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Parker Spitzer

Interview With John Yoo; Interview with Virg Bernero

Aired November 19, 2010 - 20:00   ET

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


KATHLEEN PARKER, CNN ANCHOR: Good evening, I'm Kathleen Parker. Happy Friday, y'all.

ELIOT SPITZER, CNN ANCHOR: And I'm Eliot Spitzer. Welcome to the show tonight. Another great program.

We're going to have a conversation, Kathleen, with John Yoo. He is the controversial lawyer from the Bush administration, in the Justice Department, who wrote the memo saying torture was OK.

PARKER: We're also going to hear from a major success story, the mayor of Lansing, Michigan. He's going to tell us how his city has been reborn since GM came back to life.

SPITZER: But first as always, our "Opening Argument."

You know the trial, the conviction of Ahmed Ghailani. Yes, it was only on one count out of 285, but it is a big, big win. This terrorist is going to spend, I predict, the rest of his life behind bars exactly where he should go.

And you know what? Yes, there wasn't all the evidence before that jury that maybe there should have been. But you know why? You can't put evidence into a court when that evidence is produced by torture.

We all know that, we all agree with that. Our system works. Terrorist goes to jail, justice was done.

PARKER: Let's remember what that really looked like. I mean those buildings were two embassies in Kenya and Tanzania in 1998, the lost life, 224 people dead, including a dozen Americans.

And you know essentially, Ghailani got off on those -- on those murder charges. So that's part of the conversation we're going to have with some great people tonight and try to get to the bottom of some of these still conflicting feelings we have.

SPITZER: That's right. Let's get into "The Arena" and have that conversation.

Joining us now the author of the controversial torture memos written under President Bush, former U.S. Deputy Assistant Attorney General John Yoo.

PARKER: Welcome, Mr. Yoo.

President Bush recently was asked about torture and waterboarding. And he essentially said, well, look, the lawyers told me it was legal.

(BEGIN VIDEO CLIP)

MATT LAUER, MSNBC ANCHOR: Why is waterboarding legal, in your opinion?

GEORGE W. BUSH, 43RD PRESIDENT OF THE UNITED STATES: Because the lawyer said it was legal. He said it did not fall within the anti- torture act. I'm not a lawyer. And -- buy you've got to trust the judgment of people around you and I do.

LAUER: You say it's legal and the lawyers told me.

BUSH: Yes.

(END OF VIDEO CLIP)

PARKER: And I guess he was probably pointing to you in that case. And I wonder if you feel that he's walked away from you.

JOHN YOO, DRAFTED BUSH "TORTURE MEMOS": Look, I know part of the job of being the lawyer is defending sometimes unpopular decisions that your clients make. And I'm willing to put -- do that part of the job.

But I also think that there's no escaping responsibility if people who make the policy decision. I mean just because a law says you can drive 65 miles per hour doesn't mean you have to drive 65 miles an hour.

There's still a lot of discretion and choice that the elected leaders of our government had to make. And I'm prepared and confident in saying that I think my legal judgment then was right under the circumstances.

But that doesn't mean that you had to -- that President Bush had to choose the policy they did either.

PARKER: And so you still stand by your definition of waterboarding as not torture?

YOO: Well, I think that torture, as used by Congress and the criminal law, was undefined. It's never been used in any court decision. Never been in use by the Justice Department until that time. And so it is a hard job of trying to figure out. Do the impressive interrogation methods that the CIA wanted to use at that time, right, a few months after 9/11 violate the criminal statute against torture. And I didn't think then and I don't think now that the CIA's methods do.

SPITZER: John, would you agree that waterboarding would constitute harsh interrogation rather than typical plain vanilla interrogation?

YOO: Of course. I mean I -- certainly there is questioning of the kind that we use every day in the United States and police stations all over. Obviously waterboarding goes well beyond what the police officers do in the police stations.

SPITZER: Now I want to go one step beyond that. Your objection, I gather -- and tell me if I'm wrong -- to the way the Department of Justice and the Obama administration handle the Ghailani case is that they tried it in a civilian court and certain evidence as a consequence of that was ruled inadmissible.

Is that correct? Do you think in a military tribunal, it would have been admissible?

YOO: I actually have a broader objection to the use of civilian trials that really goes beyond whether the military courts would be superior to this. I think the military courts do give the judge discretion to allow certain kinds of evidence that a civilian court wouldn't.

But actually what worries me is that we're conducting these trials right in the middle of warfare. And we ought to do is wait or at least use proceedings where the decisions that courts make aren't going to have harmful effect on the way our men and women in the field carry out their missions.

I don't want -- I hope you would agree. I don't want, you know, the men and women in Afghanistan to be collecting evidence on the battlefield and interviewing witnesses. I think that's the really harmful effect that these kind of decisions -- just to try them in the first place at civilian court is going to have.

SPITZER: Well, look -- I disagree with you that that is in any way, shape, or form the consequence of handling this case in a civilian court as oppose to a military court. But to come back to the admissibility issue, a statute was passed. And I'm glad you agree that waterboarding would be harsh interrogation.

A statute was passed barring the use of evidence obtained by harsh interrogation even in military tribunals. Isn't that correct?

YOO: But they also I believe -- and I haven't looked at the rules in the last few days, I do believe that the military commissions still allow a judge to make a finding if he thinks it's in the interest of justice and that the evidence is not more prejudicial than probative to allow it in, if it's torture.

SPITZER: Well, right but there is a bar on evidence from harsh interrogations. So the point I'm making is that I don't think there would have been any difference whatsoever in the outcome here based upon the rules of evidence that have been created for either a military tribunal or a civilian court.

And that is exactly the decision or the point of view that Judge Caplan and the southern -- the federal judge who presided over this came to, in a footnote in his opinion. So it seems to me --

YOO: Right.

SPITZER: -- the outcome here would not have been different even in a military tribunal.

YOO: I don't know if that's true. I don't know if Judge Caplan is correct that the rules clearly prohibit the introduction of this kind of evidence.

SPITZER: But you --

YOO: I really don't think that's --

SPITZER: But you don't have any reason to believe --

YOO: I'm just saying --

SPITZER: Let me just finish -- you don't understand any reason to believe --

YOO: No, I understand --

(CROSSTALK)

SPITZER: -- this evidence would have been admitted?

YOO: No, no. I think that that would obviously be a contested issue that would have to be litigated in the military court system and maybe all the way to the Supreme Court, but it's not in my view clearly foreclosed the way it is -- and I agree with you on this point -- it's clearly foreclosed in civilian court.

SPITZER: Right. But all the screaming and shouting of -- against the decision to put this in a civilian court presumes this evidence would have been admissible and everything we've looked at suggests that it wouldn't have been admissible based on the statute and the decision of Judge Caplan.

And so I think it's all basically a misguided statement of anger and an outcome people just aren't happy with.

the question. You don't have any reason to believe that evidence would have been admitted.

Well, actually I disagree. I mean I'm not angry that this should have been a military commission rather than a civilian -- I think it's a mistake to try to put these guys on trial now no matter what the system is. I think that we ought to wait longer until the war is almost over or is over before we -- because I think having a trial in the middle of a war like this is going to create difficult security versus openness conflicts and could risk the revelation of intelligence and affect the activity of our soldiers on the field.

PARKER: Mister --

YOO: That's putting aside whoever convicts them or not.

PARKER: Mister Yoo, I can certainly see how this could be potential conflicts. I want to just talk about the human aspect of this in your case. You've certainly been through a lot when your name is attached to forever more the torture memos.

And I know people have given you a pretty hard time especially out there at Berkeley. But I wonder if you look back on that period and would like to redo anything. How do you think history will look back on your -- at your memo? Is there something you would like to change about it?

YOO: No, look, I knew when I was in the government and we had to face these questions which nobody wanted to answer -- I mean, they're thrust on us by the circumstances of the 9/11 attacks. But when that happened, obviously these are controversial issues. People are going to be angry no matter what you do -- which choice you make.

And so, I'd be happy -- not happy, but I'm willing to do the same things again and I don't think I would change my mind. I think I would reach the same conclusions that I did then.

I mean, I thought very hard about it back then. Now that doesn't mean, you know, it would be better if everyone, you know, got together in a big group hug and said, that's great that you reached the decision. That's not the nature of these hard national security decisions.

I wish they were otherwise. But that's the kind of conflict that the 9/11 attacks thrust on us.

SPITZER: John, I'm intrigued by your issue of timing as though somehow we should wait until the war on terrorism is over to initiate or bring the prosecutor this case. It seems to me the events in the Ghailani case transpired -- am I'm right -- in 1988.

So this is already well over a decade after the events. I mean traditionally criminal cases have a very tight time frame. How long would you wait? Are you saying since the war on terror might go for another 20, 30 years? We never try people, we just hold them indefinitely?

YOO: Well, that's the view of the Obama administration, too, right? I think they've said publicly even if Ghailani had been acquitted, they still would have detained him until the war is over. That is one of the big differences between --

SPITZER: But no -- but, John, that's --

YOO: -- a civilian trial and a military -- no, but I mean it's still the same authority. I mean the same authority is you, as a nation at war are allowed to hold members of the enemy they capture until hostilities have ended.

And yes, it could be a long war, but detention is not punishment in the military system. It's to prevent them from going back to the fight, which according to the Pentagon about 20 -- over 20 percent maybe of the people we let go from Guantanamo Bay have done back to doing.

So I think it's better to wait, detain them as we are allowed to under the laws of war, and then try them after it's over -- when there's no collateral cost to our military and intelligence agencies from holding the trial.

PARKER: All right, John Yoo, thank you so much for your time.

YOO: Thanks. Thanks for having me.

SPITZER: Our pleasure.

PARKER: All right. We'll be right back.

(BEGIN VIDEO CLIP)

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: John Yoo, respectfully, is a widely despised figure in the legal -- in the legal profession because of that torture memo. Because he said anything that isn't tantamount to organ failure is not torture.

(END OF VIDEO CLIP)

(COMMERCIAL BREAK)

PARKER: Now two esteemed legal scholars join us to talk about how so-called torture evidence can be used or not use in terror trials invoking al Qaeda.

Joining us now, Noah Feldman, Harvard Law School professor and the author of "Scorpions: The Battles and Triumphs of FDR's Great Supreme Court Justices." And also Jeffrey Toobin, CNN senior legal analyst.

SPITZER: As you know, we just spoke with John Yoo, who is the Department of Justice official during the George W. Bush administration, who said this evidence would have been admissible either because it wasn't torture, derived from torture, or even if it was it would be admissible in military tribunals.

So let me pose to you, Professor, the question -- the evidence in the Ghailani case that was suppressed by Judge Caplan in the trial that just ended leading to a conviction on one count and acquittal on 284 counts. Would that evidence have been admitted in a military tribunal?

NOAH FELDMAN, AUTHOR, "SCORPIONS": It's possible. Depends exactly what they did to Ghailani to find out the information that eventually led to evidence against him. And if that constituted torture, it would be excluded from military tribunal under the rules that are presently in place.

On the other hand, if it were pushy, as it were, if it were coercive without being torture, it's possible that it might have been admitted.

SPITZER: Let me just -- so it's -- the reason we don't know what they did is that the federal government did not contest that this evidence was derived from coercive behavior. Is that correct?

FELDMAN: They acknowledged that for purposes of a regular criminal trial, what they did was outside of the bounds. But they didn't say exactly what they did do for understandable reasons.

SPITZER: Right.

PARKER: OK. Let me back up because I'm a little bit confused. As I understand it -- OK, so torture is not allowed. Confessions derived from torture are not allowed in court.

SPITZER: Period.

PARKER: And yet, Mr. Yoo came up with the definition of torture -- or a new definition that said this is not torture. So why wouldn't it be allowed if the confession were from something that isn't legally torture based on their definition?

TOOBIN: Well, John Yoo, respectfully, is a widely despised figure in the legal -- in the legal profession because of that torture memo. Because he said anything that isn't tantamount to organ failure is not torture.

So, for example, waterboarding to Mr. Yoo is not torture. That view I think it is safe to say has been repudiated by virtually every legitimate law expert in the world, not just the country. So his view on what constitutes torture, I would say, is somewhat unique.

PARKER: So how did he come up with this definition? What's the difference between, for example, enhanced interrogation techniques and torture as he described? You say the organ failure thing. But based on what? I mean what was the original definition he used?

FELDMAN: Well, he got the definition actually out of a treaty that we signed, where we promised that we wouldn't torture people. I mean Congress passed a law with language exactly now being language of the treaty. And it said cruel and inhumane treatments counted as torture. So you can just find that for yourself.

He didn't have an exact analog anywhere in American law. So he looked to a health care statute and said that that was a basis for figuring out what counted as prolonged pain and suffering.

PARKER: And the health care statute pertained to what?

FELDMAN: It pertains to the compensation of hospitals under certain conditions of emergency room treatment.

(CROSSTALK)

FELDMAN: Nothing to do -- bottom line, nothing to do with torture. PARKER: Nothing to do with torture.

(LAUGHTER)

FELDMAN: Right.

SPITZER: So it's fair to say that John Yoo's interpretation of both what torture is and its -- torture's place in our legal structure has been abandoned universally by other than a small fringe of the legal community?

TOOBIN: Including by the Bush administration.

SPITZER: Correct.

TOOBIN: And this isn't like the radical crazy liberals in the Obama administration.

SPITZER: Right.

TOOBIN: These are his successors in the Justice Department under Alberto Gonzales and under Michael Mukasey.

SPITZER: Let's come back to the trial which has generated all sorts of screaming and shouting because there was conviction only on that one count.

Was this a victory or defeat for our judicial system?

FELDMAN: In my opinion, it's a huge win for the judicial system and for the American jury. Because the jury was extremely sensible. By finding him guilty on one single count, they assured that he will get 20 to life and very possibly life.

But at the same time, they sent a message that this kind of treatment is un-American and that the ordinary criminal justice system should not tolerate evidence that's based on outrageous things. And so that's the perfection of the jury that it can do something that pulls off the both commitment to our values and keeping us safe.

(CROSSTALK)

PARKER: But doesn't that seem like that was a deal in the jury room where they said OK, we'll go -- I think I understand one juror really held out for a long time and essentially caved on the one -- the conspiracy to destroy buildings -- and let the other 284 go.

I mean --

(CROSSTALK)

SPITZER: Jury verdicts are very often compromises among 12 people who have a disagreement. That does not in any way argue against the outcome here. I think the more theoretical question, Jeff, love your views on this, is whether or not -- looking at all the evidence that was given to this jury, did the jury do the right thing and did the judge do the right thing, suppressing the evidence? And did the administration do the right thing taking this to a civilian court?

TOOBIN: I don't have a problem with the judge. I don't have a problem with the jury. I think there is a political problem here. These cases are going to be very difficult to do in civilian courts. And each case is going to be different based on the particular circumstance of how the evidence was gathered in that case.

But I think the message here -- and I'm not talking about the unfair criticism of the Obama administration, but I just think it's going to be very difficult under our rules of evidence in American district courts, the same place where John Gotti and every other criminal is prosecuted, to use -- to bring cases against the people in Guantanamo. It's just going to be really hard.

PARKER: But what if he had been acquitted? What would have happened to him? Would he be just been released?

FELDMAN: In a statement that he made before the trial was over, the judge actually said that the administration would probably hold Ghailani indefinitely as a prisoner of war in our war against al Qaeda. That's possible. But it all depends on whether he did anything to support al Qaeda after September 11th.

He was only charged here with crimes before September 11th. We wouldn't be able to hold him as a prisoner of war on those crimes.

SPITZER: Jeff, your concerns here relate to whether this evidence can be admitted in a civilian court. And therefore you kind of presume that the evidence would be admitted in the military tribunal.

TOOBIN: Absolutely.

SPITZER: Judge Caplan, in a footnote in the end of his opinion, said don't be so quick to jump to that conclusion. That in fact the evidentiary rules -- this isn't a law school class, but it's a critical point. The evidentiary rules in the military tribunal also prohibit evidence that's derived from coercion.

TOOBIN: Right.

SPITZER: So why do you think it would have been admissible?

TOOBIN: Well, there is -- there are differences in evidence between the two. Certainly there are more things that could be admitted in the military tribunals. There are looser rules regarding hearsay.

SPITZER: Right.

TOOBIN: There are looser rules about classified information. But it is true that torture is out in either place, as well it should be because we shouldn't be benefiting from torture in our legal system on any way. But I do think it's easier --

SPITZER: But that was -- the evidence here derived from torture. This wasn't a hearsay issue. This was evidence that came from torture. And so it's not so clear to me that the outcomes would have been different at all.

FELDMAN: Well, do we know that it was definitively -- derived from torture? We don't.

(CROSSTALK)

TOOBIN: See, this is a distinction that only lawyers could love, which is it's coercive but it's not torture. What does that mean? Like -- like they're only removing some fingernails but not all of them?

(CROSSTALK)

SPITZER: Fundamental question. What should the dividing line be if you're either Attorney General Holder or the president of the United States, and you're trying to determine whether a terrorist who is caught -- an al Qaeda terrorist who is caught overseas plotting should be tried in a military tribunal or a civilian court?

What are the -- what are the basis for that determination?

TOOBIN: Well, I think if there is admissible evidence in a federal district court in the United States, you should do it there. Because that is the most legitimate, most respected form of American justice that we have.

But if you can't do it there, the evidence just won't support it and you have limits on the evidence, you should go to the military tribunal.

PARKER: All right. Noah Feldman, Jeffrey Toobin, thank you so much for a very fascinating conversation.

SPITZER: Later in the program, how did Wall Street gamble away your money and avoid any criminal charges? A question I'll never stop asking. Stay with us.

(BEGIN VIDEO CLIP)

MAYOR VIRG BERNERO, LANSING, MICHIGAN: Anybody who believes, who accepts that Mexico or China can do all of our manufacturing for us, I think, is mistaken. I think that's dangerous. That's headed in the wrong direction. We have to have a vibrant, advanced manufacturing sector.

(END OF VIDEO CLIP)

(COMMERCIAL BREAK)

SPITZER: General Motors stocks started trading again yesterday for the first time since the government's $50 billion bailout. Since the company filed for bankruptcy last year, GM has created or restored nearly 8,000 jobs.

PARKER: And that's great news for our next guest. The mayor of Lansing, Michigan, home to two GM plants. Our headliner tonight is Mayor Virg Bernero. He's joining us from Art's Bar and Grill in Lansing.

Thanks for joining us, Mayor.

BERNERO: My pleasure, thanks for having me. Thanks for stopping in Lansing.

PARKER: We think we'd like to come and join you right now. You look like you're having a great time.

BERNERO: You better believe it. We're gearing up for our big holiday celebration, Silver Bells. And we feel good, of course, about this wonderful news to have this incredible world record IPO with General Motors.

We are still first and foremost a GM town. We're proud to be -- you know, have MSU next door, of course. But we're -- we're a GM town. We're an auto town. We always have been.

We're diversifying and adding to our economy, but we are in no way ever giving up on autos. We're growing autos. Our Cadillac plant is expanding and we're just buoyed by this great news by GM's revival.

PARKER: Well, this is great. I don't even have to ask you a question.

(LAUGHTER)

PARKER: Listen. You fought long and hard for the government bailout, going to Washington and you call it -- your efforts the most important mission in your time as mayor. I guess you feel validated for -- about your push for the bailout?

BERNERO: I -- you know, Kathleen, I appreciate you remembering that here. We had some scary days here. I mean for any mayor and a citizen for a town like this when GM was facing bankruptcy, we were scared to death. But we weren't content just to be scared.

As you know, I organized mayors and went to Washington and fought, and praise god, we had not one but two presidents who stepped up and helped rescue the plants and give GM and Chrysler a new lease on life.

And that's paying off. I do feel this is a vindication, a validation, an affirmation that we need to make things. You know what? We're good -- we're great workers here. We have the most talented, productive workforce in the world in places like Lansing, Michigan, and Detroit, and Flint. And all over this country the manufacturing backbone of this country. It's important that we make things. SPITZER: Mister Mayor, first let me jump in and say congratulations. This is a huge win for you. It's a huge win for Lansing.

I've got to ask you, you're adding 600 jobs. You haven't given the number yet. But I think it's 600 jobs GM is going to bring back to your town. It's going to bring up to about 6,000 GM employee there is in Lansing.

Now on the other side, at one point, it was 30,000. So how do we begin to get back to 30,000? What are the policies you want to do to get us back so that GM brings us back the other 25,000, 24,000 to bring you back to where you used to be?

BERNERO: Well, look, Eliot. I appreciate the question. Part of it is the reality that we're more automated today. These plants are state-of-the art -- this is state-of-the art technology. This is not your father's -- my father's -- my dad who retired from General Motors, god love him, Julio.

You know, this is not the same. These plants are more automated. So the truth is look, we're never going to get back to 30,000. But my point is we need to be making -- anybody who believes, who accepts that Mexico and China can do all of our manufacturing for us I think is mistaken. I think that's dangerous. That's headed in the wrong direction.

We have to have a vibrant, advanced, manufacturing sector. That's what I'm fighting for. This administration, the Obama administration has a manufacturing framework that they have issued. They understand the importance. We need to make sure that Congress understands, that all of our elected officials and Americans understand.

You know this is a great day not just for Lansing but Americans everywhere because manufacturing matters.

SPITZER: Look, I am with you 100 percent. First, I want to nominate you to be secretary of commerce because clearly you've got the passion, you've got the energy. I can't imagine if we sent you over to Korea we wouldn't get the trade treaty that we need.

You'll just beat them down and I love that approach. And we need you out there fighting for us. But here's the question. When it comes to trade, clearly we're running this huge deficit with China. What do we do? Are they manipulating their currency? Are they not being fair in terms of what they do in the environment?

Where do you want to see us change our trade policy so we have that level playing field that you just talked about?

BERNERO: Well, look, you know well that they're manipulating their currency. And they do a lot of other things. They subsidize their industries. They sometimes provide free utilities to their industry. Here we you see -- here we adopt this rigid stance that government should be on one side and business on the other. And that would be fine if we were isolated. But we're not. It's a global economy. And we're asking our people to compete on an unlevel playing field. And so when our businesses can go to China, or to India, to Mexico, and get away with things with the environment that they would never get away with here, when they can pay workers dirt, when they can and expose them to problems and toxins that we wouldn't here, so it's not a level playing field.

And the other thing is. We allow countries to put tariffs on our goods. You know? And then we don't. We should treat their goods as they treat ours. I'm asking for a little reciprocity.

PARKER: All right. Mayor, one final question. It sounds like you're gearing up for a celebration tonight. Tell us what that's about.

BERNERO: This is Silver Bells. I get to wear my Christmas vest that my wife has tried to give away several times. So --

(LAUGHTER)

BERNERO: Thank you for helping me --

PARKER: We all want one.

BERNERO: -- to get it out there. This is Silver Bells. It's the lightning of the state tree where the city and the state work together and we light the official state Christmas tree. It's a great celebration. It's the kickoff to the holiday season in Lansing. Thousands upon thousands of people will converge on downtown Lansing around the state capitol. It's a great day for all of our community. Most all the activities are free, but the merchants downtown make out pretty good as well. I hope you'll come down to Lansing, Michigan and join us, the home of the Cadillac CTS and the Buick Enclave and a number of great vehicles that are made by our great workers here.

PARKER: OK. Well, Mayor Bernero, we are coming to Lansing tonight, so stand by. Thank you so much for joining us.

Still ahead, the freshman class. Why the newest members of Congress may not want to get too comfortable in their new digs. That's coming up. Stay with us.

(BEGIN VIDEO CLIP)

BETHANY MCLEAN, CO-AUTHOR, "ALL THE DEVILS ARE HERE": I'm always amazed at the difference between ethical wrongdoing and what could be criminally prosecuted.

ELIOT SPITZER, HOST: Right.

MCLEAN: And just because something strikes us all as shockingly wrong doesn't mean there's a prosecution in there. And that never fails to amaze me.

(COMMERCIAL BREAK) ELIOT SPITZER, HOST: Now it's time for a new segment called "The Exchange" where we examine the world of business.

When historians look back at the roots of the4 financial crisis, they will certainly reference my next guest's book. And a fascinating and disturbing explanation, it recounts how Wall Street found new ways to almost gamble away the global economy.

Joining me now to discuss those innovative ways, Bethany McLean and Joe Nocera, authors of the riveting book "All the Devils Are Here: The Hidden History of the Financial Crisis. Thanks you for joining us.

BETHANY MCLEAN, CO-AUTHOR, "ALL THE DEVILS ARE HERE": Thanks for having us.

SPITZER: Bethany, let me start with you. You have said recently that this was not an accident. That in fact one of the revelations to you as you wrote this history was what you thought might have begun as sheer failure of judgment indeed wasn't an accident. Who are the culprits, who are the villains, who should go to jail?

MCLEAN: One of the stemming things when you research this are the number of times where different paths could have been taken and one moment that jumps out to me are the 1990s when consumer advocates were protesting desperately about the kinds of loans people are getting and how they couldn't pay them back. And so one of our villains is definitely the Federal Reserve for not taking the power they had to crack down on subprime lending and you have to broaden that out and say Congress as well.

SPITZER: I want actually to drill down on that because that point is so enormously important. The Federal Reserve had the power to stop this.

JOE NOCERA, CO-AUTHOR, "ALL THE DEVILS ARE HERE": You know, everybody thought of Alan Greenspan as somebody who worried about monetary policy. And he did. The Fed has this other job. It's a regulator. It's an overseer and it has absolute power if it thinks there's abuses in the system to do something about it. But Alan Greenspan was ideologically opposed to regulation as he says in his own memoirs. So he actively turned his back on that part of his job.

SPITZER: Reading his memoirs. I like you reacted by saying you've got to be kidding, the guy who heads the Fed is a libertarian. You can't be a libertarian and run the Fed. But I want to throw another game out there. Tim Geithner. Now Tim was not there in the New York Fed during in the entirety of the '90s, but he was there in the worst of this bubble explosion. And when he testified before Congress when he being affirmed as treasury secretary, he said I've never been a regulator. Did he misunderstand his job?

MCLEAN: You know, some people have said that one of the reasons that the guidance on nontraditional mortgages which came so late in the game, finally came in 2006, the regulators cracking down. One of the reasons it was delayed was also the New York Fed and their belief in the market, the power in the market.

SPITZER: Right.

MCLEAN: The market is making these loans. And of course, you could ask to who is whispering in their ear that the market is allowing these loans.

SPITZER: The consumer advocates, Bethany, that you referred to are screaming from the tops of the hilltops saying these loans will not be repaid. The Fed, the OCC, a lot of other people did nothing.

Now, did the banks know that these loans were bad when they securitized them and stuffed them into that pipeline that exploded?

MCLEAN: I don't see how they couldn't have known. The banks were suppose to do due diligence on the mortgages when they bought them before they packaged them up and sold them to investors. They told investors they were doing due diligence. How could short sellers, the people who made fortunes by shorting this dig into the details of these mortgages, say, they're going to go bad? And how could Wall Street firms do the same thing and said, these are great? I don't understand that.

NOCERA: Don't forget also the banks weren't just securitizing the mortgages. They were making -- they were extending the credit to New Century, to Ameriquest, to Countrywide. They had information that the rest of us didn't have about this --

SPITZER: They were on every side of these transactions.

NOCERA: Absolutely.

SPITZER: And there is a due diligence firm whose documents have recently tumbled into the marketplace, Clayton (ph), that says that these documents and I've looked at him and I've spoken to the heads of these companies that said the banks were told 30 percent, perhaps, of these loans were not conforming and the banks that were then packaging these loans did nothing about it. Does this give us and regulators today the foundation to go after them with a hammer and really, you know, recoup money and send people to jail?

MCLEAN: I think you understand the legal subtleties of this better than we do. I'm always amazed at the difference between ethical wrongdoing and what can be criminally prosecuted.

SPITZER: Right.

MCLEAN: And just because something strikes us all as shockingly wrong doesn't mean there's a prosecution in there. And I -- that never fails to amaze me.

SPITZER: Look, you're right. I spent a couple of years playing that role. The thing that is disturbing is that the fact that they had this information was not revealed. It was disclosed to the marketplace. Nobody was told that they, in fact, had information putting them and the banks on notice that these loans were going to blow up.

NOCERA: A lot of the reason for that is because a machine had been created and they couldn't -- nobody -- there was no incentive to shut it down by anybody, by the subprime companies, by Wall Street, and by the regulators for that matter. And so the thing just takes on a life of its own. And then -- then it blows up.

SPITZER: That is one of the most important points and it comes back to Chuck Prince's famous comment. As long as the music is playing, we'll dance. Nobody was going to turn off the jukebox because everybody made money and the regulators were libertarians who said, oh, if the music is playing, it must be good. And that was the crisis.

NOCERA: In our book, the example we use is not Citibank but Merrill-Lynch. So the machine is going and they can't sell the triple A's to anybody because nobody want them anymore. So what do they do? They put them on their own balance sheet.

SPITZER: Right.

NOCERA: Because that's the only way they can get rid of them and keep the machine going.

SPITZER: Yes. In your book you also point out Goldman was smarter than that. You go, Goldman did what? They sold them, shorted the stock. How does a bank do that? Is this a problem?

MCLEAN: Well, you have to give Goldman some credit for being smarter than the rest of Wall Street and actually understanding the two little words, risk management, that everybody else said they didn't practice.

SPITZER: Right.

MCLEAN: So start there. But, you know, Goldman has always had this line that our clients' interests come first. And it's hard to look at what happened in the crisis and not say, no, wait a minute, Goldman's bottom line comes first. And I think the issue is hypocrisy. If that's the way they operate, that's fine. But let's just tell the world that's the way they operate.

SPITZER: Well, can't we -- looking back now to the supposedly structural reform we put in place, we didn't change fundamental structures. We did not rip apart the tensions and the conflicts of interest that are the very core of this. And one of my favorite quotes of the last decade is Jack Roblin (ph) who said what used to be viewed as a conflict of interest is now viewed as a synergy. And people rationalized it and said this all makes sense. The synergy for the person on both sides of --

MCLEAN: That's Goldman Sachs --

SPITZER: That's right. Or any of the banks that plays both sides against the consumer and that's what we've got. One of the things that is mystifying to me is that so many of the same CEOs and same regulators are still in place. I mean, we're halfway through the football season. Teams aren't doing well, coaches are kicked out. Maybe it's justifiable, maybe not. But somebody's head is on the block and they're gone. The regulators are still there. The same people who created this. How do you justify that?

NOCERA: Well, I think part of the reason is nobody can figure out who else to put in there. I mean --

SPITZER: I got a bunch of names. Nobody has called me, but I've got a bunch of names.

NOCERA: I mean, I was rooting for Paul Volcker to be secretary of the treasury.

SPITZER: Right. I agree with you.

NOCERA: Just because he's one guy -- I mean, he's old and he couldn't do it for eight years, but he's one guy who doesn't care what Wall Street thinks. And the biggest problem for a lot of these guys is that they -- they want Wall Street. They want to be -- they want your thoughts --

SPITZER: They want to be loved.

NOCERA: Right. They want to be a sophisticated, by God, as Wall Street.

SPITZER: Right.

NOCERA: And it's a terrible problem.

SPITZER: When all else fails, state A.G.s will step in.

NOCERA: I knew you were trying to say that.

SPITZER: You know, I couldn't miss that opportunity.

NOCERA: Yes.

SPITZER: All right. Thank you for a fascinating conversation, Joe Nocera, Bethany McLean. If you'd like to read an excerpt from their book, please go to our Web site, CNN.com/parkerspitzer. Then you have to buy the book. We'll be right back.

(BEGIN VIDEO CLIP)

SPITZER: Every two years, they photographed the incoming freshmen on the steps of the Capitol.

PARKER: Well, that's the one they took this morning?

SPITZER: Actually, no, this is the one from 2008. Almost 40 percent of the first-year congressmen and women in this picture, out looking for jobs. Biggest dropout rate in history.

(END VIDEO CLIP) (COMMERCIAL BREAK)

SPITZER: Time for the "Culture of Politics." You've seen the class picture, haven't you, Kathleen? Every two years, they photograph the incoming freshmen on the steps of the capitol.

PARKER: Well, that's the one they took this morning?

SPITZER: Actually, no, this is the one from 2008. Almost 40 percent of the first-year congressmen and women in this picture, out looking for jobs. Biggest dropout rate in history.

Lots of good people gone from this picture. Just to pick one, Glenn Nye, a Democrat from Virginia, graduated from Georgetown University where he volunteered on medical education missions to the Middle East. He'll serve one term no more. He lost to Scott Rigell. Mr. Rigell is a car dealer who signed the Tea Party pledge. The Tea Party will have plenty of faces in the new freshman class. Here they all are: red state, blue state, and Tea state. Take a look at that.

PARKER: It's the largest freshman class since the 1930s. Sixty new Republicans. But don't despair, Eliot, for every Glenn Nye who got a pink slip, there's somebody like Terri Sewell. She's Alabama's first African-American woman representative. And on her way to Capitol Hill, she spent some time in places you might recognize, Princeton, Harvard and Oxford.

SPITZER: Sounds pretty impressive. And turnover isn't necessarily a bad thing if it means new ideas and energy. At least, that's what I keep telling myself.

PARKER: All right. Look at their smiling faces, Eliot. Just like your first day in college when somebody said look to the left, and then look to the right. In four years, one of you won't be here.

SPITZER: Keep that in mind, class of 2010, remember rent, don't buy. You may not be there very long.

PARKER: "Our Political Party" is next. Stay with us.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We have some of the best-trained military right now who grew up on video games. You know, with the predator drones and so on and so forth. And these guys are very good at this simply because, well, they -- they know how to use these controls and specifically if they're using stuff like this, I think that we're very lucky in a certain sense.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

PARKER: Welcome to "Our Political Party." It's a chance for our guests to speak their minds in a whole range of subjects. Let's meet our guests. You go first. SPITZER: All right. Charles Blow, visual op-ed columnist for "The New York Times" whose specialty is using design and graphic techniques in his opinion pieces. And Kerry Picket, an online producer and opinion writer, editor of "The Water Cooler" blog for conservative media company, "The Washington Times." In a previous life, Kerry produced new segments for Robin Quivers of the "Howard Stern Show." Wow, that's quite a jump.

PARKER: Yes, no kidding.

KERRY PICKET, BLOGGER, "THE WASHINGTON TIMES": Quite an eclectic background.

SPITZER: I can vouch for that.

PARKER: That's seeking diversity and resume. We have over here Elizabeth Spiers. She's a media consultant and writer. Elizabeth is also the founding editor of pop culture blog Gawker.com, and Errol Louis is the host of "Inside City Hall." That's NY1's popular roundup of New York politics.

Welcome, everybody. There's a new CBS poll that says four out of five Americans are perfectly comfortable with the body scans. That would not be me. The x-rays that make you look as though you're naked. But there's a ground swell of protests as you well know. So are you feeling -- let's take a quick look here. We've got a video from --

SPITZER: Who are we looking at? Not sure we want to see this video.

PARKER: Yes.

(BEGIN VIDEO CLIP)

TYNER: If you touch my junk, I'm going to have you arrested. I don't understand how a sexual assault can be made a condition of my flying.

TSA: This is not considered a sexual assault.

TYNER: It would be if you weren't the government. I'd like only my wife and maybe my doctor to touch me there.

(END VIDEO CLIP)

PARKER: Oh, dear. OK, so does the TSA make you feel safer or more uncomfortable?

PICKET: You know, I'm sorry, I have to say, I just went through one of those machines today. I was coming in from Memphis. And here the thing is that you're watching someone get groped and the guy who's getting groped, he was actually seemed like he was enjoying it. And so I'm feeling sort of uncomfortable.

PARKER: You're not comfortable with voyeurism. PICKET: Yes. Exactly. Come on.

CHARLES BLOW, "NEW YORK TIMES" OP-ED COLUMNIST: I'm on the wrong side of this debate because at some point, you have to make certain concessions. And if you --

UNIDENTIFIED FEMALE: No, you don't. Where do you stop making concessions?

BLOW: If you're not going to go through and take the picture, then they have to figure out some way to search you. And I don't understand -- I've seen -- I've seen these x-ray things. What is the problem? I mean, it's just -- it's an x-ray. They flush it as soon as they take it.

PARKER: Oh, no they don't.

BLOW: Yes, they do.

PARKER: Well, they're supposed to. But some of these things do. They can be stored and they can be saved. And you don't know what happens to them. What do you mean they won't be?

(CROSSTALK)

ERROL LOUIS, NY1'S "INSIDE CITY HALL": The amazing thing about all of this is how bad the experience is. Nothing makes me feel more unsafe than the notion that a bunch of people with poor training, bad procedures, and low morale and low pay, frankly, are in charge of security. Nothing makes me feel more unsafe than that.

The stuff that we put up with in the airports is so far past reasonable. I think this is just the straw that breaks the camel's back.

You know, in 2009, 25 million pieces of baggage went missing. We put up with this. That's 2,800 pieces every hour, hour after hour after hour, holidays, work days, weekends. And we just put up with it. In fact, we pay for it. All they do is compete on price. Nobody competes on -- let's make this a reasonable, smart, effective secure system.

SPITZER: A couple of airlines do.

PARKER: But who is a gawker?

ELIZABETH SPIERS, WRITER AND MEDIA CONSULTANT: Honestly, I found the poll results really surprising. I mean, you know, 80 percent of the people are really OK with this. And you always wonder about sampling problems.

PARKER: I don't think they knew what --

SPIERS: And 78 percent of the people polled knew this or --

SPITZER: I'm kind of with Errol on this one. It seems we're going to such extremes for every person. Half of the bags don't get searched, the cargo doesn't get searched. You look at the people working on the airplanes. The security system is so porous. I'm not offended by this as a personal matter. It just doesn't work terribly well.

(CROSSTALK)

UNIDENTIFIED FEMALE: You might.

BLOW: Porous doesn't mean that you don't take steps to make it less porous even if the baggage doesn't get checked. If people are strapping bombs into their little tighty whiteys, I think we have to take some pictures.

PARKER: Well, I don't think --

SPITZER: All right.

The new video game is called "Call of Duty: Black Ops." It's the most popular ever. Get this, $650 million in sales in a week. Here is the trailer. Take a look at this nice passive game. Take a look at this thing.

(BEGIN VIDEO CLIP)

CALL OF DUTY: BLACK OPS

(END VIDEO CLIP)

PARKER: All right. Errol, admit it, you've got one of these games?

LOUIS: You know, I wish I did, actually. Look, it's clear to me what's going on right down to the music, frankly, is that this is the '70s all over again. This is the '60s, and the '70s and as a shoot them up kind of experience, it's the perfect villain.

SPITZER: Have you bought one?

LOUIS: No. No. I don't -- how could you justify it? How could you justify it?

SPITZER: Fess up. Fess up.

LOUIS: I think what the phenomenon is, though, is that the Cold War was the last time where you had the official enemy.

SPITZER: Most of this relates to the Cold War.

LOUIS: Of course, of course. As a guilty pleasure, it's ideal.

PICKET: Hold on a second. We have some of the best-trained military right now who grew up on video games, you know, with the predator drones and so on and so forth. And these guys are very good at this simply because, well, they know how to use these controls and specifically if we -- if they're using stuff like this, I think that we're very lucky in a certain sense.

SPITZER: Never heard it. So we want video games because it's training our future military officers.

PICKET: Absolutely.

SPITZER: Oh, my goodness.

(CROSSTALK)

PARKER: Video games, actually. Military.

BLOW: Perfect American conversation. We're queasy about it and in the next room our kids are blowing each others' brains out on the screen. It's perfect American conversation.

SPIERS: This is secret nostalgia for the '80s and we all really miss Air Supply and this is manifesting itself in some way.

PARKER: I have a theory. I think it's just -- I know that the demographic for these games is a little bit younger. But I think that the baby-boomer generation that's now entering retirement, there are a lot of guys there that have some unfinished business with the Cold War, maybe with Fidel Castro. Vietnam vets, they haven't been able to play their Rambo to the finish line. So, you know, why not?

SPITZER: Oh, my goodness. All right. We have to take a break. We want to hear from you. Check our blog at CNN.com/parkerspitzer. Follow us on Facebook and Twitter. We'll be right back with another quick question.

(COMMERCIAL BREAK)

JOE JOHNS, CNN SENIOR CORRESPONDENT: Hello, I'm Joe Johns. More of "PARKER SPITZER" in a moment. First, the latest.

A seven-year legal battle has ended. Ground Zero workers who were exposed to toxic debris today approved a settlement that will pay them $625 million. The lawyers said the measure passed by a narrow margin. The money will go to more than a thousand, 10,000 plaintiffs. The TSA says it's streamlining screening for U.S. airline pilots. Translation: pilots in uniform with proper I.D. get to skip those intrusive scans and pat-downs. They'll still be subject to random searches.

And tonight on "AC 360," what scientists are learning from lemurs' powerful brains. Yes, lemurs.

That's the latest. "PARKER SPITZER" is back after this.

PARKER: Welcome back to "Our Political Party." Let's do one more quick question.

Now, Elizabeth, this week, you linked to a threat that talked about what makes me feel old. And, of course, just reading that makes me feel old. What here -- what makes you all feel old these days as they say?

SPIERS: That piece is actually written by -- people (INAUDIBLE) of the young men where the median age is around 38. And they refer to a lot of -- 40 years old.

(LAUGHTER)

I mean, for me, it's, you know, newly born fruit flies and (INAUDIBLE) so --

PARKER: All right, Errol.

LOUIS: I get the feeling every time I go into a store or restaurant and just get horrible, horrible service from a young person. And you try to explain to them, it's like you're not supposed to do that. You know, you're not supposed to touch me if you're the waiter. You're not supposed to tell me your first name and all of your business. And you realize it's like you're trying to explain a country that they've never visited. You're talking to them in a language they're never going to understand at least for 20 or 30 years.

BLOW: I have a son who had the same-sized clothes. And now I'm like, there's another man in my house. That's weird.

LOUIS: That's a good thing.

PARKER: I tell you what makes me feel old. We interviewed the mayor of Lansing tonight. And he is wearing this red plaid sweater and I thought he's adorable. And then I thought, well, you know you're old when you think the mayor of Lansing in a plaid sweater is adorable.

(CROSSTALK)

PICKET: No, actually, I think sometimes what makes everyone feel old is sometimes you go back to a music concert that you thought, you know, this certain rock band, and you go there and wow, everyone is --

PARKER: All the long-haired are gray haired.

SPITZER: People are walking in the Bruce Springsteen concert. That's when things are getting a little bit too much.

All right. Charles Blow, Kerry Picket, Elizabeth Spiers, Errol Louis, thanks so much for being with us.

Good night from New York. "LARRY KING LIVE" starts right now.