when i watched the students teaching, i actually learned a lot. one of the things i picked up on is the teachers had the kids sitting too much. the kids, when they were up front, had the teachers dancing and singing and learning. >> principal perry, thanks. >> thank you. tonight, he is getting out of jail, and he is out of a job. what happens to imf governing chief dominique strauss khan now? after arnold's bombshell what next for maria shriver. also tonight, how main street took the fall and wall street got the check. >> you wanted too big to fail. here it is. >> the shock waves from the financial crisis. it's your money. >> why would you bail out people whose sole job is to make money? >> who are the bad guys? >> you can blame greenspan. can you blame the rating agencies. you can blame congress.

you can blame the bankers that went wild. regulators that weren't minding the store. >> what goes on behind closed doors on wall street? >> we stand strong, and on the other side we'll eat golden sludge. >> could it happen again? >> i don't think anybody realized that we were within a day away from a major international catastrophic and economic meltdown. >> james wood from "too big to fail," andrew ross sorkin, the man who wrote the book on the crisis. this is "piers morgan" tonight. good evening. it's costing dominique strauss-khan $1 million to get out of jail. the judge is granting him bill, but he also posted bond for another $5 million and will be required to submit to home detention. he is being indited on seven criminal charges, related to allegation that he sexually abused a hotel maid in new york. joining me now, lisa bloom and author of "think,

straight talk for women to stay smart in a dumbed down world." and the break-up of the marriage of arnold schwarzenegger and maria shriver. and ralph, divorce attorney, and the author of "getting away with murder." let's start with the case of this imf boss and turn to you, lisa. this is your area of specialty. an extraordinary case. we don't really know what went on in that hotel room. what we do know is that he has been allowed bail. he will come out tomorrow. >> what jumps out at me are the conditions on this bail. he has been required to pay $5 million, an extraordinary amount for a rape case. an armed guard will be posted at the door of his apartment, and he promises to waive extradition. this judge clearly does not want another roman polanski situation and flee to france and never see him again. >> does this infer any sense of the evidence stacking up against him? >> it very well could.

the judge in this type of case is going to look at whatever evidence the police has, photographs, physical evidence, any dna tests, hair, fiber sample that may have come in, and the judge may say, look, this is a serious case. we want to make sure he stands for trial. >> given the charges that he is facing, if he is convicted on all seven of these, what kind of sentence are we looking at? >> he could be looking at 25 years behind bars. these are class one felonies here in new york. if convicted. of course, he is presumed innocent. we haven't heard both sides of the story yet. >> i mean, you are a divorce specialist. it seems to me that the absolute best scenario from everything i'm reading is that he may say this was consensual, and if that's the case, i would imagine this is where you would come in where the divorce courts were -- >> i was a prosecutor. these are not easy cases. he-said-she-said unless they have photographic evidence. what may happen is this, she hired a first class civil lawyer. that lawyer may sue him for assault. that will destroy the criminal case. it happened in the rape case of

the kennedy boy. same thing. i wouldn't count hem out, and i wouldn't think a long-term situation of that wrist bracelet or whatever is he wearing. >> to me the most interesting part of this case is what the state court judge is going to allow in. are they going to allow in evidence of the other women who have similar stories, who say that they suffered similar fates like this maid? under a theory of modis operandi, that he has done this before and this is a common occurrence for him, a new york state court judge just might let it in. >> if you couple this with the damaging images that we're getting all the time, which the french are going mad about saying that this is -- what happened in france? do you think -- >> that is the perp walk. we have the first amendment

here, andly defend the first amendment. we have a right to photograph people when they're on the street, being taken out of the car, into the jail. we have free press here. i'll defend that until the end, but, look, there's only two defenses. i didn't do it, or it was consensual. if there's physical evidence linking the two of them sexually, the only defense is it's consensual. then the question is are there marks or contusions? is he going to say it's consensual rough sex? a 32-year-old maid walks into the room of a 62-year-old man and has consensual sex with him. >> there are many outrageous theories. we're all hearing different versions. that he has been linked this escort agency and that he may have ordered an escort and thought the maid was -- have you heard this rumor some. >> yes. that's the rumor. >> does it seem a potentially credible one to you? >> i don't know. i don't know. i would think that the d.a. probably investigated that, and if that were true, it would affect -- >> you still can't rape an escort. how is that a defense? that's a dangerous defense.

if you have physical evidence that there was and type of a struggle and evidence that she was in the bathroom with him, she escaped and she was almost at freedom, but is dragged back, you are putting all your eggs in a basket that may be destroyed by the physical evidence of a fight of blood in the room and other types of abrasions on this maid. >> wasn't she wearing a uniform? >> the whole thing -- at the moment there are too many unanswered questions as to where we sit. we don't know enough of what's going on behind the scenes. it's interesting that he has been let out. he will be out tomorrow. then we'll find out more. let's move to the other case, which is the schwarzenegger scandal. if it hadn't have been for the imf guy, it would have been bigger. what a bombshell. it's a strange story to get our heads around. you know, see images of him with his housekeeper. it doesn't seem feasible that this has happened, and he has admitted it. it looks like we're heading to a divorce, although maria shriver at the moment hasn't gone to divorce lawyers. she's known since january.

you two are the experts in this area. if it goes to a divorce, we're talking huge numbers, but answer me with this question. how much of what arnold has admitted to in terms of bad behavior -- it doesn't get much worse than impregnating your housekeeper, where does that come when it comes to a divorce settlement? >> not really. i understand she has lawyered up at this point. >> she is. >> yes. laura lasserman, from what i hear. the significance of all of this stuff would affect custody. saying he has moral terpitude, he is a degenerate, but it's ten years have passed and all of a sudden this lady gets shocked and seen in casa blanka, where i'm shocked. she pockets the money. that has to be some kind of music in this -- >> it comes down to how maria shriver decides to react to this. i have said this repeatedly since this broke.

i saw them both together in los angeles only a month ago. clearly long after she found out. they seemed happy. they were going for dinner together. clearly, it wasn't that hostile when i saw them. does a lot depend on how she reacts now? >> absolutely. there has been rumor after rumor about how many affairs that arnold has had. i mean, you know, the joke is -- the real issue in this case is not the affair. it's not the child. it's the coverup. for 14 years he knew he had an affair and had a child with this woman in the same home as his wife and his four kids. that is the most distasteful part of this entire event. >> especially in california, is there any particular aspect of californian law that might relate to this? >> well, i wonder if she has a sexual harassment claim, because she was an employee. that would be time-barred because these incidents were so long ago, unless something happened in the last three years. she was still working there. did he make a pass at her? did he make a move on her? if something happened in the

last three years, she could bring in all of the old stuff. i'm sure over time with an iron clad confidentiality provision. that's why she hasn't talked to any news outlet. that's probably why she will not talk because she won't get paid in the fight if she starts talking. >> arnold schwarzenegger is worth -- depending what story you believe -- up to $1 billion. what percentage-wise could he expect to lose if maria goes for the jugular here? >> california is a 50-50 state, but if there's no prenuptial agreement and he was shuffling money to this lady, that gets figured back in the pot. that's a dispayings of money here. >> just remember, we just had the mcchord case where yam ji mccord got to -- she had been a previous divorce lawyer.

the fact that, you know, we are on a swing in california, they're not afraid to set aside a prenuptial agreement. >> i wonder if you are in arnold schwarzenegger' position. what is the prudent thing to do now in terms of public statements or interviews? what would you advise him? >> i wouldn't give the story legs. he made a statement. a gracious statement of sorts. i would just go to cincinnati or somewhere and disappear. >> pay maria whatever she wants. don't fight her. give her her 50%. give her child support. give her spousal support. she gave up a broadcast journalism career for him. let's not forget that. she stood at his side. many people credit her with getting him elected governor. give her whatever she wants, settle it, lay low for a while. eventually come out. >> what is the mood in the california smart set about all of this? shock? >> really it is so appalling, and i have to say among women -- not that i speak for all women, but the idea that this woman may have had relations with him in their marital bed, that she lived there, that they may have

had babies five days apart, i mean, the shocking aspects just keep on coming. it's hard to get your mind around how appalling this really is. >> how about the last ten years this maid has started to look more and more like maria shriver. changing her hear and color. it's very strange. >> i don't know if i see that. >> she had some kind of idolizing relationship to maria. she asked her her advice about love. that's where it gets really painful for a woman, i think. >> this is the woman that for ten years maria has been going up to and saying do i look good in these jeans, and now you realize that maybe she wasn't so honest. >> to his credit arnold schwarzenegger has been a very good father. i think everyone agree with that. >> what about to this child, though? >> well, apparently -- >> giving money is not the same thing as being a good father. >> he has not ab solved his responsibilities to the housekeeper. he has provided financial support. >> isn't there more to be a father other than providing financial support. wouldn't it have been better to own up to the boy and be a father to this boy.

>> he made -- >> many men who are in this situation do own up to it and become a father figure to the child. i disagree. i think it is about the child. the child doesn't deserve this. >> he is apparently good friends with arnold's children. >> looks like arnold, they say. >> looks exactly like him. >> maybe the kid, you know, has come to this conclusion on his own, looking in the mirror, looking at pictures. >> in terms of a divorce settlement, how much of it is tainted -- how much of it comes down really to arnold and maria? >> you got to do something pretty, pretty bad to affect that financial thing. >> on the other hand, you look at something like the tiger case where presumably there was a prenup, but tiger ended up paying significantly more, as has been reported by some sources, just to try to get back his p.r. emage. i think the same might happen in this case as well. >> we don't know, and a lot of those allegations are unsubstantiated, and it will be fascinating to see if other women do come out and

corroborate earlier claims that were made against him. he always said they weren't true. the jury is out. thank you all very much. >> thank you. coming up, the financial crisis that brought this country to its knees. the story of "too big to fail" with james wood and author andrew ross sorkin. ♪ [ male announcer ] in 2011, at&t is at work, building up our wireless network all across america. we're adding new cell sites... increasing network capacity, and investing billions of dollars to improve your wireless network experience. from a single phone call to the most advanced data download, we're covering more people in more places than ever before in an effort to give you the best network possible. at&t. rethink possible.

her morning beginsve you the bewith artitis pain.e. that's a cofe and two s. . back to sore knees. back to moreills. the day one but hang on... her doctor recommended aleve. st 2il can keep arthritis pain awaall day fewerillshan tylenol. th is laraho chose 2leve anfewells r day free opain. and get the all day pain relief ofleven liquid gels.

the 3.6-liter pentastar v6 engine in the jeep grand cherokee has a best in class driving range of more than 500 miles per tank. which means you don't have to worry about finding a gas station. which is good... because there just might not be one.

the movie "too big to fail" is based on a best-selling book and premeerz on hbo on may 23rd. andrew ross sorkin was a columnist for the "new york times", and james wood plays the chairman and ceo of lehman brothers who has filed for chapter 11 in september 2008. they both join me now. andrew, let's start with you. you wrote this book. it's a brilliant title, because it kind of perfectly encapsulates the mindset of all these guys, doesn't it, on wall street? they simply never imaged that any of them could fail in the way that lehman brothers failed. >> you could call it failure of imagination. the title -- my editor hated the

title when we first started the book. i always thought about not the institutions themselves, but people who in their own way thought they were too big to fail, and couldn't accept the reality of sort of what was happening to them. >> you are from a business, which is not dissimilar, i would argue, to wall street. lots of big egos, lots of narcissism, and lots of people who themselves consider themselves too big to fail. >> a sign curve of success and failure that's very much like the world of economics where, you know, you are as good as your last movie, good as your last earnings quarter. one thing i said to curtis when i first started to play this sort of -- the -- that i thought it was a very shakespearean story because these people have these tragic flaws, it seems, and i'm not -- i don't think that, for example, that mr. fuld was an evil person. he was trying to protect his

stockholders as well, and wouldn't take certain acceptable offers on the stock as it was making a freefall to precipitate this crisis, but in our business i've seen that so many times where, i mean, the fellow who was the head of columbia, david beagleman started hiding checks, and ended up committing suicide. there are legendary hollywood babylon stories, and i'm sure there are wall street babylon stories, and this remarkable book and this is something that's important to point out, by the way, because really we're talking now about the entertainment that we made here for hbo. i thought how could anybody pull this incredibly complex story together, a, which he did, remarkably, and, b, make it exciting. this thing is like all the president's men. it's the most exciting thriller, and i just never expected it. >> i was, like -- >> it's a great film. i wouldn't say that lightly. have you. you have energized the story that could have been quite dry.

i was trying to think of the reason why because it's in the end. it's like robinhood. have you very rich people running a collective scam which encourages pretty poor people, not the brightest of people in many cases, to leverage themselves right to the hilt, so when this ballooned never to be op popped which the smart, rich guys know has got to happen, it's the poor people who get hammered, and they just simply get bailed out by the government. i mean, they start all over again. >> there's one amendment i would like to put to that. these people put this cultural zeitguys of greed into the poigs atmosphere. during the bottom of this crisis, i was trying to sell my late brother's house, and real estate agent friend was trying to sell it and said this is just a catastrophe. he said i had a woman come into my friend who was a mortgage broker. she was trying to refinance her house. she had gotten a $750,000

mortgage for her house, and when they asked for her driver's license, she said i didn't have to give it the last time i got a mortgage. she didn't have to give her driver's license to get $507,000. she was a cocktail waitress. that was insane. >> this is what was going on. this is real life. when you came up with the idea for the book, did you see these guys as villains? >> it's a great question. i actually -- i'm not sure i saw them as villains. many some cases, in some cases dick is a villon, and some some cases he is a tragic person. not a tragic hero. >> he is either shockingly naive, not very intelligent, or he is willfully now pretending he is such. >> i think wall street, these people are professional traders. they always believe there's one last trade to be made. there's one more card that they can play, and i think that dick fuld felt he had one more card. did he know that he had taken on too much risk? i think he did. did he think it was going to be the end of him and our country and the global economy? no.

>> let me ask you a hard question, because you're a top reporter for a top newspaper imersed in wall street and business. did you see what happened coming in any way? >> honest answer, i didn't. i didn't -- i don't want to say that i didn't see that we were going to have problems. i did. i wrote articles saying that there were going to be problems. did i think that we were going to be on the edge of -- did i think we were going to see a bank like lehman brothers go under, that aig was going to almost falter and we're going to be living in this 9%, 10% world of unemployment, and people were talking about 25% unemployment. that part is what i didn't get. >> one of the things that you're both hitting on -- i don't want to ruin the drama of the story, but i don't think people at large -- i didn't even -- i went to m.i.t., and i studied economics and so on, and i was as confused by this as i think all of us are. i don't think anybody realized -- this is one of the points of this movie and this book -- that we were living within a day away from a major international catastrophic economic meltdown.

my mom always talked about what it was like to live during the depression. literally, people were virtually starving to death. you know, of course, the big wall street guys are jumping out of windows, unless they had not already put they are money away, much that they were going out to their summer homes. it's always the same cycle. you talk about being on the edge. i don't think anybody understands that war is terrible, disease is terrible, but economic depression can be the most single -- >> it impacts on everyone. >> everything. >> even contemporaneously, when i was reporting on this september 2008, it wasn't until i actually started working on the book and later as we were working on the film where i think i appreciated that it wasn't just bad, it was worse than bad. it was really -- >> i had an amazing conversation with the former british prime minister, gordon brown, who was prime minister at the time in britain when this all was kicking off. lie man brothers and so on was happening. he said he got a call at 5:00 in the morning. he was woken up by his

chancellor, his treasurer, and he told if you do not commit $50 billion right now to the u.k. banking system, this is over. it's kind of a -- it was like economic apocalypse. >> literally. >> staring any the face. no british banks went under, which they continue to consider a great sug success. do you think professionally speaking now, that was a smart move to let lehman go under, or not? >> it's a personal view. i still think that's one of the great mistakes of this crisis. not because they deserved to be saved, but because ultimately what the ramifications were. the domino effect that we saw. that if they had tried to save them or at least give them some breathing room, some time, could we have actually avoided the catastrophe? part of this whole crisis was about confidence. it was about people's confidence, the market's confidence in the system, and because we had saved bear stearns, because we had gone and saved freddie and fannie, and it was at that moment when that

didn't happen that lehman wasn't saved, that people really almost, you know, just couldn't understand what could happen next. that is when the abyss became possible. >> there was a desperation in the air. you look at the sequence of events. you could see that people were really panicking and trying to work out how they saved because we're now such a global economy. not just america's economy, but everybody's economy. >> here's one of the really scary parts of that. when you look back through history, you know, and you look, for example, at world war i, it's always some singular event that precipitates something that, of course, was coming, but all of the allegiances and treaties and so on that we had at that time, it was impossible for the world not to implode or explode into war. when arch dude ferdinand, it was that singular event precipitated things that now in retrospect we realize were inevitable. you look at something like this event with dominique strauss khan, imf boss and so on, a singular event like this -- oh,

it won't have any effect. greece and ireland and portugal are in the same position we were almost in, you know, not so long ago. >> i think it's a good point. it's a good story, and the reality is the boss of the imf right now who is, you know, spearheading the bailing out of all these countries. >> this is dangerous. >> yes, it is. >> but that's -- i think that's the beauty of this project and this film project and what they've actually done, which they have prooun that this is a human drama, that it's actually about people. we oftentimes think about these folks with, you know, million dollars in their pockets, and they have business cards and great titles, but ultimately, it's about people and what they do in these little decision that is they make that somehow can really change the world. >> when it all blew up, i was looking at the subprime mortgage thing. is there any expert in this field that didn't really want to go there or must have known? this was a huge problem that had to explode. didn't they?

>> it was the elephant in the room. even warren buffer et, when he made the first offer, which was eones better than what they ended up with, what about the real estate? i mean, it was one of those things where you -- you know, it's the way people now in the modern politically correct world try to get something across that they can't be sued for. real estate, it's a little himky? >> i think they knew there was a problem. did they know that it was going to become this kind of problem? i don't. i think a lot of people today -- some people want to revise history. they want to say everybody knew it. it was there for the taking. everybody everyone knew it. should we have known? absolutely. did we want to know, and, by the way, was everybody incentiveized not to know? absolutely. that was part of the problem. >> i had an interesting involve. in this personally. i was with a bank, the queen's bank. they are the most prestigious banks in the world, and they had encouraged me about a year before to put a lot of money

into a -- my kushlt current account into a premium account, aig. a lot of people did this. when lehman brothers went under -- first it was google, aig, and i heard one report saying they might be one of the next to go. i range my bank, and i tried to get all my money out of that. >> no chance. >> six weeks later i finally did, but i know there are thousands of people who are still trapped without getting their money back from aig. i mean, it's extraordinary that everyone just assumed that my end of this process that the ordinary punter, if you like, that our money was safe. it wasn't safe at all. >> right. because when all of a sudden we can learn as much from bernie madoff as we can from dick fuld's situation. one was a willful vicious criminal that defrauded people of billions of dollars, but it was a ponzi scheme that did everybody in. i hate to say this because i don't know much about it, but pi mom said to me the other day -- she's elderly, elderly, and

she's been frablg ill lately, and i've been helping her out, and we went to get money from the bank, and she wanted to get something from the bank. she said, by the way, where is all our money? i said, well, what do you mean? in the bank. she said, no, no. i'm asking what seems like a naive question, but it's actually a very -- >> pretty good question. >> where is all our money? it's actually kind of leveraged out and pays other people's mortgages. >> what if their houses aren't worth as much? >> i said, well, then we've got a problem. >> the entire international economic structure is kind of a ponzi scheme. i hate to say it. >> when we come back, i want to get into this. lessons learned, who we should be blaming and how we move on. >> i blame you. >> thank you.

desperate for nighttime heartburn relief? for many, nexium helps relieve heartburn symptoms caused by acid reflux disease. talk to your doctor about your risk for osteoporosis-related bone fractures if you take multiple daily doses of nexium for a long time. possible side effects include headache, diarrhea, and abdominal pain. other serious stomach conditions may still exist. talk to your doctor about nexium. if you can't afford your medication, astrazeneca may be able to help.

>> i had 36 right now. we haven't been anywhere near 66 in months. our kids like buffett. his name will push the price up overnight. >> i don't care who is he. i am not spending $360 million a year for the pleasure of doing business with him.

real estate will come back. >> koreans have been sniffing around. >> there you go. they won't steal us blind. i have seen this before. ceos panic and sell out cheap. right now the street is running around with its hair on fire, but the storm always passes. we stand strong, and on the other side we'll eat goldman's lunch. that was a scene from the movie "too big to fail." back now with andrew ross sorkin and james wood who we saw there starring in it. i suppose when you see a clip like that, you can just tell this kind of -- it's part arrogance, part ann arbors shichl, part defiance, it's part the wall street mentality. what's extraordinary to me and to lots of people watching from the outside, not a single one of any of these executives from wall street has ever gone to jail. over the greatest financial scandal in history. why? >> well, so i think the hardest part is that this entire financial crisis is a crime unto itself. it's a crime against our country. it's a crime against our economy, the global economy, and, yet, on an individual basis

it was so engrained in the culture, every -- all the decisions, all of the risk taking that we haven't figured out a way to make the risk taking itself a crime. these people just made horrible decisions over and over again, but it's unclear whether all of it was fraud. was there some fraud? absolutely. was there fraud at the top? it's been a lot harder to pin the blame there than probably should be. >> let's remove the word fraud. it carries with it all kind of contations. >> that's what the crime is supposed to be. >> let me throw out the name right now. certainly shocking negligence in my view. a failure of duty to care for their customers, et cetera, et cetera. i mean, when you look at what happened with goldman sachs -- >> by the way, you are seeing the s.e.c. go after these guys, for some of us. we haven't seen them go behind bars. >> the rationale was that they wanted to protect their shareholders. i actually believe -- he said dick fuld, i'm not going to give away this company. in that clip when he was referring to -- the character i play was referring to not

wanting to pay $360 a million for the pleasure of doing business with him, he was talking about a potential deal with warren buffett. very brilliant man, and a decent man. you know, the bottom line was he didn't feel that it was right, you know, not only for himself, but -- and for his cohorts, colleagues at lehman, but also for his investors. >> i was about to mention warren buffett. he is one of the richest men in the world. he is a genius. certainly one of the most successful business people. if you look at what happened with goldman sachs, fascinating, they are right on their knees. they could easily have gone under. they get bailed out by the government, and they also get bailed out by warren buffett who looks at the stock price and thinks, wow, i'm in here. buys $5 billion worth of stocks, which is now worth trillions more. god knows how much he made. he quadrupled his money. they are making so much money. the first thing they do, goldman sachs, is hand out the $1 million bonuses all over again. it's like nothing has changed.

while they're doing this, ordinary people in america who were caught at the tail end of this economic influenza are still suffering. this cannot be right. >> one of the great lines in the book and in the movie is when they're talking to him about doing something in real estate, he says -- buffett said i'm a little short on cash right now. >> about $40 billion. i don't blame him. he sees his opportunity, and he helped bail out gold man stacks. good luck to him. i blame the government that allows this system to then just start up all over againing with no penalty, no real punishment. just get on with it, guys. >> the great disconnect during this period was the idea we bailed them out and we're still living in this sort of 10%, 9% unemployment world, and, yet, we're watching not dick fuld, but many of the characters in this movie who now have huge bonuses all over again, and it doesn't feel like we've changed mying. >> we've changed nothing. you know these guys. my argument is not that goldmans was bailed out.

that may well have been the right thing do do. >> you needed to add some strinkz strings. >> you need to add absolutely strict regulation that once they're back on their feet and making money again, they do not hand out these bonuses for the next five years. the money is divided amongst all the people who have helped bail them out, who have been chucked out of their homes. that's what should have happened. >> right. a lot of times when they have these bailouts and they have to structure them very quickly, they miss opportunities. we were talking during the break, and i mentioned that there were some friends of mine that i play poker with out in california. very rich guys. when the bailouts were happening, one of the guys said, oh, i have to get some of this for these buildings that i own. i said -- >> the bailouts. >> i don't think this is for -- in this kind of situation. he said, if approximate it's legal. you know -- >> exactly the point. >> the problem is -- >> you're not required. here's the problem. you're not required to be

ethical, but as long as you're legal, you know, you can have lawyers -- it's amazing. the laurdz will coach you without coaching you. okay? >> they just want to rack up money. >> who do we blame? is it president bush who got us into the mess, or was it president obama who went he sorted the mess and didn't put the regulation in to prevent exactly what's happening? >> a lot of people thought it started way before bush. it was started with barney frank and clinton. it's apolitical. that's one thing. >> well, see, i don't want to get too -- i think there's a lot of people that blame on the way in. there was a perfect storm on the way in. you can blame greenspan. can you blame the rating agencies. can you blame congress. can you blame the bankers that went wild. the regulator that is weren't minding the store. the question today is who do you -- who do we blame for not changing the system for the next time, for the next too big to fail, and that is for the folks in washington today. that is the administration today. that is a group of people that has not made all of the real decisions that need to get -- that need to be made, and we now

have the same folks that were at the scene of the crime on the police force. ben bernanke is still there. tim geithner is still there. i don't think they've pushed the needle as far as they need to. >> let's have a short break, and when we come back, we'll look at exactly that point and come back with a clip from president obama saying this won't happen again. [ male announcer ] there's just something about werther's caramel that makes a chocolate so smooth and creamy, you don't just taste it, you feel it. ♪ do you believe in magic? ♪ ♪ it's magic ♪ [ male announcer ] it's a comfort that comes from the only caramel worthy of being wrapped in gold. ♪ do you believe in magic? [ male announcer ] werther's original caramel chocolate. what comfort tastes like.

[ male announcer ] werther's original caramel chocolate. distracted driving. it accounts for 25% of car crashes. - ♪ [ dance ] - music, cell phones, food-- the list goes on. this is why safe driving is so important. - correct. - and it's why the best agents... help safe drivers get a lower rate. - oh! - exactly. ♪ another dream but always you ♪ whoa! ♪ it's like a vision-- [ tires squeal ] ♪ [ resumes ] [ man announcing ] we are insurance. ♪ we are farmers bum-pa-dum, bum-bum-bum-bum ♪

>> i've insisted that the financial industry, not taxpayers, shoulder the costs in the event of any large financial companies should falter. the goal is to make certain that taxpayers are never again on the hook because a firm is deemed too big to fail. >> that's president obama a little over a year ago. back with me now from "too big to fail" the movie and the book andrew ross sorkin and james wood. i'm seeing -- we left off with this really -- exactly the same kind of arrogance and dismif dismissiveness. they're already too big to fail, aren't they? >> it's part of the culture itself. the market does give you answers. you know, the fact that gold is at what, $16 -- the highest it's ever been many history shows

that people, you know -- the common person, among which i happily count myself, is leary of all these promises, leary of the fact that, oh, the economy is in recovery. really? how come i don't have a job? how come 9%, 10% of the country doesn't have a job? you can't see a job coming. it's not like all of a sudden they're going to start rebuilding factories in detroit. >> there is gold and silver that became a safe haven. it was t had a bit of a blip last week. the thing is people are desperate to find somewhere that's genuinely safe for their money. i was so shocked by what happened with this aig thing. suddenly this money that was mine, whenever i wanted it -- i was told that it was, i would only get back 10% of my money. this was a bank. this was not some kind of punt i had a casino. >> i'm taking care of my mom right now who had some problems in rhode island. i have been around the common man in the hinterland, what people call flyover country. i say maybe they should drive

through it once in a while and see the people they're making movies for. with all due respect to the differences between new york, l.a., and then the rest of the country, you know, people out there are really -- when they don't have a job, they don't eat. i mean, people are really having a hard time, and they don't see any hope. when you talk about attitude, you talk about confidence, you can have all the billionaires you want, but if the people out there by the tens of millions are not happy, you have a real problem. now, what happens when this culture of greed and, you know, we've had it, the japanese had it, and whatever it was, the 1990s or 1980s, and you go back to all of these places, and i see greece failing, portugal failing, ireland failing, and i see people in china where they were literally, you know, living in poverty under mao now all of a sudden they're all buying gucchi, and they own all of our paper. >> i do believe doesn't obama -- i don't know this stuff. this was a question i wanted to ask you. you know, i -- you hear these people say, well, you know,

they're printing money like it's paper, which it is. you know, so on. how do i know as a guy who is just a mere humble actor, and i'm not kidding when i say that, i'm asking you two experts. how do i and all the people like me that don't know about this stuff, how do i know that this isn't going to happen again tomorrow or next year? >> you're the man to answer this. how do we know? >> i think the sad answer is it will happen again. i don't think it's going to happen tomorrow, but i think it will happen again. every time -- >> i'll call my bank. hold on a second. >> look, this financial crisis, as all financial crisis are based on debt. too much debt in the system. there was too much debt at the banks. they had levered themselves up too much. the story has now changed. it's no longer about financial institutions. it's about this country. it's about the country you talked about in europe. it's about municipalities. that's what happens. the worst part about it -- i think what hopefully this project will get people to remember is confidence doesn't erode over years and months. it erodes in days and hours. and at some point somebody decides that someone in the

daisy chain or the line of trades is no longer good for the money, and then it falls apart. >> everybody panics. >> that's what happens. it happens every single time. will we have another crisis again? absolutely. jamie diment said, daddy, what's a financial crisis, and he said something that happens every seven years. they laughed in the room at the time, but there's some real truth to that. if you think about this last financial crisis starting 2007, do the math, we're not that far away from the next one. >> what will you see then which we could do that we're not doing? in terms of somehow preventing another crisis like the one we just -- >> there's two issues. we need to think long and hard about the banks themselves, whether they will precipitate the next crisis. they are bigger than ever. they are too big to fail squared. the top ten banks in this country now control 75% of the bank assets. think about this concentration and what that means if one of them goes down. >> terrifying. >> the second component goes to

the larger -- it's a larger political question. it goes to the debt ceiling we're talking about, and how are we going to deal with our debt? so far it's been fine. so far we've been able to push it into the future, and we always think we're going to get hfd it, but at some point we may not. >> like james was saying before, these things are often governed by a singular event. something could happen that damages the economy big-time. >> and it's usually something we're not thinking about. >> it's a great book, great movie, and great story. it's a story that people ought to go and see because that way lessons may be learned. >> thank you for your passion on it, by the way. >> i watched it with mounting fury. >> about the issue. it's important to let people know. we're trying to save lives here. if we have an economic crisis, people will literally die of starvation in america like they are, sadly, around the world. >> i agree. be warned. thank you very much. >> thank you. >> coming up, cnbc's morning maverick joe kernan and his daughter, blake, on capitalism and what they think you need to know about this country's economy.

naomi pryce: i am. i'm in the name your own price division. i find empty hotel rooms and help people save - >> - up to 60% off. i am familiar. your name? > naomi pryce. >> what other "negotiating" skills do you have? > i'm a fifth-degree black belt. >> as am i. > i'm fluent in 37 languages. >> (indistinct clicking) > and i'm a master of disguise >> as am i.

> as am i. >> as am i. > as am i. >> well played naomi pryce. ♪ flash, aah-ah l about blackberry playbook? that's right. it runs flash. so unlike some tablets we could mention, you get the best of the internet - not just part of it. ♪ flash, aah-ah ♪ flash, aah-ah

this is stacy. who runs circles around asthma. and dan. he never lets high cholesterol get him too low. and amy with her arthritis well in hand. they go to walgreens... where their pharmacist not only refills prescriptions but gives advice... immunizations... and health tests. staying on top of your health starts right in your neighborhood. walgreens. there's a way to stay well. should i bundle all my policies with nationwide insurance ? watch this. on one hand, you have your home insurance with one company. and on another hand, you have your auto with another. and on another hand, you have your life with another. huh... but when you bundle them all together with nationwide insurance... ... they all work together perfectly-- and you could save 25%.

wow... it's all in the wrists. ♪ nationwide is on your side you know joe kernen, co-anchor of cnbc's "squawk box." and he's written a book with his 11-year-old girl, blake. the book is called "your teacher said what?" the liberal assault on capitalism, tell me how this started. what was the germ for this book? >> i would say if i had to point to one thing, it's the financial

crisis, and the backlash, which is to be expected. >> if you had a moment in the book where blake comes back from school and says something so offensive to you, you decide you're going to do a book. >> it's the bank's fault, wall street's fault. i said there's a lot of blame to go around. but because she's a student, she spends all her day at school with teachers. but she gets it from tv, we get it from the obama administration, main stream media. >> now, blake, let me talk to you about this. do you know what capitalism means, what do you think it is? >> yes. to me, it's the free markets doing their thing and the private ownership of business. >> why do you think america had its big financial crisis in >> well, it was nobody's fault, really. >> you think that? >> well, i'm only 11. >> when she asked you that

question, whose fault was it, dad, what do you say? >> it's complicated. one side that says it was wall street, one side that said it was fannie and freddie. then people in the middle i think that are smart enough to see how many different things were happening here. >> you don't understand all this, do you? >> not all of it. >> if you were america's president, given that you've now written this book with your dad, and it's an interesting book, and i think you're a smart young lady, if you were america's president, what would you do to get america back on its feet, do you think? >> well, what i would do is i would encourage the businesses to get back on their feet, to me -- >> how about regulations, blake. you don't just invent a new regulation. every time you have a crisis, you don't put 3,500 pages of new regulations on the book. >> what about this issue of the

bonuses from bailed out companies and the moment they get the cash running through again, award themselves with these bonuses while americans are suffering. that sticks in my gullet. >> the head of cash compensation, there's no clawback. if it's $140 million or whatever it was, they were fake profits. they were built on air. they weren't real. so there's an argument to be made to make sure that the compensation structure is long-term and is correlated with performance. long-term performance. >> you talk about your abhorrence of regulation. i would say i would love to have seen happen with president obama is that when they bailed out these companies, they put an absolute cast iron regulatory

clause in these contracts saying we will give you this money and get you back on your feet, but the first five years when you would normally award yourselves these grotesque bonuses, that money is going to go to the poor people out there. >> that's a loaded question. when you're making $50 million a year, which i fully expect that you probably will some day, is that going to be grotesque for you? would you characterize it as gr grotesque. >> if i made it without anybody else suffering from my actions, that's okay. either the experts were very stupid or very naive or it was worse than that. >> it's not possible that so many different things -- you've heard of tulip bulbs. everybody thought housing was going to go up forever -- >> we're out of time. it's been a pleasure meeting you. >> you're more than welcome on "squawk box." >> thank you very much. when we come back, a preview of my interview with john and molly. tomorrow night, i'll stalk with john and marlene matalin. it's an extraordinary thing to witness.

when i was trying to think if i had been on "the apprentice" this season, watching marlene having to interact with 14, 16 people to start with and hold her own and win challenges, a remarkable thing. >> without a doubt. i don't think anybody that's ever met her thinks anything other than what you just said. she's a remarkable person, period. i mean, really impressive. and to watch this -- >> it's amazing. >> it's a privilege to experience being around such a relationship, because how many people have seen something like this in person? it's incredible. >> it happens every day, deaf people --