the Republicans I talked to don't even think they could mount a successful filibuster, unless the candidate is way from left field, because they assume they would lose a couple of the moderate Republicans on that.

What's really interesting about this, Ali, though, is that the fight is going to be different. It's not, you know -- you talked about abortion up on the top with the Obama. I'm sure we'll hear about that.

But we're going to hear about a lot of those issues that the Tea Party folks are talking about. Property rights issues. Is health- care reform constitutional? Campaign finance reform is something the Democrats want to talk about. The role of government in our lives is going to be a big part --

VELSHI: Yes.

BORGER: -- of this discussion we're going to hear in confirmation.

VELSHI: That seems to be the theme of 2010.

Gloria, good to see you, as always. Thanks for joining us.

BORGER: Sure.

VELSHI: Talk to you in the next hour.

BORGER: Sure.

VELSHI: Gloria Borger, our CNN senior political correspondent, joining us from Washington.

All right. It's a safe bet, if you haven't heard about it already, that you're going to be hearing about derivatives as Congress tries to revamp the rules on Wall Street.

Don't change the channel yet. Put the remote down. Put it down. This is not just about politics; it's actually about your money. I'm going to break it down in a way that you're going to want to go out and tell your friends when I come back. Put the remote down.

(COMMERCIAL BREAK)

VELSHI: I promised to talk about derivatives, and I'm a man of my word, so here it is. I'd be willing to bet that you know more about derivatives than you think you do. And if you take me up on that bet, I win.

Derivatives, in the financial sense, are bets, pure and simple, on the future price of this or the cost of that or the risk of doing something or something happening. Hedge funds did not get their name because they invest in shrubbery. They hedge bets. Derivatives.

Why am I telling you this? Well, reckless trading in derivatives tied to mortgages helped turn a downturn in the U.S. housing market into a full-blown catastrophe from which we are still trying to recover. AIG, Bear Stearns, name something synonymous with the meltdown, and you will find derivatives at their core.

On the other hand, farmers, manufacturing, innovators of all sorts have relied on derivatives for centuries, not to exaggerate their profits but to hedge or to mitigate their risk.

Now comes the Senate Agriculture Committee with a bill from its Democratic chairwoman, Blanche Lincoln of Arkansas, that would outlaw derivatives -- derivative trades by banks. The measure passed with one Republican vote, and now it may or may not fold into a larger financial overhaul that a week ago was splitting the Senate strictly down party likes. Today the parties are talking. Republican opposition to many parts of this bill are softening. We'll get into the politics in a minute.

But first, I really want you to be smart about derivatives and why they matter. Let's give you an example. Imagine a family buying insurance for their brand-new teenager and his 10-year-old pickup truck that he's going to drive. Now, imagine the kid totals the truck. Insurance pays out. The family collects. One truck, one tree, one policy, one check. Simple, right?

Now, this is where it gets interesting. Let's imagine this were derivatives. Imagine that anybody could buy insurance for that truck. That kid is my neighbor. I know how he drives. I've seen how he -- I've seen him growing up. This kid's going to wreck that truck. I know it. So when the truck hits the tree, I can buy insurance on it; you can buy insurance upon it. I can tell all sorts of people, and that payout could soar into millions, even billions of dollars, many, many times the actual value of that 10-year-old clunker that hit that tree.

Those policies would be derivatives. I'm not exaggerating their power or their popularity. By a conservative estimate by the U.S. Treasury, some $600 trillion worth of derivatives are held by investors as we speak. That is ten times the GDP or the economic output of the entire world.

Derivatives are by far the biggest investment vehicle in the entire world, bigger than all the stock markets put together.

I want to get back to Capitol Hill and a Republican senator who knows a lot about this stuff. He's highly suspicious of Washington's ability to regulate it. Senator Judd Gregg of New Hampshire.

Welcome to the program, Senator. Good to see you again.

SEN. JUDD GREGG (R), NEW HAMPSHIRE: Thanks for having me on.

VELSHI: Senator, you're a guy who's been able to get past partisan politics in the past. So we want to do that here. I want you to tell me. It seems to me that derivatives can be a great thing and a very valuable thing to people. It seems to me that AIG nearly brought the country down with its unregulated use of derivatives.

So what is the answer to this? By about a 2-1 margin, Americans would like regulation in the financial system, and this seems to be the sticking point.

GREGG: Well, first off, it's not a simple answer because, as you said, you've got $600 trillion of notional value out there in derivatives, so you're obviously not dealing with one simple vehicle or one simple instrument.

But to try to put it in -- at its lowest common denominator would be this. First, you've got to take, as much as you can, the systemic risk out of the system while, at the same time, keeping America as the best place in the world to create safe and sound derivatives products, and these critical to our economy.

VELSHI: That -- that's what you comment on. That's your concern, that something that we do in this bill, if it passes, could affect America's role as the best place to invest.

Now, explain that to my viewers. What do you foresee happening in 5 years, 10 years, 15 years down the road if we don't do the right thing in regulating derivative trading?

GREGG: Well, it won't be five or ten years. It will probably be the next day after the bill passes. You'll see a huge amount of the market go to Singapore or someplace else in the world, because this is a very fluid world economy, and you can do these instruments just about anywhere.

Now, you don't have to have a structure that is onerous in order to make it safe. Basically, what you're aiming at here -- and AIG is an excellent example to use. AIG was a total disaster.

But you can correct the AIG situation through better transparency, better reporting of what actually is being marketed as derivatives and making sure that there is capital or what's better called liquidity and margin behind it. So that when somebody issues one of these insurance policies...

VELSHI: Yes.

GREGG: ... which is essentially what a derivative is in most instances, there's something behind the insurance policy.

VELSHI: So here's the question...

GREGG: If the insurance is called on, there's actually -- there's actually value there to pay it out.

VELSHI: That was the problem with AIG.

GREGG: But essentially, that's what you want. It's how you want the system to work.

VELSHI: AIG...

GREGG: Transparency means...

VELSHI: Let me interrupt you for a second.

GREGG: That those markets are made in derivatives, they'd be reported, reported in a -- in a real-time basis to the regulators and regulators can look at this...

VELSHI: Yes, Senator, hang on a second. Hold on a second. Hang on a second.

GREGG: OK, there's too much activity occurring.

VELSHI: Can the senator hear me? I don't think he can hear me. GREGG: ... because they can't handle that volume. Therefore we're going to step in, and we're going to slow that activity down or we're going to force the -- force more margin, more liquidity, more capital into the market.

VELSHI: OK. Senator, I've got -- I want to ask you a question.

GREGG: This can all be done. It should be done. There are a lot of good proposals for how to do it, and hopefully, we can do it in a bipartisan way.

VELSHI: Can you hear me, Senator?

GREGG: Yes, I can.

VELSHI: OK. Senator, you talk about AIG. AIG was writing something called credit default swaps, which are a derivative. They were allowing people who either had an interest in the mortgage market or didn't to bet that the mortgage market was going to fail, that people were not going to pay their mortgages, and hundreds of thousands of mortgages were going to go south.

Now, by all -- I think you would see that as an insurance policy, and so would I. But if it were insurance, AIG would have had to have a certain amount of money in reserve, just like any insurance company would have to.

But because it wasn't regulated as insurance, they were able to keep on writing these policies that they did not have enough money to pay out, and that is what caused us all to have to get involved in AIG. That would be a good thing for us to regulate.

GREGG: Absolute -- absolutely accurate. Absolutely. That's an absolutely correct statement as to what happened. And that's why the regulatory regime that we need to put in place will require, first transparency, and secondly, that there be capital behind these different instruments.

You do that through putting these instruments on a clearinghouse as much as possible so that, as part of the clearinghouse exercise you actually have a third party intermediary who maintains capital positions or margin positions, as they're called, liquidity positions, so that you know that the counter parties actually have something behind them besides their name. So you don't have any AIG type situation. That's very doable.

VELSHI: Senator, what's holding you back and other Republicans? What's in the bill right now that's holding you back from supporting it? Because I think you'd agree with me, there's a lot of stuff in there that's good and necessary and that would be supported by the public. What would have to change?

GREGG: Well, the Lincoln Bill, as it's been reported out of committee, basically over-reaches, because it forces -- first, it's a report out by the Ag Committee, and the Ag Committee has a little different report of the world than, let's say, the financial markets do.

But basically, it's forcing everything to go into an exchange program, where they actually go from a clearinghouse to an exchange instantaneously or by mandate. That's a real problem because a lot of these instruments can't go directly on an exchange, and if you force everything directly on exchange immediately, you're going to end up with these instruments going overseas, and that sort of cuts off our nose to spite our face.

There are some other big problems with the bill also, but that's -- that's really where the essence of the debate is. The fact that you'd have to spin off your swap debts from some of these entities is another question.

VELSHI: Yes.

GREGG: How do you do that? Who ends up doing swap tests? Doesn't that actually make the whole system a little less stable when you spin them off? There are big issues right there.

VELSHI: Senator, I want to apologize. You lost your -- your ability to hear me for a minute there, so you and I were both talking at the same time.

GREGG: That's all right.

VELSHI: But thank you very much for coming on and having this conversation with us. Appreciate it.

GREGG: OK.

VELSHI: Senator Judd Gregg of New Hampshire on the Republican -- a Republican on the banking budget and appropriations committees.

All right. We're not done yet. In just a few minutes we're going to go to the White House, where I'll put some of these same questions to one of President Obama's top economic advisers. Is this regulation actually the right thing to do?

But first, I want to bring you up to speed with some of the top stories that we're covering here at CNN.

General Motors says it's now paid in full its loans from the U.S. and Canadian governments. GM announced today its final payment in the $8.1 billion that the governments gave it when it filed for bankruptcy last year. General Motors' CEO says the loan repayment, which is about five years ahead of schedule, shows that it's on the road to recovery.

But Chrysler's road not so smooth. It lost close to $4 billion since leaving bankruptcy protection and merging with Italian automaker Fiat last year. It did post its first positive operating profit this quarter, but the net profit was still down. The CEO predicts that Chrysler will break even by the end of the year.

And Iran is announcing what it calls U.S. nuclear threats. The nation's says one of its elite military forces will begin staging war games tomorrow in the Persian Gulf. About 40 percent of global oil and energy supplies pass through that area.

And this just in to CNN. The NFL is suspending Pittsburgh Steelers quarterback Ben Roethlisberger for six games without pay for violating the league's personal conduct policy. He must also undergo a, quote, "behavioral evaluation" by medical professionals.

Last week prosecutors decided not to charge Roethlisberger after a college student accused him of sexual assaulting her in a George nightclub.

All right. When we come back, tornados ripping through Texas. Imagine being face to face with this. So is the region back in the bull's-eye again today? Jacqui Jeras is joining us. She'll tell us about it after the break.

(COMMERCIAL BREAK)

VELSHI: Government regulators are now keeping a watchful eye on your salt intake. Be careful about that. Americans eat more than twice the sodium that they need, and most of it doesn't come from your salt shaker. Our chief medical correspondent, Dr. Sanjay Gupta, went to the store.

(BEGIN VIDEOTAPE)

DR. SANJAY GUPTA, CNN CORRESPONDENT: When it comes to sodium, we simply eat too much, on average about four grams per day as an adult, and we really need about half that, about two grams per day.

There's a study that came out that said if you get down to two grams per day, we could potentially save about 150,000 lives a year simply from that one thing. Frozen foods, they're going to have a lot of sodium in there for lots of different reasons, but mainly because sodium is a good preservative. That's why it's in there.

But also, canned foods. You know, a lots of parents, again, like me, will go to canned foods. The problem is you can get 950 grams, almost a gram of sodium just from something like this. Far too much for an adult and far too much for most kids, as well.

Cereals also, obviously an important food choice for many homes. Make sure to read those labels again.

One thing about reading labels, as well: when you're reading labels try and find foods, foods like this, that has less than five ingredients. That's really going to help.

When it comes to that sodium, again, one thing that we do in our house, we never leave crackers or cookies just sitting out in a big box. We'll pour a little bit into a small table, and that's really important to try and find some salt substitutes, as well. We don't leave salt shakers out there. But if you find a substitute like this -- no salt, for example, or just some flavorings -- you can both cut down on your sodium, increase your potassium, and possibly solve a lot of those problems.

Simply put, the Institute of Medicine, the scientific arm of the National Academy of Science, is urging the FDA to start regulating how much salt is in all of our foods, foods that you buy at the grocery store, like you just say there, food in restaurants, as well. Saying we should come up with a national average. Sort of trying to predict how much salt people are getting in any particular day and start to slowly bring that down in an incremental way.

You know, they say, look, we've known about the relationship between salt and hypertension, stroke, heart disease, all the things just mentioned for a long time, decades now, and public education campaigns simply haven't worked. So it's time for the FDA to get more involved. That's what the IOM, the Institute of Medicine is sort of saying.

Now, again, for some of these average products, like that can of soup you just saw, it may mean a significant reduction overall in the amount of sodium because as things stand now, that single can of soup has your entire day's sodium. So you really start to need to bring that down, because you're going to get other foods throughout the day. Overall, they want to get people more to that level of about 1,500 milligrams to two grams per day, depending on your health history, some sort of medical problems that you may have had in the past.

Most people seem to be buying into this. The FDA is sort of going to mull it over for a time being and have public, open hearings about it. There is a Salt Institute, which we talked to, as well, and they say, "Look, this essentially comes down to regulating what are low levels of salt," they say. And carrying this out is sort of like conducting a clinical trial on all of society. So they're not supporting this.

But again, that Stanford study, just not that long ago last month, said if you simply cut down the sodium across society, across the United States, by about half on average, you can save 150,000 lives a year. And that's something that a lot of people are paying attention to. Interesting news there. Possibly coming out of the FDA. We'll keep tabs on it and bring it to you. Back to you.

VELSHI: All right. Thanks, Sanjay. I'm going to watch how much salt I take in. Let's go over to Jacqui. She's standing in there in the Severe Weather Center. And some problems. We've got some tornadoes yesterday; is it looking like we're getting more today?

(WEATHER REPORT)

VELSHI: Jacqui, we will continue to stay on top of that. If you get any reports of tornadoes, let us know, and we'll pass it on to our viewers. Jacqui Jeras in the Severe Weather Center.

Earlier, I talked to Senator Judd Gregg who is telling to the Obama administration maybe they want to be a little more hands off when it comes to financial reform. Straight ahead, I'm going to bring you the other side. We're heading straight to the White House. Stay with me. (COMMERCIAL BREAK)

VELSHI: If you have a bank account or 401(k) or a pulse, then you've got a stake in the financial reform debate that may well rewrite the rules of Wall Street. Earlier, I showed you how derivatives make the world go round. I spoke with a Republican critic of Democratic plans for sweeping regulations.

By the way, I have a response from somebody on Twitter who said -- called me an idiot for the description. I thought it was pretty good. But whatever.

Let's hear from the White House. Austan Goolsbee is the chief economist on the president's economic recovery advisory board. In his other life, he's a professor at the University of Chicago. Smart guy. Clearly not something I was accused of being moments ago.

Austin, look. I'm trying. Look, I'm trying to find analogies and ways to describe these things to people.

AUSTAN GOOLSBEE, CHIEF ECONOMIST, PRESIDENTIAL ECONOMIS RECOVERY ADVISORY BOARD: Welcome to my world --

VELSHI: Yeah, no kidding!

GOOLSBEE: I hear it all the time.

VELSHI: Listen, I wanted to talk to Judd Gregg earlier. There is what I think some legitimate concern out there that -- all right, we need a safer world, safer world for Americans. We need a safer world when it comes to dealing with banks and credit cards. We need simplicity, we need contracts that can be understood. We have a regulatory system that is out of date.

There is something to the argument, Austan, that you can over- reach and you can cause damage to innovation in the world of business. How do you respond to that?

GOOLSBEE: Look, as some theoretical matter, I completely agree. As a practical matter, with this reg reform bill, I do not believe we have overreached at all. I think the president laid out and will reiterate tomorrow that he has been saying for a long time, more than two years, that reg reform in the financial area was vitally need to restore public trust to our capital markets. That it doesn't undermine capital markets at all for us to have robust oversight. It actually is quite vital and, without it, these institutions can not survive, as we saw.

VELSHI: I think polls that we have taken show that Americans support that by a huge margin. I think most people you would run into on the street says something needs to be done.

Here's the issue. The issue of derivatives, which is what a lot of this is coming down to, derivatives are sometimes very good. They make people wealthy. Regular, average people. They save people, farmers in some cases. And they can be very complicated, and they did a lot of damage to our economy in the case of AIG and other financial institutions.

So, do you think that what the administration is proposing, those bills that have -- the bills that have passed Congress and the ones debated in the Senate, do you think that they achieve some balance in the regulation of these complicated derivatives?

GOOLSBEE: I do. Now, look, the thing is, I'm not advocating anything that would get rid of derivatives. As you say, there are a great many commercial enterprises and farmers and others that rely on them to edge their risks.

The issue that there are some $600 trillion of derivatives that are sitting around in dark pools that no one knows virtually anything about and that those dark pools of derivatives threaten to the blow up the entire financial system when AIG went under, that has to be stopped. That cannot continue. And that's what this -- that is the president's foremost concern about derivatives here.

And the dynamic of what's playing out is that the president is outlining a perfectly reasonable standard that we need to bring them out into the open, and we need to get a lot of the most dangerous kinds into the so-called clearinghouses so they can't blow up their neighbors the way they did with AIG.

And you've got a determined core of people, a lot of them leadership from the Republican side, funded by literally hundreds of millions of dollars of lobbying expenses on the part of the special interests. Trying to get loopholes written back into derivatives laws to allow them to keep hundreds of trillions of dollars in these dark pools. It's not acceptable. That cannot happen.

VELSHI: Let me ask you about this. Judd Gregg said something that I've heard others say, and that is that the day after this bill becomes law, you will see money go to other places where people can create and trade in these derivatives without the oversight that we are proposing.

GOOLSBEE: Well, look, you have to strike a balance of which things you're going to do and where you need to press. But as regards -- trading on exchanges, let's say, there are many things now, many types of derivatives that trade quite comfortably on exchanges. There are many types of derivatives where making them transparent has not ruined the market in any way.

We should be mindful not to drive productive activities overseas. The president has been mindful of that in a lot of areas, not just in finance.

But the argument that because there's some bugaboo that we don't want to lose the transactions to somewhere else, we're not going to change anything. Let's stick with the status quo that threatened to almost blow up the world? I just don't think that makes any sense.

VELSHI: Austan, conversations about derivatives, I bet you we're not going to be showing our grandchildren this video. It's very complicated stuff to talk about - GOOLSBEE: I certainly hope not.

VELSHI: It's necessary, it's important, and I appreciate you and I appreciate Senator Judd Gregg coming on here and allowing my viewers to try and understand these things we don't think are part of our world, how they actually affect us. So, thank you very much.

Austan Goolsbee is the chief economist on the president's economic advisory board.

GOOLSBEE: Thank you. Great to see you.

VELSHI: Great to see you.

And if you think derivatives are complicated, the politics at work in Washington in melding Washington and Wall Street are mind boggling. But they are all in a day's work for senior political analyst Gloria Borger. She's going to join me next hour with information that you can actually take to the bank. Stay with us.

(COMMERCIAL BREAK)

VELSHI: Give you a check on top stories we're working on.

Members of SNAP, a support group for people abused by priests, are demonstrating at a Connecticut cathedral. They're blasting Catholic bishops' opposition to a a state house bill that would lift the statute of limitations on civil sexual abuse suits. Church officials say that could bankrupt them and lead to old claims that are impossible to defend.

The yoke is on a British politician today, and the white, and the shell. Conservative party leader David Cameron has been the victim of a vicious egging. The teenager, the guy in the gray shirt on the right. Look at that. The guy should be a baseball player. Look at that. He got him as he left a campaign stop. Police questioned the kid and then let him go.

Speaking of egg on your face, the balloon boy farce will cost Richard and Mayumi Heene more than just their reputations. They have reached a dial with Colorado prosecutors to pay more than $36,000 in restitution. The money will go to police and other agencies who wasted their time chasing what turned out to be an empty, silver helium balloon.

All right. We all heard about the Pew study yesterday about teens sending up to 100 text messages a day. Today, we want to tell you about one school that's using cell phones and texting as teaching tools.

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UNIDENTIFIED FEMALE: It's almost like you want to look at the screen. It's almost like a mini TV where you want to look at it. You don't want to look at a piece of paper.

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VELSHI: Ah, isn't that the story of kids these days, going from paper to electronics. The iPad and other tablet computers on the horizon for kids in the classrooms. Some teachers and principals and guidance counselors are actually using cell phones as teaching tools.

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UNIDENTIFIED MALE: Pandora's box is open here. The technologies are here. What we need to do is take control of them instead of letting them control us.

UNIDENTIFIED FEMALE: You can't put the genie back in the bottle. The cell phones are here.

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VELSHI: You can't put the genie back in the bottle. Here to talk teens and texting with us, Vanessa Van Patton. She's the founder of radicalparenting.com. She's self-proclaimed youthologist. You can't imagine how many comments I got on that on Facebook and Twitter yesterday.

We had a conversation yesterday, Vanessa, where you didn't come out against kids texting. You came out against kids texting if it's sort of takes over their lives, their meals, their home life. Is that a good characterization?

VANESSA VAN PETTON, RADICALPARENTING.COM: Exactly, yes.

VELSHI: All right. So, now we have this idea that some schools are saying, you can't put the genie back in the bottle. This is what they do. This is how they communicate. Why don't we use that as tool? I was anxious to get your view on that. What do you think?

VAN PETTON: I mean, I think it's really great. This is a really controversial issue. You have three different groups weighing in on it. Parents, teachers and students.

But you know, you see kids now, they go home. They're Twittering, texting, listening to music, their insisting that they're doing their homework. When they go to school, the image doesn't change that often. They're watching a teacher that the only image only changes about once every hour. So, they're learning, they're getting the wrong message from schools that learning is slower. It's not technologically advanced, that it's not going to be as exciting.

We want to send them a different message. We want to send them that learning can be great. It can be multidimensional. You can do many things at once. You can use your cell phone no to not only talk to your friends but also for good things.

VELSHI: At what point do we just say the world has changed? I mean, we like digital documents, we like things that can be updated faster than textbooks can. Today's kids are better able to get information than you and I were able to when we were that age because it's just more easily acceptable.

So, is there a line? Who should be deciding on how much is enough with respect to using cell phones and that sort of technology in school and for schoolwork?

VAN PETTON: I actually think that that line is getting pushed further and further back. I think we have to look at real life. How often do employees sit in a boardroom and they're sort of texting under the table while their boss is talking? That line is no longer in the workplace. So, I don't know if it should be in the school, in the classroom because kids have to learn in school that it's inappropriate to text while their teacher is talking. If they don't learn it then, they're going to be in the boardroom, texting while their boss is talking and not listening.

So, I think that line in the school should actually be pushed back to where real life is.

VELSHI: You came up yesterday with some good, real-life solutions. What I thought was great about our discussion yesterday is you talked about the degree to which people are texting or using electronics in their home and using computers. And you came up with some things people can do, some very straightforward things parents and kids can do.

In this case, we're not talking about not having an access to -- to cell phones, for instance, in the long term in schools, so what's the way in which that can be applied that's useful?

VAN PETTON: So, for teachers, I think that it's really important for them, especially for teachers who are a little bit afraid of technology. We get a lot of teachers who say "I'm not sure what Twitter is and I'm not sure what a Wiki is." The first thing they can do is to assign their kids to make a technology makeover on assignments and lectures. Our teachers said they would love to come up with new assignments.

So, for teachers that are a little bit afraid, to ask their kids, how would you make a wiki about this history study guide. How would you make a social network based on our math class?

It's also really important for the teachers in terms of bringing technology into the classroom to always be tempering it with in-class writing assignments. The more kids your on cell phones and using auto correct on their Microsoft Word, they are not learning to spell. They will need to do it on the SATs and when they're writing notes to their bosses. So, always making sure they in-class writing assignments.

VELSHI: I was always the best speller when I was a kid, but it definitely deteriorated as I started using word processing. I mean, you really mean writing? You mean we should really have kids writing out, cursive, longhand?

VAN PETTON: I actually think we should be doing more writing assignments. Kids cannot do the basic spelling probably, maybe, definitely. They're having a lot of trouble with those basic words, and the way that teachers can temper this is by saying, okay, I'm fine having you text and doing browser research in the classroom, but I also want to make sure that we're doing an in-class writing response and not stopping grading on grammar and spelling until senior year.

VELSHI: Very good. It's a lot to think about. You know, there's some great ideas you've suggested. I'm still working off of yesterday's conversation, but this is interesting, because so often we have conversations about texting and -- and -- or kids using electronics, and it's one way or the other. Kids are spending too much time in front of video games. Kids are spending too much time texting, in front of computers or it's the, you know "let it happen."

I just think the middle ground is very, very interesting.

Vanessa, thank you for the conversation. Good to see you again.

VAN PETTON: Thank you so much for having me again.

VELSHI: Vanessa Van Petton. Youthologist and founder of radicalparenting.com. I like saying "youthologist" because then you people send me messages on Tweeter -- Twitter and Facebook about what a youthologist is. Maybe we'll have her back and just talk about that.

All right. A nearly weeklong, worldwide disruption. Thousands of planes grounded, maybe a billion dollars lost. And there it sits - look at that -- still smoking away. CNN's Gary Tuchman is near the foot of Iceland's pesky E-15 volcano. We're going to get the latest from him, coming up next.

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VELSHI: Okay. Iceland's volcano with the big name, boy, it's had a big impact. Airlines have lost an estimated $1.7 billion in a week, according to a global group that represents them.

Planes are finally back in the air, though, crisscrossing Europe today. About 75 percent of scheduled flights are expected to take off. It's a sudden change, it might make you think the volcano has gone quiet, but as Gary Tuchman will tell you, that's not totally true.

GARY TUCHMAN, CNN CORRESPONDENT: It's a frigid, windy spring day here in Iceland, but the visibility is amazing. It gives us some of the most remarkable views of this volcano from the ground since we've been here. You can see the plume rising from the volcano, heading to the south right now.

But the good news from scientists here in Iceland today, the eruptions are much weaker. We're told 80 percent weaker than when it first began. There are three craters in the mountain. All three craters were erupting at one point and now only one is erupting. The word we're getting is it's very likely the worst is over, no guarantees, but it's very likely the worst is over. One thing we want to mention to you, to the left of this volcano, you can see in the background, it's a small amount - it's actually bigger, but it's farther away. That is Mt. Katla and that's also a volcano. It's been dormant since 1918. But historically over the centuries, both of these volcanoes have erupted around the same time. Now, scientists don't necessarily think that one causes the other, maybe it's a coincidence.

But here's a lot of sensitivity here in Iceland, because the president of this country in an interview said the current eruption is a dress rehearsal for Katla because it's much bigger, much more dangerous. In a worst-case scenario, if Katla erupted, there's six times as much water of the Amazon River in there that could cause massive flooding.

Tourism officials here seem a little angry that the president said this. There's no evidence that Katla is erupting, but nevertheless, everyone is keeping their eye on Katla. But once again we emphasize, nothing is happening with Katla, and the word here this volcano is getting weaker.

This is Gary Tuchman, CNN, in Kollsvelura (ph) Iceland.

VELSHI: Okay. Scared of nothing. He walks toward the volcano while it's still going on.

All right. We're following news of the explosion in the Gulf of Mexico. An urgent search for 12 workers from an oil drilling platform. Look at that. A huge explosion ripped through the rig late last night. We'll bring you the latest on the search, and we'll talk to a guest who has trained oil field workers for emergencies just like this one. Right after this.

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