involved like this, the nearly 200-page offers for abacus, the security that's in question here. it includes lots and lots of disclosures, including the one that begins on page 33, that talks about aca. it beginning likes this. various potential and actual conflicts of interest may arise from the overall adjustment activities of the port follow quo selection agent and its affiliat affiliates, yet the suit at the heart of it was that there was not proper disclosure. one thing is also clear as far as goldman sachs is concerned, they field blindsided. cnbc has learned that they responded twice to the wells notice back in 2008, finally last month asking for a meeting with the s.e.c. there was no response until the lawsuit on friday, but an s.e.c. spokesman tells cnbc that all the proper procedures were followed. >> thank you very much, scott co cohn.

-- and admissions in connection with the synthetic collateralized debt obligation structured by goldman and marketed to goldman investors. very complicated. i'm going to give you straight down the middle as best i can. i know very smart people who are lining up on one side that said the s.e.c. fraud action is weak, and i know equalitily smart people who are lining up who say, this is a very serious matter, that in fact will be followed by numerous other s.e.c. fraud charges against other wall street underwriters. look, i'm not a lawyer, and i do not know how this lawsuit will play out, but let me make a couple simple, straightforward points that may help everyone informed in regards to john paulson's involvement in the selection for the abacus cdo, and whether this is in fact a material fact that goldman sachs should have disclosed to

investors. that is mr. paulson's involvement. all right? from the s.e.c. complaint, let me put up a very important timeline of the securities selection process, who was the portfolio selector. let's go back to january 9th, 2007, from the s.e.c. complaint -- goldman sentence e-mail to aca titled "paulson portfol portfolio." it contained a list of tranches selected by paulson for the abacus 2007 reference portfolio. is sends 123 choices. then we go to january 22nd, 2007. aca sends the e-mail for fabrice tourre and others at goldman, including 55 of the 123 selected by paulson. now, that means -- let me just pause here.

this is very important. goldman maintains that aca was in fact the portfolio selector. come back with me. i want to stay on the full screen. goldman says they were independent, they were the selector. there's no reason to deny that. they rejected 68 of paulson's recommendations, okay? they accepted 55 and the list at this point was 86. let's go to the third point on the timeline. this gets us into february 2nd, 2007. after meetings with paulson and tourre. the aca e-mails paulson, toure and others on which paulson and aca concurred, plus 21 others. so at this point they are in

agreement in i on 82, but insert 21 others. finally i think we have the clincher on this. s. >> then deleting 8 of the mortgage-backed securities recommended by aca and leaves the rest alone. i think that's the end of the time did not line -- there's one more. february 26th, '07. after further discussion, paulson and aca agree on a reference portfolio of 90 rmbss for abacus to 07-ac 1. what i gather is aca management was most definitely the portfolio selector, no question about it. that's goldman's single biggest defense in not mentioning hedge fund manager john paulson's

name. however, i'm looking at this and saying with all the these negotiations and backing and forthing, they got rid of happen of them and worked with paulson. it's quite clear that mr. john paulson played a very key role in the portfolio selection process. to me that is undeniable. that raises the question whether goldman's decision not to disclose mr. paulson's involvement was a correct judgment or was it a material omission as one lawyer put it to me today? let me make a second point.

-- in order to provide higher yield. all right? this troubles me enormously. creating something that's designed to fail. you know what? if it's not legal, it appears to me to be unethical and i must blame goldman sachs for this. why sell it to customers if it's going to fail? why go there in the first place? now, there's nothing wrong with creating a neutral security that will have buyers and sellers. that's free market capitalism, and the buyers and sellers do not have to know who they were. but if in fact these goldman sachs cdos were designed to fail, then there's something very wrong with this whole system and it must be changed. the phrase from this sophisticated investor who had put together -- he put together many, many of these things was that it was designed to unravel

quickly. that troubles me a lot. whether goldman sachs lied about mr. paulson's equity stake or not is another different issue. there's two sides to that. if they lied, then it is material misrepresentation, and the s.e.c. is dead right, but there are different pins about this. later on in the program, we're going to talk about this 3-2 s.e.c. vote to prosecute goldman sachs, which suggests controversy inside the building, and i have no doubt, after bombing out on madoff, steamford and other disasters, s.e.c. is trying to regain its manhood or under mary schapiro, maybe i should say womanhood. we'll talk about that in just a little while, but leading into the experts, i want to say this more. it would be great if somehow washington can solve these issues without totally

demonizing, demoralizing, and even destroying america's great global banks. guess what? we need these banks for full-fledged economic recovery. guess what? we also need them for america's full-fledged leadership in the global financial system in the world economy. in other words, can we figure out a way, please, to not throw the baby out with the bath watb? as we get to our panelists, i'm going to withhold my opinions this evening. i want to report just the facts and different points of view and hopefully let you, the viewers, decide. this thing is going to go on for a while. we have ron gib anywhere, currently of sadis & goldberg. we have brad simon at simon and partners. thank you for coming on the "the

kudlow report." i want your take on these two processes. aca was the portfolio selector, but paulson was heavily involved. goldman sachs never put this in. they didn't believe it was material for the prospectus, what's your quick thought and the presentation we made, which i might add comes from the s.e.c. complaint. i'm not making this up. >> why would they not have given full disclosure about paulson's role in all of this? not only his role in selecting the mortgages, but his taking a short position? it seems like there was a concerted effort to keep him under wraps? why not make full disclosures? what was their motive in keeping that basically from everyone? >> and brad, let me ask you this, before i let ron respond, as has been pointed out in "wall street journal" editorial page and lots of other places. s john paulson wasn't john

paulson, wasn't the famous super-successful guy that bet against the housing bubble. in fact in michael lewis' best-selling books, he quotes goldman sachs people saying paulson was a third-rate hedge fund manager. so given the fact that he wasn't paulson, what do you think goldman sachs was afraid of? why didn't they -- as they structured this portfolio in what are they hiding? >> that's what i'd like to know. why not reveal all this information? don't you think investors have a right to know that paulson is taking a short position and had he a role in selecting they products? it's a real serious question of materiality here. >> ron, what's your question? >> i think he raised a good question in his own statement -- >> you mean brad sherman? >> correct. the s.e.c.'s complaint is a

story. it represents the strongest kay the s.e.c. has. whether it's a balanced story, we don't know yet. we have to wait for the facts to unfold. i'm curious to see what notes it has in the research. yes, paulson had an influence, but i don't know yet. i'd like to understand the research that aca conducted. >> aca, who went long about a billion. >> yes, they were the largest. >> of this product. they have a pretty good reputation in the past, at least at that point in early 2007, but i just don't get this. the complaint we put on the board, the various stages and processes of the discussions rye wouldn't goldman want to reveal that? what is the motive for not revealing that? >> could they presume it wasn't as material as we think it is

now? that's why on some level step 1 it to look at the research, their notes internally to understand what influence it had on aca's selection. >> brad sherman, just on a related point, all this stuff is related. as you walk through this, do you think there's any possibility of additional criminal -- will the u.s. be filing criminal charges? and do you expect additional charges to be leveled at other wall street firms who play this game? >> well, whether it would rise to a criminal prosecution is unclear, but i can tell you generally when there's an s.e.c. investigation and companion criminal justice investigation, whether it would result in criminal charges is unclear at this time, but i guarantee you that the justice department and u.s. attorney's office is looking at this, and i think

it's pretty clear that there will be additional individuals brought into the s.e.c. action within goldman. i think it's odd they just listed one person fairly far down in the pecking order. it's goldman sachs and mr. tourre, as if there's no one in between. >> i can tell you based on my experience at the s.e.c. when we worked on matters of significant size, we tended to coordinate or investigation alongside the fbi, and also in this case i would imagine the new york state attorney general, connecticut, their attorney general verbalize that they're looking into this. they want to understand whether it was tied to just goldman. with regard to fabrice, assuming he was guilty, it's hard to believe he acted alone.

>> if it's true that he represented that -- this guy is going to jail, i don't know about that, and i've heard conflicting opinions. >> goldman i don't believe believes he misrepresented things. otherwise he would have been fired. >> i think they'll put a lot of pressure on him, the s.e.c. and possibly the justice department. it's amazing the kind of pressure they can put on somebody like that. if he goes over and cooperates with them, clearly they're going to want him to give up other people. >> brad simon, i apologize for calling you sherman, by the way. >> no problem. >> one of the defenses is that everybody did this the way we did it. this is partly a technical shy and partly a legal issue. the opinion that this cdo designed by goldman, whether aca was running it our paulson was running it, the fact that it was

designed to unravel quickly everybody i find this terribly troubling from an ethical standpoint. i used to work on wall street. i haven't been there for many years, but these kinds of practices are relatively new. what's your quick take on this? >> well, if -- depending on whether or not the justice department decides it rises to the level of a criminal violation, i agree with you, it's at the very least unethical and could result in criminal charges. the criminal statutes are quite brought, and the justice department could very well find a conspiracy here to engage in deceptive and conspiracy to defraud. >> but i find it hard to believe that goldman, who has a large business to run put itselves at risk, or participated in a port follow that they expected to

unravel. >> did they play it close to the line? that's one of the criticism. they sold securities and then shorted on the other side. i'm not saying this -- >> but but goldman is snacky, sleazy, and that's why they're disliked. >> goldman is one of those firms that people seem to love to hate. i've been trying to withhold my opinion and get to the real facts. i think it's too soon for me or to you to come to that decision. >> i agree. >> i've like to heard 100 people who have designed those cdos -- >> we've got to get out of this segment, but it also should be said that goldman sachs has made ga jill onof people wealthy with their smart banking and brokering. that's the business they're in, to please their investors, they are a massive wealth creator.

some people caulk them snacky, owner they've crated wealth for many people. >> every person i've ever dealt with at goldman has had the highest of integrity, and same thing with both of the investment banks. >> well, you're right about that. ron geffner, and brand simon, thank you very much. we've learned today that the vote to sue goldman was straight down party lines. 3-2 vote, is the s.e.c. playing politics? are there going to be new lawsuits against the rest of wall street engaging in exactly these mortgage-based, collateralized department obligation structures? you're watching cnbc, first in business worldwide.

all right. if turns out the s.e.c. vote on

whether or not to proceed with the case was split down party lines. mary schapiro and two other democrats on the commission voted for, and two republicans voted against. so is this investigation nothing but a political stunt? here is tom kern of pekar and abramson. what's your quick take on this? i've called the s.e.c. thing, they are attempting to regain their manhood or womanhood, do you have a thought of that. >> i think the enforcement under mr. khuzami has made big gains. they are acting as an independent agent, not tied down by what other agencies or attorney generals around the country are doing. they're bringing their cases as they see them. the steamford case is a perfect example of that.

i think we're walking toward making the enforcement more efficient. >> why was it split? 3-2, harvey pitt commented on this, you know, it's interesting for a crusading s.e.c. trying to straighten thing out. that's kind of a squishy vote. >> let's hope the s.e.c. is not crusa crusading, but they have to regain their manhood, tom. >> they shouldn't be doing that for headlines, and if they are, that would be the height of irresponsibility, but i hope that's not it. here we are talking about the bona fides of it. >> goldman has published the document originally sent to the s.e.c. in the wells process. in other words, this goes back almost two years, and goldman

knew that something was cooking. they sent a detailed document. it's been posted on several web sites. i have not yet read it, but i want to ask you, why is it that the s.e.c. never responded to goldman? that was a big surprise. it seems like the s.e.c. undermined the wells process. >> there wasn't radio silence, there were conversations. you are showing your hand or at least substantially a lot of your hand by telling them, you think the facts look bad here, we have a different view and here's why, and you support it with facts and law. you've shown some of your hand to the person that is going to be coming after you. they've told you as many. so the wells process is a trap as much as a way out of trouble. >> do you, tom curran believe that the obama white house was

in collusion with this? >> i would only -- if -- which clearly at least some of the commissioners on the s.e.c. thought was a bad idea at this time, which is part of a greater picture which has been brewing for years. now they bring it right on the eve of this meaningful senate debate on reform. reform is important. the cynical part of me says, of course it is. >> you know, of course, that the s.e.c. is an independent agency. >> of course, it is. >> so therefore you have to be ultra-partisan or cynical in order to think that the white house is controlling these strings. i worked in the white house in reagan's first term. i actually don't believe that team obama will be that dumb to leave some kind of paper trail or e-mail trail get involved with the s.e.c. in such a crucial action as this. >> if they did, you'll never see it. if they did, it's between lawyers and you'll never see it.

>> nowadays everything is always seen all the time. all holy hell would break out if we found this to be the case, tom. >> maybe it would, maybe it wouldn't, but it's clear given the length of time this case has been brewing, and maybe that's what the republican commissioners were against. maybe we don't need to do this right now. >> in light of recovery and worries about bank credit and solvency and things of that sort? >> and reform, larry. >> if they did it at 4:00 p.m. after the close of business in the marketplace on friday, no one would have noticed. they had to do it at 10:30 in the morning. everybody noticed. >> that's exactly right. i have to sit there and think there was some resistance to think at this time. if you really wanted to bring this case and add it toed reform

discussion, which is an important discussion, maybe we should have held off to avoid any appearance that someone cynical like tom curran could say of course they're linked. >> thank you, tom. in other news, a new poll reveals a staggering 80% of americans don't trust washington. 80%. well, heck, even the creme ling had better numbers than that. this is why the tea party movement is surging in popularity and why the movement warrants constitutional limits on government. incidentally today happens to be patriots day, a day to commemorate the first battles of the revolutionary warrick in lexington and concord. let me ask you -- is the game change in the cards come november? yes, i believe it is. i'll answer my own question. over on the economic front, we have a great chart, another

potent portion of leading indicators just reported its 12th straight month in the plus column, up 1.4% -- no, that's goldman sachs' stock. there you go. look at that. big v shape, leading economic indicators from the conference board. :v-shaped recovery. we may be heading towards an art laffler recovery, but here it's about harvesting the mustard seeds we spoke about a year ago. the airline industry is have been because of the volcano. u.s. airlines aren't immune to

the ash, but you know what? i regard that as small potatoes, they will make it up raidly as soon as the ash dissolves. can we depend on today's bank stock rally given the growing pressure on the financials? there's major legal event risk now. stocks applauded today. will it last? two very smart people. keep it right here with "the kudlow report."

stocks rebounded this

afternoon after news leaked that the s.e.c. vote to sue goldman sachs was a less than overwhelming 3-2. banks led the way. cnbc contributor done luskin, and jason trender, strategist and managing partner as strages. jason a lot of people think we'll have more s.e.c. fraud suits, not just goldman but other suits. there's even loose talk about criminal suits. what is your view? what is the event risk here. >> my view is it's probably more specific to goldman sachs, and that's mainly because i can't see how it would be seen in anyone's best interests. it's still in the nation stages, and the thing you haven't seen, which we think we will see is

payroll employment gains. having said that, i think this is like a tiger woods thanksgiving. this is just the beginning of the bonfire of the vanities, of agrieved parties, there's an awful lot of event risk, but i think it will be somewhat more specific to goldman. >> so you don't think they're going to go after the other originators of these cdos? >> i don't know if the s.e.c. will. i do wonder whether aspiring governors, the ags. >> justice departments. >> u.s. attorneys run fog mayor and governor. >> sure. absolutely. again, for whatever reason i wrote a note this morning i do think there's an element like the tiger woods story, where these things get a life of their own, regardless of the facts. >> don, how do you see it? weigh in, buddy. >> isn't it a strange situation

where we have these banks that are too big to fail, now they're too big to be held accountable, because we're afraid we'll bring them down and throw the country back into recession. the reality is that the practices for which goldman sachs is being held accountable now are absolutely widespread. everybody did it, and it was in the nature of the beast. remember. this was not a cdo issued here, this was a synthetic cdo, where the whole point was to bring together a long who loved if, a short who hated it. it was goldman's duty to create a portfolio that maximized the difference between the two? >> a lot of strong evidence, the way this thing was constructed internally, bad cash flows, bad covenants, a lot of problems with this. >> well, that's fine. there's nothing wrong with that inherently, and the s.e.c. has not said there is.

the s.e.c. simply said the role of paulson & company was not disclosed so that the long side of the trade didn't have all the material information. but those things themselves are not sins, okay? >> well, we can disagree on that. >> maybe we will, and a jury will decide, but the problem is, because of that strange factor that even you and i can't agree on, that's why the practice is so widespread. it falls into this gigantic gray area. >> would you buy banks now? i guess that is the bottom line. >> no, i wouldn't have bought them before. the only thing that was keeping the whole u.s. banks sector in a growth industry back in the good old days was lendling money to people who didn't have applications and jobs. that was their best idea. what are they going to do now? >> you have free money, a historically steep yield curve

that's great for banks. will that change? how do you weigh the free money versus the legal threat from the s.e.c. and lord knows who else? >> i think money trumps all. i agree with much of what don said. i just think that from a practical point of view, listen, the fed funds rate could be 1% tomorrow. now the fed can also pay interest on reserves. that's not going to change anytime soon, you might call it basically a subsidy for the banks, but i don't see anyone wanting to remove the subsidies from the banks. i think banks will continue to make an awful lot of money. whether you think that's fair or not is another story, but i would find it hard to be short them. >> don, would you short them?

>> when you said would i buy banks maybe i misundertook you to invest in them. would i buy them as a run to play off cheap money, maybe, but probably i would be moor likely at the short them. they have recovered so sharply on nothing but free money from the fed and now sort of the dam ocleese, and those people and their spitual grandchildren will come out of the woodward, so yeah, i would nail them. >> >> today's leading indicators are very strong, almost all the data points were extremely strong. does that protect for industrials? or do you think it's all in the market already?

>> i think our chief economist thinks we'll see 200,000 payrolls for the next year. i don't think that is in the market. i think a lot of good economy news is in the marketings but the s&p's estimate is $the 8 next year, i have a feeling you're going to discount that. for me the best place are commodities and commodity-related ecities. i think tech is interesting, and given the strength of cap flows, i think tech and commodities are probably the best places to be. >> don luskin, you're a money politics kind of guy, you heard trennert say jobs will be -- do you think that would hold congress?

>> no it would take 250,000 to keep the i want employment rate from rising. we lost so many in the last 12 month it would take 300 every month to move the unemployment rate down a couple basis points. it will not help the democrats. >> maybe it's about the constitutional limits necessary to restrain big governments and spending. the last word, because you're a money politics guy, too. >> i think it's the process. people feel like they've been disenfranchises, and i think that's what this election will be about. there's an awful lot of people that feel like they've been left out. >> thank you, gentlemen, don luskin and jason trennert. thank you very much. how is the case playing out in the financial regulation debate? we'll hear from hampton pearson

in washington, and ten mr. ed ying ling, the head of the american bankers association. he's going to weigh in. aflac is not more benefits at greater cost to your company insurance. aflac is not how do i fit it in my company's budget insurance. aflac is help protect and care for your employees at no cost to your company insurance. with aflac, your employees pay only for the coverage they want or need. and, the cost to you - nothing at all. if all you know about us is... duck: aflac! ...then you don't know quack. to find out why more businesses provide aflac, visit getquack.com.

all right. so how is the s.e.c. fraud case

playing into the financial regulation debate? cnbc's hampton pearson joins us with the details in washington. >> it spins around the question, okay, what's in financial regulation reform, if anything, that could have prevented a goldman sachs-type alleged fraud case. house financial services committee chairman barney franks and senator christopher dodd both say yes, here are the key elements. proposals for the first time ever regulation of derivative markets and greater transparency from top to bottom. >> when it's done in the shadows, you get yourself in trouble. so you have to begin the conversation, in my view, on the assumption it's transparency, sunshine, light on these instruments.

>> the house starts with strengthening mortgages, requiring those who issue securities to period a percentage of the risk, the so-called skin in the game argument. and more liability for their bond ratings, and finally most derivatives will go through clearinghouses and there would be tougher standards for collateral to back them up. >> the theory that the buy side needs no protection, that because i've got sophisticated wealthy buy-side people you don't need any regulation in the transactions, i think is the major piece, and. >> some senate democrats are at odds with how far they should go, and larry? >> hampton, do the republicans

have the votes to prevent it? >> they have the votes that have signed on. you almost heard senator dodd daring mitch mcconned and the republicans to go for the tactic of a filibuster or having this early on confrontation. >> thanks very much, hampton pearson. my view, if senator mcconnell does go down that route, actual be a big mistake. the nation wants an end to too big to fail. then this even on "the kudlow report," we're going to go straight to the source, the head of the american bankers association to find out what's missing that they want. [ crowd gasps ]

[ announcer ] if you think about it, this is a lot like most job search sites. - they let everyone in, - [ crowd groans ] so the best people can't stand out. join theladders.com. the premium job site for only $100k+ jobs... and only $100k+ talent.

all right. joining us is president and ceo of american banks association, mr. ed yingling. welcome back. >> good evening. >> you have this goldman fraud case from the s.e.c., the conventional wisdom, not always right, is that it puts huge pressure to get a financial regulation bill through and the white house is running with it. what's your thinking? >> i think it address a bit to the pressure, though the

disclosure today about the s.e.c. vote probably muddles that. however, i've been on the hill today, and so have other staff, and we don't see it changing votes at this point. you have wanted that prefunding out and you say we can financial any bankruptcy resolutions later. does that make you happier? >> if they take it out, we think that's an important step. as you know, the irony is that the administration originally opposed that, and then republicans came along and said the up-front fund is a bad idea and now it appears it would be dropped. that's important, because that fund did send a signal to the market that we were going to

have too big to fail. a lot of it was a perception problem. there's still other issues in the too big to fail section but you have to make that airtight, that there will be the perception that the government will help out. >> i know specific, i want too big to fail to end, but if the whole system was going down, you would want some regulatory assistance. in the head the government may have to advance some money, and this is what the administration originally proposed, and we agree with this type of system, then you would have the financial instrument come back in and make that up. >> just bottom line, large banks represented by the association, are you opposed to the dodd bill?

in favorite of it? how do you recommend that senate members votes. >> the association represents all the bachgs of all sizes across the country. i think there's a bit of misdirection, because this is constantly talked about how does this affect wall street? >> this affects the entire country. and the real opposition is coming from small businesses and community banks. >> i don't middle eastern to interrupt. i thought camp pine has doorsed it. >> i don't know that we endorsed it. just as an example, we send up a letter in which we identified 27 separate new or expanded regulations that applied to traditional banks, 27 new or expanded regulations, many of which have nothing to do with the financial crisis. i have members of congress all

say traditional banks had nothing to do with it, yet you have a bill with 27 new times of regulations. now, that's something that would be addressed. >> so the consumer piece is very much up for grabs? >> that's part of t that's not the only new regulation. >> how about you derivative piece just in our remainling minute is it units i think it could be worked out. it's troublesome the rhetoric has gotten so hot. everything agrees we ought to have stronger regulation of derivatives. i think we need some room so that hedges from a boeing or farming can be covered, and i think we need to make sure we don't undermine or leadership.

>> do you want the republicans to filibuster, or would you like to see a bill worked out? >> we have accepted odd record we oppose the dodd proposal as it is right now, however we are strongly for reform, and we think a lot of these issues could be worked out. >> mr. dodd told me last week he's open to amendments of it. i appreciate it. sorry. we're out of time. coming up, my last word.

on the anniversary of patriots day, let us not demoralize and destroy america's big global banks. we need them for recovery and we need them for american leadership. we'll figure a way out. see you tomorrow night.

tdd# 1-800-345-2550 to help with my investments. tdd# 1-800-345-2550 so where's that help when i need it? tdd# 1-800-345-2550 if i could change one thing... tdd# 1-800-345-2550 we'd all get a ton at advice tdd# 1-800-345-2550 just for being a client. tdd# 1-800-345-2550 i mean, shouldn't i be able to talk about my money tdd# 1-800-345-2550 without it costing me a fortune? tdd# 1-800-345-2550 if i had my way, tdd# 1-800-345-2550 investment firms would be falling all over themselves tdd# 1-800-345-2550 to help me with my investments. tdd# 1-800-345-2550 (announcer) at charles schwab, investors rule. tdd# 1-800-345-2550 are you ready to rule?

hi, ellen! hi, ellen! hi, ellen! hi, ellen! we're going on a field trip to china! wow. [ chuckles ] when i was a kid, we -- we would just go to the -- the farm. [ cow moos ] [ laughter ] no, seriously, where are you guys going? ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! [ female announcer ] the new classroom. see it. live it. share it. on the human network.

and the "bill gates dancers!" >> he started out as a shy, computer obsessed teenager please welcome bill gates and the bill gates dancers. >> he started out as a shy, computer-obsessed teenager and ended up the richest man in the world. >> lifestyles of the rich and famous. that's never been bill gates. you get this sense that the money is almost an annoyance to him. >> william henry gates iii. most people just call him bill gates, has built an empire by thinking way outside the box. >> i have no doubt that 100 years from now, he will be talked about in the same way that rockefeller and carnegie and ford are talked about as people who transformed an era. >> now after leading the digital revolution and facing several government anti-trust battles, bill gates is a different man than he was just a few years

ago. he's a devoted father and an avid golfer who just happens to have a portfolio worth $50 billion. he could rest on his laurels, but that's not the bill gates style. >> what makes gates so competitive is that he finds it fun, he finds this like a thrilling game, like the games he used to play as a kid. >> he's loved and respected, hated and reviled. but one thing neither detractors nor supporters can deny is the lasting impact bill gates has had on our time. the values that shaped bill gates, as one of the business titans of the 20th century, go back to his roots in the great northwest. bill's great grandfather, j.w. maxwell founded the first national bank in seattle. the maxwells enjoyed their privileges and social position,