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In the Arena
Did Banks Get Away with Fraud?; The Other Side of Wall Street; Nuclear Waste Mess
Aired April 14, 2011 - 20:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELIOT SPITZER, CNN ANCHOR: Good evening. I'm Eliot Spitzer. Welcome to the program.
Tonight, a national disgrace. Wall Street brought the country to its knees, millions of jobs lost, homes lost, life savings lost.
Our economy came close to complete collapse and no one at the top, not one of them, has been charged with a crime. Today, we found out why.
But before I get to that, let me take you back to the darkest hour, 2008, just as Lehman Brothers collapsed, just the market began to come down like a house of cards. At that exact moment, the big lie was born.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, FORMER PRESIDENT: I know Americans are concerned about the adjustments that are taking place in our financial markets. The White House and throughout my administration will focus on them and we're working to reduce disruptions and minimize the impact of these financial impact developments on the broader economy.
(END OF VIDEO CLIP)
SPITZER: He looks nervous, doesn't he? No wonder the big lie is scary. You know the big lie. Trust us. We can handle this. The banks will take care of themselves. The banks said it, the government said it.
Well, today, a Senate report exposed it all with stark and frightening language. Our country's biggest banks were, and I quote here, "shoddy, risky and deceptive." Goldman Sachs, the world's most successful investment bank knew, they knew before just about anyone else, just how bad it was.
And not one person who worked there, not one, ever said stop. No one said, we better tell the customers we've been selling this junk to, or how about a simple call to someone in the government, hey, guys, this merry go round is going too fast, we're about to crash.
Nope. Goldman made a decision, we can make some money here. Don't tell anyone what's coming. So much for trust us. Look, I used to be the attorney general of New York. I went after these guys. Because for the capitalist system to work, everyone has to play by the rules. It's conceivable to me, in fact it's obscene that no big fish has been reeled in. No one who matters has gone to jail.
This is too big a story for one night, folks, so we're going to do a series called, "They Got Away with It." We're going to keep going after this story until we get all the answers.
And to help us get started, here's one of the best financial reporters in the business world, once upon a time he was also one of those Wall Street analysts that I prosecuted.
Henry Blodget, welcome. You've got some questions for me I know. But you know what? You're a good guy to come back on the show and it's great to have a chance to have a conversation.
HENRY BLODGET, EDITOR, BUSINESS INSIDER: And you're good to have me. Thank you.
SPITZER: My pleasure.
BLODGET: And it's great. Your producers have actually asked me to ask you some questions, very nice to ask you some questions for a change.
SPITZER: All right. Without a lawyer present.
BLODGET: So, Eliot Spitzer, why is nobody in jail?
SPITZER: Well, look, I think we got incredibly valuable window into this today.
Gretchen Morgan said in an article in the "New York Times" in which she says, Tim Geithner, the Treasury secretary, was going around to prosecutors saying, don't bring cases, it will rattle the markets.
Now if that's the case, and I sure expect a lot of people are going to be zeroing in on that, and saying, if he did anything like that, it's not only outrageous, it is -- you know, it's also -- it's a lot worse than that. So they're going to be finding out, I presume, e-mails, phone calls. Did he meet and say, it will rattle the markets because what rattles the market is fraud, corruption and abuse, the likes of which we've had?
BLODGET: If he did that, that's outrageous.
SPITZER: Right.
BLODGET: But to be very simple.
SPITZER: Right.
BLODGET: Was it weak laws or weak enforcement? BLODGET: More weak enforcement than weak laws. Let's be very clear. The laws are crystal clear. You lie to a customer, you withhold material information, that's all you've got to do.
Look, our case was all the analysts in Wall Street -- not to relieve history -- were basically being told, look, your bonuses get bigger if you pump up good stocks even if you think they're bad.
OK, we tried to zero in and change that. That's what was going on with all these junk bonds. The investment banks had these Clayton documents. They were told these mortgages that were underneath these highly sophisticated mortgage backed securities were going to go bust. They knew it.
The proof is there. That information traveled up into the companies. They still marketed them. They still gave -- the aiding agencies gave them AAA ratings. They were still marketed. And when Goldman knew this was going to go south in December '06, took a short position on its betting against the market. Did they tell anybody? No, they kept selling the stuff.
BLODGET: Let me defend Wall Street. Goldman Sachs is a bookie.
SPITZER: Right.
BLODGET: They sit between people who want to make bets. Sometimes when there's no one that wants to take the short side of the bet, Goldman has to take it. That is perfectly legal. It is done every day and yet you're making it sound like a crime.
SPITZER: No. This is not -- they were not making a market so there was liquidity. They made an affirmative decision we're going to bet against this stuff because in December '06 they said it, it's in this report, it's amazing, a high-level, top-of-the-company decision, this stuff is going to go bust.
They knew it. And a lot of people -- look, a lot of people had seen this coming, people -- other people placed bets, but they weren't lying about it. Goldman had customers they were selling this stuff to.
And here's the biggest lie. The investment banks had said for years, we will regulate ourselves. We don't need government to ensure that we're honest. We will do it ourselves. Trust us. We will look out for the public. This puts the lie to it. They were corrupt, greedy and aberrations.
BLODGET: That is my point.
SPITZER: And I'm worked up with that.
BLODGET: But that's my point. That's not weak enforcement. That lord of the flies.
SPITZER: That's right.
BLODGET: Regulation. We'll take care of it. So that's weak laws.
SPITZER: No, the laws were there.
BLODGET: Congress bears some responsibility.
SPITZER: Well, yes-no. The laws were there. As I said, look, remember, I did this as the New York attorney general. All we had was we had a marked (INAUDIBLE), but really it was nothing more than a common law statement of principles. You can't lie to people.
Being wrong and everybody says, well, gee, maybe they were just wrong or other people are wrong. Being wrong is not a crime. Just so it's very clear. Being wrong is not being deceptive. Where you're deceptive and hence liable either civilly or criminally is when you affirmatively misrepresent.
That's what they were doing by withholding information if they've gone to their customers and said, we are -- we're going to tell you something that may be material to you. We're betting against this thing that we're selling to you. That would have been different.
BLODGET: You said in your opening which is an opinion that is going to be echoed around the country and world, it is obscene that no big fish is in jail.
SPITZER: Right.
BLODGET: What big fish should be in jail?
SPITZER: I'm not going to name individuals yet. That would be improper. But I'll tell you, when I have seen the documents, these Clayton documents, that say in the FCIC, Phil Angelides' commission, (INAUDIBLE), all the more power to him and credit to him for doing that.
These documents which are documents produced for the banks because the banks asked these companies, go out and tell us, are these mortgages any good? Because we're securitizing them. Highfalutin language for reselling it. We're selling it to other people. So we've got to know, is it any good?
And the information they got back was, no, it's not good, and they kept selling it. This information, they were securitizing junk.
Back in 1999 when I was AG, we began making subprime lending cases. We saw a sort of fraud that was pervasive in that industry, in that sector. We tried to bring the case and we got to lay a lot of cases. By '04, I wrote an article, I said, this stuff is going to default. Everybody knows it.
And you know what happened? The OCC and the banks went to court to stop us from digging deeper. They didn't want people to know for the simple reason they were making too much money on it. That's the corruption.
BLODGET: If the problem is weak enforcement, is it weak and wimpy prosecutors? Or is Tim Geithner and others, saying, lay off? We've got to save the system then we'll worry about it?
SPITZER: I think it's a combination of many factors. It's not easy to make these cases. You're standing up to some very, very powerful institutions. And not every office, not every individual wants to do it, is willing to do it. You have the Tim Geithners of the world, and he isn't the only one who kind of go around saying, well, you know, we're not so sure.
You should -- when I first brought the first series of cases against virtually every major investment bank in New York, the SEC came to me and said, you don't know what you're doing. And I said, no, you don't know what you're doing. You're sitting here and accepting the fact that fraud is -- you know, Harvey Pitt, who was the chairman of the SEC back then, said we want a gentler, kinder SEC.
I said that's absurd. I want an enforcer with teeth. And so the entire sensibility in that sector was be kind and gentle, instead of protect the integrity of the market. And I said to them, if you don't protect the integrity, there'll be a cataclysm. And that's what we got.
BLODGET: Isn't it part of the problem that there are regulators everywhere, nobody knows who is in charge of anything, you stepped in said you know what, SEC, you're incompetent, I'm taking over.
Isn't that part of the problem? We just don't know if it's a simple regulatory system --
SPITZER: Sure, it is. We should simplify it. We should make it coherent. We've got to do that. The competition among regulators works also.
Look, Henry, we've got to move on. You're going to come back. You're off and off, and because you've seen it from every side. I haven't seen it from every side but a lot of different sides. It's a great conversation with you, Henry. Thanks so much. And it's great to talk to you any day, especially with no lawyers present.
BLODGET: You too.
SPITZER: All right. Coming up, Democratic Senator Carl Levin of Michigan today released his bombshell report on what really led to the collapse. I found it shocking because it confirmed so much of what we already suspected and I think you will, too.
I spoke with Senator Levin just moments ago.
(BEGIN VIDEOTAPE)
SPITZER: Senator, thank you so much for joining us.
SEN. CARL LEVIN (D), MICHIGAN: Good to be with you.
SPITZER: I want to go back, if we could, to December 2006, when Goldman Sachs realized that the entire mortgage industry was going to blow up, there was going to be a cataclysm. Am I reading this report right that what they did once they realized this was figure out how to make money on this? Instead of going to the government or even telling their clients that there was a problem there.
LEVIN: They decided that they were going to do what is called the big short, which means they were going to bet very, very heavily against the mortgage market. And to sell securities, short as it's called, they were in a hole because they had bought those securities and they've actually done some of the securitization themselves.
And they wanted to get out of that position. They not only got out of that position, they went very, very short and made a whole lot of money at the same time, misleading their clients into buying those securities with representations, for instance, in the case of the Hudson Security that we went into on great depth.
They told the future customers that they were on the same side as the customer. In other words, that they were investing in that security with the customers. As a matter of fact, they were betting $2 billion against the Hudson Security at the same time they were representing to their clients or potential customers that they were -- their interest were aligned. That was totally misleading and they made a lot of money in that year 2007 on that big short which they acknowledged in their own internal documents is what they were doing but publicly they continued to deny it.
SPITZER: Look, I don't want to put too fine a point on this. They lied. They lied to their clients and they lied to the public. Isn't it that simple?
LEVIN: They misled their clients and they attempted to mislead the Senate, and they, I believe misled their clients and their customers. It's that direct. I don't want to reach any -- as you know, with your background, I'm not going to reach any legal conclusions.
SPITZER: Right.
LEVIN: That's up to prosecutors and up to the Securities and Exchange Commission and hopefully they're going to look at our entire report because there's a lot of factual material here against a lot of firms and a lot of individuals, not just Goldman.
SPITZER: Senator, I'm going to take a leap. I'm going to say it out loud. Very directly.
Goldman Sachs, you lied to the public. You lied to your clients. You've got a problem. You come on the show. Sue me. I don't care. You lied to the public, you should be prosecuted.
I'm going to say it right now. And I hope they are.
I want to come back to something deeper, though. For years and years and years, the entire time I was attorney general when I was in office, these investment banks said, trust us. Self-regulation is going to solve all the problems in the market.
Alan Greenspan with his libertarian shtick and all that stuff, it was idiocy, that they said, trust us, we will regulate ourselves. Facing this cataclysm, they knew it was coming. Did they do anything to stop it?
LEVIN: Well, no, quite the opposite. They first of all protected themselves from the position that they were in and then they went way beyond protection and made a whole lot of money in betting against the mortgage market, that they could see from their own materials that have plenty of holes in these mortgages that had been -- that they had bought, that they had solicited.
They very much were kind of a sponge soaking up these mortgages from a bank called Michigan -- Washington Mutual. Washington -- State of Washington Mutual, by the billions, these defective mortgages were being solicited by these big banks, including Goldman, but not only Goldman, and then they were putting them in securities, selling them into pension funds, making a lot of money on the sale.
And then in many cases betting against those very same securities that they were selling to those pension funds. So I would say that they not only were able to protect themselves against losses, which other banks suffered by their practices and tactics, but in the case of Goldman, they made big money on going short, betting against their own clients, betting against the mortgage market in 2007.
SPITZER: So, look, one of the biggest lies ever perpetrated in my view was being pushed on us by the investment banks for the entire decade, longer than that, when they were saying, trust us, we will take care of the public interest, and they did everything exactly opposite to that, sunk us deeper and deeper into this hole and created this catalyst.
LEVIN: I tell you, Eliot, you must have not just a cop on the beat and we put that cop back on the beat hopefully in the Dodd-Frank bill but we also have to have an aggressive cop on the beat. So we have written the laws now to get some regulation back into these markets to make sure that they are clean. And that people can rely on them. It's very important that people be able to rely on our markets and the damage that's been done to those markets has got to be corrected.
SPITZER: I've got to ask you a political question and I don't want to be partisan about this. But how is it that the Republicans and the House of Representatives have learned the wrong lesson from the crisis of two years ago?
How is it that they are going back immediately to a deregulatory philosophy, sort of saying the same things that were said in the run- up to this crisis and trying to destroy and gut the law Dodd-Frank -- Dodd-Frank that you've worked so hard to pass?
LEVIN: Beats me. It seems to me --
(LAUGHTER) LEVIN: The lessons are so clear. You don't obviously want to over regulate. Nobody wants to over regulate. The problem that got us into this difficulty was not overregulation. It was under regulation. People know that. People know that we made the mistake of deregulating and that these deregulation steps were wrong.
And -- I mean it's so obvious they were on. The public knows they were on. The public wants to cap back on the (INAUDIBLE). They don't want excessive regulation. Nobody does. But they do want regulation. They want us to have people who are protecting our food, protecting our water, protecting our free markets. People know that.
And I don't know why the Republicans don't see it. I think they're not only on the wrong side of history, having learned the lessons of history -- recent history, I think they're also on the wrong side of where public opinion is on this issue.
SPITZER: You know, Senator, you are so right. Nobody is for over regulation. All the years I was attorney general brought cases, I said there's only one simple rule you need to enforce when it comes to this. Tell the truth to your customer, tell the truth to the public. That's it.
And then all of those things you write about in your marvelous report wouldn't have happened. They wouldn't have lied to their customers, they wouldn't have lied to the government, and this cataclysm wouldn't have happened.
LEVIN: Yes.
SPITZER: Senator, I just want to thank you for your all man's work and putting this report together and I'm sure you've seen it. But "Inside Job," everywhere I go, I tell people go see that movie. It deserves the Oscars. It tells the story almost as well as your great report does.
LEVIN: Well, thanks so much. We feel very strongly that a bipartisan report with two years of work behind is going to have results in a lot of ways. And so we thank you.
SPITZER: Thank you, Senator.
(END VIDEOTAPE)
SPITZER: That is one great report Senator Levin put together and it really tells the tale in a way everybody should read it, or go see "Inside Job," as I said.
All right. By now I guess it's pretty clear what I think about Wall Street. In a moment I'll talk to someone who says I'm all wrong. We'll be right back.
(COMMERCIAL BREAK)
SPITZER: Goldman Sachs is doing god's work? Hold on. What? Goldman Sachs doing god's work? Well, that's what Lloyd Blankfein, Goldman Sachs CEO said, and my next guest agrees with him and he pretty much disagrees with everything I've said here tonight.
Joining me now is John Tamny, editor of both "Forbes Opinions" and Realclearmarkets.com.
John, thank for being here, or down in Florida where you are.
Look, I'll give you the first shot. You think it would be wrong to prosecute the executives on Wall Street. Explain why that is.
JOHN TAMNY, EDITOR, FORBES OPINIONS: I think it'd be wrong, because failure in the United States should not be a crime. The people we put in prison are the Ben Bernankes in the world, the Tim Geithners of the world and the political class who bailed out banks that should have been left to die.
Capitalism doesn't work when failed economic concepts are propped up by taxpayers. So in this case, the people that we should be putting in prison are those that save them on the taxpayer dime.
SPITZER: Look, John, I'm going to try and struggle real hard to find some points of agreement between the two of us. I'm going to start with one.
Couldn't agree with you more, being wrong is not the crime. And I've said that over and over again in all the years I've been in the business of being a prosecutor.
What's wrong is lying and being deceptive about it. Now you would agree that if an investment bank -- and I don't want to personalize this to Goldman or anybody else. But if an investment bank went out to the public and said buy this stock or buy this, you know, mortgage-backed security, and back up at the home office there, they're laughing to themselves. This pig won't fly. And they're shorting it. That's a problem.
You'd agree with that?
TAMNY: Not as much as you think. And there's a reason why. Everyone on Wall Street or anywhere else has a different opinion on different securities. That's why there's money to be made in any market because there are deferring opinions.
But implicit there is that Goldman or other banks knew that these securities were bad, went out and sold them. But if in fact they knew that, why did they all need to be bailed out? What was very clear here is they also did not how toxic these securities were. And if they had, they wouldn't have needed the government to come in and save them.
SPITZER: Goldman ended up making a ton of money when it went short. But just so it's clear. Let's go back to the other sorts of cases that I made back when I was an AG analyst where these analysts were being given millions of dollars in bonuses to pump up stocks that they knew were going to go bankrupt.
You'd agree that is a crime, if that goes on, right?
TAMNY: I don't think it's a crime either because again there are different opinions. But in this case --
SPITZER: Wait a minute.
TAMNY: If in fact they are pumping up bad stocks that means that ultimately they will have no credibility to pump up anything and they will not be paid for.
SPITZER: So you're saying the market --
TAMNY: Everything in life is an economic decision.
SPITZER: Well, not everything. There are certain rules of integrity that don't need to rely upon the economics. If I'm your broker and I lied to you when I say buy the stock and I sell you my stock, my holdings are in the same company because I want to get out of it because think it's a piece of junk, and you then get stuck with it, you'd agree that's a violation of every duty, every rule, every principle of integrity that you drive the market, right?
TAMNY: It's a violation, but I don't think we need government to fix that violation. People who lie to their customers tend to lose customers very quickly. And so once again, the problem here is that there's too much government, there's too much regulation and an unregulated atmosphere, those that lie and cheat their customers are quickly out of business.
SPITZER: Boy, it hasn't worked that way so much. But look, let's switch to a second issue. You would agree, I suppose, that there's a negligence theory. If the banks had information that told them that all the mortgages underneath these mortgage-backed securities -- because I don't want to get technical with anybody -- but if they knew the stuff they were selling, that all those mortgages were going to default, and they didn't tell anybody that, and only they had that information, don't they have some duty to tell people that, that they're selling the stuff to?
TAMNY: They may well, but once again it's very apparent to me that they did not have this information.
SPITZER: Well --
TAMNY: Once again, we see that Bear Stearns was bailed out, that Lehman Brothers almost was bailed, that Goldman Sachs was bailed out, that Morgan Stanley was bailed out. If they knew what you say they knew, they wouldn't have been in that position to begin with. So I think it's unfair to say that they lied.
SPITZER: No, no. They had to be -- Goldman in particular had to be bailed out, had to -- overnight it was the given the opportunity, a bank holding company, to go to the Fed window because even though they had made billions of dollars in the specific trades we're talking about, when the entire system collapsed, even they didn't have the liquidity to handle that situation.
When the commercial paper market went bust, these banks that depended on overnight borrowing went bust. So even though they had gamed the system, they got caught up in -- I hate bad metaphor right now -- but the tsunami of what they created.
But I want to come to you with only --
TAMNY: But that's just --
SPITZER: -- a moment or two left. Why do you think the bailouts were bad and not just bad but criminal? I want to hear more about that.
TAMNY: They're criminal because for capitalism to work, you must have a scenario whereby bad business concepts and bad ideas are cleansed from the system. The bank failures were a sign that the economy was on the mend, that we are ridding this from the system.
So for politicians to bail them out, first off, was anti -- was a blatant violation of the constitution but it's also anti-economic growth because we perpetuated the very concepts that got us into trouble to begin with.
SPITZER: Look, let's leave the constitution out of this. I think there's -- I don't -- I disagree with you there as a lawyer that was unconstitutional. I agree with you, your premise. There's got to be the creative destruction in the economy.
TAMNY: Yes.
SPITZER: Bad ideas fail, you can't borrow. Now the larger issue here, though, was that if nobody had been resuscitated, the entire economy could have gotten to a point with 20, 30 percent unemployment.
I -- where I come down on this, John, we're not that far apart, is we needed to inject liquidity into these banks but they should have been forced to disgorge the bonuses and all the bad stuff that they benefited from over those years when they were sucking all these profits out that turned out to be false and deceptive.
Would you agree at least that would be a middle position you can live with?
TAMNY: No, I wouldn't agree with that, because I don't think the -- the economy would have collapsed without the bailouts. The simple truth is that 80 percent of all lending occurs outside of the banking system. And so the substitution effect in the economy means that others with capital would have come and lent.
Secondly, I think all this talk about regulating bonuses and all this is missing the point. If you want to regulate Wall Street, it's very simple. It's a one-line regulation. If you fail, you die. And I think once you do that, all of these problems that you don't like and I don't like also quickly disappear. SPITZER: Look, to a certain extent, I agree. Shareholders should do a controlled pay, not the government. Government has no idea how to control pay. Shareholders should.
John, appreciate you coming on the show. Next time we'll longer. I'm hoping we'll find some more points we can agree with.
TAMNY: Definitely.
SPITZER: All right.
Up next, attention all taxpayers, you're paying billions to store nuclear waste in Nevada. But guess what? It's not there and you don't know where it is.
And E.D., you're working on a great story also. What is it?
E.D. HILL, CNN CONTRIBUTOR: Yes, well, it's one thing if you're the vice president and he falls asleep on the job. It's another thing entirely if you're guiding planes around our nation when you do that. So we're going to talk to a former air traffic controller who wrote a great book, it's called "Secrets from the Tower."
SPITZER: "Secrets from the Tower." Sounds --
HILL: Yes.
SPITZER: And he was sleeping -- is it dreams from the tower or secrets?
(LAUGHTER)
HILL: No, he'll tell us what really goes on there.
SPITZER: Or also it's nightmares from the tower. All right. We'll be right back.
(COMMERCIAL BREAK)
SPITZER: The ongoing nuclear crisis in Japan is making Americans look at their nuclear plants a little differently and it's not a pretty picture. Many plants stored dangerous radioactive wastes exactly the same what the Japanese did at the damaged Fukushima plant.
What most Americans don't know is that for decades we've been paying billions to store that dangerous radioactive waste some place else. But those billions were wasted. And we're still in danger.
Drew Griffin of CNN's Special Investigations Unit is here now with the first of a fascinating two-part story.
Drew, what have you found?
DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT: Eliot, I think it's fair to say that up until now, the way the decisions have been made on how we store nuclear waste have been made on politics, not science. Politics, not safety. Now if that may sound unbelievable given the dangers involved, take a look at this.
(BEGIN VIDEOTAPE)
GRIFFIN (voice-over): If you live in a place where you get even some electricity from nuclear power, for more than 30 years, whether you realize it or not, you have been paying a tax to find a place to store waste from your nuclear plant safely. How much are we talking about?
JAY SILBERG, PILLSBURY LAW: The government is sitting on a pool of about $25 billion.
GRIFFIN: That, with interest, is now worth 30 billion, with a "b." And where's the money now and what is it being used for?
SILBERG: The government is sitting on it and they're not doing what we're paying them to do.
GRIFFIN (on camera): And that money is earning interest, about a billion dollars a year and some of it is being used for program costs according to the Department of Energy. But the idea was to use all of it to store the nation's nuclear waste in a bleak spot in the Nevada desert called Yucca Mountain. So how much nuclear waste has been stored in Yucca Mountain? Not a single ounce.
(voice-over): The nuclear waste has been going nowhere. Nuclear power plants in the U.S. have been doing what Japan has been doing. Instead of storing the waste in this multibillion dollar scientifically studied waste depository in Nevada, the waste is being stored right where it's being created, on site at nuclear plants across the country. Two years ago when we first reported this story, it was easy for Nevada Senator Harry Reid to tell us nuclear waste was safer right where it was.
SEN. HARRY REID, SENATE MAJORITY LEADER: Leave it on site, where it is. You don't have to worry about transporting it. It saves the country billions and billions of dollars.
GRIFFIN: But Japan's crisis has even Democrats wondering if Harry Reid's effort to keep nuclear waste out of his state is really safer?
SEN. DIANNE FEINSTEIN (D), CALIFORNIA: I truly believe we must begin to rethink how we manage spent fuel.
KEVIN CROWLEY, NATIONAL ACADEMY OF SCIENCES: If this was a rail fuel assembly, it would be 13 feet long and it would weigh over a thousand pounds.
GRIFFIN: This is what that waste looks like. This is a mock-up of a fuel rod assembly, a tightly engineered package of steel tubes, coated with a zirconium alloy that protects the highly radioactive uranium pellets inside. Except for the height, it's the same as a real fuel rod.
CROWLEY: Even when the fuel is taken out of the reactor, radioactive decay continues. The fuel rods continue to generate a great deal of heat and they also generate a great deal of radioactivity.
GRIFFIN: Kevin Crowley directs nuclear and radiation studies for the National Academy of Sciences. From his research, he knows how dangerous these spent fuel rods could be in the event of attack or natural disaster.
CROWLEY: There is no such thing as zero risk in any technology.
GRIFFIN: In his office in downtown Washington, Attorney Jay Silberg is very much aware of that danger. Silberg represents many of the nation's nuclear utilities who have been suing the federal government to try to force it to pay for continued storage on planned sites, suing the Feds to pay for what he says the government should have sorted out years ago.
SILBERG: Well, the government, unfortunately, has made it more of a mess than it should have been. The program, when it was set up, was supposed to be science-based. Millions, billions of dollars have been spent in studying Yucca Mountain. I refer to it at the most studied piece of rock in the world.
GRIFFIN: The latest picture CNN has of that most studied piece of rock are from 2002. We wanted to go back there to show you what's going on Yucca Mountain now, but the government citing safety said no. Members of Congress say they too are being kept out, that, despite not an ounce of nuclear waste on the property.
(END VIDEOTAPE)
GRIFFIN: But because of what is happening right now in Japan and because of the same conditions exist here, the Yucca Mountain closure that seemingly was a complete done and sealed deal is being rethought because everyone now realizes the dangers of all of this waste, Eliot, and so many potentially dangerous areas around the country. You have to do something.
SPITZER: You know, it's been horrific what's happened over in Japan in so many levels. What it has also generated is sort of one of those educational moments we all look a nuclear plants. We used to worry about meltdown. The active reactor could go bad, dangerous radioactivity spewing all over. Now, we're understanding these spent fuel pools could be at least a greater risk.
GRIFFIN: Right. And it's the not in my backyard syndrome, which is why those fuel rods stay where they are. Which is why the plant in Tokyo, in Japan has six reactors at the same spot.
SPITZER: That's right.
GRIFFIN: Just keep piling it on the same place that's already been approved. That is not going to work out. That's not going to be a politically viable solution, based on what's happening in Japan.
SPITZER: Maybe it hasn't gone wild and we need an answer somehow, somewhere, given that we already have 104 nuclear power plants in the nation, even if we don't build anymore.
GRIFFIN: Right. We have the waste.
SPITZER: All right. Drew Griffin, thanks so much.
Just ahead, you know those people who dress up in civil war costumes and refight that horrible conflict. Now they're being joined in battle on Twitter, on film, and online. And Americans are still divided on what caused it.
(COMMERCIAL BREAK)
SPITZER: The civil war began 150 years ago this week and ended four years later with 600,000 dead. The institution of slavery destroyed and a nation that for the first time began to call itself a nation, not a collection of states.
Lately, it seems the civil war is still being waged. The "Washington Post" is tweeting the civil war, replaying war correspondents and dispatchers on its Web site as if they are happening right now. And a new film by Robert Redford dealing with the Lincoln assassination conspiracy opens tomorrow. But it's not just Hollywood that's still fighting the war. Here to discuss this are John McWhorter, Columbia University linguist and columnist for "The New Republic," and CNN contributor Will Cain.
Gentlemen, thanks for being here.
So, John, let me begin with you. Was slavery the reason for secession and the reason we had this war?
JOHN MCWHORTER, CONTRIBUTING EDITOR, "THE NEW REPUBLIC": Slavery most certainly was the reason for secession. And if anyone doesn't know it, then they have been misled. In other words, they are ignorant and it would seem that we have polls lately showing that a lot of Americans are ignorant about that aspect of the civil war but ignorance never surprises me about anything and I don't see why the civil war would be an exception.
SPITZER: All right.
WILL CAIN, CNN CONTRIBUTOR: That's strong. Yes, that's strong.
SPITZER: Will, since you're on the other side of this, go at it.
CAIN: I'm not on the other side necessarily, Eliot. Slavery was a reason for the civil war. Was it the only reason for the civil war? No. And it's almost -- the poll that we have CNN suggests was slavery or states rights the reason for the civil war? I don't think it can be an either or.
Here's the deal. Look, Abraham Lincoln said my paramount objective to the struggle is to save the union. It's not to abolish or enshrine slavery.
MCWHORTER: If there had been no slavery, there would have been no war, right?
CAIN: That's obviously right. But he said, if I can get rid of this civil war without freeing a single slave, I will. The point is, look, the emancipation proclamation freed slaves in the north. It didn't do anything for the half a million slaves in the border states who are loyal to the union.
The point is this, it wasn't just about slavery. It was about another purpose and that's this concept of states rights. The unfortunate thing is the right the south was fighting for was slavery.
SPITZER: Will, let me jump in here one second. States rights has been a dividing issue, a divisive issue all through our history.
CAIN: Absolutely.
SPITZER: Nullification doctrine. Even today with health care, there are states saying no you can't tell us, but it doesn't cause a war. I mean, John is exactly right. The only time this issue is sort of metastasized this way was when it was about slavery.
MCWHORTER: It also seems to me that what we're really asking is, if there are people out there who don't understand the role that slavery played in the civil war, and I think we all agree that it was significant, then does that mean that there is some sort of racism that's lurking out there? And what worries me is that the last time I was told we were supposed to be quaking in our boots about the racism out there is when there was that fashion to go into diners in the Midwest and find an aging man with a truckers cap and have him say into the microphone that he wasn't going to vote for Obama because he was black and we are supposed to worry that there was racism out there that was going to keep the president out of office. Notice I'm now calling him the president. So this racism out there, might be there, but the question is whether it matters and I think that as in so many cases we're seeing that if this has something to do with racism, it doesn't really give any indication of mattering that much.
SPITZER: Well, let me look -- let me ask you about some of the sort of hot button issues, like flying the confederate flag. Should that be permitted? It causes an outrage in South Carolina. What do you think?
MCWHORTER: Well, very briefly, I think that there are southerners who would like to have a pride in their state and they're in a delicate position because one has to acknowledge there's a little something called slavery that has to be talked about. But I don't think that it's fair to suppose that somebody who lives in a southern state, usually who's white, can't have any kind of local pride because of the history of slavery in their state. That's the delicate thing.
CAIN: Let me tell you a delicate thing. I'm quite conservative and from the south. For me to comment on the confederate flag would be totally inappropriate because the racist box is checked for me pretty much out of the gate. It's my job to uncheck it.
SPITZER: But it's unfair of anybody to impute that to you. CAIN: No.
SPITZER: And I don't think anybody would.
CAIN: But here's why it's happened that way and I think we've all agreed on this point. States rights has been an issue since the founding of this country. It was Jefferson versus Hamilton. It metastasized as you said with the civil war and it's present today. That's what Obama versus the Tea Party is about. But the problem is, because the civil war enshrined this concept, that if you're for states rights, then you're for slavery. Then today, we still have to fight that concept. If you're not for a strong federal government, then you are akin to racist.
SPITZER: No. Look, Will, I reject that. I think there are people who are for states rights who clearly have very progressive views about race and all that. I think states rights --
CAIN: Thank you.
SPITZER: Wait, so I don't buy that linkage that you just made. But let me ask you the question, is it wrong because so many people are offended if for the state of South Carolina to fly the confederated flag or to enshrine it in any way?
MCWHORTER: No, they just have to make an argument. They have to say this confederate flag to us does not signify that we're in favor of the fact that slavery was here or that we're racist but we do have pride in other things that have happened in South Carolina. There's a notion that a lot of people have that you are supposed to hate people in the past for not being able to see beyond the social morays of their time. I find it childish. I don't get it. I'm not surprised the founding fathers owned slaves. I'm not surprised that almost any man who was famous before about 1965 was by our standards a sexist. And in the same way, there are people in the southern past who we would not want to sit through dinner with now, but we can still have pride in the other things that they did. I say that and I'm not even from the south.
SPITZER: That's a fascinating prism to which to judge people saying to judge them my modern morays is to be false and frankly, we would condemn everybody that way. Do you buy that?
CAIN: I think to set the confederate flag has become a modern day roar shot test. You see in it what you want to see. And, you know, I actually agree with John. I mean, there are plenty of people that see something of the confederate flag -- I'm a fan of John (ph). I'm not here to disagree with him.
MCWHORTER: I'm actually with Will.
CAIN: Here we go. But the point is, there are plenty of people that see things in the confederate flag that have nothing to do with --
SPITZER: OK. Let me make it a bit more difficult then. There are some people for whom the civil war has a mystique, who they continue to kind of play with it. Is that a little odd? I mean, do you find in that something that is troublesome, is that they're trying to revive a piece of a southern society or an issue that somehow should be left behind?
MCWHORTER: Cops and robbers, good guys, bad guys, Lincoln's death, it was a long time ago. The music was kind of good, especially people who are not women usually enjoy playing with soldiers on fields and dressing up and going bang bang. The civil war has that kind of play value and it always will. We can acknowledge that there were some highly unsavory aspects to why one side was fighting. But on the other hand, of course, people are going to be fascinated by a war and there are things about it other than the slavery aspect. I think as ordinary, intelligent people, we can look at it that way.
SPITZER: OK. I want to come back to this flag issue because I'm going to raise a metaphor that always gets people in trouble. How do you distinguish between the confederate flag and the Nazi swastika?
MCWHORTER: Oh, it's very simple.
SPITZER: Glad there's an easy answer.
MCWHORTER: Yes. If you look at the Nazi swastika, really, what was going on with the Nazi philosophy was something very focused. The idea was there's certain people that we must do away with. The confederate flag was about the south. And here was a war that was fought where slavery was definitely what pushed it over the edge but we're talking about a region of people with customs, with the history. There was something about it that was rather nasty. Luckily that part of it is gone. Yes, there are still the legacies but that part is gone.
The flag has a different meaning now. I think that the Nazi flag was and still is, in terms of what being a Nazi today would be, something quite different and much more resistant inherently to any kind of mutation in our interpretation of it.
SPITZER: Do you buy this distinction?
CAIN: Yes, I do.
SPITZER: So this is not just a question of where you sit, determining where you stand. I mean, as somebody who's Jewish, I certainly agree with you. You see the Nazi swastika, you think one thing only. What you're saying as African American is you see the confederate flag, you can see beyond. It is a broader set of values, principles, and speaks to an entire --
MCWHORTER: The south was and is more than slavery.
CAIN: And it's not that the confederate flag doesn't represent some important things. It does. The point is, it also represents more than that.
SPITZER: All right. MCWHORTER: You can think of it as moving through time.
SPITZER: All right. John McWhorter, Will Cain, thank you so much.
Up next, we know that what air traffic controllers keep falling asleep in the towers. But what else goes on up there? You may not like what you hear. E.D. Hill will be here to get to the bottom of it. Don't go away.
(COMMERCIAL BREAK)
E.D. HILL, CNN CONTRIBUTOR: The news today is that the man in charge of the nation's air traffic controllers has quit. The announcement comes after yet another incident where a controller fell asleep on the job. And this time it happened at 2:00 in the morning as a medical flight carrying a sick patient tried landing at the Reno- Tahoe International Airport. The pilot radios the control tower over, over again. No answer. And finally, this.
(BEGIN VIDEO CLIP)
PILOT: We're going to need to land.
AIR TRAFFIC CONTROL: Lifeguard, you're tango, November, roger, and landing will be at your own risk.
(END VIDEO CLIP)
HILL: And landing at your own risk, that is from the former air traffic controller he had been speaking to, not even the one at the Reno airport. They've been trying to contact that person, missing in action. Apparently, asleep on the job.
Retired air traffic controller and author of the book "Secrets from the Tower," Bob Richards joins me now.
Bob, thanks for being here.
BOB RICHARDS, RETIRED AIR TRAFFIC CONTROLLER: Good evening.
HILL: So we've had a number of incidents, six different ones just since the beginning of this year. Last month, two jetliners had to land without a controller at Washington's Reagan airport. Also, there have been incidents in Knoxville and three separate ones in Seattle where controllers fell asleep. In Lubbock, Texas, controllers failed to answer when they were supposed to help a flight land. And the government said that they put more people in the towers but in Reno there was only one. Apparently, that one was asleep. So are the skies safe?
RICHARDS: Well, the skies are absolutely safe and let me start off by saying any controller sleeping in the tower, that's an indefensible situation. We won't tolerate that, number one. But it doesn't represent the 10,000 plus controllers who are working their proverbial tails off to get people from point A to point B and probably what is the most safest endeavor an industry in this country, much less the world. So you look up to the (INAUDIBLE) crash in 2009 and you have three million operations, 1.5 billion unscathed. So safety, the sky is falling, that's not it.
This is an issue though we still have to address. And this is not an issue as far as I'm concerned. This has been going on for 15, 20 years and it has to do with fatigue. It has to do with stress, has to do with staffing. And it's also not an issue unusual to just controllers. This is also a pilot issue, if you recall correctly.
HILL: Well, let me stop you. Hold on one second.
RICHARDS: Sure.
HILL: Why? Why are they so tired on the job?
RICHARDS: Well, fatigue-wise, I mean, you can look at a lot of different reasons. Controllers work the most unusual work shift called a compressed work week, a rattler shift.
HILL: Let me ask you why? Why do they do that? Why do they not have regular shifts where you work either, you know, midnight to 8:00 a.m. or 8:00 a.m. to, you know --
RICHARDS: You mean, straight shifts is what you're asking.
HILL: Yes.
RICHARDS: Why don't they work straight shifts?
HILL: Why do they work shifts that change all the time?
RICHARDS: OK, I'll tell you. Because particularly at the busiest airports, if you did that, then some of the controllers would be working all the busy traffic, other controllers would be working much less busy traffic and the proficiency of all the controllers would suffer because you get guys that are working all -- men and women working all the busy airplanes and many not working any and the proficiency would suffer. So you try to equalize that workload out, particularly at places like Chicago, O'Hare, LAX, JFK, Atlanta, Dallas, where the workload is incredible. So, yes, you don't want to put all that on one group of people. You want to spread it out. So that's the downside. We've been doing that for 30 years. This is not unusual to us. We've been able to work with it.
HILL: I mean, I've worked weird shifts and I know how difficult it is especially if you've got to work a night shift and then the next day you've got to work a day shift. And, yes, you've got eight or nine hours off in between, but it's hard to go right home and, you know, hit the bed and go to sleep for seven or eight hours. And that's what a lot of these air traffic controllers are being asked to do. If they really can't handle -- and that's what you're saying, they can't handle an intense workload day to day, then why aren't we doing shorter shifts with more people?
RICHARDS: Well, first of all, this, again, this has been an ongoing problem. We have been addressing the issue in different ways. Controllers have addressed it. Probably the best move just increasing the midnight shifts to two people, that was major. In the 30 years that I have been in government, that's the fastest I've ever seen the government move on something. And I get to go see --
HILL: Hold on. Hold on.
This was at 2:00 a.m. There was only one person on. So why?
RICHARDS: Why?
HILL: Yes.
RICHARDS: Why do you need two people?
HILL: Well, no, you said it was made into two people if they change the rules but in this case there was still just one. Is it just at large airports that they went to two people? It sounds like we need to be two people everywhere.
RICHARDS: We need to be two people at controlled busy airports. And there were 30 airports left that had not been doing that. They've been doing it with just one controller. Like Reno. And now they've decided to do it, which is something long overdue. Not for the reasons of should we keep, make sure the other guy, person is awake. But my main reason for this is, if we have an emergency and air traffic emergencies happen on the spur of the moment. And to ask one person to talk to the aircraft and emergency, get the details from them, find out what's going on and then also ask him to call the emergency equipment, call, coordinate with the city, coordinate the air traffic facility is not a good thing.
HILL: That's a great point.
RICHARDS: And that's the safety aspect.
HILL: Yes.
RICHARDS: That's the thing I fear the most and it's happened a lot at O'Hare but we've always had two people at O'Hare. We've always understood that more than anybody because we work so many airplanes and it happens all the time.
HILL: Now, when we talk about increasing the staffing and you said Reno is one of those airports where they just had one person on overnight and hopefully that will all change, do we have enough people being trained? I mean, are they trained at a fast enough clip so that you can replace people when they go or, you know, bring in as many people as you really seem to need right now?
RICHARDS: Well, in the last two years, we've definitely been very generous about getting a lot of trainees in, but that's because the years previous to that we didn't. And when 10,000 people were set to leave in 2007, we still hadn't brought anybody in. At least not a significant number. And what people failed to realize it takes two to three years to train a controller. So if I walk in the door and you come in the door, E.D., you don't replace me. It takes you two years, and that's if you make the program. And that's the numbers against that too. So we're just -- we're just starting to feel that, again, when Randy Babbitt came, the best thing that happened was, here's a guy who is a pilot, who understands the air traffic operation, who understands pilots, and he's been a big impetus to getting these things done. So we'll see the benefits to that hopefully in the coming year or two.
HILL: My dad was a pilot out of O'Hare. I heard a lot about the difficulties of landing there and the air traffic control situation.
Bob Richards, thank you very much for being with us. Again, Bob's book is called "Secrets from the Tower." Thank you.
RICHARDS: Thank you.
HILL: Eliot, and I will right back.
(COMMERCIAL BREAK)
SPITZER: All right, E.D. Here's the question of the evening. Which is safer to rely on, an advice from Goldman Sachs on Wall Street or rely on an air traffic controller to be awake at 2:00 in the morning when you're landing?
HILL: I would say Wall Street because you determine the risk level that you want to take. You determine whether you trust that person. With the air traffic controller --
SPITZER: Not if there -- not to give the information you need.
All right. You still trust Wall Street. I know it was in your blood.
HILL: Of course.
SPITZER: All right. We'll fight over that some other day.
Good night from New York. Thanks for watching.
"PIERS MORGAN TONIGHT" starts right now.
