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Call in the National Guard?; Betting Against Mortgages; Clean Energy Alternative

Aired April 26, 2010 - 14:00   ET

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

ALI VELSHI, CNN ANCHOR: Here's what I've got "On the Rundown."

Could you imagine the National Guard patrolling the streets of Chicago? If two state lawmakers have their way, that's exactly what would happen. They say crime is so bad, it's time to call in the troops.

Are we talking about martial law? I'll talk to somebody about this in a minute.

Plus, a seemingly endless path of destruction carved by a tornado across the South, 150 miles long. In its wake, lost homes, lost neighborhoods. And sadly, some lost lives.

We're giving you a first-hand look at the devastation.

And there have been all kinds of new developments in the fraud case against Goldman Sachs. The case itself -- the case is under investigation. But as Congress gears up to put the magnifying glass on Goldman, I want to do the same. I want to help you put this big bank and this big story into context.

Deadly gun fights, murders, abductions, rapes. I'm not talking about a war zone, I'm talking about Chicago.

Two Illinois state lawmakers say desperate times call for desperate measures. They want Governor Pat Quinn to call in the National Guard.

Let's talk about how bad it really is in Chicago.

In 2010 so far -- we are in April -- 113 murders so far in Chicago. That averages out to about one murder every single day. And let me give you some perspective on that.

One hundred and twenty-six U.S. troops have been killed in Iraq and Afghanistan so far this year, real war zones.

Democratic State Representative LaShawn Ford is one of the lawmakers calling for the Guard. Here's what he has to say.

(BEGIN VIDEO CLIP)

LASHAWN FORD (D), ILLINOIS HOUSE OF REPRESENTATIVES: U.S. troops have been winning the hearts and minds in Iraq. They stabilized those communities. They made those communities much better from the time that they went in, and now those communities are safe. And we're saying that's what we want here in Illinois, for the National Guard to come in and help stabilize the community with the Chicago Police Department.

(END VIDEO CLIP)

VELSHI: Let's bring in Dr. Dennis Rosenbaum. He's a criminology professor at the University of Illinois in Chicago.

You've heard the representatives. You heard what he has to say, Dr. Rosenbaum. The city's police superintendent is not in favor of this idea at all.

What do you think the right thing to do is?

DR. DENNIS ROSENBAUM, CRIMINOLOGY PROFESSOR, UNIVERSITY OF ILLINOIS, CHICAGO: Well, I don't think it's a good idea. I think it's a mistake to bring in the National Guard.

I think they do a fantastic job of -- in a military setting. But in this particular urban environment, we -- it's not necessary, they're not well trained to deal with civilians. They're trained in a theater of war. Yes, they can help out in catastrophes and extreme situations like Katrina, but that's not what we have in Chicago.

VELSHI: Right. And that's an interesting thing to bring up.

This crime in Chicago does tend to be geographically centered. It tends to be centered. There's a lot of youth violence. There is a problem that needs to be addressed, and all the discussions we've had about this over months, it doesn't seem to simply be a policing matter.

ROSENBAUM: No. It's much more than that.

It needs to involve the community. And, in fact, the local police, the Chicago police, are very well-trained in working with the community, working with the schools, working with the churches.

You have to see this as a process of some formal control, but also the informal control of the community, taking charge, taking ownership of this. And, you know, you can't just see it as a war zone. It's not.

Yes, it's been upsetting to people lately, because some children have been caught in the crossfire, some young, some innocent people. But the homicide rate is no different than it was a couple years ago, and it's substantially lower than it was a decade ago. So I also think that we have to put this in perspective. The National Guard is not trained to deal with the protection of civil liberties, to make proper arrests, to promise -- guarantee that there's no unreasonable search and seizure.

VELSHI: So what is the real answer? I mean, I understand what you're saying about how it needs to lean on the community, but we have talked to -- at CNN, we have talked to church leader, we've talked to educators, we've talked to the secretary of Education, we've talked to politicians, we've talked to police and state legislators.

What would you say as a criminologist? What would you say is the thing that has to be done?

ROSENBAUM: Well, you do need a comprehensive, strategic plan that involves all of these entities and requires that they play a role. And there has to be leadership in that. And you also do need to take out repeat offenders.

There's kind of a weed and seed approach. You do need to remove the repeat offenders. But Chicago has thousands of officers that work in special units that focus entirely on hot spots of crime. And they're doing their best they can at that.

But I think the city as a whole does have to come together. We've got community organizations like CeaseFire and others that do a great job of helping. You have to intervene in the violence when it's occurring to prevent retaliation. You have to work with parents.

We need surveillance of kids. Also, we need much more mentoring and parental roles. And there's critical periods after school that they're working on.

VELSHI: All right. This is going to continue to be an issue. This is such a great city continuing to suffer, these problems.

Professor Rosenbaum, thanks for joining us.

ROSENBAUM: You're welcome. Thank you.

VELSHI: All right. Goldman Sachs, are they a bogeyman, are they a scapegoat? The answer actually depends on who you ask about this.

We'll take a closer look on the other side of this break.

(COMMERCIAL BREAK)

VELSHI: Let's take a quick look at the markets.

The Dow is up about 23 points. Not too worried about all this Goldman stuff that's going on and the attention that's going to be on Goldman Sachs, as seven senior executives at the company go before Congress to testify about what role, if any, that company had in the economic meltdown.

But there you go. The market's up, not too concerned about it.

All right. Swimming against the tide, betting against the bubble, keeping your head when all about you are losing theirs, all that can make you a lot of money. And in the case of Goldman Sachs, can get you into some trouble.

A week and a half after the Securities and Exchange Commission accused Goldman Sachs of defrauding investors in mortgage-backed securities, top executives are being hauled before the Senate Permanent Subcommittee on Investigations. That happens tomorrow. I'll be on Capitol Hill to cover it.

In the meantime, let me bring you up to speed with what has happened just since Friday.

The Securities and Exchange Commission's own inspector general is now investigating the timing of that fraud suit. It was filed April 16th, just as the Senate was heading into the final stretch on a financial regulatory overhaul. We've also seen some Goldman e-mails showing how the bank made "serious money" from the housing market and the meltdown.

Given a choice of investing in securities tied to home mortgages or betting that the mortgages would fail, Goldman did both. And they say they were just, you know, trying to balance things out.

In July of 2007, to cite one example, the bank says it lost on the -- hang on a second here. It lost $332 million -- OK. Those arrows are wrong.

Let's get that off the screen. Let's just go ahead with this.

The bottom line is, Goldman bet against the mortgage market and they bet in favor of the mortgage market. And we have to decide whether or not we like that, whether it was legal, whether it was immoral, whatever it was. The most we can say is that it remains to be seen.

Here's what Goldman says. The Senate Subcommittee, "has cherry picked just four e-mails from among 20 million pages of documents and e-mails provided to it by Goldman Sachs. It is concerning that the subcomittee seems to have reached its conclusion even before holding a hearing."

I could go on and on, but I want to bring in the guy who wrote the book on the deals that brought Goldman Sachs so much unwanted attention. Greg Zuckerman is a senior writer for "The Wall Street Journal." He's the author of "The Greatest Trade Ever." He joins me now from New York.

Greg, in fact, what you have written a book about is exactly what the SEC has charged Goldman About. A lot of confusion out there amongst my audience.

What is Goldman allegedly -- what have they allegedly done wrong?

GREG ZUCKERMAN, SENIOR WRITER, "WALL STREET JOURNAL": Sure. Just taking a step back here, what happened was this investor, John Paulson, was really bearish on housing and on the whole -- kind of financial market, didn't have enough to bet against. So he went to Goldman Sachs in early 2007 and said, if you create this product, this CDO product, I can bet against it. And Goldman turned around and sold it to some of its investors, and the accusation is that they didn't tell -- Goldman Sachs didn't tell these investors that, hey, John Paulson played a role in selecting some of the underlining securities behind this deal.

VELSHI: So, what part of that is allegedly wrong? It's not the bets, it's not John Paulson, it's not Goldman creating an ability for people to bet against the mortgage market. In fact, those turned out to be pretty smart bets in the end. The issue is whether or not Goldman was honest with one of its clients that another one of its clients was betting against this, and it had some stake in it.

ZUCKERMAN: Yes, it's not so much that Goldman was betting against mortgages at the time. That kind of looks a little icky to us, that they were selling some of these investments while some of the people at that same firm were betting against similar kinds of things. It was more that they are accused of misleading their investors by not telling them that John Paulson and his team played a role in selecting some of this underlining securities for this deal. So it's more of a misleading rather than a conflict of interest charge.

VELSHI: All right. So you know this from covering this for a long time. We know this, that people are mad about what happened in the economy. They think it's not fair dealing.

Goldman has been one of those names that continues to pop up as having made money on everything that everybody else seems to have lost money on. And I guess my concern as we go into these hearings tomorrow is that it's too satisfying to find Goldman Sachs responsible for the downturn in our economy, for betting against America, for doing something bad. But ultimately, that stuff wasn't illegal.

ZUCKERMAN: True. To me, it's a really fascinating and an important case, because it's probably the first time a major firm and the major, the biggest on the street, has been accused of defrauding its investors as part of this whole financial crisis. If you think about it, the last few years, we've all been hurt, taxpayers have been hurt, investors have been hurt, but the banks themselves have really been crippled if you think about Lehman Brothers and Bear Stearns, et cetera. This is one of the few cases where it wasn't that the experts got it wrong and hurt themselves, they hurt their investors, which is the accusation, which makes it really crucial.

VELSHI: Right. But for people who are looking for this bogeyman, or this scapegoat, is it sensible for us to allow Goldman to be that? I guess my concern is, if you put it on Goldman, if you somehow hold them responsible for more than what they might have been responsible for, do we miss actually finding out who was responsible for the downturn in the economy?

ZUCKERMAN: Yes, I completely agree with you. I mean, Goldman Sachs can be credited with a lot of things. They got nervous about housing before things started getting bad in early 2007, so they get some credit.

They did a better job of some other places, like Lehman Brothers and Bear Stearns and Citigroup. We had to help Goldman Sachs, but not nearly as much as some other banks, so in some ways, you know, we shouldn't as hard on them. But there is resentment, as you know, the fact that they make money when markets go up and down, and we as taxpayers have had to bail out bank after bank. So they in some ways are a scapegoat.

VELSHI: Resentment is key to this whole thing.

Greg, great to talk to you. Thank you for being with me.

ZUCKERMAN: Good being here.

VELSHI: Greg Zuckerman is a senior writer at "The Wall Street Journal." He's written a book, literally, on this, "The Greatest Trade Ever."

All right. Coal mines, exploding oil rigs, leaking volcanoes in Iceland. Coming up after the break, I'm going to tell you what all of these three different things have to do with a very possible clean energy alternative.

It's going to get hot on this show in just a few minutes. Stay with me.

(COMMERCIAL BREAK)

VELSHI: With the coal mining tragedy in West Virginia and the oil rig explosion in the Gulf, our dependence on energy is in the forefront of everyone's mind.

Well, this week in Indonesia, there is a meeting of world leaders to talk about a possible clean energy alternative, something called geothermal. You might have heard about this before.

Let me show you what we're talking about.

Geothermal energy comes from the heat that exists within the Earth, instead of harvesting fuel and then burning it, the way we do with coal and oil or natural gas. According to the Department of Energy, geothermal energy is a renewable energy source because the heat is continuously produced inside the Earth.

You see the crust, the mantle, the outer core, the inner core. Most of you -- most of the time you've got to dig for this geothermal energy, but sometimes it just comes right to the surface itself, like a volcano or a fumarole, which is a hole where volcanic gases are released, or hot springs, or geysers. Geothermal energy is heat in the form of steam or hot water that can be used to heat buildings, or it can be used to create electricity the way coal is or oil is.

People around the world use geothermal energy to heat their homes and to produce electricity by digging deep wells and pumping the heated underground water or steam to the surface. You can also use the stable temperatures near the surface of the Earth to heat and cool buildings. A heating system like this provides heat for 95 percent of the buildings in Iceland, ironically, where the big volcano eruptions impacted air travel all around the world earlier this month.

Now, the United States leads the world in electricity generation with geothermal power. California has 34 geothermal power plants. Nevada has 16. Hawaii, Idaho, Montana and Utah each have one geothermal plant.

They don't burn fuel to generate electricity, so their emissions are very, very low. Take a look on the left of your screen. Those are the emissions that would be put out by a -- this is just, by the way, a very, very rudimentary representation, so don't worry about whether it's accurate. Coal and oil put out lots of carbon dioxide emissions. On the right would be the equivalent number of emissions, or value of emissions, put out by geothermal.

They release -- actually, it's not even equivalent. They were less than one percent of the carbon emissions of a fossil fuel plant. Just so you know, more than half of our electricity in this country comes from coal-fired plants. Geothermal plants emit 97 percent less of the acid rain-causing sulfur compounds that are emitted by fossil fuels.

Just one of those ideas that's worth thinking about. You'll hear more about geothermal in the coming years and months, so worth knowing what it is. Obviously, if you want more information on that, lots of it available on the Internet.

Let's take a look at some of the top stories that we're covering this hour.

The exact cause of the mine explosion in West Virginia that claimed 29 lives a few weeks ago remains unknown. The mine's owner, Massey Energy, held a news conference today saying the air levels were safe right before the blast. But people want answers. A Senate hearing will be held tomorrow, and investigators continue to probe.

President Obama and Vice President Biden led a memorial for those 29 miners yesterday.

And a bunch of oil is leaking into the Gulf of Mexico from that oil rig that exploded and sunk last week off the coast of Louisiana to the tune of about 42,000 gallons a day. That's 1,000 barrels. At last check, officials said the oil slick extends about 600 square miles. You can see it in that picture. And they estimate it could take hours or months to stop the leak, which is about a mile under water.

Also a, judge in Haiti has dropped kidnapping charges today against American missionary Laura Silsby and nine others. They were accused of kidnapping 33 children in the aftermath of the Haiti earthquake. They say they were just trying to save the kids from the quake zone.

The other missionaries went home weeks ago, but Silsby has remained behind bars. She still faces charges for irregular travel. The kids returned home last month.

All right. These pictures are stunning. It's a killer tornado ripping through the Southeast. Look at that. You can't even tell what part is a tornado and what part is the sky it is so big.

It hit so fast and so hard, we're going to take you to a Mississippi community and show you where three children, very sadly, were killed. The community is still reeling

(COMMERCIAL BREAK)

(WEATHER REPORT)

VELSHI: And, of course, staying in the Gulf of Mexico, there's a major battle right now to stop or try and contain that huge oil spill. You can see the slick in this picture from late last week. It's grown since then.

Here you can at least see it now. It's so big, that it's hard to see the definition of it.

It's a very complicated attempt to stop the spill. We'll tell you about it and talk to a guest about the prospects for success.

(COMMERCIAL BREAK)

VELSHI: Another developing story we're following for you, that huge oil spill in the Gulf of Mexico, about 50 miles off the Louisiana coast. That's where the Deepwater Horizon drill rig sank after a huge explosion ripped through it last week. Right now about 42,000 gallons of oil are gushing into the gulf on a daily basis. That's 1,000 barrels. A small army of workers are fighting to stop that leak. They're hoping that robot submarines will be able to trigger what's called a blow out preventer. It's basically a valve at the top of the well head. If that works, the valve would be closed and that would shut off the leak. That could take 24 to 36 hours. If that fails, then they might try placing what's called a relief rake about a mile away, enter the leaking one at an angle in an effort to help stop the leak. That could take weeks or months.

Joining us now from Houston to talk more about this is Greg McCormack. He's the director of petroleum extension service at the University of Texas, has many, many years of experience working with the crews of offshore oil rigs. Greg, thanks for being with us again. You were with us last year, last week when we were trying to make sense of the fire and the developments. What do you think of these efforts? Does this make sense what they're trying to do?

GREG McCORMACK, DIR., PETROLEUM EXTENSION SERVICE, UNIV OF TEXAS: It certainly makes eminent sense, and these are tried and true efforts there. There's a couple other efforts that they might try to employ. One is to put a dome over the leak and run a pipe up to the surface and collect the oil that way or to put dispersants down close to where it's leaking.

VELSHI: Dispersants are the chemicals that go in there to try and break up the oil. And I understand that they have been applying those dispersants. It's like a soapy mixture?

McCORMACK: Yes, it breaks (ph) the surface (INAUDIBLE) so it can really mix with the water so it doesn't end up on the shoreline. They have been spraying that on the surface.

VELSHI: I have been talking to the Department of Interior who told me, OK, we got 1,000 barrels of oil leaking from this. On any given day in the Gulf of Mexico, there are about 1,700 barrels of oil leaking into the Gulf of Mexico anywhere. I guess that just disperses?

McCORMACK: Yes, that's correct. And because it's been leaking for quite a while, this microbial action, which is eating the oil up. So that in and of itself will help the present spill that we have here.

VELSHI: When do we start to really worry?

McCORMACK: I think we star to worry right now. We have not found the true method of killing this well right now.

VELSHI: And should this work into the larger political discussion, where there's been a lot of pressure because of the price of oil, because of our increasing demand in the world for oil to drill off shore in the United States? Is this arming people who sit there and say, hey, maybe we haven't got this thing nailed.

McCORMACK: It's inevitable this will enter the debate. It's also inevitable that if we want reasonably priced oil, we are going to have to drill in deeper waters and we're going to have to go deeper in areas that we have not explored before.

VELSHI: And is that more dangerous or more prone to difficulty than shallower water drilling?

McCORMACK: It is definitely, infinitely more difficult, because you're drilling down into higher temperatures and higher pressures.

VELSHI: All right. What's your general view of how this well is going to be capped and how this leak is going to be stopped? Is it going to be this first effort or are they going to have to drill that, send that second rig in there which could take weeks?

McCORMACK: I pray it will be the first and I'm hoping it will not be the relief well, because you're right, that will take weeks and maybe even months to locate the existing well bore and to drill into it and to stop the flow of hydrocarbons.

VELSHI: Complicated work. Greg, good to talk to you again. Thanks very much for being available to us to try and understand this. We're getting a lot of comments from our viewers who want to try and understand what is happening here. Greg McCormack is the director of the petroleum extension service at the University of Texas.

You've probably heard the saying, at least I've got my health. Well, unfortunately, a lot of people don't.

(BEGIN VIDEO CLIP)

KELVIN ARIAS, HAS NO HEALTH INSURANCE: I've cried so much, I don't want to do it anymore, you know? I just want to try and -- whatever obstacle I have in my life.

(END VIDEO CLIP)

VELSHI: We're going to meet a young guy who is facing a health challenge, along with the challenge of being uninsured. Poppy Harlow is up next with that.

(COMMERCIAL BREAK)

VELSHI: Your early 20s can be challenging. Job prospects are uncertain, even if you are pulling in a paycheck, benefits aren't often there. Under the health care reform package that passed earlier this year, young adults will be able to stay on their parents' insurance plan a little while longer. The provision kicks in later this year and a whole bunch of folks are just trying to hang on, until then. Poppy Harlow has talked to one of them. She joins us now with that. Poppy?

POPPY HARLOW, CNN CORRESPONDENT: Yeah, Ali, this is a man, like so many others out there right now, he's 24 years old. His name is Kelvin Arias. He lives in Brooklyn and he suffering from Crohn's (ph) disease, which is an inflammation of the intestines and by the way, it does not go away. He's stuck in this position Ali. He's too old to be on his parents' insurance. He doesn't have enough hours in his job right now to get insurance through his employer, but he makes too much money to qualify for Medicaid. He's one of the many people stuck right in the middle. Here's Kelvin's story.

(BEGIN VIDEOTAPE)

KELVIN ARIAS, HAS NO HEALTH INSURANCE: If I don't have my life, if I don't have my health -- I've cried so much, I don't want to do it anymore, you know? I just want to try and -- whatever obstacle I have in my life, I want to be able to live instead of worrying about it so much.

HARLOW: What would help?

ARIAS: First of all, for me to get good health insurance. Without health insurance, I'm nothing. I'm not able to get my medicine. I'm not able to go see a doctor.

HARLOW: And that makes it worse, your disease worse.

ARIAS: Yeah, it definitely aggravates it. I don't have any medication, my disease is not in control.

HARLOW: How much does the medication cost you right now, without insurance?

ARIAS: For a generic 30-day supply, it's $640.

HARLOW: $640. That's a paycheck.

ARIAS: Yeah. That's more than a paycheck for me.

HARLOW: So do you go without it sometimes?

ARIAS: I've been going without it since January.

HARLOW: And you've spent a lot of time in the hospital even recently?

ARIAS: Yeah. I went to the emergency room to get admitted. I was feeling stomach pains and a whole bunch of other side effects from my condition.

HARLOW: Are you going to have to pay for part of that?

ARIAS: I'm going have to pay for everything. Yeah.

HARLOW: Do you know how much that's going to cost?

ARIAS: Hundreds and hundreds of dollars, if not a couple thousand, at least.

HARLOW: Do you ever try not to go to the hospital because you think I can't afford it?

ARIAS: Yeah. That's probably why I wait so long, is because I know I can't pay for it. I was robbed of my childhood, because I wasn't able to run and play basketball or play baseball. I was in little league, and I had to stop playing little league because of my condition.

HARLOW: You really think that if you get insurance, it's going to make the situation at least better for you?

ARIAS: Most definitely. Like I said before, if you have your health, you have everything.

(END VIDEOTAPE)

HARLOW: Certainly right. Ali, we're going to check back in with Kelvin in a few months this fall, once that change kicks in. We have health care reform, but nothing has changed for him right now and I'm afraid to say he's certainly not alone, a lot of people out there like him

VELSHI: What costs the system more, him going to the emergency room because that's where he can get health care or the system when it kicks in? What do we think is going to be a better deal?

HARLOW: Absolutely, Ali, he spent four days right before we talked to him in the emergency room in intensive care for that entire amount of time. That definitely cost the system more than putting him on some sort of insurance, putting him on Medicaid and letting him buy the prescriptions. He literally goes without his prescription, because it's $640 a month and his paycheck every two weeks is less than that, Ali. Costs the system more right now, but it's his only choice. He doesn't have another choice.

VELSHI: All right Poppy, thanks a lot for that. And by the way, we'll be talking a lot tomorrow. We're both going to be on this Goldman hearing and story tomorrow. Poppy Harlow Checking some of our top stories right now, Senate Republicans say they'll block the start of Democrats' debate on financial reform as they work to finalize their own proposed legislation. GOP lawmakers say the Democratic version has some loopholes in it that need to be closed. They also want to include regulations aimed at mortgage giants Fannie Mae and Freddie Mac.

The Supreme Court says it will take up a case on violent video games. California is trying to ban their sale to minors on the grounds that the voluntary rating system in place doesn't do enough to protect kids. The industry says that's going too far and that this is a matter of free speech.

And Iceland's main international airport back up and running after a three-day shut down. Flights were grounded from Friday when winds changed direction and blew volcanic ash that way. Iceland's volcano is still spewing smoke and ash but not high enough to affect flight paths.

And where is he? Is Ed there? Look at that. There he is, Ed Henry. He is live and he is going to be talking about something very near and dear to my heart, the New York Yankees.

ED HENRY, CNN CORRESPONDENT: That's right.

(COMMERCIAL BREAK)

VELSHI: That is what got Ed out to the east room of the White House today. We're both fans of the Yankees. The Yankees coming into the White House. You're in the east room. This is a different scene than we normally see with you.

HENRY: We're in the east room and over my left shoulder you see the championship trophy right there, Ali. It's not in Boston this year. It's in New York, but now it's at the White House, pretty cool. The Yankees are going to be here with President Obama just in a few moments. I've got my pin stripes on here, but I also got a Yankees world champions cap. So I think I'm going to wear it. The only time I get to wear a baseball cap to work. It's pretty cool. The Yankees earlier today went to Walter Reed Army Medical Center, I should mention that as well. It's not just about baseball. They were there meeting with wounded troops from Afghanistan and Iraq, signing baseballs, et cetera. That's a nice thing that they did today to remember people who are serving overseas, obviously.

VELSHI: I brought a jersey into work, and forgot to bring it here, but I am wearing the tie you gave me when you were here, so it's kind of honoring you.

HENRY: That's cool. It's kind of funny. Derek Jeter was quoted in the "New York Daily News" today talking about how he thought it was going to be sort of routine. The early part of his career he was at the White House something like four times when they won so many titles. It's been a few years since the Yankees have been here and now they're back and he was joking about how it's pretty cool to go into the oval office and Derek Jeter said it's a little like going into Steinbrenner's office. I don't like to disagree with Derek Jeter, but I'm not sure you can compare.

VELSHI: I don't get the impression that the president is much of a yeller. Steinbrenner is known for his temper and his strong ways. This has been -- the Red Sox were at the White House recently?

HENRY: A few years ago, I heard the Red Sox were here. I'm not sure, though. I didn't attend that one. I didn't want to. Here let me put the rest of this on. They're going to start in a couple minutes. I'm going to actually have to wrap this in a moment, because they've got to clear the room. But I'm going to be ready when the president comes out. I don't usually get to do this, but it's the one day a year I'm going to do it.

VELSHI: That is excellent. You're going to have a good time. This is some of the perks. You had to work -- I turned on the TV on Saturday and I know we were joking about how the president was in North Carolina and who knows when the president is on vacation whether you work or you don't work. You've always got to be ready and I saw you on TV, so I figured you do work an awful lot. So I'm glad you're getting to meet the Yankees. Tell them I say hi.

HENRY: I will, Ali, we'll send a shout out to Jeter and the boys.

VELSHI: Excellent to see you my friend, Ed Henry on the Ed Henry segment every day here on our show. Tomorrow -- I'm going to be up in Washington tomorrow. Goldman Sachs executives will be center stage on Capitol Hill, which I think is not going to be as much fun as the Yankees. What does Goldman Sachs actually do and how do they do it? We're going to demystify Goldman Sachs for you after this break.

(COMMERCIAL BREAK)

VELSHI: Tomorrow, Goldman Sachs executives are going to take center stage in front of a Senate committee. Goldman Sachs is known as the most feared and once the most respected firm on Wall Street. But what does the firm do and how do they do it? Here's Christine Romans.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): 85 Broad Street, home to the revered and feared, Goldman Sachs. But after more than a century of avoiding the media spotlight, the bank finds itself front and center. "Rolling Stone" ridiculed it as a great vampire squid wrapped around the face of humanity. Critics blame Goldman for selling toxic assets like mortgage-backed securities that contributed to the financial collapse. Like other banks, it took government bailout money, although it has since paid it back. And while the country is still reeling, Goldman Sachs is having a banner year.

ELIOT SPITZER, FORMER NEW YORK GOVERNOR: Goldman always brings to the table the attitude we're smarter than everybody else and we're better than everybody else and that's why we make money. ROMANS: Former New York Governor Eliot Spitzer investigated Goldman's business practices while attorney general. What is it about Goldman that makes them so feared and respected?

SPITZER: To the extent, they're the New York Yankees of the investment banks. They keep winning. They have all the money, they keep winning, they have an arrogance, but people underneath it say, boy, they're good. And so you love them, you hate them, you resent them, you fear them. You think the game is fixed and sometimes it's probably all of the above.

ROMANS: It all began in 1868 when Marcus Goldman created a trading company that invested in other businesses. Soon after, his son-in-law, Samuel Sachs joined the firm, a rare Jewish bank. Outside of headquarters, you won't even see a Goldman Sachs sign. The company declined our request for an on-camera interview. Instead Goldman Sachs prefers to let its high octane roster of traders, investment managers and bankers speak for itself.

JANET HANSON, FORMER GOLDMAN SACHS EMPLOYEE: This was the equivalent of getting to work at NASA.

ROMANS: Janet Hanson spent 14 years at Goldman, starting in the '70s, the first woman to manage the money market sales desk. For Hanson, the allure was simple.

HANSON: The excitement of working with really smart people, I think, is really what attracted these very talented young people, particularly young people.

ROMANS: To begin with, the firm recruits top students from the best graduate schools. Charles Ellis is author of "The Partnership: A History of Goldman."

CHARLES ELLIS, AUTHOR, "THE PARTNERSHIP": If you've got the very, very best people and very large numbers, and you discipline them well and train them well and give them tremendous motivation to do great things and teach them to play as teams, you get very formidable organization.

CHRIS WHELAN, INSTITUTIONAL RISK ANALYSIS: Goldman bankers just work very hard. They try and get information before everyone else does and they try and act on it first.

ROMANS: They also rely more on complicated, high-tech trading over traditional investment banking to make money -- loads of it. In the third quarter, more than $49 million in profit a day. Allowing for bonuses Goldman's CEO claims are justified. He said in October --

LLOYD BLANKFEIN, GOLDMAN SACHS CEO: I can't do too much that subordinates the interests (ph) of our shareholders in having a great franchise in Goldman Sachs and maintaining our people and being able to recruit other people.

ROMANS (on-camera): After a public outrage, Goldman backed off and decided to offer 30 top executives bonuses in deferred stock instead of cash, a sign to Goldman watchers that the days of avoiding the public spotlight are long gone. Christine Romans, CNN, New York.

(END VIDEOTAPE)

VELSHI: Be sure to tune in tomorrow. I'll be in Washington to cover the Goldman Sachs hearings on Capitol Hill. But before I do, I want to set the stage a bit and give you some perspective. My XYZ is coming up next.

(COMMERCIAL BREAK)

VELSHI: Time now for the XYZ of it. In a few minutes, I'm headed to Washington, DC, where I'll be covering congressional hearings focusing on Goldman Sachs, and what role, if any, it played in the worst recession we've had in decades. I've covered the story from the beginning and I'm going into this with an open mind, as you should. There are some facts that are not in dispute. Goldman Sachs is a 140-year-old investment bank and considered the gold standard in its industry.

Investment banks are where big companies go to be matched with investors, to buy other companies, or to merge. And investment banks are where growing companies go when they list on the stock exchange and grow bigger. Goldman took the Ford Motor company public in 1956. Before that, as a predominantly Jewish firm, it handled big business transactions for Jewish-led business that other banks refused to deal with. It entered into transactions with smaller companies that Wall Street wouldn't deal with. It was the enabler for companies to grow. Three former U.S. Treasury secretaries are Goldman alums, including Robert Rubin and Henry Paulson. So is former New Jersey Governor Jon Corzine and the current head of the Bank of Canada.

Goldman became the biggest investment bank on Wall Street and one of the most influential companies in the world. But all of that has turned on its head. Today some argue that Goldman's influence reaches well beyond Wall Street into the corridors of power in Washington, that the company got special treatment or influenced government policy to line its own pockets. In truth, it could be that Goldman always known to hire the smartest people around, may have just made wise choices and hedged its bets. Goldman is charged by the Securities and Exchange Commission with double-dealing, working against one set of clients in favor of another.

Also, Goldman has submitted some 20 million pages of evidence to Congress and some of it seems quite damning. Tomorrow we'll hear directly from several Goldman executives, including the boss, Lloyd Blankfein and a vice president named Fabrice Torre (ph) or as he called himself in what appears to be a self-incriminating e-mail, fabulous fab. Bottom line is that you couldn't make some of this stuff up. At a place at a time when we really need someone to blame for this financial crisis, Goldman Sachs looks to have served itself up to us on a silver platter. But given that this was the worst recession since the great depression, we actually need the truth more than we need a scapegoat or a bogeyman. It would be easier for and for some people more enjoyable to decide that Goldman had a hand, a major hand in the near destruction of our economy. But the truth, as we know, is often not that convenient. So together, let's keep an open mind. I'll see you tomorrow from Washington. That's it for me. Time now for "Rick's List."