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Ex-Obama Insider Advises Goldman Sachs; From Wall Street to Washington; Supreme Court Rules on Animal Fighting Videos

Aired April 20, 2010 - 17:00   ET



Happening now, we'll take you inside the revolving door between Wall Street and Washington. It could be key to the fate of financial reform and the fraud charges against Goldman Sachs.

The Supreme Court says this dog fight video is an example of free speech -- why the Justices struck down a law designed to stop the marketing of animal fighting.

And the U.S. military faces a new enemy -- volcanoes. The eruption in Iceland is creating fallout as far away as the war zone in Iraq.

Wolf Blitzer is off today.

I'm Candy Crowley.


In the towering corporate headquarters of Goldman Sachs, executives might be celebrating today -- if the Wall Street giant wasn't facing civil fraud charges and being held up as a poster child for financial reform. The investment bank reports its first quarter earnings doubled, to $3.5 billion, well above expectations. But a conference call to tout those gains turned into a grilling about the company's legal and P.R. problems. Federal regulators accuse Goldman Sachs of misleading investors who bought complex mortgage-based securities that were expected to fail. A top lawyer for the bank told reporters today that the firm would never intentionally mislead anyone.

In the midst of this mess, we confirmed that Goldman Sachs is getting advice from a former Obama administration insider.

We want to bring in our senior White House correspondent, Ed Henry -- Ed, what can you tell us about this?

What's the White House's reaction?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Candy, the White House is trying to stay away from this because they don't want it to look like one of their -- you know, that they're too close to their former aide here, Greg Craig. He was the White House counsel. Obviously, he's got deep ties in the Democratic Party going back to the Clinton administration. You'll remember, he played a key role in the Clinton impeachment trial.

Also, back in the Obama campaign back in 2008, he broke with Hillary Clinton. Many thought he might endorse her in that campaign. As you remember, instead, he went with Barack Obama. He was -- was a really pivotal sort of spokesman for the candidate, pushing back on talk shows and whatnot.

But on the flip side, he kind of really fell out of favor here last year as the president's lawyer -- really clashed with the White House chief of staff, Rahm Emanuel, on a lot of complex legal issues.

And so there are -- I can tell you, some people close to Goldman Sachs telling me they're kind of scratching their heads over why the company has really brought Greg Craig on, because he's somebody who was sort of pushed out of the job as White House counsel here at the White House. So they're not sure that he's really going to have really good ties here to help the company right now -- Candy.

CROWLEY: Well, on the other hand, I guess, Ed, you could look at it and say the positives here for Goldman Sachs are that this is a man who really knows the inner workings of Washington, even if he happened to tick off some people, and that he's a good lawyer, right?

It could work, certainly, in their favor.

HENRY: It could, because you're right, I mean that's what is very positive about Greg Craig. He's got a sterling reputation in this town as somebody who really understands sort of intersection of the legal and the political. And, again, that dates all the way back to the Clinton impeachment trial.

But, on the other hand, this administration actually put in some tougher restrictions on lobbying and -- and the revolving door you spoke about a moment ago.

So Greg Craig and other former White House aides can now no longer lobby this White House for two years after they leave. This obviously falls under that window. So even if Greg Craig still has deep ties here -- and as you noted, is somebody with a sharp mind and can reach out here, he can't have direct contact with people like Rahm Emanuel and other senior aides here for two years.

So how much will those contacts really help Goldman Sachs right now?

It's a big question -- Candy.

CROWLEY: It is a big question. And, of course, knowing how the legal system works, it may be two years before he needs to talk to them so...

HENRY: That's right.

CROWLEY: So, thanks very much. Ed Henry at the White House.

Now, we want to take a fresh look at the revolving door between Wall Street and Washington against the backdrop of this Goldman Sachs case and the push for financial reform.

Our Lisa Sylvester is here.

And it's really hard to keep the players straight as to where they're working at the moment.

SYLVESTER: It pretty much is, Candy, you know. And there is absolutely no question. Goldman Sachs has friends in high places. A number of big time players have swung through that revolving door between Washington and Goldman Sachs.

First, there are the former Goldman CEOs, Henry Paulson. He left to become President Bush's Treasury secretary.

Jon Corzine, another former Goldman CEO, he became a U.S. Senator and later New Jersey's governor.

Robert Rubin also ran Goldman, then left to become Treasury secretary under President Clinton. Then he went back to Wall Street to work for Citigroup and he was an economic adviser to Barack Obama during the 2008 presidential campaign and a mentor of Mr. Obama's current top economic aides.

And there are also more Goldman alums who are currently -- currently in high positions in Washington. A few examples here. Representative Jim Himes currently sits on the House Financial Services Committee overseeing financial companies. Himes is a former Goldman vice president.

Gary Gensler is the curman -- current chairman of the U.S. Commodities Futures Trading Commission. And his office is expected to have a big hand in the future regulation of the derivatives market. He's also a Goldman Sachs alum.

And many people might recognize this man, Neel Kashkari. He was the point man on TARP funds, helping to dole out some $700 billion of taxpayer money to Wall Street. He also came to the federal government from Goldman Sachs.

And on top of all of this, there are more than 40 former Congressional staffers and federal agency employees who registered in 2009 to lobby on behalf of Goldman Sachs. That's according to an analysis by Public Citizen and the Center for Responsive Politics -- Candy.

CROWLEY: I -- I guess the basic question is, what does this portend for future regulation of -- of any of these markets, I mean, I guess in particular Goldman Sachs, but for the rest of them, as well?

SYLVESTER: You know, when you take a look at this, Candy, it really does speak to the power and influence of Wall Street firms. And, you know, even as Congress is considering new regulations of the industry and to try to prevent another financial meltdown. But, you know, when you have regulators, a member of Congress, advisers to the president who are all Goldman Sachs alumni, it really does raise the question that you just raised, which is just how serious are the regulators going to be in imposing and enforcing new rules to rein in Wall Street and, specifically, Goldman Sachs in this case -- Candy?

CROWLEY: And does Goldman Sachs appear to be sort of the largest one, I mean that it -- everybody just sort of goes to that because it's kind of the gold standard (INAUDIBLE)?

SYLVESTER: Yes, they definitely are.

And when you take a look at it, it's not just the number of connections, it's how high placed they are, you know, when you talk about former Treasury secretaries. And you also have, as with Gregory Craig, you have a number of people who are leaving government and then turning around and advising Goldman Sachs. Representative Richard Gephardt, for instance; former SEC chairman, Arthur Levitt.

So they're -- that revolving door has very, very been active between Washington and Goldman Sachs and Wall Street in general -- Candy.

CROWLEY: Bi -- Bipartisanship at last.

SYLVESTER: Yes, exactly. That's a good way to look at it.

CROWLEY: Thanks so much, Lisa Sylvester.

Appreciate it.

A U.S. Supreme Court ruling today on videos that many Americans would probably find disgusting. Ahead, the justice's surprising take on a case involving animal fighting.

Plus, the mysterious death of the president of a Major League baseball team.

And this is just coming into THE SITUATION ROOM. British Airways says the first flight has arrived at London's Heathrow since UK's air space reopened. We will tell you how much longer some airline passengers stranded in Britain will have to wait to get home. The volcano fallout isn't over yet.


CROWLEY: Something I have always wanted to do, because Jack Cafferty is here with The Cafferty File.

I get to introduce him -- Jack.

CAFFERTY: I am so delighted to welcome you to our little gab fest here. And as I was saying during the break, you lend a touch of class to everything you touch at this network. And it's a pleasure to have you here in THE SITUATION ROOM as the host. CROWLEY: I'm coming back, I promise, after that.

CAFFERTY: Absolutely. Good. Good.

CROWLEY: What you got today?

CAFFERTY: The people of Arizona are fed up when it comes to illegal immigration -- and they ought to be. Almost 20 percent of those trying to enter the State of Arizona illegally from Mexico come with a criminal record. It's one reason why Senators John McCain and Jon Kyl are calling for 3,000 National Guard troops to be deployed to Arizona's border with Mexico. They also want funding for an additional 3,000 U.S. Customs and Border agents, a double row border fence, increased mobile surveillance and hardship duty pay for Border Patrol agents.

But that's not the only reason -- at least for John McCain.

Can you tell that he might be in danger of losing his Senate seat this November?

Where have all these clowns in Washington been on this issue since 9/11?

Virtually nothing has been done to secure this nation's borders, because Democrats want the Mexican vote and Republican donors want the illegal aliens to work for them. President Obama insists that his administration is committed to securing the borders and has taken unprecedented steps over the past 14 months.

What a load.

The fact is it's unlikely anything will be done about illegal immigration because it's an election year, for the reasons laid out above.

But Arizona is taking measures into its own hands. The state senate has passed a tough new immigration law that will force police to arrest people who can't prove they're in the country legally.

Now critics say that would lead to racial profiling.

Well, so what?

The state's governor has five days to either veto the bill or sign it into law.

Do the right thing, governor.

Here's the question -- what should be done about border security if almost 20 percent of illegal immigrants entering Arizona from Mexico have criminal records?

Go to and post a comment on my blog -- Candy. CROWLEY: I think you hit on something, Jack. We always used to say there's like 10 stories that we do and they just keep going around and around.


CROWLEY: This one just never goes away, does it?

CAFFERTY: Nine years since 9/11 and the government has done virtually nothing about this. Nothing.

CROWLEY: I can't wait to hear your answers.

We will talk to you later.

Thanks, Jack.

CAFFERTY: All right, dear.


CROWLEY: A controversial ruling from the Supreme Court today upholding the right to sell alarming animal fighting videos.

Our Jeanne Meserve is here.

We do want to warn our viewers, you know, this is fairly disturbing video.

JEANNE MESERVE, HOMELAND SECURITY CORRESPONDENT: Yes, Candy, and we're not going to show you the worst of these videos because they are just too hard to stomach. But despite their deeply disturbing nature, the Supreme Court ruled today they are protected speech.


MESERVE: (voice-over): They are called crush videos because that is exactly what they show -- women in stilettos stomping and mutilating small animals to give sexual thrills. A law intended to stop their sale and marketing banned videos of extreme animal cruelty, including dog fighting. But the Supreme Court voted 8-1 to strike it down, saying it was too broad and infringed on the First Amendment right of free speech.

STEVEN SHAPIRO, AMERICAN CIVIL LIBERTIES UNION: I think it's important that the decision was written by the chief justice. It gives it even added emphasis as a reaffirmation of -- of basic values that the First Amendment protects even un-populist speech.

UNIDENTIFIED MALE: For centuries, the American Pit Bull Terrier has reigned supreme as the gladiator of the pit.

MESERVE: The particular case considered by the court involved dog fighting videos made by Bob Stevens of Virginia. Though he characterizes them as educational, he received a 37 month sentence for selling them. He tells CNN the court's decision is exactly what he was hoping for. His lawyer condemns animal mistreatment, but says video is a tool to stop it.

PATRICIA MILLET, LAWYER FOR BOB STEVENS: How is it we -- we learn about problems of animal cruelty?

How do we learn about baby clubs -- baby seals being clubbed?

We see pictures. Pictures galvanize us to action.

MESERVE: The Humane Society of the United States has used undercover video to improve the treatment of cattle and inspection of meat. But the group says for profit videos of animals being tortured and killed are another matter.

WAYNE PACELLE, HUMANE SOCIETY: If you sexually abuse a child in your basement, if you're not caught, should you be able to sell the video?

Of course not. That's child pornography. It's forbidden. The court says that's not protected speech. And the same principal should apply to crush videos and dog fighting.


MESERVE: The Humane Society says it hopes to see a bill introduced within the next week which will more narrowly target crush videos. But until such a bill becomes law, some expect an increase in their production and their sale -- Candy.

CROWLEY: I think disgusting was the right word.


CROWLEY: Thanks, Jeanne, very much.

President Obama is reaching out to possible Supreme Court nominees. In our Strategy Session, we'll talk about his options and whether he's likely to satisfy Republicans.

Also, the latest on the airline gridlock caused by that volcano in Iceland -- will the situation get worse before it gets any better?

And a death in the civil rights community. She may not be a household name, but she was an historic figure.


UNIDENTIFIED FEMALE: The black man needs the white man.



CROWLEY: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now -- Lisa, what do you have?

SYLVESTER: Hi there, Candy. Well, new glimmers of hope for travelers grounded by that ash cloud from Iceland's erupting volcano. U.K. air space has reopened and British Airways says the first flight has arrived. More than half of European flights were cleared to fly for first time today. Scientists worry that increased seismic activity at the volcano, though, could lead to another eruption.

One of the teens charged with bullying a Massachusetts 15-year- old who committed suicide is now pleading not guilty to a drunken driving charge. Eighteen-year-old Austin Renaud was arraigned today, then released on personal recognizance. Police say he was arrested yesterday with a blood alcohol level of 01.5. He pleaded not guilty to statutory rape in the bullying case. Five others have also been charged in connection with that case.

And the president of Major League baseball's Colorado Rockies team has died. Forty-eight-year-old Keli McGregor was found unconscious in his Salt Lake City hotel room this morning. Medics were unable to revive him. The cause of death is unknown. Now, the Rockies are scheduled to play the Washington Nationals here in D.C. this evening.

And the United States has lost a major civil rights movement pioneer. Dorothy Height died today at the age of 98. She worked tirelessly throughout the 1950s and '60s, along with activists like Martin Luther King, Jr, helping (ph) to organize the movement. She also headed the National Council of Negro Women for 40 years. Not long ago, she shared her hope for the younger generation.


HEIGHT: Many times when people are going through open doors now, I wish that they could hear the stories of how those doors got opened.


SYLVESTER: Height had been hospitalized for weeks.

And what an amazing story and an amazing life -- Candy.

CROWLEY: Really, Lisa, you know, I was -- I was with a group of women a couple of weeks ago and Dorothy Height was in the hospital at that time. And they were literally holding vigil around the clock with her. She influenced the lives of so many young black women who are now middle-aged and -- and older. I mean her -- her reach has just been really tremendous.

SYLVESTER: Yes. And that's the thing that we're hearing again and again. All the e-mails that I was getting, everybody is celebrating the life that she led and her contributions. So it's nice that we've taken a moment to recognize her again.

CROWLEY: A life well worth noting.

Thanks so much, Lisa Sylvester.

Appreciate it.

We told you Goldman Sachs raked in big bucks in the first quarter, but is it profiting on its past donations to political candidates?

We'll follow the money trail of the company fighting fraud charges.

And will embattled Republican Charlie Crist try to rescue his Senate bid by quitting the GOP?

We'll tell you what he's saying.

And the mother of a young American facing terror charges in Pakistan is speaking out. She's defending her son and blasting the way he's being treated.



Happening now, there are five American students jailed in Pakistan for allegedly plotting terror attacks. Now, the mother of one is speaking out, with a chilling account of what she says happened to him.

And many of you get a lot of it in the food you eat every day -- salt. And it could be putting your health at risk. We'll tell you what one agency wants to do about it.

Wolf Blitzer is off today.

I'm Candy Crowley.


Back to our lead story. Investment giant Goldman Sachs is a prime target for renewed anger at Wall Street right now. It's defending itself against civil fraud charges as the Senate nears a showdown over financial reform. A lot of questions are being raised about the politics of all of this and whether Goldman Sachs' campaign donation will have any influence on the outcome.

We want to bring in our senior Congressional correspondent, Dana Bash, to tell us about Goldman's donations and whether -- I mean you always think how could it not help but influence things?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, it's no surprise, probably, that Goldman Sachs and its employees have tried to influence politicians. But it may surprise you, actually, Candy, given the fact that this is what this do, they're investor, that one of their investments doesn't seem to be paying off. And that investment was in candidate Barack Obama.

Wait until you check this out. Here's a list back here of Barack Obama's top PAC contributions. That's from PACs and employees of big organizations and companies. Check out number two. Number two, Goldman Sachs -- $994,795. That's how much they tried to give to -- that they did give to Barack Obama.

And it's not ending. In this election cycle, 2010, to Congressional candidates, $332,375 to Democratic candidates. They obviously run Congress, so they're getting a lot more than Republicans. But they're getting a -- a good amount -- $190,000 and change to Republicans.

And what's interesting is today on Capitol Hill, a lot of the discussion is whether or not these lawmakers and candidates should be giving back their contributions, particularly in light of allegations of fraud against Goldman Sachs. And so far, only one Republican candidate, Mark Kirk from Illinois, is saying yes. Other Democrats who I asked and Republicans, they said no.

CROWLEY: Today, we have an interview with Blanche Lincoln coming up and I asked her that. I know you asked her that today. I think it's something that a lot of them hadn't actually thought about until this morning.

BASH: Yes. It was pretty clear.

CROWLEY: Yes. So let me ask you something. I mean the Democrats have been all over Republican leader Mitch McConnell for having a secret meeting in -- with Wall Street types. And now it turns out he wasn't the only one out there having meetings.

BASH: That's right. Republicans, in response, have been yelling, wait a minute, you know, what about the Republican. -- the Democratic leader, rather, Harry Reid, the fact that they have been raising that -- that Harry Reid was actually in New York recently, in the past couple of months, and went to a fundraiser where, in New York, on Wall Street, with Wall Street executives.

So we wanted to ask Harry Reid, well, what about that?

We tried, at least.

Take a listen.


SEN. HARRY REID (D-NV), MAJORITY LEADER: Well, first of all, everything that we have done on this legislation is about as transparent as it can be. I think that it's pretty clear that I'm leading the effort to rein in Wall Street. So I'm going to make sure that, in this legislation, I do everything within my ability to make sure that banks aren't too big to fail.

BASH: Did you (INAUDIBLE) fundraiser?

UNIDENTIFIED MALE: Did you have a fundraiser?

REID: Thanks, everybody.



BASH: So you heard me at the end there trying to ask him again about the fundraiser. That was the second time I had asked. The first, you saw him reading from his talking point there in response to the whole issue of Wall Street and cracking down on Wall Street.

And afterwards, an aide did give me a little bit more information that he did go to a fundraiser in January. He raised $37,000, mostly from Goldman Sachs executives. But the point that his aides are making inside Reid's office is, you know, that might be nice, but, essentially, he's taking the money and running because he's taken the money, but he is coming back to Washington saying I'm going to crack down on Wall Street. And they make the point in Democratic circles that Republicans not so much.

CROWLEY: We talked a lot yesterday about all the -- well, I think it was like only one in four actually trust the U.S. government. I think it's probably stories like this that we're losing that one.

BASH: Bingo.

CROWLEY: Just because there's just so much intertwining lives and money and all that.

BASH: Wait until tomorrow. More than 1,500 lobbyists, we hear, are coming to -- coming to Washington to lobby on Wall Street.

CROWLEY: Never a dull moment.


CROWLEY: Thank you, Dana, so much.

BASH: Thanks, Candy.

CROWLEY: Now let's turn to a Republican whose stock is plummeting, within his party anyway, Florida governor turned U.S. Senate candidate, Charlie Crist. His Republican primary opponent, Marco Rubio has a big advantage in the polls and in endorsements from top Republicans. And Crist now acknowledges that he may try to salvage his candidacy by running as an independent.


GOV. CHARLIE CRIST (R), FLORIDA: I can tell you, I'm getting a lot of advice in that direction. And so I'm a listener. And so I'm -- I'm certainly listening to it.


CROWLEY: That sounds pretty much like a yes.

Our senior political analyst, Gloria Borger, joins us.

Listen, Marco Rubio has -- has really gained a lot of steam.

What are Republicans telling, asking, pushing Crist to do?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Very simply -- get out, endorse Marco Rubio and please end this embarrassment for us. You know, it's hard. I was talking to a lot of Republicans today, Candy. It's hard to find one of them who says, oh, yes, yes, have him run as an independent. We think that would be very good for the party. In fact, our political editor, Mark Preston, obtained a memo that was written by a top staffer at the Senate Campaign Committee to Republican strategists. And it said that Crist needs to do the right thing and that he has zero chance of winning the primary, so if you happen to have any contact with Crist, tell him to get out, because he's not returning Senator John Cornyn's calls -- the man who runs the Campaign Committee.

CROWLEY: Which we're not surprised by.

BORGER: No. Why should he? Right.

CROWLEY: What happened here to Crist?

BORGER: Well, there's the micro and there's the macro. Let's talk about the micro, which is the campaign itself. First thing that went wrong for him is that $787 billion stimulus package. Remember that, Candy? That he supported. So you had every Republican voting against it except for a couple. Then you had him supporting it. And remember that hug of Barack Obama? Those hugs can get those guys in trouble.

CROWLEY: The pictures.

BORGER: Then to make matters worse -- and this may be a hint of what's to come -- he went against Republicans in his own state and vetoed an education bill that ended tenure and allowed merit pay for teachers. So they're really mad about it including former Governor Jeb Bush who hasn't come out and endorsed anyone. People say he's going to endorse Rubio. But he was very much a big supporter of this education bill.

CROWLEY: You sort of got the feeling with that last act, vetoing that.

BORGER: Right.

CROWLEY: That this was Charlie Crist going, you know what? I veto just to make everybody that disappointed him angry.

BORGER: Right. And that's the macro. The macro story he is here that a year ago these guys went out and recruited Crist. And a lot of other establishment Republicans. Because the Republican Party was all about proving it had a pulse after Barack Obama's election. And then lo and behold, the tea party comes along and establishment candidates don't look as good as they used to look. Marco Rubio is a very attractive candidate in that state who has done very well campaigning against a governor who wanted to establish an air of inevitability about his own campaign. And it didn't work so well for him. And so here is where you're seeing the influence of the sort of anti-establishment tea party come into effect. And, you know, causing some trouble for the Republican Party.

CROWLEY: I think here, too, it always strikes me old and new.


CROWLEY: New always wins. Charlie Crist ends up looking like the guy who had been there forever. Marco Rubio who has been in politics for a while but relatively young age looks like the young guy.

BORGER: Once you start hugging Barack Obama who is growing less and less popular, then that creates a problem and people don't like when they're told, okay, Charlie Crist is the inevitable nominee and he's going to run. Not so much. Exactly.

CROWLEY: All right, Gloria. Thank you so much. Appreciate it.

BORGER: A check of the top stories is next. Plus the U.S. military battles volcanic ash from one war zone to another.


CROWLEY: Lisa Sylvester is monitoring some of the other top stories in THE SITUATION ROOM right now. What have you got?

LISA SYLVESTER, CNN CORRESPONDENT: Hey there, Candy. A new snap shot of how the swine flu epidemic affected pregnant women. The Centers for Disease Control and Prevention 56 expectant mothers died from the virus last year. The CDC says quick treatment with flu medicine saved the lives of many other pregnant women stricken with the new strain of swine flu.

Washington, D.C. residents are going to have to put their hopes of getting a vote in Congress on hold again. The house has abandoned plans to take up a D.C. voting rights bill this week. House majority leader Steny Hoyer says the legislation probably won't come up this year. A major sticking point, the bill was linked to a provision that would have effectively eliminated the district's tough gun control laws.

And happy 90th birthday to Supreme Court Justice John Paul Stevens. He celebrated the milestone today with his colleagues who, incidentally, also throw him a party when he retires in a couple of months. He's is second Supreme Court justice to mark his 90th birthday on the court. Oliver Wendell Holmes was the oldest sitting justice. He retired two months shy of his 91st birthday.

As President Obama reviews possible successors to Justice Stevens, Americans disagree about the kind of candidates that he should consider. Our new CNN Opinion Research Corporation poll shows 25 percent of those surveyed want the president to nominate a liberal justice. 37 percent favor a moderate, 36 percent, you see there, they want him to pick a conservative. I don't think that's going to happen as far as picking a conservative.

CROWLEY: I think we should take odds on that. We'd probably both bet the same thing. It wouldn't be a worthy bet.

SYLVESTER: The question is whether a moderate or a liberal. In there there's a little wiggle room.

CROWLEY: I'll go on the liberal side of moderate, but we'll see. Thanks so much Lisa Sylvester.

President Obama is set to meet with Republican leaders to discuss the upcoming Supreme Court vacancy. Will he take their advice? Or has he already made up his mind?

And you likely get a lot of it in the food you eat. It's salt. But if one agency has its way, that might soon change. We'll have the details.


CROWLEY: A new poll shows that half of Americans support giving the government new powers to regulate Wall Street. Joining me to talk about that and more in today's strategy session I'm joined by two political contributors. Democrat Paul Begala and Republican -- I'm sorry, Ed. I looked up and thought, wait a second. We've only talked five minutes before this. Ed Rollins. Sorry. I was looking at those numbers. That may be what distracted me. Only 50 percent say the government ought to be giving new powers to regulate Wall Street. I mean, I think that's kind of low. I would expect it to be pretty high.

ED ROLLINS, REPUBLICAN STRATEGIST: I think it's low today. I think if this was starting a year ago and all the things that occurred on Wall Street, it would be much higher. I think what's happened in the course of the last year, health care, General Motors, people are getting concerned about government takeovers. I think to a certain extent in this economic environment, people don't understand what this means. They think it may affect the economy. And if that affects the economy, then they're not very happy about it.

CROWLEY: Paul, what's the message? Let's say they don't get this. Let's say they just have stalemate on Capitol Hill. What's the message that let me switch hats with you, that Republicans take into the November elections about this?

PAUL BEGALA, DEMOCRATIC STRATEGIST: I think this actually if it fails, it hurts Republicans a lot. Obviously it hurts Democrats. They want to reform Wall Street. But for Republicans, think about this, the Republican base hated the Obama health care bill and it passed anyway. Even Republicans mostly but solid numbers of Republicans want Wall Street reform. If you're a Republican, you don't like big government and you don't like Wall Street. So you can sit there and say, wait a minute. They passed the bill, I didn't want health care, then they killed the bill I did want, Wall Street reform? They've got to pass this bill. The Democrats know that. The Democrats won't make it any weaker to get Republican support. I was on the hill yesterday talking to people in the Congress. There's no appetite among the Democrats to weaken this bill. They want a tough, strong Wall Street regulatory bill. The Democrats think they have the better issue.

CROWLEY: Paul is right. There are -- Americans don't much like Wall Street these days. They don't much like government interference. But why, why would Republicans be against this at this point? Do you think they're positioning themselves for a better bill? Or do you think they want the politics of it?

ROLLINS: I don't think there's any great political gain, to be perfectly honest. This is one of those things that you do what is right. Republicans at this point in the time don't feel they've been involved in the process. They're afraid this will hurt the economy and not necessarily benefit it. It is not like health care, as Paul said, at the end of the day being on the side of Wall Street as opposed to being on the side of Main Street is not the best position to be in today. But they feel that they're now the opposition party, this is not a good bill, this will damage the economy long term and they'll be against it.

CROWLEY: What do you make of Greg Craig showing up as the lawyer for Goldman Sachs? He held many positions in Washington, was recently in the Obama white house as a white house counsel. What is that about? What do you make of it?

BEGALA: He's a friend of mine. I worked with him in the white house. Obviously he and I both worked and won the big impeachment fight with Bill Clinton. Yet, I have to say, this doesn't help Barack Obama. Doesn't look good for Barack Obama. It's perfectly legal. Let me make that clear. Greg Craig has a right to earn a living and Goldman Sachs has the right to the best defense money can buy. But in terms of politics, this is the sort of thing that Barack Obama campaigned against. The revolving door from the white house to Goldman Sachs. I do think it's a little tarnish on the Obama brand at a time hen they don't really need it.

ROLLINS: I totally agree with you, Paul. I don't think it helps Goldman Sachs. It looks like Goldman Sachs is trying to get somebody inside to go fix a problem that they might be able to fix by the legal battle. Washington is a town full of great lawyers. Greg Craig is a great lawyer, but he doesn't need to be in this fight right today.

CROWLEY: Let me switch over to the supreme court just because we're told that president Obama's been privately reaching out to some of his choices or possible choices, and that there will about, in fact, maybe a pick by early may, that the president wants to reach out to Republicans. But we have these new CNN Opinion Research polls that show 6 in 10 Americans think Obama will pick a liberal but only 25 percent think he should pick a liberal. Who and what is he going to pick, Paul?

BEGALA: He's going to pick a liberal. Come on. At least certainly a Democrat, somebody in the mainstream of the progressive part of government. That's as it should be. Elections have consequences. 53 percent of it, we the people, voted for Barack Obama to make him our president. I think the model frankly is when Ed Rollins is working for Reagan or George W. Bush, these presidents were conservative. They nominated the most qualified and most conservative people they could find. So you have Scalia, you have Chief Justice Roberts, people with impeccable credentials who I think are way outside the mainstream because they're conservative. That's what Barack Obama has to do, that's what he will do. He's running the traps. I hope he's actually listening, but I think he's already got his pick in mind and he's just now kind of doing the Stations of the Cross here.

CROWLEY: That may be the operative phrase, running the traps. He's going to talk to Republicans about this?

ROLLINS: Well, he may. I think at the end of the day, I'm always hoping that you get your suitor. You appoint someone who you think is a conservative and you get your left wing liberal. Right now you'll pick someone that will be the fourth vote, but who will be the intellectual giant that can compete with the Roberts and the Alitos and Scalias who are real conservative intellectuals? That's the key thing. You have someone whoever you pick that can draft documents that in the future, as young political science students can read it, understand it and see which direction the country is going.

CROWLEY: Crystal ball time. I need a yes or no from both of you. Will there be a big Republican fight of whoever gets thrown out there by the president?

ROLLINS: There will be a fight. I don't think -- unless it's an extremist with a big record, you know, I think there's going to be maybe a third of the Republicans not voting for whoever he picks, but I don't think it will be one like the Bork fight or anything like that.

BEGALA: That's right. The magic number of course is 40. Republicans have to hold 40 to filibuster a Supreme Court nominee. I don't think they'll be able to do that. So I don't think there will be a massive fight because of the reason that Ed states. The most liberal member of the court being replaced with probably a slightly less liberal. Not much of a game changer.

CROWLEY: Thank you very much.

ROLLINS: That fifth vote.

CROWLEY: That wasn't yes or no, by the way. And Republican strategist Ed Rollins. Thanks so much.

Stand by for the Cafferty file. Jack will be back in a moment.

If you're like most Americans, you probably eat too much salt. Should the federal government try to stop you?

And the CNN express makes a new stop in Kansas to show us a small business that's helping to build up America.

(COMMERCIAL BREAK) CROWLEY: Jack is back. Joining us again with "the Cafferty file." So, now you have the answers. Did you get a lot of responses?



CAFFERTY: Yeah, this is a very emotional issue with folks and we got a lot of response. The question is what should be done about border security if almost 20 percent of illegal immigrants entering Arizona from Mexico have criminal records?

Sterling writes from Phoenix, "We in Arizona are tired of paying for health care for illegal immigrants. They clog our emergency rooms. This tough new state law will do more to contain medical costs in Arizona than anything Obama or the Congress have done."

Jay writes, also from Arizona, "What's the big deal? As a white Arizonan I carry the state-mandated driver's license, a federally mandated social security card and proof that I carry automobile insurance. I'm required to show these things anytime law enforcement requests it. The segment of society that's howling about the potential for some real immigration oversight is the far left Latino whiners who don't want to be profiled simply because massive numbers of their illegal voters to be might be asked to leave the country that they have entered illegally."

John writes, "What do I have to carry to prove I'm a natural-born U.S. citizen if I travel to Arizona? Do I need to get a passport to travel in my own country? Can they arrest me if I don't have proof of my birth? I know driver's licenses and social security cards prove nothing. How many innocent people will they stuff in jail because they don't have a passport?"

Aaron writes, "I am beside myself with frustration over watching previously prosperous neighborhoods being turned into bordertown slums by illegal immigrants who have absolutely no investment in this country. For them, America is but one thing -- a cash cow."

And Sam writes from California, "I lived in a small town on the eastern slope of the high sierra for 30 years. It was beautiful. We didn't lock our doors. There was no crime. Until the illegals came to town. They are now over half the total population, living 20 to a house. Now there is crime. The hospital's about to go out of business because of the cost of providing care to the women who bear five or six children as quickly as they can. It is horrendous. Illegals have taken advantage of America, and it must stop now."

Very emotional issue. If you want to read more about it, you can go to my blog, Miss Crowley?

CROWLEY: I think you proved my theory, everybody's theory, probably, that people say things in an e-mail that they probably wouldn't say to you sitting on TV.

CAFFERTY: Well, you know, I don't know. They -- they talk to me in what I'd like to think are pretty honest tones on both sides on most of the issues, but this particular issue has a lot of people fed up, for won't of a better phrase. The government won't address it and there are communities that have been destroyed economically and socially by the influx of people who are shouldn't be here.

CROWLEY: Now they are mad at me for talking to you, Jack, so I have to go.

CAFFERTY: If you'll have me.

CROWLEY: I'll have you, thanks.

It's wreaking havoc in the skies. And now the thick Icelandic volcano cloud is forcing the U.S. military to transport injured troops from one war zone to another. We'll explain.


CROWLEY: They are alive and well in Kansas, and some say critical to helping build the state back from recession. Our Tom Foreman looks at the success of small businesses "Building up America."


TOM FOREMAN, CNN CORRESPONDENT: In a shower of sparks and hot metal, Terry and Debbie Schrag are building success at Cannonball. Ten years ago they opened shop to make one of Terry's inventions, a fully automated hay loader and they are turning them out as fast as they can. Why do you think your business is doing well when so many others aren't?

TERRY SCHRAG, CANNONBALL: Well, I think, number one, is we have an excellent product. And we have personal contact with almost everybody we sell to.

FOREMAN: But there's more. The Schrags could not get a loan when they started, so they paid for everything. That kept them from getting too big, too fast, or sinking money into buildings or help, and it prepared them for hard times. So, you didn't have the loan money to work with, but you also didn't have the debt to be saddled with.

DEBBIE SCHRAG, CANNONBALL: That's correct. With us, since we've always worked out of our pocket and always made our cash flow work, I think we weren't hit with that when all the banks started tightening up on their money.

FOREMAN: At Wichita State, the small business development center says such homegrown success stories are critical to this state's rebound. Because, David Mace says, only a tiny fraction of new jobs come from out-of-state companies moving in. So, what makes the difference between a small business that succeeds and one that does not?

DAVID MACE, KAN. SMALL BUSINESS DEV. CENTER: I think the biggest thing is probably customer focus. And it really starts with, I think, identifying a real need that exists and going after it and meeting that need and really taking an outside-in approach to the market.

FOREMAN: He should know. Back in the late '50s two of the school's graduates borrowed $600 to start Pizza Hut. And 20 years later, sold it for $300 million. Cannonball is not that big, but it provides 18 full-time jobs with $3 million in annual sales. And --

SCHRAG: If I was 20 years younger, I'd double the size of it.

FOREMAN: It could be that big. You have that much business?

SCHRAG: Oh, yeah. I could double it.

FOREMAN: For a farm equipment maker in the middle of a recession --

SCHRAG: Come on, beauty!

FOREMAN: -- not a bad harvest.


FOREMAN: People here have absolutely felt the downturn, Candy, but you hear that mantra everywhere you go, the simple belief that a good idea, hard work, and a careful expansion of your market can make you say, what recession? Candy?

CROWLEY: Our Tom Foreman in Greensburg, Kansas, travel on, Tom, thanks.