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JOHN KING, USA

Goldman Sachs Executives Grilled by Congressional Panel

Aired April 27, 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: Thanks, Wolf. Some developing news tonight on immigration, number one, an increasing number of national Republicans voicing concerns about Arizona's tough new immigration law and number two, CNN has learned that the Senate Majority Leader Harry Reid tonight rejected an appeal to another senior Democrat that he put off any discussion in the Congress about comprehensive immigration reform until after the election, Senator Reid saying no.

But our "Lead" tonight, outrage at Wall Street, but not your outrage, but outrage in the Congress. Senators call Goldman Sachs before the committee. They say there are a number of dirty deals and they want answers. The testimony continues live tonight and we're keeping track of it.

Also when we go "Wall-to-Wall" we are now the USA of IOU. A new commission put together by the president and the Congress exploring ways to bring down the deficit and the long term debt. It started its work today. Among the tough choices, what should you cut and should we raise taxes here in the United States.

The most important person you don't know, well if you're on Facebook he's the man who makes the rules that many in Congress now say invade your privacy. You won't want to miss that. And in our "Radar" tonight some fascinating stories. We'll show you the president back in Iowa. It's not just about 2012, the Democrats have a problem in rural America and as conservative darling Marco Rubio enters the race for Florida Senate he also steps into the big debate about immigration in Arizona.

Most of what you're about to hear will make you mad or annoyed anyway. Some of it isn't 100 percent family friendly either like this from Democratic Senator Carl Levin of Michigan to Goldman Sachs executives he believes knowingly sold clients bad investments and undermined broader financial markets in the process.

(BEGIN VIDEO CLIP)

SEN. CARL LEVIN (D), MICHIGAN: June 22 is the date of this e- mail. Boy, that Timberwolf was one (EXPLETIVE DELETED) deal. How much of that (EXPLETIVE DELETED) deal did you sell to your clients after June 22, 2007?

UNIDENTIFIED MALE: Mr. Chairman, I don't know the answer to that. But the price would have reflected levels that they wanted to invest in at that time. LEVIN: Oh, but they don't know -- you didn't tell them you thought it was a (EXPLETIVE DELETED) deal.

UNIDENTIFIED MALE: Well I didn't say that.

LEVIN: No. Who did? Your people internally, you knew it was a (EXPLETIVE DELETED) deal and that's your e-mails show.

(CROSSTALK)

(END VIDEO CLIP)

KING: The hearing pitting Congress against Goldman Sachs is just one act in the financial reform drama. Another is an all too familiar partisan duel or a blame game as we call it here in Washington. The Senate can't quite agree to begin formal debate on new rules designed to prevent another big market meltdown. Democrats blame Republicans and vice versa.

Yes, same old game but remember your 401(k) is still in those markets so this one matters. New developments in that legislative fight in just a minute, but first the big bipartisan show of outrage at Wall Street and Goldman Sachs particularly. At a time most Americans give their Congress historically low approval marks that Congress was all too happy to cast itself in the role of good versus evil. Even senators embroiled in Ethics Committee investigations felt they had the high ground.

(BEGIN VIDEO CLIP)

SEN. JOHN ENSIGN (R), NEVADA: Most people in Las Vegas would take offense at having Wall Street compared to Las Vegas because in Las Vegas actually people know that the odds are against them. They play anyway. On Wall Street they manipulate the odds while you're playing the game.

(END VIDEO CLIP)

KING: The big binders of documents were part of the evidence and props for the theater. The senators say the e-mails and other records show Goldman put greed above all else. And at times when the witnesses wanted time to review the record, the senators, experts of this after all, made clear they know a filibuster when they see one.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: I cannot help but get the feeling that a strategy of the witnesses is to try to burn through the time of each questioner.

(END VIDEO CLIP)

KING: Goldman CEO Lloyd Blankfein is still being grilled by senators right now -- you see a live picture -- so beyond the drama what did we learn today and do we end this day any closer to passing new rules designed to protect you and to prevent it all from happening again.

Joining me tonight CNN national political correspondent Jessica Yellin, Democratic Senator Maria Cantwell of Washington whose committee assignments include finance and Republican Senator Kay Bailey Hutchison of Texas a member of the banking committee and counsel to the Republican leadership. Welcome all. Did we learn anything today beyond the fact that Congress like most Americans is outraged at Goldman and Wall Street?

SEN. MARIA CANTWELL (D), WASHINGTON: I think we learned something and that is that sometimes people think this issue is too complex to understand. And when you see these e-mails and you see and understand that there were people in these companies that also thought these were bad deals, it kind of turns a light bulb on for a lot of my colleagues, a lot of for people in the United States that this truly is a market that has not been transparent and not all the facts have been on the table.

KING: And yet, Senator Hutchison, the CEO is still testifying but here's something he said early on in his testimony. He essentially was saying look, we know this is risky but so are the people we brought in to do business with us that they knew things were in trouble. They knew these were risky investments and they willingly made them.

(BEGIN VIDEO CLIP)

LLOYD BLANKFEIN, CHAIR & CEO, GOLDMAN SACHS: The people who are coming to us for risk in the housing market wanted to have a security that gave them exposure to the housing market. And that's what they got.

(END VIDEO CLIP)

UNIDENTIFIED FEMALE: Well --

KING: Do you buy Goldman's excuse essentially -- especially on the most risky stuff involving the housing and selling short and everything? That everybody involved knew the risks. Do you buy that?

SEN. KAY BAILEY HUTCHISON (R), TEXAS: It depends on what they told the person that they were selling this to. I mean that is the key. Transparency is the key and clearly if a person was selling something, not giving all the facts, maybe even hedging the other side at the same time, that's fraud. It is simple. That's fraud.

And I think the SEC under the law is taking that on. I do think we need transparency in derivatives. That is very important. And I and the Republicans in the Senate want reform. We want good reform. We want a seat at the table. And that's what we're not getting right now.

KING: We'll get to the specifics of that in a minute. I want Jessica to come in the conversation. As I do, I want to introduce the voice of Senator Tom Coburn, one of your Republican colleagues because he said he was fine with seeing the Goldman CEOs there but if Congress is really going to get into it. What happened here? It made -- Senator Coburn made clear he'd like to see a lot of other people before the committee.

(BEGIN VIDEO CLIP)

SEN. TOM COBURN (R), OKLAHOMA: The most honest observers would acknowledge that the roads of responsibility lead to places like Washington and Congress as well as Wall Street.

(END VIDEO CLIP)

KING: If this is going to be done right, should you be calling Larry Summers and Tim Geithner from the current administration, people who were regulators in the previous administration? And should you be calling the past chairman and the current chairman of the banking committee? Republicans controlled Congress from 2000 to 2006 while a lot of this was happening. Democrats have controlled the Congress since 2006. I remember, Senator Cantwell, during the Bush days the Democrats complained all the time where's the oversight. How did we get into Iraq? Where's the oversight of the intelligence of weapons of mass destruction. Where's the oversight now?

CANTWELL: Well it's really important that we do get to the bottom of this. And yes, you can go back to the 1990s and you can hear from a lot of people that were part of economic strategy who are both Democrat and Republican administrations saying that oh these derivatives don't need to be regulated because they will only be used by a few people. Well what we have seen is since 1999 this has grown into a $600 trillion market, much of it dark. And so we don't really know what's going on because, as you talked about or as my colleague, Senator Ensign said, I mean you'd never be able to go to Las Vegas and make those kinds of bets if you didn't have any capital to back them up, so it really was a casino game at its worst level.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: And may I ask you, Senator Hutchison. It's your party that's been arguing, for example, that the housing market was allowed to flourish and that the government fed the housing market. But it was under the Bush administration that this was allowed to expand so exponentially. Do you think President Bush should be called? Should he be held responsible? Should his treasury secretary, his head of housing and urban development?

HUTCHISON: Well I do think that the subprime lending that has been encouraged by administrations of both parties -- that's very clear -- is part of this fault. We encouraged subprime mortgages. Not we, but many people in Congress and the administration trying to get more people into home ownership. That was something that was sought. But, Fannie Mae and Freddie Mac are not in this reform bill. That's one of the complaints that Republicans have because that was a big part of --

KING: Is that a legitimate complaint, Senator Cantwell? Is that a legitimate complaint that Fannie and Freddie part of the problem should be dealt with --

(CROSSTALK)

KING: -- down the road?

CANTWELL: I think you know from the grand perspective, no, I think it's not the issue. What people took were bad loans basically and created a mechanism to try to make them look good. And the question is who took those loans and really created this unbelievable market for them that involved all of these people. So how was it that Goldman influenced the rating agencies and the rating agencies said oh these are good bets? How did everybody you know from the regulatory oversight perspective you know look the other way?

And those are the questions that I think we have to get to the bottom of. And we have to pass a bill and we have to have the Republicans say that they really are for exchange trading and clearing and position limits and the kinds of things that are about getting transparency to this market.

KING: Much more to discuss and much time dedicated (INAUDIBLE), first though a quick break. The senators and Jessica will stay with us.

And as we go to break, a quick look behind the numbers. The Dow industrials nosedived 213 points over worries not about anything here at home but about Europe's debt crisis. One exception to the freefall -- who else -- Goldman Sachs which closed up $1.01 higher.

(COMMERCIAL BREAK)

KING: Back again with CNN national political correspondent Jessica Yellin and Senators Maria Cantwell and Kay Bailey Hutchison. Where are we in terms of doing something designed to prevent this from happening again. The second test vote to bring it to the floor for debate failed today. And the Democrats have decided, Senator Cantwell, they think that even though you're losing the votes they're putting the Republicans in a bad spot.

The negotiations continue behind the scenes. This is one of those games that I think as the Americans watch from home they think why can't you guys behave like grownups sometimes and why can't you figure this out. If Senators' Dodd and Shelby, the two key players, Democrat and Republican, are making progress why do the Democrats feel the need to keep having these votes essentially to have a political fight?

CANTWELL: Well we have a very good bill. The combination of two efforts of the Banking Committee and the Ag Committee that has oversight over these derivatives and it's about bringing the bill to the floor so that you can have a debate. Senator Reid hasn't limited the number of amendments that Republicans can offer, so they can come out to the floor and offer what amendments they want to try to change this legislation.

But what we can't put up with is people who are saying we are not going to reform the system. You can see by reading the papers today what's happening in Greece, what's happening in other markets. This thing is continuing to be a problem for our economy and Main Street wants to know when we're going to get a handle on what Wall Street is doing because it's impacting our entire economy. So we're going to keep moving ahead until we get real reform.

KING: I get the sense from your facial expression you take issue with some of that.

HUTCHISON: Well I do. First of all what's happening in Greece is what America is on the way to doing as well. And it is so heavily in debt that they can't pay their debts. And that's exactly the direction that this Congress and this president are going and --

KING: We'll talk about that -- we'll talk about that in a minute in the next block. But in terms of the financial bill, you have been concerned --

HUTCHISON: Yes.

KING: -- some Republicans have raised concerns that you don't think the language is ironclad. That as you read the bill still could potentially leave taxpayers on the hook --

HUTCHISON: Absolutely --

KING: -- for some intervention.

HUTCHISON: It does not --

KING: Is there progress being made? The Democrats -- some Democrats concede the point, others say it's vague enough but there's negotiations on that key point. Are we making progress?

HUTCHISON: Well the reason that we are not ready for this bill to go to the floor is that we have just had an experience with health care reform in which not one Republican amendment was passed, not one Republican vote was a part of this process. Now we are trying to have a part in this process and we have been promised negotiations before the bill would go to the floor.

And I think that if time is given to us, we will be able to do that because we do want reform. But the bill that is before us does not stop taxpayers from having bailouts in the future. It does not. It does not regulate derivatives that also allow the legitimate use for airlines and farmers and ranchers and candy companies, which use derivatives for legitimate hedging of their own budgets so that they don't get caught with big price increases that they have to absorb and pass it on to customers.

Those are the things that are so important that we need to have some idea and some Republican input before this goes to the floor and then have an amendment process. But if no Republicans are going to be heard, no Republican amendments are going to be passed like health care reform then it's going to be another bill that we think will hurt our economy and will not produce the result that we all want, which is reform.

(CROSSTALK)

CANTWELL: John, Greece is in trouble because just like the U.S. economy, Goldman Sachs bet on both sides of the equation. Somewhere in America, you have to stand up for the fiduciary responsibility of being honest with your customers. And what we're trying to say is after four or five attempts to regulate derivatives in the last six or seven years after the Enron crisis, the majority of Republicans always voted against regulating derivatives.

In fact it was Republicans who led the charge to take out the oversight regulators of this market and say stand on the sidelines. So we clearly want to get the referee back in the game. We want somebody paying attention to these dark markets as soon as possible.

YELLIN: Senator Cantwell, may I ask while you're talking about derivatives, there was a deal negotiated on derivatives by a female head of a committee, Blanche Lincoln. It's been reported that you said subsequent to her decision that you felt there was some sexism in the way it was handled from there that the secretary of treasury and Senator Dodd didn't necessarily incorporate her ideas or didn't meet with her appropriately. Do you still believe there's a problem with sexism and how pervasive?

CANTWELL: What I said was that this was a meaningful bill out of the House -- out of her agricultural committee. In fact, a lot of people don't understand that because of commodities trading that committee really is the committee of jurisdiction. And so she had out of the House Banking Committee, out of the Senate Banking Committee, out of the House AG Committee, she produced the toughest bill on clearly having oversight over these derivatives to bring them out of the dark and into a transparent market. So I wanted to make sure that bill got brought up on the Senate floor. And we've been given that guarantee by the leader that it will be.

YELLIN: But what step was missed? You said she brought a strong measure forward --

CANTWELL: Well I think a lot of people were giving attention to just the banking bill itself, just as we've been talking here about the notion of a Consumer Products Safety Commission. The issue is in 2000, we deregulated this market. We took the policemen off the beat. And the consequence of that has been all of this problem and so she was I think not getting enough attention --

KING: Is it still a boy's club --

(CROSSTALK)

KING: I think that's the point. When there's eight voices in the room if one is a woman, is that voice heard somewhat less?

HUTCHISON: Oh, I think the bill that Senator Lincoln came out of committee with is a bill that doesn't allow airlines to set a price on fuel so that they don't have to jack up their prices when the jet fuel prices go through the roof.

KING: Do you think it's too much?

HUTCHISON: Oh yes I do --

KING: Too much regulation in your mind?

HUTCHISON: Well, no, no, not too much regulation. Maria keeps talking about one way to regulate. We all want transparency. We have got to have transparency. And we can do that in a way that doesn't jeopardize the economics in this country. Because when you have legitimate businesses that are trying to set their budgets by leveling their costs in fuel or sugar prices -- candy manufacturers need sugar -- those are the things that have made our economy actually be helped in stabilizing.

Otherwise, prices would go through the roof. And her bill stops the legitimate use in an effort to do what we all want to do and that is produce transparency. We can do it without shutting down the end users, which are so important --

(CROSSTALK)

CANTWELL: So last week the end users came to Washington, D.C. The Air Transport Association, the Manufacturers Association, those involved with agricultural products and they all said we are the end users who have to legitimately hedge and we support the Lincoln language. That is because they know when people who are coming into this market and doing kind of these activities that drive up the price it hurts them as well.

(CROSSTALK)

KING: I need to call a quick time-out -- just hold our time because --

UNIDENTIFIED FEMALE: That isn't what I heard at all --

(CROSSTALK)

KING: -- as you can see there's a little bit of disagreement and mistrust here and that's a critical point as we move on to our next subject. We'll continue our conversation in a minute, but first, I'm going to go Wall-to-Wall to look at a money crisis that affects every one of us and is only getting worse. We'll break down the numbers and then we'll get some reaction from our senators. Stay with us.

(COMMERCIAL BREAK)

KING: Continue our conversation with Senators Hutchison, Cantwell and Jessica Yellin in just a minute but first we're going to go "Wall-to-Wall" to break down a major challenge facing the country and then we'll get their thoughts on it.

The president today gave marching orders to a new commission. The new commission is charged with finding ways to reduce the national budget deficit, annually and the big long term debt. Just before the commission began its work, the president came into the Rose Garden to lay out the ground rules.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D-IL), PRESIDENT OF THE UNITED STATES: This is going to require people of both parties to come together and take a hard look at the growing gap between what the government spends and what the government raises in revenue. And it will require that we put politics aside, that we think more about the next generation than the next election. There's simply no other way to do it.

(END VIDEO CLIP)

KING: So let's go to the magic wall now and take a look at some of the tough choices. Number one is how do we deal with this? The economists did a big poll asking the American people what are they willing to cut? Because one thing you have to do if you're going to balance the budget and reduce the deficit is to cut spending. So let's stop right here for now.

What are the American people willing to cut? Well they overwhelmingly say cut foreign aid, cut spending on the environment, housing -- you see how the support goes down. When it comes to Medicaid, Social Security, Medicare and veterans benefits there's very little support for cutting down there. So let's go over here.

Are American people willing to cut where all the money is spent? We'll look at that? Foreign aid is only a smidgen of the federal budget, the environment only a tiny bit, housing a tiny bit. National defense is relative willingness to cut about 20 something percent of Americans -- that is a big chunk of money. But the most money is spent down here -- Social Security, Medicare, veterans' benefits, Medicaid. That's the biggest chunk of the federal budget and the American people say we're not willing to cut that.

That's too important. So what is the commission going to do? You have this group here, there's a Democratic chairman, a Republican co-chairman, six sitting members of Congress, six sitting members of the United States Senate, four non-elected Democrats and two non- elected Republicans, 18 in total. They will debate this for weeks and months and get a report to the president to decide what happens next.

Here's what the president says he needs from this commission. Here's right now the annual federal budget deficit -- $1.6 trillion this year -- a huge amount of money. The president says he wants this commission to come up with a plan that gets it down to 600 billion by 2015. Again, you have to weigh what can you cut, what can you squeeze? Do you have to raise taxes?

So let's look at some of those tough choices. One, the federal government will get some more revenue if the Congress as is currently slated allows the Bush tax cuts to expire at the end of the year. That's one way revenues will come up somewhat. But among the conversations now should there be a value-added tax like a sales tax or something like that to raise revenues. The other big choices of course cut entitlement spending. That's Medicare. That's Social Security. Maybe find a new way to treat younger Americans different than current Americans who are close or already using those programs. It's a very tough challenge. The Republican co-chairman of the committee is the former Republican Senator Alan Simpson of Wyoming and he recounted his days in Congress when all the time people talked about balancing the budget but then they kept spending money.

(BEGIN VIDEO CLIP)

ALAN SIMPSON, CO-CHAIRMAN, NAT'L COMM., FISCAL RESP. & REFORM: Both parties have done nothing to stem this unstemmable tide. I was in that Senate for 18 years and the cry to me was always, Al, go bring home the bacon. Well, the pig has died.

(END VIDEO CLIP)

KING: The pig has died -- from Alan Simpson there -- a reference to there's no more money to spend on pork in his view. Senators Cantwell and Hutchison, we'll be back in just a minute. We'll ask them about the very tough choices. What should our government do? Cut taxes -- cut spending -- excuse me -- raise taxes? Can Democrats and Republicans get together? We'll talk about it in just a minute.

(COMMERCIAL BREAK)

KING: Joining me once again CNN national political correspondent Jessica Yellin and Senators Maria Cantwell of Washington and Senator Kay Bailey Hutchison of Texas. Let's talk about the tough choices you face now and you face them, you'll face them just after this very contentious election year. But I want us to listen first to the voice of Ben Bernanke, the chairman of the Federal Reserve who says look you can have people on the left saying you can't cut these programs, let's raise taxes some. You can have people on the right saying let's cut taxes and slash in the spending. Ben Bernanke is saying you're going to have to both figure this out.

(BEGIN VIDEO CLIP)

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Thus the reality is that the Congress, the administration and the American people will have to choose among making modifications to entitlement programs such as Medicare and Social Security, restraining federal spending on everything else, accepting higher taxes or some combination thereof.

(END VIDEO CLIP)

KING: Where does this head? Senator, in your case you just felt this personally. You just lost the Senate primary back home in part because people blame you for being part of this Washington that can't do what every family has to do, figure out how to make the checkbook balance.

HUTCHISON: That's correct and that's correct about Washington. I believe that we have proven that tax cuts spur the economy. President Kennedy, President Bush, President Reagan cut taxes and it spurred the economy. Increasing taxes on the people who hire and employ people is not the way to go. And I'm concerned about the debt that we are incurring and what it's going to cost in interest. The health care bill that is going to have huge astronomical costs with it is going to keep us from attacking this unemployment issue. This is where the rubber hits the road.

KING: There were times when both Ronald Reagan and George H.W. Bush at Camp David agreed to raise some taxes when deficits got out of control and people in the Clinton administration would tell you they had a balanced budget for a couple of years in part because George H.W. Bush, a Republican president, made that risk. It cost him dearly but he took that risk.

HUTCHISON: I think that when Reagan lowered taxes -- I mean, look what happened in Great Britain when Margaret Thatcher lowered taxes. It freed the economy and Great Britain was in much better shape and it's happened in America as well. I think raising taxes is just not the way to go. You're going to - you're going to put a cap on the people who are the entrepreneurs, the producers, the people who are going to create the jobs of the future.

KING: Do you see a way to do this without some tax increases? And in this environment where there's mistrust over financial reform, the hangover of health care. This commission has to have almost a unanimous view for the Congressional leaders even to commit to voting on what they recommend.

CANTWELL: It does. It does.

KING: Is this going to work or is this going to be a great exercise that gets us nowhere?

CANTWELL: Well you know, I think these commissions do have a hard task because they can have a great bipartisan feel to it. But when it comes to the end of it, Congress has to vote. Senator Hutchison and I agree on some things. We both agreed to have a sales tax deduction be part of this recent tax bill so that our states wouldn't be penalized because of our own tax structures or to say that I'm sure she supports making sure people get a break for hiring new employees. But the bottom line is that we have to grow our economy and move forward and we have to reduce spending. And two key areas that Bernanke talked about is you have to take our biggest programs and figure out how we're going to reduce them for the future. And that's why on health care I actually supported it because those programs that are going to drive down the cost of health care, to say we're not just going to go out and have fee for service and spending and spending. We have to get efficient about health care delivery and controlling those costs because that's going to be a big driver of our deficit moving forward.

YELLIN: Reining in budgets obviously is a big theme in an election year. But because it's an election year this year and because we're gearing up for a presidential election next year, do you think there's any political will to make any tough choices ahead of the 2012 elections? Do you see anything significant coming if this debt commission doesn't get its way, will Congress act? CANTWELL: Well, I think there's going to be a really tough decision and that is the president keep his commitment on what we're doing in Afghanistan. And the issue is that part of our largest expense is making sure that the Iraqi government and the Afghanistan government and their partners stand up and take the role and responsibility for security in both those parts of the world. That's a huge expense that the United States is spending. And what we need to do is focus on making stability in that region a successful goal.

YELLIN: Would your party --

KING: No, go ahead.

YELLIN: Would your party approve to defense spending cuts if that's what the Democrats propose?

HUTCHISON: I think it is time for others to share the burden of the war on terror. Afghanistan and Iraq have been largely funded by America. And our allies are really feeding off the American largess by not participating and helping because all of us will be the targets of terrorism and I do think that we should be cutting back. I'm the ranking member of the Military Construction Committee and I'm telling you I want to stop some of the spending in Europe for building things that we're -- that's not where our focus should be. We shouldn't be building in Europe. We should be focusing on Afghanistan and Iraq and putting our money there. So I am raising that issue.

KING: A little bit of bipartisan agreement there. We're out of time. Let me ask you both quickly in closing I'm told that Senator John Kerry, who has been working on the climate change legislation that I know is very important to you Senator Cantwell, went to Leader Reid today and said please don't bring up immigration this year because then we lose Lindsey Graham, the Republican on climate change, and we won't get that done this year and that Senator Reid said, no, that he plans on bringing up immigration reform this year. Do you want to debate immigration reform this year? Will Republicans vote to get it to the floor, a bill that includes status for the millions who are here illegally, also does some things on the border? Are you prepared to have that debate this year or will Republicans say no way, Mr. Leader?

HUTCHISON: Well John, I think Republicans and Democrats alike have great reservations because of the climate right now. People want to see controlling the border. And right now the violence that's coming across the border, people say, oh, no it's not coming. It is coming across the border. We see it in our border states. And that is not the right climate. Nor has the president nor the members of Congress on both sides had the chance to sit down and work on a bill. I was part of the negotiations the last time we tried to pass a comprehensive immigration reform. And we met for probably a whole year because it's very complicated and you have to have the border security. You have to have guest worker programs that can work. And then you have to deal with people who are here and have been here. And you have to put all of that together. And it was very difficult. There's been no preparation. You can't put a bill out there without a lot of back and forth and piecing it together. KING: I'm very much out of time but is your leader making the wrong call if the end result is you don't get immigration reform and you don't get a climate bill?

CANTWELL: I'm for comprehensive immigration reform but the next bill that we should take up in the United States Senate is getting access to capital to small businesses through community banks. Let's get that done and then you can tackle whatever the next big issue is he wants to tackle.

KING: Appreciate it, Senator Hutchison, Senator Cantwell. Jessica, thanks so much. Still a lot of ground to cover.

Next, today's most important person you don't know has a huge say in Facebook's rules about giving out your private information.

(COMMERCIAL BREAK)

KING: Today's most important person you don't know is the guy who manages the privacy policy for Facebook. Elliot Schrage is a VP who has also worked for Google, Gap, has been a law professor of Columbia. It's worth noting that Facebook's former chief privacy officer Chris Kelly is now running for California attorney general. California is a big state but with 400 million users, Facebook would qualify as the world's third largest country. However you look at Facebook, four U.S. senators think they're giving out too much of your private information. Today they called on Facebook to change its policy that automatically assumes you wanted to share information to automatically assuming that you don't. It is Elliot Schrage, our most important person you don't know, that has to write back to the senators. Let's bring into the conversation Democratic strategist Cornell Belcher and Republican Kevin Madden. You guys know how much I learned about you because of this guy's Facebook policy? Did you know that when you signed onto Facebook? If you're on Facebook and you go to CNN.com or Yahoo! there's an automatic swap.

KEVIN MADDEN, REPUBLICAN STRATEGIST: I assume that when you do something like that it's -- I think maybe it's because I'm somebody who has worked on campaigns and everything I say is usually somehow on the record unless I say it's not. I just assume that's going to be something that's shared and that's going to be out there for everybody for the internet to see.

KING: The senators want to change it so that you have to opt in as opposed to find your way to opt out which is more user friendly I guess we would call that.

CORNELL BELCHER, DEMOCRATIC STRATEGIST: It makes sense to me.

KING: Let's move on to some stories on our radar today. The president is out in Iowa today visiting a wind turbine plant in Fort Madison. He will spend the night in Des Moines. Then he's moving onto Illinois and Missouri. You see the map there. He's making stops in several small towns. You might call this his reconnecting with Middle America tour. The president's approval rating, and here's why he's doing this, among rural voters has dropped from 68% right after he took office to 41% now. This is not just about Iowa and 2012. Cornell, the Democrats know a lot of the Congressional races run through small town rural America. When it comes to the banking crisis, federal spending, they're among the most I won't call them angry but they dislike Washington.

BELCHER: There's a lot of anxiousness out there especially in rural America where they're being hit. That is a little kind of misleading to me because truth of the matter is at that time once Barack's numbers were in the 70s everywhere. And rural America is somewhere Democrats have historically struggled. We made some ground in 2006 and we made some ground in 2008 but it's a Republican defend area. I would be interested to see if the Republican numbers are much better than Democrats.

MADDEN: It was like walking through an art gallery. We see the paintings very differently. I see this as Barack Obama exposed to Middle America. The genius of Barack Obama's campaign was that he presented himself and his campaign presented himself to voters as a centrist. In the last year the voters in places like Iowa and elsewhere in places like Indiana and places like North Carolina, they found out that he is not a centrist. That if anything he has both an ideology and I think agenda that is very left of center. Because of the spending and because of everything else that's now on top of that they're starting to go back into this undeclared place. That's why Republicans we have an opportunity to now bring them into our camp.

KING: All right. We'll watch the president over the trip. We'll see what he does tomorrow too. Here's another one here. Arizona's new controversial immigration law doesn't actually take effect until 90 days after the legislature adjourns. State lawmakers are still working and could be on hold indefinitely if the federal government steps in and today Attorney General Eric Holder signaled it just might.

ERIC HOLDER, ATTORNEY GENERAL: The justice department along with the department -- along with DHS is looking at the law to decide exactly how we are going to react to it. We are considering all possibilities including the possibility of a court challenge.

KING: They see possibly some civil rights violation here.

MADDEN: I think this is why we need lawyers on the show probably to go through this. I think that Republicans and Democrats together on this look at this bill very warily. I think first of all we're all just still learning about this. If you look back two weeks ago not many of us knew this bill was even under consideration. Now that it has, we're all starting to question whether or not it would work in our state and how would it feel if we were somehow and somehow its application was put to me as an individual or Cornell and how we would look at the United States - how we would look at that as an approach that the United States ought to be taking. I think we're still kind of learning about it.

BELCHER: I think it's interesting you had Jeb Bush come out against the bill today as well. KING: Jeb Bush, Karl Rove, an increasing number of what we would call national Republicans who have been down this road before and who have made a lot of time talking about we need to help with the Latino vote.

BELCHER: A lot of us think this is a dangerous bill. It's interesting because we talk about pulling power back away from government. This is a bill that basically gives a lot of power to government and I would argue takes away some freedoms and as an individual it threatens my freedom. I think it's a scary bill.

KING: It also came up in that race today that we can never get enough of. That's the Florida U.S. Senate race. Conservative Marco Rubio today signed the papers that officially make him a candidate. Still no word on whether Governor Charlie Crist will stay in the primary or run as an independent. Stay tuned. That one will come Thursday we're told. Rubio meanwhile stepped right into this controversy we're just talking about Arizona's immigration law.

MARCO RUBIO (R), FLORIDA SENATE CANDIDATE: The law has a potential unintended consequences. It's one of the reasons why I think immigration needs to be a federal issue, not a state one.

KING: Hmm.

MADDEN: The face of the new Republican Party possibly. Somebody like Marco Rubio who is both young, who is conservative, who has Hispanic roots being able to talk openly and freely about what he disagrees with on an immigration approach. And actually can offer a more comprehensive vision for what the Republican approach on immigration ought to look like.

BELCHER: It's interesting because to me it's interesting the distortions and flip-flops occurring now because that same Rubio took a harsher and tougher stance. But now that it looks like he needs to move to the middle because the primary is almost over it's interesting how he's moving to the middle where voters are.

MADDEN: This is why I think immigration is very hard. It's that it's a very complex issue. So taking a stance and learning more about it and building a more comprehensive, a fuller approach on it ought not to have -- ought not to be -- put you at the bull's eye --

KING: You've always said if it's the guy from your party it's thoughtful reflection and reconsideration. The guy from the other party it's flip flopping. All right. Hold on. Next on play by play we'll break down body language from the Goldman Sachs hearing. What was Goldman's top boss doing with his middle digit?

(COMMERCIAL BREAK)

KING: All right, two veterans back for tonight's play by play, just like the sports shows. We play the tape, break it down. Sometimes we stop the action to study just what happened. Kevin Madden and Cornell Belcher still with us. We were talking about the break about the tone of the immigration debate. And some of the tone in our politics this year is not so great, shall we say. I want you to listen to Governor Jim Gibbons of Nevada talking about the issue of racial profiling, which he says sometimes is okay.

GOV. JIM GIBBONS (R) NEVADA: Absolutely out of terrorists ought to profile everybody that looks like a terrorist. I don't have a problem with that. But if they want to have a racial profile of Irishmen, you know, then I'm going to question that.

KING: Maybe there is an attempted joke in there.

MADDEN: An Irish man, I have no idea what that means.

BELCHER: That's a danger because a terrorist could look like me. A terrorist could very well look like me. Profiling anywhere is wrong. And I understand why Gibbons' numbers are tanking.

MADDEN: I think what he is trying to say we saw 19 men board planes on September 11th. And they all looked alike, they all looked a certain color that is why if we're going to put our resources right where the problem, we should be looking at Middle Eastern men. That's a very dangerous place to go when you look at who we are as a society and who we are as a country. But I guess that's the part of the debate.

BELCHER: But it's a double standard because we don't profile you because Timothy McVeigh blew up a federal building.

MADDEN: That's exactly it. And if the standard is even wrong once, then it's un-American.

KING: Let's move on to something else. The CEO of Goldman, Blankfein is up on Capitol Hill. You know your every move is being watched. We're going to watch some video of him coming into the room getting ready for his testimony. Let's play this out. Stop. He is just scratching. And I want to be-- in the interest of full disclosure, when I first started working the magic wall, I realized every now and then I was doing it with one finger, and the wrong finger sometimes.

BELCHER: I'm going to cut him a break because he is having a rough week.

MADDEN: That's my buddy Joe Wall sitting two men away from him. From now on for the rest of this show, I am going to talk like this. With just my fists.

KING: A lot of interesting body language today. Not just from the Goldman CEO. One of the most animated, energetic senators was Democrat Claire McCaskill of Missouri. Let's watch some of her body language.

SEN. CLAIRE MCCASKILL (D), MISSOURI: I mean I don't know why we need to dress it up. It's just a bet. There is where I don't get. This is the same one your folks called [ bleep ] later. This is the same one, okay. Did you tell IIKB that?

UNIDENTIFIED MALE: Suggestions from different parties.

KING: Let's stop right there. That's a good one. So what do you guys think of that?

BELCHER: It's interesting because I sit behind focus groups, panels all the time. And she looks exactly like those Middle American women out there when talking about sort of their frustration with what is going on with Wall Street and the banking industry. I think she is giving perfect voice and face to that quite frankly right now.

MADDEN: I think that's right. I think that's perfectly aligned with a lot of the frustrations a lot of Americans feel. I don't know if you guys play poker, I would love to play poke with Claire McCaskill. You would always know whether she has a good hand or a bad hand. She has a hard time hiding her emotions. That's a good thing in politics sometimes.

KING: How do you she can do that at the hearing and then maybe be ice at the poker table?

MADDEN: I'm going to take my chances. I think I could make a little money.

KING: All right. If you're watching Senator McCaskill, Madden invites you to the game. All right. Here we go. We think our politics are feisty, and we have watched some pretty rough things in recent months. Let's go to the Ukraine. A little egg throwing on the floor of the parliament. Check this out. Now the speaker was smart enough to bring an umbrella. You know if you carry an umbrella, they say it won't rain? Hmm. Watch this play out. We've got eggs. There was punching and fighting elsewhere. Two umbrellas. Think they knew this was coming or was there a leak in the roof? You ever seen anything like that?

MADDEN: Well, I started in New York politics where we used to do a lot of wart healing. And I've seen fights at polling stations. I'd say this is a little extreme. This makes Yonkers look like a civil discourse.

BELCHER: You know God bless American because as bad as it gets, we do not get that bad. We still can have a conversation.

MADDEN: We'll see what happens in the green room.

KING: It's our one rule. No eggs. Cornell, Kevin, thanks.

Next our offbeat reporter Pete Dominick tracks down people who play those violent video games. It looks like he lives. Let's see. I don't know. He might turn violent. We'll be right back.

(COMMERCIAL BREAK)

KING: We told you last night the Supreme Court is reviewing a case to decide whether California can ban the sales or rentals of video games for those under the age of 18. We sent our offbeat reporter Pete Dominick out to investigate whether folks support something like that.

PETE DOMINICK, OFFBEAT REPORTER: Well, in my day, John, we just had Frogger and Pac Man. That didn't make us violent. I went out to ask the guys buying video games and playing them what they thought of that idea.

(BEGIN VIDEOTAPE)

DOMINICK: What games do you play?

UNIDENTIFIED MALE: Modern Warfare.

DOMINICK: Modern Warfare? Like shooter games? Are you a violent person, then?

UNIDENTIFIED MALE: No, I hate violence.

UNIDENTIFIED MALE: Real-time strategy which isn't shooting or violent games. It's more commanding small armies which --

DOMINICK: That's pretty -- you want to be a dictator or a world ruler? You play these war games all the time. How many people have you shot in real life?

UNIDENTIFIED MALE: In real life I've shot nobody.

DOMINICK: Your 9-year-old might be carjacking someone as we speak.

UNIDENTIFIED FEMALE: I hope not.

DOMINICK: Remember when we were little the games we played? They weren't violent.

UNIDENTIFIED MALE: They were nice. They were Pac Man.

DOMINICK: Pac Man never made you want to --

UNIDENTIFIED MALE: Never.

DOMINICK: Go out and kill colored ghosts. Can you meet ladies when you play all these games? Come on. You start dating a guy and find out he spends a couple of hours in front of the TV playing video games, what do you say?

UNIDENTIFIED FEMALE: Get your ass off the couch.

DOMINICK: He is loser.

UNIDENTIFIED FEMALE: An absolute loser.

DOMINICK: How much time do you spend eating crap while playing video games?

UNIDENTIFIED MALE: I wish I did it less but way too much.

DOMINICK: And you spoke marijuana while you play the video game, before, or after? Do you allow your kids to play the violent games?

UNIDENTIFIED MALE: No, I don't. I have a 3-year-old.

DOMINICK: In a few years he is going to want to play video games. What are the rules going to be in your house?

UNIDENTIFIED FEMALE: It will be time-limited. I'll have to see the video game before he gets to play it.

DOMINICK: When will she be allowed to play the video games?

UNIDENTIFIED MALE: When she understands the concept of real life and what's fiction.

DOMINICK: To be honest sir, you and I don't really know the difference between real life and fiction at this point in our lives.

UNIDENTIFIED MALE: My kids never played video games.

DOMINICK: What? What kind of a parent were you? Some kind of a dictator of some sort?

UNIDENTIFIED MALE: Absolutely. I was the king.

DOMINICK: What did they do read?

UNIDENTIFIED MALE: Yes they did.

(END VIDEOTAPE)

KING: That's all for us tonight. Have a great night. We'll see you tomorrow. Campbell Brown starts right now.