Return to Transcripts main page
CNN Newsroom
Camping Out for Jobs; Tornado Terror in the South; Arizona's Immigration Battle
Aired April 26, 2010 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: Here are some of the big stories in the CNN NEWSROOM for Monday, April 26th.
How about this -- the 20th anniversary of the Hubble telescope?
After the storm. Violent tornadoes turn across the South. At least 12 people killed. Survivors relive the terrifying moments.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It was terrifying. I mean, it scared me to death. I have never been in anything like this before in my life.
(END VIDEO CLIP)
HARRIS: Our severe weather team bringing you all the angles of the storm.
Plus this --
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I was based here. I grew up here. I don't know if I even want to live here anymore.
(END VIDEO CLIP)
HARRIS: Fighting for his country, taking on his state's new immigration law, an American soldier born in Mexico, raised in Arizona.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Well, you know, for a short term, you know, whatever. At least to try to get some of the violence down, you know. I think it will work.
UNIDENTIFIED FEMALE: I don't think it's a good idea.
UNIDENTIFIED FEMALE: Why?
UNIDENTIFIED FEMALE: It's dangerous.
(END VIDEO CLIP) HARRIS: Yes. Yes. In Chicago, residents are certainly reacting to what some consider a pretty drastic idea. Yes, you see the picture right there, calling in the National Guard to combat a violent crime wave.
Good morning, everyone. I'm Tony Harris. Those stories and your comments right here, right now, in the CNN NEWSROOM.
Just in case you need proof the job market is still struggling -- can't imagine that you would, but here it is -- look no further than Queens, New York. Hundreds of people camped out over the weekend for a chance to apply for 100 jobs repairing elevators. They started lining up at 4:00 a.m. Friday.
CNN's Ines Ferre is there.
Ines, good to see you.
What's the situation like this morning?
INES FERRE, CNN CORRESPONDENT: Well, Tony, I mean, as you said, these people have been here since Friday, some of them since last night. This is really kind of the end of the line now.
The door started opening at 9:30 a.m. for 750 applications that were going to be given out. With those applications, you could take tests and then interview for elevator mechanic jobs.
This was just filled with hundreds and hundreds of people that have been waiting here. And as you can see, it's drizzling. Yesterday, it rained.
And right here -- Gabriel, you have been here since midnight, you're saying?
UNIDENTIFIED MALE: Yes. Since midnight last night.
FERRE: And now I just heard the announcement from one of the cops that there weren't any more applications left, correct? I mean, or there were only 50 left.
What are you feeling right now?
UNIDENTIFIED MALE: Yes, that's what we were told. I mean, I feel horrible. I mean, the fact is that last night, around 4:00 in the morning, there was just -- I mean, someone said something about the line forming, and hundreds of people literally ran for this spot.
FERRE: A lot of people came here.
UNIDENTIFIED MALE: And literally running. I mean, skipping everyone else. And this sort of chaos, this sort of desperation that really causes people to get hurt, causes serious situations.
FERRE: And Gabriel, you have been looking for a job for how long? UNIDENTIFIED MALE: For over a year now.
FERRE: For over a year. OK. Well, good luck. I hope you are one of the people that gets to go in there.
The cops have been slowly just letting about 20 people in at a time, because this is really the last of it, Tony. As you can see, this job is really important to people because, A, it's a union job.
Some of the people in line have told me that they have been looking for work for a long time. Other people have work, but they feel like this is a real career that they can go towards. It's an apprentice type of job. It's four years of school, plus a job that pays $16 an hour, starting salary with benefits. So it's important to them.
HARRIS: Well, Ines, help me with this. And maybe you can clear this up for me. We are getting word -- and maybe you don't have access to this information because you're outside, and maybe this information is coming from someone inside, that the doors are about to close and that the facility has essentially allowed in just about everyone that it can at this point. It looks like, sounds like you have got a lot of people still waiting in line.
FERRE: Definitely. Definitely. And some people have left already because there was an announcement just a little while ago saying that there's only 50 applications left. And the probability is that you guys aren't going to be getting in to those doors, Tony. So, yes, this is really dwindling down.
HARRIS: Hey, and one last note here. How much do those jobs pay?
FERRE: $16.40 an hour starting salary, plus increases every year. It's a four-year apprentice program.
HARRIS: OK. Ines, appreciate it.
Was there something you wanted to add there?
FERRE: No. A lot of these folks are saying this is a career. I mean, this is good. This union takes care of about 60 percent of the elevators in New York City.
HARRIS: Well, let's hope all those folks get an opportunity to get in there. But I guess if the applications aren't available, the jobs are filling up, that's just the way it is.
All right. Ines Ferre for us.
Ines, appreciate it. Thank you.
Got to tell you, some of the most coveted jobs in America right now are apprenticeships. That's where you learn how to do the job on the job and you don't have to pay for the training. Watch our story, "Apprenticeship," and this is coming up on Wednesday, noon Eastern, right here in the CNN NEWSROOM.
Checking the day's other big stories for you.
Internal company e-mails show the most profitable firm in Wall Street history, Goldman Sachs, bet on the housing crash, even bragged about it. Those e-mails are fueling Democrats' push for more financial oversight.
Goldman Sachs executives face tough questions tomorrow on Capitol Hill about the company's conduct before and during the housing market meltdown. Meanwhile, the inspector General for the Securities and Exchange Commission says he will investigate the SEC's decision to pursue fraud charges against the firm.
A violent crime wave in Chicago prompts a call for the National Guard to step in. The surge in crime includes a night last week when seven people were killed and 18 wounded. The police superintendent says calling in troops is not the answer, but two state lawmakers say the violence is so rampant, police need help.
(BEGIN VIDEO CLIP)
JOHN FRITCHEY (D), ILLINOIS STATE HOUSE: We have the ability with very little effort to immediately deploy these men and women right here in their back yards to assist the police department.
SUPT. JODY WEIS, CHICAGO POLICE: Let's go back to 1970, you know, at Kent State. The National Guard comes in, four students shot, killed. I don't think we want that here in Chicago.
(END VIDEO CLIP)
HARRIS: Got to tell you, we want to hear from you on this issue. Should the National Guard be called in? Think about it.
Go to our blog, CNN.com/Tony, leave us a message. And we will share some of your comments on the air a bit later in the NEWSROOM.
You know, it's been nearly a week since an oil rig exploded and sank off the Gulf of Mexico. The crews are still scrambling to find ways to stop it from leaking.
Right now, an unmanned submarine is being used to try to shut off the valves. Officials say about 42,000 gallons are gushing out every day. The leak goes as far as a mile down, and an oil slick on the surface of the water has grown to about the size of Houston. Wow.
A painful cleanup effort is under way after this weekend's deadly tornadoes. At least 10 people were killed in Mississippi and two in Alabama.
CNN meteorologist Reynolds Wolf is in a hard-hit city there in Mississippi.
Reynolds, if you would, tell us exactly where you are. And look at that scene behind you. REYNOLDS WOLF, AMS METEOROLOGIST: It's hard to believe, Tony. I mean, this is basically the stamp of a storm that came through here, something that was a mile wide. From where you happen to be, Tony, and our viewers that are tuning in, seeing this on the screen, the storm came from the direction behind you and then back, right over towards the water towers.
Again, as I mentioned, the storm, incredibly wide, about a mile at times. It actually expanded to about a mile and three-quarters farther up the path, this path that extends not just through Mississippi, but back over into Alabama also.
Now, when it came through here you can see just the damage. Here, in the foreground, you have got what's left of this church. In the background, of course, you see some of the tree damage. Some of the trees almost untouched, the others just shattered stumps for the time being.
Far and away, some of the worst damage was right here in Yazoo County.
(BEGIN VIDEOTAPE)
WOLF (voice-over): A trail of destruction and a fatal blow to central Mississippi.
ASHLEY SAXTON, TORNADO SURVIVOR: It was terrifying. I mean, it scared me to death. I've been in anything like this before in my life.
UNIDENTIFIED MALE: The roof started to cave in on us. The roaring sounded like a train coming right through the restaurant. The top flying off the restaurant and --
WOLF: A twister with winds up to 160 miles per hour tore across Mississippi Saturday, killing almost a dozen people, including two children and a 3-month-old baby. More than 30 people were injured.
ROB SAXTON, TORNADO SURVIVOR: It was unbelievable. It just -- when the wind just exploded, it wasn't like anything I've ever experienced.
WOLF: Sunday, many people came to see what's left of their neighborhoods. Toppled trees, damaged cars, hundreds of homes and businesses destroyed.
UNIDENTIFIED MALE: We're just lucky to be alive. We're very thankful.
WOLF: The hardest-hit counties were Yazoo and Choctaw, where rescue operations continued Sunday, though a state of emergency official says there are no specific reports of people being trapped inside the rubble.
Mississippi Governor Haley Barbour says there was utter obliteration in Yazoo County, where he grew up and owns a home. But he believes it could have been worse.
GOV. HALEY BARBOUR (R), MISSISSIPPI: By God's grace, it did not go into the central part of the city or the most populated.
(END VIDEOTAPE)
WOLF: Now, it is expected that later this afternoon, Governor Barbour is going to request for federal assistance. And understandably so when you have this kind of widespread devastation, devastation that Rob was talking about earlier, during an update, where the winds now, much stronger than the 160 miles per hour, but possibly exceeding 170 miles an hour.
HARRIS: Wow.
WOLF: That is as strong as a Category 5 hurricane, Tony. And this being in a state that borders parts of the Gulf of Mexico that is prone to dealing with tropical systems when they come on shore, be it tropical storms or hurricanes.
They are used to some of this stuff. But still, it's still mind- boggling. And they certainly have their work cut out for them.
There have been many instances of neighbor helping neighbor, but they are also getting some assistance right here within the state. Over 80 members of the Mississippi National Guard will be here to help clean things up. What a tall order on a day with sunny skies.
Let's send it back to you.
HARRIS: Well, Reynolds, I'm going to do this on the fly with you because I know you can handle anything I can throw at you. But I just want to see that scene behind you here.
What are we looking at here behind you?
WOLF: Well, unfortunately, I'm kind of encumbered by a little bit of what we in TV refer to as an Ifb cord.
HARRIS: You're tethered?
WOLF: Exactly. We've got CNN photojournalist Orlando Ruiz (ph). He's behind the camera.
He's going to get a nice shot for you. And it's a nice shot, but not nice content of what you're seeing.
HARRIS: Yes, sure.
WOLF: I mean, just -- this thing came through like a giant saw blade. And this is just a tiny thing. This is a tiny part of it, what happened here at Hillcrest Baptist Church.
You've got to remember, Tony, this scene has played out in many places. Nearly 700 buildings completely damaged by this storm as it came through. Many people at home today. The local shelters that are set up by the American Red Cross housed 38 people last night. Many people didn't go to the shelter. They were able to stay with friends and family. Again, pure evidence of people helping people.
But the sad thing is this is a tiny speck of the stamp of the storm. You're going to see more of this.
On the other side of the hill -- one thing -- Orly (ph), I don't know if we can get a shot of this -- you can see a bit of aluminum siding, you can see wires. You can even see pieces of cars, a car door here and there that have just been picked up and thrown.
Michael Humphrey, our truck operator, actually went out with his own camera and took some shots, shots of wood actually driven through -- by the strong winds. A piece of wood going through parts of cinderblock walls, it's a mind-boggling thing to see. Shocking. Yes, hard to believe.
HARRIS: Well, terrific.
WOLF: And that's the big killer.
HARRIS: Yes. Well, I appreciate that. I knew you could handle that. But we just wanted to see what was behind you there, what's left of the church there.
And good stuff, Reynolds, as always. Appreciate it, sir. Thank you.
My goodness.
So, some of our iReporters were also on the scene minutes after the twister barreled through Yazoo City. Take a look here.
These incredible shots are from Timothy Ginn. And you can see it for yourself here. It's like a bit of a small forest there of broken trees, snapped off, looking like toothpicks there.
Don't forget, if you have any pictures you'd like to share with us, just send them along to CNN.com/ireport.
So, will more parts of the Southeast get hit today? Rob Marciano is tracking the system from Florida to Virginia. His forecast coming up in just a couple of minutes for you.
The markets have been open for -- coming up on two hours now. Let's get a look at the latest here. The Dow up 41 points, as you can see.
We're following these numbers throughout the morning, throughout the day for you, right here in the CNN NEWSROOM.
We're back in a moment.
(COMMERCIAL BREAK) (BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Don't spend your money in Arizona!
(APPLAUSE)
(END VIDEO CLIP)
HARRIS: Well, so here we go. Thousands of people have been demonstrating against Arizona's new immigration law, calling it racist.
The law signed Friday by Governor Jan Brewer is due to take effect in about 90 days now. It will require police to check the immigration status of anyone suspected of being undocumented.
Our Thelma Gutierrez introduces us to one U.S. soldier for whom the issue is personal.
(BEGIN VIDEOTAPE)
PFC. JOSE MEDINA, U.S. ARMY: I'm here because this is something that's close to my heart. I went off to protect this country and protect my family. That's what hurts. It's my job to try and save lives.
THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): Private First Class Jose Medina is 20 years old, an Army medic, home on leave in Arizona.
MEDINA: I remember when I first joined the military. They would ask, "Where are you from?" And I was proud to say I'm from the great state of Arizona, because I was raised here, I grew up here. I don't know if I can say that so proudly. I don't know if I want to live here any more.
GUTIERREZ: For Medina, this is personal.
(on camera): You were not born in this country?
MEDINA: No, I wasn't.
GUTIERREZ: You were born in Mexico?
MEDINA: That's right. Originally.
I came here illegally when I was two.
GUTIERREZ (voice-over): But now he has his green card.
MEDINA: I thought I (INAUDIBLE). This country has given me so much.
When I heard of the law that passed, I couldn't believe it because the America that I know, the freedom, the liberties that we enjoy, are for everyone. It's a shame, because I loved the state. I grew up here. But a state that doesn't even want you here?
I might take this uniform off, and I'm just another Hispanic.
GUTIERREZ (on camera): Why do people feel indignant about being asked to produce an I.D. that they ought to have?
MEDINA: It's an insult, almost, because the color of your skin, because you're not white. GUTIERREZ: Is this that you resent the fact that you could be stopped and asked for your papers while you're fighting for this country? Is that what angers you?
MEDINA: It's not so much anger, it's hurt that, you know, that could happen to me, it could happen to my family, my friends.
UNIDENTIFIED FEMALE: (SPEAKING IN SPANISH).
MEDINA: Come on, man. Come eat.
GUTIERREZ (voice-over): Hours before his flight, Jose Medina invited us to his going away dinner.
"VICTOR", CLOSE FAMILY FRIEND: You may go to Afghanistan, you may go to Iraq. After this night, man, we may not see you again.
You're offering your life for this country, for all of us, but you might maybe stopped (ph) tomorrow by your (INAUDIBLE).
MEDINA: It's my duty to go and do what I have to do.
GUTIERREZ: Before Jose Medina left Arizona, he told me he was leaving with a heavy heart.
MEDINA: I worry, will my family live in peace. And what good is keeping us safe here if we lose ourselves, if we lose a part of what makes America so great? We drive here into (ph) our own people's hearts.
GUTIERREZ: Thelma Gutierrez, CNN, Phoenix, Arizona.
(END VIDEOTAPE)
HARRIS: Changing the climate on Wall Street. U.S. senators meet in just a few hours for a showdown on financial reform.
(COMMERCIAL BREAK)
HARRIS: A political showdown today over efforts to crack down on Wall Street. Democrats have scheduled a vote this evening to begin debate on financial reform legislation. Republicans say not so fast.
Let the bipartisan negotiations play out.
(BEGIN VIDEO CLIP)
SEN. RICHARD SHELBY (R), RANKING MEMBER, BANKING COMMITTEE: They vote against this bill as it stands, and I hope a lot of Democrats would.
SEN. CHRISTOPHER DODD (D), CHAIRMAN, BANKING, HOUSING & URBAN AFFAIRS: Eighteen months later, we're in no better position today to protect ourselves against that kind of a crisis again than we were 18 months ago.
(END VIDEO CLIP)
HARRIS: All right. Senior Congressional Correspondent Dana Bash live from Capitol Hill.
Dana, great to see you.
Look, so here's the lay of the land here. We have got a test vote planned for early this evening to start debate on this legislation, but it's not looking like it's going to pass. So why hold the vote?
DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It's a very good question.
Look, Democrats say it is one of the lessons that they learned from the health care debate that lasted a very long time, that if you let the bipartisan talks go on too long, then the whole thing will drag out. So they say that they're going to hold this vote to keep the pressure on.
But Democratic sources I talk to, Tony, are not shy about the political upside to potentially losing this vote tonight. And according to a source I just hung up the phone with, they say, look, Republicans will be faced with a day of headlines saying that they blocked Wall Street reform.
Now, Republicans I talk to say they're well aware that that is a potential problem. But here's what their political goal is. Their political goal is to -- they think that they have all the Republicans lined up to vote against this to start debate. That means blocking it, because Democrats need at least one Republican vote.
And their argument will be, look, we're voting against the Democrats' bill. We don't think it's good enough, but we're voting for bipartisanship because there are earnest bipartisan discussions still going on. And if they have a few more days, maybe a little longer, that there could be a pretty big bipartisan bill here.
HARRIS: OK. So let's dig a little bit deeper here.
What is in the bill Democrats are pushing right now? And what are the issues that Republicans have with it?
BASH: Very long and very complicated. So let's just peel out a couple of interesting nuggets here.
First of all, the bill -- and this is the Democrats' bill, written mostly by the banking chairman, Chris Dodd -- would have a new Consumer Financial Protection Bureau. So what this would do is it would set up a bureau designed to protect you, the consumer. Protect you from abusive practices from lenders, from mortgage companies, credit card folks, and others.
Republicans are worried that that specific bureau would be too -- not only intrusive, but it would just set up too much work for a lot of these banks, especially the small lenders in communities all over the country. And it would actually make them fold and cost jobs. That's one example.
Another is a new process to liquidate failed companies. We all remember from the fall of 2008, when government had to bail out these companies, it was because they were called too big to fail. It would hurt the entire economy.
Well, the goal here is to set up a process to unwind or liquidate some of these companies in an orderly fashion so there wouldn't be such a thing as too big to fail. The problems, say Republicans, is there are too many loopholes in this, and that the goal is to make sure that taxpayers aren't on the hook anymore, but there are some loopholes in there that actually do just that, put taxpayers on the hook.
So those are some of many, many things that they are trying to work out to -- with the overall goal that everybody does say that they have, which is to make sure that that taxpayer bailout doesn't happen again.
HARRIS: So, let's see here. So, Senator Shelby is holding an event here pretty soon?
BASH: Some of his staff is giving a background briefing to have a discussion with reporters on what exactly his position is, just to lay the groundwork. We do believe, Tony, that at 2:00 this afternoon, Senator Shelby, the ranking Republican who we heard from earlier in the segment, and the chairman, Chris Dodd, will go back to the table to have some negotiations. But at this point, hearing both sides, it doesn't sound like they're going to have a deal by the time this vote happens tonight.
HARRIS: Just because we want to follow this as closely as we follow, Dana, the two of us, health care, let us know what happens in that little briefing, that little gaggle, if there is any news made there. Would you please?
BASH: Will do. Sure will, Tony.
HARRIS: All right. Thanks, Dana. Appreciate it.
BASH: Thanks.
HARRIS: And coming up later this hour, financial expert Diane Swonk will join me, and "YOUR $$$$$" co-anchor, Christine Romans. We're going to kick this around a little bit, a lively roundtable debate on reforming Wall Street.
And let's do this -- let's check top stories right now. Tensions are rising again in a long-running dispute over a U.S. air base on the Japanese island of Okinawa. Nearly 100,000 protesters turned out for a rally there yesterday demanding that the base be removed. A new poll suggests that Japan's prime minister could lose his job over the controversy.
One of Spain's most famous matadors was badly gored during a bullfight. I want to see this. Oh, oh, oh.
In Mexico, Jose Tomas (ph) needed up to 17 pints of blood, but he is now reported in stable condition and his life is no longer in danger. Pretty nasty stuff.
After six months, officials have reopened a stretch of Interstate 40 in western North Carolina. The road was closed after an October rockslide. A local newspaper reports that it took almost $13 million to clean up the mess. The road is still closed to some big trucks.
The sun is out and FEMA crews are on the way as several communities across the Southeast are picking through the debris following this weekend's deadly tornadoes.
We're back in a moment. You're in the CNN NEWSROOM.
(COMMERCIAL BREAK)
HARRIS: More now on one of our big stories of the day. A massive cleanup in full swing across parts of the South today after weekend tornadoes swept through.
The most severe storm ravaged parts of Mississippi. Severe damage there, killing 10 people, including two children and a 3-month- old baby. FEMA teams are on the scene right now.
The storm cut a path of destruction some 50 miles long and more than a mile wide. Two people died in northern Alabama, dozens more hurt. Hundreds of homes damaged, destroyed.
And in Missouri -- we're not done yet with this story. In Missouri, no injuries, but power lines and trees were knocked down.
HARRIS: These systems seem to run in a bit of a pattern, right? It looks like it's shaping up again.
MARCIANO: Yes.
HARRIS: We're talking about more of this kind of action possible by the end of the week.
MARCIANO: Yes, I think so. You know, it's been a slow 2010. Now it's ramping up. The Gulf of Mexico is warmer and that certainly helps with the sun getting stronger. And we still have a lot of cold air leftover at the upper level of the atmosphere from this cold winter that we had. So, a lot of folks really afraid of what may is going to bring.
HARRIS: Rob, we appreciate it. Thank you, sir.
MARCIANO: See you, guys.
HARRIS: New developments in the Goldman Sachs fraud case. The government itself is asking was the SEC's investigation politically motivated?
(COMMERCIAL BREAK)
HARRIS: So, the SEC's internal watchdog says he will investigate whether the agency's decision to pursue fraud charges against Goldman Sachs is politically motivated. That is a serious claim. Several Republican leaders have made -- listen to my conversation last week with a Republican congressman, Darrell Issa.
(BEGIN VIDEO CLIP)
REP. DARRELL ISSA (R) CALIFORNIA: I'm suggesting that it is a very politically motivated attack by the SEC. They could have sued Goldman Sachs six months ago. They could sue them six months from now. They sued them during the basic run-up week to this event.
HARRIS: Do you have a document? Where do you get to make a claim? What do you have?
ISSA: Look, first of all, I have letters out to do discovery and I have not been given responses. Do I have an event with the SEC that shouldn't have happened? You know, the SEC does not release during the trading day except, in this case, they released during the trading day, and Goldman goes back down by 13 points. And now, there is this whole back and forth about whether it was an appropriate case or maybe it was just intended to cover up an I-team (ph) report that said this SEC doesn't do its job.
(END VIDEO CLIP)
HARRIS: Wow, wow, wow. It was hot, Christine. Harsh charges there from the representative. Any evidence of this? I just wanted something, a document.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: It gets hotter every day. No evidence of this yet, and that's why Darrell Issa and others have asked the inspector general of the SEC to go back and investigate this. And last night, the Inspector General David Kotz said yes, he will launch an investigation of the timing of the investigation to probe the timing of this lawsuit after, of course, Republicans like Issa questioned the SEC's independence and impartiality.
Of course, Mary Shapiro who runs the SEC, the White House, many White House aid, and the president himself have said there was nothing -- the timing for regulatory reform and the Goldman Sachs fraud case are completely unrelated, but the SEC inspector general will investigate the timing.
HARRIS: I can't wait to see. Lawmakers released some interesting, shall we say, internal e-mails from Goldman Sachs.
ROMANS: Yes.
HARRIS: Showing how the firm really profited from the subprime mortgage meltdown.
ROMANS: Yes. OK. So, four e-mails were released out of, as Goldman Sachs points out, more than 20 million pages of documents released by Senator Carl Levin's office over the weekend. And among the e-mail, one from Lloyd Blankfein where he's commenting on position of the company in the mortgage crisis. Of course, we didn't dodge the mortgage mess. We lost money, then made more than we lost because of the shorts. And then he goes on to say, also, it's not over, so who knows how it will turn out ultimately?
Then, there's another e-mail from a Goldman Sachs manager, Tony, on the downgrade of mortgage securities as those securities were downgraded, that minute triggered some things that meant Goldman was going to make money and this Goldman Sachs manager said, sounds like we made some serious money on that particular downgrade. There are a couple of other ones as well that seem to appear as if there are Goldman managers who are gloating over the fact that they're making money while the mortgage market was coming unglued.
Goldman is coming out hard on this saying, overall, Tony, in 2007-2008 on residential mortgage-backed security, they lost $1.2 billion. They say the Senate subcommittee has cherry-picked just four e-mails from the almost 20 million pages of documents and email provided by Goldman Sachs. Lucas Van Praag, the Goldman Sachs spokesman saying, it's concerning that the subcommittee seems to have reached its conclusion even before holding a hearing. Goldman just e- mailed me. I'm going to send it to you, too.
HARRIS: OK.
ROMANS: Hundreds and hundreds of pages of documents explaining its different dealings throughout the mortgage crisis. They say the narrative is simple. They have prudent risk management. Their internal alarm bells in late December 2006 were saying something is happening and it's not good in subprime. We need to start hedging. So, the work that we're doing for client who is want to be exposed to the subprime market, we need to make sure somewhere else we're not exposed so that we can as they say quote/unquote, "closer to home."
The question here is did Goldman profit from the collapse? Did it somehow in the things that it was making and selling to clients exacerbate the collapse? What exactly is Goldman's position here? And that's what the hearing tomorrow is trying to get to the bottom of.
HARRIS: Is the fabulous fab going to be part of that hearing tomorrow?
ROMANS: Oh, yes. You know, Tony, the moral of the story is -- don't make yourself and nicknamed an e-mail. He will always be known as fabulous fab. Yes, he is the vice president of Goldman Sachs who said the only survivor of the subprime crisis in an e-mail that the SEC released, it will be me, fabulous fab standing above the record (ph) of all of these things. These monstrosities I helped to create. We'll hear from him tomorrow, too.
HARRIS: And send the e-mail back to our friends at Goldman Sachs who are e-mailing you and thanks for sending it along that, you know, look, the e-mails are the e-mails. I know we're talking about the e- mails in the middle of thousands of documents here, but sometimes that's where you find smoking guns.
ROMANS: Oh, yes. And I can guarantee you people are going through all of these e-mails like crazy. And what some of them show, I think, is at the end of the day, you know, a manager of a certain division like the mortgage division is reporting to his boss saying, this is the P&L, the profit & loss for the day. We lost $20 million on this. We made $15 million on this. We lost $5 million on this, but, look, we made a killing on $5 million because mortgages wept south and we have a hedge on this. That's what these e-mails are like, showing where they were starting, and they were starting to make money in 2007 at a time when, you know -- the way it plays for critics of Goldman Sachs --
HARRIS: When people were losing their homes.
ROMANS: Right. The way it plays from critics of Goldman Sachs is these guys were standing in the middle making all this money at a time when America was coming unglued.
HARRIS: Yes.
ROMANS: It's just not fair.
HARRIS: And when we say America was coming unglued financially that means people were losing their homes.
ROMANS: Right. These are all from 2007. So, this is even before like the big blow-up in the financial crisis, too.
HARRIS: All right, Christine. You're going to be back in a couple of minutes.
ROMANS: Yes, and more tomorrow on all this. I mean, this is going to be riveting stuff tomorrow on Capitol Hill. The CEO of this company and the fabulous fab, the trader who is now famous for his e- mails will all be ob there.
HARRIS: The trader. That's an interesting thing. Christine, stick with me, if you would, please. We're going to take a quick break and we'll be joined by economist, Diane Swonk. Where's Diane? There she is. To talk about, Diane, you haven't been on the program in a long time. It's about time you were back with us, about reforming Wall Street. That's next for the CNN NEWSROOM.
(COMMERCIAL BREAK)
HARRIS: Let's get you caught up on the couple of top stories right now. The death toll from this weekend's southern tornadoes is now up to 12 including three children. Residents across Mississippi, Alabama, and Louisiana are starting the cleanup process.
Rock singer, reality TV personality, Bret Michaels remains hospitalized in critical condition according to his publicist. The 47-year-old suffered a massive brain hemorrhage on Friday.
OK. A test vote is set for this evening on legislation to change the way Wall Street works. The push for reform is aimed to preventing the kind of melt down that brought the U.S. economy to the brink of collapse. Two heavy hitters joining us to drill down on financial reform. In Chicago, boy, it's been a long time since we've had Diane Swonk on the program. She is chief economist for Mesirow Financial, and in New York, Christine Romans, of course, of our CNN Money team.
Diane, let me start with you, Christine, weigh in, of course, anywhere you want here. Here's Senator Dodd, chair of the Senate banking committee yesterday talking about the reform effort.
(BEGIN VIDEO CLIP)
SEN. CHRIS DODD, (D) BANKING, HOUSING & URBAN AFFAIRS CHAIRMAN.: Eighteen months ago, people broke into our home, stole everything in our house, and we haven't even changed the locks on the place yet. Eighteen months later, we're in no better position today to protect ourselves against that kind of crisis again than we were 18 months ago.
(ENDVIDEO CLIP)
HARRIS: OK, Diane, that may be the case, but does the legislation passed by the House and being worked on right now by the Senate fix the problems that brought on the financial crisis that Senator Dodd is referring to of 18 months ago?
DIANE SWONK, CHIEF ECONOMIST: The simple answer is no. It's the first step in a long road towards rethinking how we lend and manage money in the U.S. And it will prevent some of the things from happening again, but the elephant in the room is Fannie and Freddie and underwriting mortgages, none of which are being an address by this legislation.
HARRIS: Make the argument Fannie and Freddie argument for me here. What is happening there?
SWONK: You know, one of the key issues in the Fannie and Freddie situation is back in 2004, Congress said that Fannie could buy subprime mortgages, and immediately, the mortgages that they bought, mortgage-backed securities on the market, they allowed lenders to lend -- we call them ninja loans. No income, no job applications. Those loans went bad almost overnight in 2005.
HARRIS: Diane, let me stop you there. Let me stop you there. The legislation allowed Fannie and Freddie to buy and permitted these kinds of loans to go forward.
SWONK: You got it. Encourage them.
HARRIS: Encourage them?
SWONK: Encourage them.
HARRIS: No job loans?
SWONK: No job loans, no nothing. You know what I mean. It was really incredible, and we've not even begun to deal with that issue yet in financial regulation. It's a complicated process.
HARRIS: Can I ask you? Yes, it is complicated, but why is a financial institution would sort of step away from what had been established practices for signing off on these loans and then get into the business of providing no doc loans?
SWONK: Well, certainly it wasn't banks. It was a lot of the nonbank creditor --
HARRIS: The countrywide of the world.
SWONK: It's now banking system. Yes, part of the country wise. Yes, which is now part of Bank of America.
HARRIS: Sure.
SWONK: It was people who were not doing underwriting, and they're selling off the risk. Unfortunately, ironically enough, our big banks weren't doing these loans, but they were buying the risk.
HARRIS: Absolutely.
SWONK: They're buying that risk. It sounds crazy but that's exactly what was happening because they weren't holding the risk, because they weren't being compensated on that basis. They're being compensated on the churn and how much volume they could get out the door, not on the quality of the loans. That's a critical issue.
ROMANS: Tony, you asked why would do that? Well, because they were making money. I mean, everyone was losing it.
SWONK: You got it.
ROMANS: This was a period of time that was America's get rich quick scheme from top to bottom. I mean, it really was. I mean, people from the person who didn't have a job, didn't have assets and didn't have money who was getting a loan to the people who were profiting off the loan, securitizing and selling it off to other investors to those investors who are selling it to other investors. Everybody was making money because housing prices were going up.
HARRIS: It's crazy, Christine.
ROMANS: And there was just a consensus held by the banks, by the lenders, by the borrowers and by Congress and by the fed chief and by several presidents that housing prices were always going to go up. And that was the fundamental miscalculation.
SWONK: Actually, Christine, wait a minute here. You know, the consensus was from 2005 on economic forecasts and I was one of them. I kept forecasting a decline in the housing market. And there was a lot of consensus, there'll be a decline. We were wrong so many times that we stopped doing it because the market kept defeating us, you know. So, the bottom line was timing. I mean, we were all off on the timing. But you know, Ned Gramlick (ph) who is no the fer reserve governor, who unfortunately, is longer with us, he called this a long time ago.
ROMANS: You're right.
SWONK: There were a lot of warning signals out there. A lot of people saying this can't last. In the newspapers, you guys were saying, this can't last, this is crazy. But we wanted to believe it. There are lot of people who were making enough money.
(CROSSTALK)
HARRIS: Let's understand what everyone was buying into and believing, look, the sector was believing and buying into this idea that you could make loans to people who didn't have jobs. Anyway, I'm about to lose --
SWONK: They're getting compensated for that. Christine's exactly right. They made money off doing bad behaviors. And a lot of that's not changed. A lot of servicers make money off of pushing home owners into foreclosure more enough they're negotiate the loan (ph). That's not beneficial to us either.
HARRIS: All right. So Christine, before I lose time of the segment, do we really need a bill? Do we really need reform and what do we need to get out of that reform?
ROMANS: Well, I mean, if you listen to the president, if you listen to Larry Summers who pretty eloquently this weekend put it as well, I mean, you got to make sure -- we don't want any more bailouts. Americans don't want anymore bailouts. So, you have to handle too big to fail. You have to handle the casino stuff. You know, you want financial innovation and growth. And I think Diane is going to agree with me on this. You want financial innovation growth, but you want to take out the dangerous part of the risk. I don't know how you legislate that, but, you know, we'll hope that they can --
SWONK: Difficult.
ROMANS: It's hard, right?
SWONK: You got it.
ROMANS: I mean, you can kill the risk but then you kill the innovation, too. It's just a hard balance to walk. You have to have consumer protection. I mean, you've got to make sure that people are not being preyed upon whether it's mortgages being written, whether its their credit card contract. Everything really here from the credit card language to derivatives, it's all on the table here.
HARRIS: Yes, but you've got to start with something, right? This may not be perfect, but you got to start with something, right?
SWONK: Right. If you don't have, that's a really important point is you need a first step because right now, we don't know. There is so much uncertainty that a lot of banks just aren't playing at all. Until they know the rules of the game, they're not going to play, good, bad or indifferent, they won't give us loans. And we need the lending environment to improve for consumers a little bit. It depends on how swung to the opposite direction where it's very hard to get loans at all.
ROMANS: Hey, Tony, real quick, I want to know does Diane think the too big to fail legislation as it fits right now, are we making sure here that if it passes like the president wants that we won't have another too big to fail problem or did they miss it on that?
SWONK: You know, actually, I think the real issue is not too big to fail. Too complex to fail.
ROMANS: Too complex to fail
SWONK: And I think that's where we're still dancing around the issue. If you know, we don't know these banks, holding companies do a lot of different things. I used to work for one, thankfully no longer. But, I think, it's really important to understand that many of these institutions are too complex. That's what got us in trouble.
HARRIS: OK. Got to go.
SWONK: AIG was finding out what they're losing within minutes.
HARRIS: Got to go.
(CROSSTALK)
HARRIS: Yes, yes. Diane, come back on the program. I know you're a big shot now.
SWONK: I promise I will.
HARRIS: All right, ladies, appreciate it, as always. Thank you.
SWONK: Always love you, guys.
HARRIS: We got to get to a break. We're back in a moment. You're in the CNN NEWSROOM.
(COMMERCIAL BREAK)
HARRIS: Congress is talking about reforming Wall Street right now. But you can reform your own finances right now this minute, this second. CNN's Stephanie Elam in New York with today's top tips. Stephanie, good to see you. Where do we start here?
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Yes, Tony, I think -- let's start with your paycheck and taxes, right?
HARRIS: OK.
ELAM: That's a good place to start basic. Make sure you're not giving Uncle Sam an interest-free loan. That's the first you want to do. The bigger your tax refund, the more money you've been lending to the government free of charge all year long. And if your refund was $1,000 or more? That's a sure sign that you need to adjust the amount of money being withheld from your paycheck for taxes.
Now, by changing your W-4 withholding, you can keep more of your money each paycheck throughout the year, which is always nice, and you can always ask your tax planner for advice on how much you should be withholding in the first place, Tony.
HARRIS: I get this a lot, so I know you must get it a lot.
ELAM: I do get it a lot.
HARRIS: Yes, and increase their credit scores?
ELAM: That is a big question. And people are -- they feel like it's a murky thing, but really, there are some really basic things you can do, Tony. Pay your bills on time. That's basic. That's what you need to do. And try to always pay more than the minimum. The amount of debt you have is also vital to your credit score. So, if you have a lot of debt and you only make those minimum payments, your credit score is taking a hit because your balances are creeping toward that credit limit. You also want to hold on to credit cards that you've had for a while because if you shut down a credit card account, your debt load looks larger in comparison to your available credit.
So, you should also avoid applying for a lot of credit cards as well, with the same theory in mind, including those retail store cards. They are included in that as well. And every application you fill out, every single one, is giving permission for your credit report to be pulled, and that together can lower your credit score.
HARRIS: So, a lot of available credit, just don't use it all, right?
ELAM: Right. Exactly.
HARRIS: OK. So, when it comes to getting guidance with your finances, how can you be sure you're really getting the best advice?
ELAM: Yes, and this is one I get a lot, too. People are concerned, like I don't just ask anybody. If you're looking for a financial adviser, check out FPA for financial planning.org. This will allow you to find a planner in your area. And make sure you talk with his or her references, and take a look at their records by going to finra.org. That's the Web site for the Financial Industry Regulation Agency.
On that Web site, you'll find a broker, check tab where you can check the qualifications, including licenses, registrations and exams the broker has taken and passed, and when it comes to cleaning a bad credit, a good real sum (ph) here is to be skeptical of anyone that solicits business.
If a credible repair company doesn't tell you what your legal rights are, huge red flag right there. And don't trust a credit repair company that advises you not to contact a credit bureau directly because you want to make sure that you're not getting taken for a ride, Tony.
HARRIS: Yes, good stuff, as always. Thanks, Stephanie. See you next hour.
ELAM: Sure.
HARRIS: The wave of crime that's hit Chicago streets in the last few years has two state representatives calling on the National Guard to assist police with patrols. We want to hear from you on this one. What do you think? Should the National Guard be called in? Go to our blog, CNN.com/Tony.
(COMMERCIAL BREAK)
HARRIS: OK. Time for troops, that's the question. Crime has gotten so bad in Chicago, some city leaders want the National Guard called out. We break down that story for you in the noon hour, and on the cheap, a man bargain hunts for surgery overseas and actually finds some success, but how wise is this move. That's coming up for you in the noon hour of CNN NEWSROOM.
(COMMERCIAL BREAK)
