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JOHN KING, USA

Cleaning up Wall Street; Mideast Peace

Aired April 20, 2010 - 19:00   ET

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


JOHN KING, HOST: Thank you, Candy. Late word tonight the president is calling Republicans trying to round up support for a new push on immigration reform and Republicans are promising a new campaign contract with America by Labor Day.

But our "Lead" tonight, Wall Street reform, as this takes shape on Capitol Hill, cleaning up Wall Street is the goal. We'll tell you about the negotiations under way, the big hang-ups and what it means for your money.

We'll also go "Wall-to-Wall" tonight on a day Goldman Sachs reports record profits. We'll show you where Goldman gives, which politicians get and how it influences the debate here in Washington.

In "One-on-One" tonight our focus Middle East peace, we'll talk to a man with a quarter century of experience negotiating for the United States who now says we have the wrong assumptions when it comes to the Arab/Israeli conflict.

And the most important person you don't know tonight is going to tell you something you don't want to hear -- $770 million of your money wasted on a project that was supposed to make big improvements in border security.

It's been 18 months now since Wall Street's collapse, almost sent the country into a depression. And your Congress has done exactly nothing to keep it from happening again. They're trying and tonight there's some optimism of a bipartisan deal in the Senate. I know we'll believe it when we see it.

After all, the president says Republicans are lining up to defend the big banks and the Republican leadership says what the president and his party want are endless bailouts. But I spent a bit of time on Capitol Hill today. One of my stops was with a key player on the Republican side, Tennessee Senator Bob Corker.

(BEGIN VIDEO CLIP)

SEN. BOB CORKER (R), TENNESSEE: I think the rhetoric on both sides is -- has been over the top and, again, especially when you -- when I really do believe that in the next week or so we're going to come together on a bill.

(END VIDEO CLIP) KING: So with that optimism, just what are the hang-ups? One is new rules governing incredibly complicated things like derivatives trading. Do you even know what that is? And of course how they are doing it makes it harder to track -- secret negotiations and back room deals. We'll spend some time tonight on the substance and what this means to you and your money and we'll spend some time on the politics.

There are millions being spent to lobby this issue and a lot of the advice in those negotiations we can't see is coming from the very same banks that caused this whole mess in the first place. Banks like Goldman Sachs, which just today reported making $3.5 billion in profits so far this year. Goldman is lobbying fiercely against some of the changes and sometimes it comes down to little things that can make a huge difference like shall versus may.

In provisions designed to reign in risky trading, the current version of the Senate bill talks about what regulators shall do to police things better. But several senators today told me Goldman is lobbying aggressively to change it to may do. Regulators shall versus regulators may -- must versus maybe. You get the picture.

So where is this headed and will your investments be safer in the end? With me tonight CNN national political correspondent Jessica Yellin, Chrystia Freeland of the Reuters News Service and CNN congressional correspondent Dana Bash -- complicated subject. Let's start the discussion by framing this as financial reform 101 and we'll frame our conversation around three big issues in the debate.

One is ending what we call too big to fail. The other is increasing consumer protection and thirdly regulating the very complicated derivatives market. Let's start on too big to fail in the sense that the Republican leadership is still saying as we sit here tonight that what the president and the Democrats want is endless bailouts, millions of dollars in the system to protect the banks and keep the big bailouts, but you just saw Bob Corker.

He is a Republican trying to broker a deal. And I asked him about this today and I said well wait a minute is that true? At first he used the word over the top in the -- to describe the Republican leadership language, so I asked him define over the top.

(BEGIN VIDEO CLIP)

KING: In Washington we use terms like the rhetoric is over the top. In America would we use terms like when it comes to whether it's the president's language that you just mentioned or whether it's the Republican leadership saying endless bailouts? Out in the country would we just call that wrong, misleading?

CORKER: I think it's -- I think -- I think both sides can have a tendency to mislead. It's like a rabbit trail is created. It's a diversion away from what I think are some of the essential elements of a bill.

(END VIDEO CLIP)

KING: Jessica, on the essential element of the bill, does the bill as it now stands end too bill to fail?

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: It doesn't end it exactly but it does enormous -- it makes enormous strides toward taking apart these huge institutions, separating them and/or finding ways to help them die so that if there's a crisis, it doesn't put the rest of the economy in danger. There is no clarity that you can permanently end too big to fail.

(CROSSTALK)

CHRYSTIA FREELAND, GLOBAL EDITOR AT LARGE, REUTERS: You know John, one thing that I think is really missing from the debate -- and you know we as journalists have a tendency to try to say on the one hand, on the other hand, one side says this and the other says that. But sometimes people are using Orwellian language which doesn't really correspond to the truth and I think --

KING: Shocking -- Washington people do that?

(CROSSTALK)

FREELAND: Sure, yes, but I think you know the Republican attack on resolution authority as meaning endless bailouts is really an example of this. You know and what it ignores is the fact that the current situation, absent any legislation, that is what will guarantee endless bailouts. Because without any legislation, what we have seen, what the markets have seen is if these firms fail, the government will step in. So if you don't have legislation, these firms already -- they have an implicit government guarantee. And the taxpayers are standing behind them. That's really important.

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: The question is where's the sweet spot and the question is where do you get to the point where you feel comfortable as legislators and as the government that you have protections in for consumers so that there isn't such a thing as too big to fail anymore or whether you feel like you go too far and that is a debate that we've been covering --

(CROSSTALK)

FREELAND: Consumer protection, it's about giving the markets the assurance that there's enough of a net -- I mean I think you shouldn't call this a bailout fund. You should call this a euthanasia fund.

KING: Euthanasia fund, OK, funeral -- they call it funeral money (INAUDIBLE). Let's move on to another big question which is derivatives which a lot of people in the country don't quite understand what this is. It's a risky investment. It's been used in agriculture and other commodities markets for years but when we got into the housing sector and loans is where it got really risky.

One of the things I wanted to do is see how do you say in English in American where people would understand in the country what is a derivative? So I went to Capitol Hill today. Among the people I saw is Democrat Mark Warner, a senator who also is deeply involved. And here's how he defines derivative. (BEGIN VIDEO CLIP)

SEN. MARK WARNER (D), VIRGINIA: What a derivative is basically an ability to try to predict something and hedge against it. So if you're in a business that depends on fuel costs and you want to give predictability to your business you want to say well I want to lock in a price a year from now for my gasoline costs. You can create this contract to lock in that price. It's basically a way to hedge risk. But it got way out of bounds. You know Warren Buffett called it the instruments of financial mass destruction if there's not a little bit transparency around it.

(END VIDEO CLIP)

KING: Not a little bit of transparency around it. So do they have the provisions -- and I should note Senator Dodd the chairman and Senator Shelby the Republican ranking member are negotiating tonight as we speak. As they continue those conversations do they have agreement on making this more transparent and less -- not less risky for an investor but more open to an investor who says all right if I'm buying one of these here's my risk?

YELLIN: No, they don't have agreement. They don't have agreement but they're much closer to having agreement than the public debate suggests. This is one of those areas that Democrats and Republicans many agree needs to be more transparent and they want to get there. And the idea that it's far away is -- they can get there. They just have to negotiate a little more.

BASH: And the fact that Blanche Lincoln, who's the chairman of the Agriculture Committee -- interestingly this is her jurisdiction. She is going to formally start to move this process on derivatives forward tomorrow morning. She said today in a press conference that she has the commitment of the Democratic leader to include this in this massive bill. And it's hard to overstate how huge that is because this is something that has not been regulated. This is something that has no transparency at all. Nobody knows how these derivatives are traded and it's something that Wall Street is absolutely apoplectic about because this is where the biggest profits come from.

(CROSSTALK)

UNIDENTIFIED FEMALE: Biggest profits.

FREELAND: Yes and I think the point about transparency is really important that it's not just about having insight, having visibility of what's happening. One of the things that we saw when the financial crisis happened in the fall of 2008 was people actually didn't know who the ultimate counter party was because the trades were happening just between parties. And when the market failed, you didn't know who owed you the money. That's part of the reason we had such a meltdown.

(CROSSTALK)

FREELAND: And that's why central clearing, which seems like an obscure concept, is really, really important. That's why when we have stock markets fall because they're a central clearing you always know who owes you the money.

KING: I think the consumer could buy into that. If I read the paper here it is, it's my fault if I get this wrong, not hidden somewhere on page 97. Hold on one second. We'll continue the conversation.

But before we go to break here's a quick look at today's numbers on Wall Street. The Dow industrials closed up as investors digested better than expected earnings reports from Coke, Johnson & Johnson and especially we named them already, Goldman Sachs. But Goldman stock actually took a bit of a hit, closed lower. Investors are worried about the fraud suit it is facing from the federal government.

And by the way, this is equal payday, reminder that if you're a woman you probably don't get equal pay. According to the National Committee on Pay Equity this year a woman only makes 77 cents for every dollar a man does. If you're an African-American or Hispanic woman it's even less.

(COMMERCIAL BREAK)

KING: In "Wall-to-Wall" tonight a look at one company and its efforts to influence the big financial reform debate here in Washington. Goldman Sachs, you've all heard the name in recent days, on Friday the Securities and Exchange Commission filed significant fraud charges against the company. Just today it reported its first quarter profit up 91 percent. That's $3.46 billion with a "B" and it is lobbying hard against many of the provisions of the financial reform legislation here in Washington.

So let's go over to the magic wall and take a closer look at how this company and others in the industry spend a lot of money to try to influence this debate. And we'll start with this right here. We'll pull down -- this is Goldman Sachs' political habits. As I stretch this out which party gets most of the company's money. If you go back and see the political contributions back in the early '90s, a relatively modest amount, below $1 million.

But look since 2000, more than $2 million. The blue is Democrats, more than $2 million to the Democrats, about $1.5 million to the Republicans there. The 2002 campaign and the 2004 campaign they crossed the $4 million mark in contributions from Goldman Sachs employees in Political Action Committee to the Democrats. In 2008 in part because of big support of the president -- we'll show you that way, way up here past (ph), so Goldman Sachs money, most of it, you get the picture, goes to the Democrats.

Now let's all look at something else about its annual lobbying spending. It's not just giving money to campaigns, it's spending a lot of money on lobbyists and look how this jumps up -- way back here 1998, a modest amount below $1 million, 2003 they crossed the million mark. Look in recent years down here, especially here as we've had all the problems on Wall Street and the issues here -- way up the lobbying money. Way up in 2008, up in 2009, and remember we're in the first quarter, now just into the second quarter of 2010. We don't have those numbers yet in the middle of this debate. The banking industry overall, Goldman, of course is just one piece of it -- more than $26 million spent in 2009 on lobbying efforts and again the debate carried over into 2010. We will track those numbers.

A quick look back at the 2008 presidential campaign -- if you look at this here you see Goldman Sachs employees were the second largest contributor collectively to the Obama presidential campaign. John McCain got some money from the Goldman group there, Goldman Sachs, $230,000 the fourth largest contributor in his case, so the president, the Democratic nominee at the time getting much of the financial benefit of that spending.

When you go to spend money, you give it mostly to the people on the important committees that influence your business. Goldman Sachs committee outreach -- how much of this goes to people on key committees? This is the 2009//2010 cycle, the current campaign cycle just shy of $100,000 to House Financial Services Committee members, just shy of $90,000 to the Senate Banking Committee. That's where we are now in the spring of 2010.

Let's look at some of their favorites on Capitol Hill. When you stretch this out -- guess what -- it goes to the key players. If you look over here, Chris Dodd, he is the chairman of the committee, about $4,200. Now remember -- now he decided not to run for re-election. Dick Shelby is the ranking Republican. He happens to be negotiating right now with Chairman Dodd, just shy of $35,000.

Chuck Schumer, a big player from the state of New York of course where Wall Street is some money there and this is the House side down here -- Democrat of Connecticut, Democrat of New Hampshire that should be -- getting big money from there as well. One last look at this -- why are they spending all this money? Well they're spending it for a reason.

They don't like some of the things in the legislation. They don't like that the Congress wants more of the derivative trading to be more open, transparent and public. They think here you increase transparency about the risk. Meaning, if you're buying a derivative you should know just how risky that investment is.

The new law would also allow regulators greater ability to step in. And the banks think it could result in billions less for them, which is one of the reasons they're spending their money to fight it. So what's the impact of all that lobbying and campaign money -- when we come back the intersection of money and politics.

(COMMERCIAL BREAK)

KING: We're back again with CNN national senior political correspondent Jessica Yellin, Chrystia Freeland of Reuters and CNN senior congressional correspondent Dana Bash. Let's talk about the intersection money and politics and lobbying. And I want to put up on the screen quickly just a quick summary of what's called the Volcker rule. This essentially would say what separates the financial dealings of commercial banks from investment banks.

It's designed to lower the risks, to make things more transparent. We put it up here because this is one of the issues when I was on the Hill today several senators say that Goldman Sachs -- we just showed their money they're spending on lobbying and campaigning. The bill currently says regulators shall and they're trying to change it to regulators may, essentially creating wiggle room so that they don't have to do certain things.

They don't have to enforce certain things. Is that what we're talking about here in all these back door regulations? They're going through changing one word at a time through what is hundreds of pages of legislation?

YELLIN: Absolutely. And one staff member on the Hill told me that they refer -- there's something called the blob. The blob is the combination of lobbyists and staffers working on the bill constantly talking and conferring on what should be in it. And it's such a prevalent part, it is just such an accepted part at how business is done, they name it.

KING: It is striking to me because one senator told me this and I went up to another senator who said they're trying to change shall to may. And I went up to another and said so when the Goldman lobbyists come to you and he said shall/may --

(CROSSTALK)

KING: Off the top of his head he knew right ahead what we were talking about.

YELLIN: And the administration doesn't want to stand for that. They want it to stay with shall.

UNIDENTIFIED FEMALE: We'll see what happens --

FREELAND: Right, but it's the difference between whether it's actually, whether the Volcker rule is a rule or whether it's just how the regulator feels that day.

KING: Idea --

FREELAND: You know and the political mood can change a lot and it would transform Wall Street. The Volcker rule would mean that some institutions particularly Goldman Sachs in fact would be very, very different. They would have to choose which side of the fence they're on and they don't want to do that.

(CROSSTALK)

UNIDENTIFIED FEMALE: Shall and may equals millions and millions, maybe billions --

UNIDENTIFIED FEMALE: Billions --

UNIDENTIFIED FEMALE: Billions of dollars. UNIDENTIFIED FEMALE: Billions of dollars.

KING: And so the political contribution is relatively small amount. But whenever a controversy like this comes up, people say aha, you took money from Goldman so you have to give it back. Now Blanche Lincoln who you mentioned earlier, she's the chairwoman, chairman of the Agriculture Committee. She's got a Democratic primary in her home state of Arkansas.

Her race is -- race is tough enough to begin with. She has a primary first. Her opponent said she should give the money back. You put the question to her today will you give it back? Let's listen to Senator Lincoln.

(BEGIN VIDEO CLIP)

BASH: You've received campaign contributions from Goldman Sachs. Are you considering giving those back?

SEN. BLANCHE LINCOLN (D), ARKANSAS: No. You know I made it clear back in September that I wasn't going to accept contributions from those that were accepting TARP money.

BASH: Beyond the issue of TARP, the question now is allegations against them for fraud.

LINCOLN: Oh, for their fraud abuse? Is that what you're saying?

BASH: Right --

LINCOLN: We haven't contemplated that.

(END VIDEO CLIP)

KING: Is this side political drama? Is it meaningful? Will pressure build?

BASH: Well I think it's because one candidate, a Republican candidate Mark Kirk is running for Senate in Illinois, he released a statement today saying that you know obviously we don't know what the deal is. They're still allegations, but just out of abundance of caution he's going to return his Goldman Sachs contributions. But look, it all goes back to the whole question of does it smell basically.

Does it smell bad? Does it look bad? Is it bad? One interesting footnote -- in the hallway Senator Richard Shelby who you showed in the photo there as one of the biggest recipients of Goldman money, he also said he's not going to return the money. And he was actually surprised, $35,000, that's all they gave me --

(CROSSTALK)

FREELAND: As far as Blanche Lincoln is concerned, I mean she is enemy number one on Wall Street right now. She is proposing the most radical legislation especially on credit derivative. Far more radical actually than the White House was initially contemplating, so Goldman Sachs definitely is not getting its money worth --

KING: But not money well spent is what you're saying?

(CROSSTALK)

KING: Jessica Yellin, Chrystia Freeland, Dana Bash thanks so much.

And next, the man with a quarter century of experience in trying to find a path to peace in the Middle East -- he now says U.S. hopes for a deal are based on the wrong assumptions.

(COMMERCIAL BREAK)

KING: For more than 20 years our next guest was in the thick of U.S. efforts to broker peace between the Israelis and Palestinians and a firm believer that other U.S. goals in the Middle East were dependent on progress in the peace process. But now Aaron David Miller says that U.S. policy is based on quote, "false religion" and that he is no longer a believer. He's here now to go "One-on-One" -- pretty strong words. Our policy in the Middle East is based on a false religion. Why?

AARON DAVID MILLER, MIDEAST POLICY EXPERT: You know I was a believer for a long time. I embraced the religion of yes. Number one, that Arab/Israeli peacemaking was the most important interest America faced. Number two, that only negotiations could resolve the Arab/Israeli conflict and number three, only America could help to deliver and I haven't abandoned that religion. I've simply begun to test those propositions, to try to determine whether or not they still make sense as the region and as America has changed.

KING: But for 30-plus years the United States says this. The Israeli/Palestinian dispute is the core issue and that sort of nothing else will ever get to the finish line in the region unless you advance that. You think that's no longer true?

MILLER: I think that there are other interests. We're now involved in two costly and very difficult wars in Iraq and Afghanistan. We are trying to contain in Iran that is determined to cross the nuclear threshold. We're dealing with a Middle East that is dysfunctional, angry, turbulent in which you have authoritarian and extractive regimes. We face the threat of another attack against the continental United States by al Qaeda and its affiliates.

There are interests which are at least as important as the pursuit of Arab/Israeli peace, so calibrating what an American role is, is absolutely critical. And part of that calibration has to do with where are the opportunities? Is there a chance right now for a major breakthrough between the Israelis and the Palestinians? Can an American president substitute his own leadership and his own sense of urgency if those things are missing among the Israelis and the Palestinians?

I guess what I'm saying is the answer is no. We have to be careful. We cannot disengage. There are things we can do and must do. All I'm suggesting is we not get overly ambitious. This region is littered with the remains and great powers who thought they could impose their will on small tribes. And we can't.

KING: You write this. "And this was the problem with Obama's tough talk to Israel on settlements. Not only was the goal he laid out -- a settlements freeze including natural growth -- unattainable, but it wasn't part of a broader strategy whose dividends would have made the fight worthwhile." Is he wrong? Is he naive? What's the issue?

MILLER: I don't think this president is naive. I think he does have transformational objectives and transactional style. I think the Arab/Israeli conflict frankly is perfectly suited to this president's view of the world. The problem is that view of the world perfectly suited to where the Israelis and the Palestinians are right now? And I would say the answer to that is probably no.

Look, fighting with the Israelis over settlements or something else is an occupational reality. Every serious or would-be peacemaker does it. But the fight has to be worthwhile. It has to be part of a broader strategy so that the end of the day, after the mess is cleaned up, after everybody's neat and is prepared to sign up or show up for the signing ceremony, everybody looks good.

The president looks good. Israeli prime minister looks good. The Arab leader of the Palestinian president looks good. You need a strategy. And this administration 15 months in doesn't have one.

KING: Doesn't have one, you say. And the administration you say doesn't have a strategy. They would probably take issue. But you say they don't have a strategy. You also have two weak leaders with not a lot of room to negotiate in President Abbas and Prime Minister Netanyahu.

You have a team of people who work for Barack Obama who you know very, very well from past trips up this hill -- Rahm Emanuel, the chief of staff, Hillary Clinton, the former first lady, now the secretary of state. General Jones has been a Middle East envoy. George Mitchell is now the Middle East envoy. Dennis Ross, with whom you worked so closely in the Clinton days, do you think they are still practicing a false religion? Did they not get this?

MILLER: You know I told Colin Powell when I left government I would not criticize the administration's policy. That lasted about five seconds, frankly, after I left.

KING: You just said this administration doesn't have a policy. These are the players.

MILLER: Absolutely. There's no question that you're dealing with a group of extremely smart experienced and talent people. I think there are divisions within each administration. I think nine- tenths of Barack Obama's problem right now is that the Israeli Palestinian problem about which he cares a great deal, about which he wants to see resolved is simply not tractable. The one part that is his problem has to do with how he is responding to the reality that there may well not be a solution.

KING: Well, let me ask you in closing what do you do about some other issues in the region? The Syrian deputy chief of mission was hauled into the state department this week because the administration sees signs, evidence, that Syria is programs providing scud missiles other weapons to Hezbollah. What is the administration's choice there?

MILLER: I don't think they have good ones. This is a small determined, tiny state with an enormous amount of regional influence. Determined to support Hamas. Determined to support Hezbollah and determined to maintain its 30-year relationship with the Iranians. We can try to contain and confine. We might even try to test. But the reality is there's no good fix right now to containing Syrian influence in Lebanon or stopping Syrian weapons supply to Hezbollah. They're going to continue.

KING: And an even bigger challenge is the Iranian nuclear program. The stakes of course much higher there. A lot of talk in town this week about a Gates memo, Secretary Gates memo and a plan "b" if the sanctions plan doesn't work, a lot of back and forth whether it was quoted out of context. Do they have a plan "b" if sanctions don't work?

MILLER: I think the reality on that one as well and I hate to be so annoying negative is no. Diplomacy is not going to work. The Iranians don't want to talk to us in a serious way. Sanctions probably won't work because Iran is a country entitled and secure.

KING: What do you do?

MILLER: You try to contain. You try to confine and ultimately you will face the decision how much is it worth to you to try to stop the Iranians from acquiring a weapon? Is it worth courting the risks, the implications and the dangers of an American military strike?

KING: Is it?

MILLER: And over time -- over time, I think the administration is going to have to take a look at that issue in a way that when this administration started, I believe they weren't prepared to do. I think increasingly they may welcome to that realization because I'm not sure Barack Obama wants to be the president or will be the president that allows Iran to cross the nuclear threshold on his watch. And if he doesn't want it, you know that any Israeli prime minister who's sleeping with one eye open on this issue isn't going to want to be that prime minister either that allows Iran to cross the nuclear threshold without cost or without consequence.

KING: Sober talk on all fronts. Aaron David Miller, thanks.

MILLER: It's a pleasure, John.

KING: Still much more to come tonight including this. When you meet today's most important person you don't know, you'll also find out your tax money -- and a lot of it -- has been wasted. (COMMERCIAL BREAK)

KING: Remember the Bush administration's plan to fight illegal immigration with a virtual fence along 2,000 mile U.S./Mexican border. Today's most important person you don't know confirmed to Congress so far it's been a colossal waste of money. The bearer of bad news is Alan Bersin. They call him the border czar. Technically the commissioner of U.S. customs and border protection, essentially the same job he had back in the Clinton administration. He met Bill Clinton, by the way when they were both Rhodes scholars and Bersin ran across Al Gore at Harvard and Hillary Rodham at Yale Law School. Between then and now he also ran San Diego's public schools and been a federal prosecutor. As for the virtual fence, the government has spent $770 million setting up a mere 23-mile stretch of cameras and sensors in Arizona and Bersin says the high-tech gadgets can't do the job.

ALAN BERSIN, COMMISSIONER, CUSTOMS & BORDER PROTECTION: What has got worked is the total integration of technology from each of the areas along the border into an overall system that would permit a central monitoring and control. That technology integration at the very broadest level has been the complete failure the committee described.

KING: $770 million. With us now back with us is Dana Bash, our senior Congressional correspondent. $770 million down the chutes essentially what he said.

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: And counting because it's supposed to cost a lot more. This is exactly what -- when we talk about against Washington, this is case in point just in terms of taxpayer money being wasted. But it is just remarkable when you think about the political debate that we covered about immigration in general. But specifically about this fence and the need for this virtual fence. And you have members of Congress, Republicans and Democrats at that hearing today saying it hasn't worked.

KING: It hasn't worked. And that admission is a reminder that the immigration debate is back before us front and center. There's a big debate in Washington but a lot of the rhetoric is fueled by a proposal soon possibly to be law in Arizona. The governor hasn't signed it but indicated it will be signed into law. One of the provisions in the new Arizona proposal would require police to question somebody they pull over about immigration status or someone they encounter. If there's a reason to suspect they might be in the country illegally. That has a lot of Latinos raw including a key member of Congress Luis Gutierrez.

REP. LUIS GUTIERREZ (D), ILLINOIS: This administration has to stop looking at this community as a community they can simply rely on and not have to fulfill a very key and fundamental promise to.

KING: Could we have another bite from Gutierrez? That was about something else. Let's go back to the other one he said today on Capitol Hill about this particular issue, the Arizona law. GUTIERREZ: I'm Puerto Rican. I was born in Chicago and my family has been U.S. citizens for generations. But look at my face. Listen to my voice. I'd probably get picked up in Arizona and questioned. Is that what we want in America?

KING: The rawness of this debate is back with us at a time when politics are already pretty raw.

BASH: Absolutely. And this particular piece of legislation that the governor has to decide whether she's going to sign or not in Arizona would be the toughest with regard to criminalizing illegal immigration, illegal immigrants in the entire country. That's why you heard that particular comment. What's interesting is we're talking about a state working on it because the federal government has just not been able to deal with this for so long.

KING: Not able to deal with it. The first bite from Congressman Gutierrez was a reminder to his companies. He also says his own party including the president promised people to move on immigration reform this year. Any chance?

BASH: Democratic leaders are well aware of that promise. That's why the president we are told called a Republican, the newest one Scott Brown of Massachusetts, this afternoon to see if he might be interested in signing on with Democrats to move forward on immigration reform. The back story is that they just have one Republican right now, Lindsey Graham who is now on this. But he says, look, I'm walking unless you can get another Republican. In the next two or three weeks, the white house is going to be fishing for another Republican. If they can't find that, they're going to move on and try to do this with just Democrats because of that promise that Gutierrez was talking about. Nobody I talked to thinks it will happen.

KING: We'll see if the president can round up some votes. Dana, thanks.

The next story is "On My Radar" including what a source is telling CNN about the search for a new Supreme Court justice.

(COMMERCIAL BREAK)

KING: This is the part of the show we bring in smart political players to talk about stories on our radar. Tonight with us conservative strategist John Feehery and democratic strategist, Cornell Belcher. Here's a few things. We'll get started with this. President Obama is reaching out to possible Supreme Court candidates. The administration source involved in the selection process won't say who but we're told the president is holding conversations rather at this point rather than doing formal one-on-one interviews. The source predicts a final choice by early May. Has the phone running?

CORNELL BELCHER, DEMOCRATIC STRATEGIST: No. But I hear he's looking for real world experience. I want to offer my mother.

KING: Real world experience. What does that mean? JOHN FEEHERY, GOP STRATEGIST: It's a good question. I think he wants someone who understands how the law impacts people on the ground and not just a theorist. Might be time for a politician. I'm still holding out hope for the Hillary Clinton.

KING: A little nefarious but that's all right. Speaking of vacancies part of the reason you might think the government isn't working better is because it's missing so many people it needs. For example, the people at the Transportation Security Administration, that's the agency that takes care of airport security, have been without a boss for 456 days. They aren't alone. Out of 157 administration positions at the assistant secretary level or higher 38 remain unfilled. Now, some of this is slow nominations but just before we came on the air Senator Claire McCaskill a Democrat went to the floor saying some of these people not only have been nominated but endorsed by committee but they're being held up. The Senate rules allow a senator to place a quote/unquote hold on somebody. It's always an issue. You see pictures of there Senator McCaskill on the floor today. She was reading some of the names saying why can't we get the people approved by the committee in? This happens in both Democratic and Republican administrations. But why?

FEEHERY: My cousin works for TSA and I'm sure he'd love a promotion. The system is completely broken and it has been broken both administrations and it's getting worse. The Senate needs to fix this because people need to get these jobs. The government needs to run.

BELCHER: Yeah. Well, you know, this is where partisanship becomes dangerous because these people are important jobs. TSA is an important part of our security. This is where partisanship perhaps gets a little dangerous and we need to pull back from it.

KING: This one is right up your lane. More proof language matters. How you ask a poll question can have a big difference in the results. Recent Gallup poll for example asked should the government regulate large banks and major financial institutions. 46% were in favor. 43% opposed. But when the question changes should the government regulate Wall Street banks essentially the same thing as the first question but the language wall street in there watch this. The support goes up. Opposition goes down. Guess what, surprise. Americans don't like Wall Street. How big of a deal is that? You do polling for a living.

BELCHER: And actually if you ask you to disagree or agree more oversight should be given to Wall Street you get even a higher majority. The problem is right now Wall Street replaced lawyers and lobbyists as the most unpopular group of individuals in the country.

FEEHERY: Thank god.

BELCHER: Yeah. And hopefully some political consultants. So it's a real bad place for Wall Street to be. Americans don't see Wall Street as working to be part of a solution. Also in those numbers that financial advisers and community banks do have sort of higher profile than wall street but right now wall street is seen as an evil player in this narrative and politically Democrats and Republicans are going to play with it come this fall.

KING: Mr. Feehery, this is right up your lane. Proof that everything old is new again. Not that John is old. House Republicans are cooking up a new contract with America just like back in 1994. Expect the details around Labor Day. Texas Congressman Pete Sessions the chair of the national Republican Congressional committee saying GOP candidates will be encouraged but not forced to sign it. You remember the day in 1994. This contract was an organizing document. There's a big dispute about how much role did it play in the big Republican win in 1994 but gave you an organizing document so that when the Republicans did sweep into the majority, they at least had a piece of paper to work off saying we promised the American people these things. How important is it?

FEEHERY: Extremely important. It gave the Republicans something to do. It gave them promises that they kept and able to point to. For almost a decade they could point that we passed the contract with America. It's still fresh in people's mind so I think it needs to be updated not only to bring in the house but also anticipate what the Senate is going to do. And with the president still being in office, how do we deal with the president and what things can we work together on. I think it has to add those elements.

KING: Triangulation clause. We'll stop there. Next in the play by play, President Obama gets heckled and not by a Republican.

(COMMERCIAL BREAK)

KING: We get the idea of play-by-play. We break down the tape, just like on the sport shows. We take a look at what works, what doesn't. John Feehery, Cornell Belcher still with us. We were talking about Wall Street becoming a dirty word, Wall Street being the bogeyman in our politics right now. The Democratic National Committee has a new ad trying to tap into this sentiment. Let's take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: For years, Republicans stood by while Wall Street ran wild. Risky bets, lax regulations. When the economy collapsed, Republicans looked the other way.

(END VIDEO CLIP)

KING: Let's just stop the ad right there. Obviously that's John McCain in the last campaign saying the fundamentals of the economy were strong. I want to focus on this line in this ad right here. When the economy collapsed, Republicans looked the other way. Now you're a Democrat. I know you want to push this message here.

BELCHER: Absolutely.

KING: But when the economy collapsed, was it not a Republican president who did T.A.R.P., the big bailout bill that now everybody in the country hates?

BELCHER: Could you say that again? It was Bush and T.A.R.P.? KING: If the Democrats are going to run this ad, so it's their bailout?

BELCHER: But T.A.R.P. is probably next to Wall Street; T.A.R.P. is what is driving much of this anger. And oddly enough, they think sort of we did it, Democrats. And it was really Bush.

KING: Now to be fair, to be fair, a lot of the stuff in the Republican ads might not pass the absolute truth test either.

FEEHERY: These laws were created by Bob Rubin and the Clinton administration. Now the Republicans were complicit in that. But they were the ones who were driving it. The other problem for Democrats with this ad, president Obama got a million dollars from Goldman Sachs, a million dollars. That's going to be the Republican talking point in counter to this ad.

KING: Goldman Sachs at the moment might be thinking that money wasn't well spent.

BELCHER: Well, they've been good at making investments and they invested and thought Democrats would take control, and we did.

KING: There you go. That's good. That's good. A little bipartisan support here. The president was out on the west coast last night, raising money for Barbara Boxer, a Democratic senator who in a state that has been blue, blue, blue could have a tough test this year, a state we want to watch. As the president was speaking, he got heckled from the crowd. Let's listen. All right. The tape froze up there here is what happened. Here we go.

(BEGIN VIDEO CLIP)

OBAMA: Passionate about fighting for California's --

(END VIDEO CLIP)

KING: Nope, that's not going to work. Sometimes the technology doesn't come with you. She is passionate about fighting for California's families he was saying, and somebody in the audience started heckling the president saying about what about don't ask, don't tell, repealing the military policy. We got to see a bit of the president's temper -- not temper, testy. He said holler at the people who oppose it. Sometimes the president gets --

BELCHER: Well, he is right. They were out of place. Look, I talk about fringe a lot on this mainstreaming fringe. We got fringe on the left as well. And this was a fringe group who they were hollering at the wrong guy and this, and he let them know it.

KING: All right, Rahm Emanuel goes on Charlie Rose last night. He is the white house chief of staff. He was of course in the Congress. He gave up a pretty powerful spot in Congress to go as the White House Chief of Staff. He is not done for office. Let's listen.

(BEGIN VIDEO CLIP) RAHM EMANUEL, WHITE HOUSE CHIEF OF STAFF: I hope Mayor Daley seeks reelection. I will work and support him if he seeks reelection. But if Mayor Daley doesn't, one day I would like to run for mayor of the city of Chicago. That's been an aspiration of mine even when I was in the House of Representatives.

(END VIDEO CLIP)

FEEHERY: It's a big job being the mayor of Chicago. It's an important job. But you're the chief of staff of the president of the United States. I think he is thinking he wants out. Maybe I should run for mayor.

KING: He likes potholes. That tells you a lot, tells you what you think of Rahm. All right. Our Pete Dominick has found his way to Goldman Sachs today as we thank John and Cornell. Suppose Pete got a bonus, maybe a campaign contribution? We'll check in with Pete, next.

(COMMERCIAL BREAK)

KING: Campbell Brown is just a few minutes away at the top of the hour. Let's head up to New York, check in and see what's coming up.

CAMPBELL BROWN, CNN ANCHOR: Hey there, John. Tonight we're looking at case before the Supreme Court that could really matter to a lot of us. Who owns the text that you send on your company phone, you or your boss? You may not have as much privacy as you may think you have. We're also going to take a closer look at the Goldman Sachs situation, and their big earnings in the wake of the S.E.C. civil charges.

Also ahead, what could be an unexpected breakthrough in treating illnesses like depression and PTSD. We're going ask Dr. Sanjay Gupta if hallucinogenic drugs may be the answer. There is new studies looking into that. We'll talk about that as well. See you at the top of the hour, John.

KING: See you in just a few minutes Campbell, thanks.

Our offbeat reporter Pete Dominick got wind that Goldman Sachs had huge profits, more than $3 billion. What did Pete do? He headed over there. Maybe to look for a job.

PETE DOMINICK, OFF BEAT REPORTER: No, no, no, please. I'm really happy with this job. I wanted to find out what people thought about those bonuses, whether or not they got one.

(BEGIN VIDEOTAPE)

DOMINICK: You guys get bonuses?

UNIDENTIFIED MALE: No.

DOMINICK: You're not Goldman guys? No.

UNIDENTIFIED MALE: Is there something else you want to be doing?

DOMINICK: No, I want to be doing this. This is a good gig.

Can I get my 20 bucks? Just a clip? The clip alone is worth more than me. What are they creating? I don't understand this very well. What do they do? What do they make?

UNIDENTIFIED MALE: I think you should go ask them.

DOMINICK: I'm trying to. They really won't talk to me. What do you do for a living?

UNIDENTIFIED MALE: I'm an iron worker.

DOMINICK: An iron worker. You're creating a building. They're creating --

UNIDENTIFIED MALE: Heart aches.

DOMINICK: Did you get a bonus?

UNIDENTIFIED MALE: If you give me a bonus, I get one.

DOMINICK: What?

You didn't get your bonus? You teach. Hmm, that's probably not as important as a Wall Street banker, right?

UNIDENTIFIED MALE: No.

DOMINICK: The bank is broke, but they still got huge bonuses.

UNIDENTIFIED MALE: Yeah, well, life isn't fair.

UNIDENTIFIED MALE: Education is far less important than keeping wealthy people wealthy.

UNIDENTIFIED MALE: Oh, I don't work for a bank.

DOMINICK: But you have a suit and a tie and the slicked back hair and all that.

UNIDENTIFIED MALE: I know that. I'm just a poor old attorney.

DOMINICK: You look like you got a bonus. Come on. What do you do? You're looking good. You're looking sharp. Your phone on your belt? Do you have your phone on your belt? Banker! Got him. You get bonuses in your line of work, right?

UNIDENTIFIED FEMALE: Not this year. The more you hustle, the more you hustle. But I didn't accept money from the government to bailout my company.

(END VIDEOTAPE)

DOMINICK: What are they building in Goldman Sachs? I don't know. But around the corner, those iron workers are building the new world trade center, John king.

KING: God bless the iron workers. Not the most talkative types down there are, they?

DOMINICK: No. I had a hard time socializing. I was fine getting out of there John King.

KING: We'll send you back Pete. We will send you back until they talk. Pete Dominick working the beat for us tonight. That's all for us tonight. Thanks for tuning in. We'll see you tomorrow. Campbell Brown starts right now.