trajectory. the americans do want it. the conservatives work for the oil companies. that's why they try to kill these cars. "viewpoint" with eliot spitzer is next. ♪ >> eliot: good evening, i'm eliot spitzer, and this is "viewpoint." it's the most important election for the labor movement in decades. wisconsin republican govern scott walker became a hero to the right when he helped end collective bargaining rights for most public unions in his state. now he faces a recall election. with less than 12 hours than the polls are set to open, the candidates are all but tied. walker in the lead with 50% of likely voters supporting him and mayor tom barrett is within the poll's margin of error with

47%. two weeks ago showed walker leading barrett by a comfortable 7%. the recall campaign that followed has sharply divided wisconsin voters. >> you have situation where is neighbors don't want to neighbors, and relatives don't want to talk to relatives because of this political civil war that scott walker has created. >> eliot: a political civil war that drew tens of thousands to the wisconsin statous to the arrest of a walker supporter in a rally last week. and for public service workers forces in and out of wisconsin have spent an incredible $63.5 million on the election. walker has outspent barrett by better than 7-to-1 including close to $10 million from the republican governor's association and $10 million plus more from david koch's americans for prosperity.

both sides have deployed surrogates. nikki hilly stumped for scott walker and former president bill clinton for tom barrett sounding a familiar theme. >> who has the best record in creating jobs? tom barrett. >> eliot: and with jobs at issue, even an "n" a state with the unemployment rate below 7%, walker played the jobs card as well. >> i think you're going to see a boom in terms of new employment in the state of wisconsin. >> eliot: or maybe a bust of middle class paying jobs. joining me now jon richards, a democrat, and andy kroll. is there a state of frenzy within milwaukee within the citizenry of the state? >> yes, it's at a fever pitch here on the ground in wisconsin. you have the volunteers and the staffers on the walker side, on

the barrett side liberal and conservative. everyone is getting out to vote. it's all full steam ahead and it's all about turning out and how many voters will turn out tomorrow on election day. >> eliot: jon, i know you're partisan, and i want you to be partisan, but andy give me if you can the dispassionate journalistic take on this, and sometimes i've been in the middle of a lot of campaigns when you walk down the streets, and people just don't care. then there are other times when the electorate is really engaged. there is excitement, energy and disagreement. how would you capture the public's sensibility right now? step outside of those who are directly involved. how is the public reacting to this? >> the public is incredibly engaged, unusually engaged in this kind of race. 1 in 5 people have given a donation to one of the

candidates. 1 in 3 have stopped talking to a relative because of the election. people are absolutely tuned in in a way they can't be because the state is being flooded with ads from in-state and out-of-state groups. you're seeing a level of engagement among the citizenry that is off the charts historic, both for wisconsin or any statewide race we've ever seen in generations. >> cenk: those numbers are staggering. one in five contributing, and one in three not talking to somebody else, i don't know if that's a good statistic it speaks to lack of civility in politics, but jon, do you think there is a momentum of the 7-point race, the leading poll is now down to within the margin of error. what explains the closure of the race, if that's real, and what is the closing argument going to be made by mayor barrett. >> you're going to see

independents breaking for tom barrett. you're seeing enormous energy from the grassroots on our side. this whole movement started with the grassroots where hundreds of thousands of people came out in the middle of warrant to storm the wisconsin state capitol to take their state back. it took 1 million signatures to start this recall, and people are coming out in droves to and talking to their friends neighborhoods to turn out and vote tomorrow. what we're seeing so far from the early voting, the turnout is ahead of what we saw two years ago in the governor's race. i don't know if we'll get to where we were in 2008, but it will be a very strong turnout. >> eliot: this is a crass political question. who wins if there is a big turnout. i know we always say democracy wins when there is a big turnout, but which side thinks it will gain comparative advantage if turnout increases. jon, if you'll take a stab at that, then andy i want your

sense. >> i think the democrats win. here in wisconsin where we've had large turnouts in elections the democrats have cared the day. sometimes it's come down to one vote per polling place but we've won. you see that time and time again where statewide races are at stake. i think you see that same dynamic here and that's why i'm confident that mayor barrett will prevail tomorrow. there is so much energy. right things are falling in place to make sure that tom barrett gets over the finish light tomorrow. >> eliot: andy let me state the alternative scenario. the unions have had a campaign to get out the votes campaign, and when the turnout is enormous, it means that people who would not normally turn out such as union voters, may be going to the other side, does that make any sense? >> yes, the union get out the vote machine is always going to be strong. unions see their very lifeblood

on the line in this race. one other thing to point out you mentioned earlier that americans for prosperity has spent millions of dollars. that's all about getting out the vote, energizing conservatives here in wisconsin. interestingly, some recent polls in the weeks leading up to this race have shown that actually voters who say they're most likely to vote is slightly higher on the republican side. it was that way a couple of weeks ago. it was a difference of five or six percentage points between 90 and 85 or 84. but that goes to show that if the turnout exceeds expectation. if we're looking at a 2008 level than a 2010 level, the room to grow is on the democratic side. if that last few percentage points, if those folks make up their minds and these folks get out and vote, that gives them the momentum, the edge for the democrats here. >> eliot: let's hope for a good turnout and it breaks the way you're suggesting. is there any chance sense abilities

of hey, guys, leave us alone and let us determine our own state law in a sense we are not going to be manipulated by these clever ads that are funded by out of staters? any of that on the street? >> what you're seeing and in your opening comments you're seeing the 7-to-1 money advantage of scott walker and his allies over tom barrett and his allies. all that money has not moved the public opinion needle one point. in all that time they've been spending money has not moved public opinion. they have not won any independents and in fact they're losing independents. people are upset that people are coming in and imposing their agenda on our state where they've had a bipartisan support over the last 30, 40 years. it's a big change for scott walker and a very bad one that moves its way from a very bad over

many many years. >> eliot: andy let me come back to you. last question. we're hearing, and i don't want to put too too too much stalk in it, but we hear that scott walker is a target of a federal investigation. will that have an impact, and how has this criminal investigation affected the race? >> whether or not the government is a target of the john doe probe, we've heard chatter but there is not that conclusive piece of evidence. that letter saying in a he is or isn't a target, that e-mail in which he some how reveals hey they're looking at me, too. we don't have definitive proof. all evidence suggests it's the case. the 13th former walker aide is granted immunity to speak in the case. now as for the affect of it, trust and integrity are big

issues. and the democrats have used this john doe ad. when i got out of the car to come here a john dough ad was playing, accusing the governor of stone walling investigators. i think that the john dough investigation has been hammered on so much in this campaign that it will have a decent effect. it will play on people's minds about how much they can trust the governor, but it never quite reached him. there was never that smoking gun that democrats hoped for that pinned him to it. we may not have had the effect going into this election tomorrow. >> one thing we know for sure he is the only governor in the country with a legal defend. under state law he's only to set up that state fund if he's the target of an investigation. it's pretty easy to connect the dots. >> many thanks. >> thank you. >> eliot: for more on the election that could be crucial to the election of organized labor in this country i'm

joined by lee saunders, the sector treasurer of afscme, the american federation of state county and municipal employees and coauthor of "the main street moment." welcome. >> thank you. >> we're doing everything that we can to unseat scott walker. we've got boots on the ground. we've made more than 300 phone calls. we dropped literature in 300,000 locations all over the state. we've got 35,000 volunteers who are either making phone calls or talking with folks or doing facebook. i mean, this is a grassroots effort that we're undertaking to get them out of office. clearly, you know eliot there are millions and millions of dollars being moved into that state from these ultra conservatives from the right wing, the koch brothers and

others across the country, but we're going to fight back, and we're fighting back with people power. >> eliot: you're bog it with people power, old fashion politics will determine the outcome of a very close election. the reason why it's so crucially important is made evidence in your book, organizing is the centerpiece of making the middle class solvent. does the public understand that sufficientcally? >> i don't know if they do, and that's one of the reasons for the book, so we can educate the public. there is a direct correlation between the decline in the american labor movement the decline of the private sector organizing there is 6.9 in the private sector, and that's why they're coming after us because of the higher density. but there is a direct correlation between the loss of

unions and the decline of the middle class. statistics prove you have to have an i don't think union movement. >> eliot: if you eliminate the right to organize then you get increasingly skewed income distribution. more money will go to the top less to the middle class and that to me is the center centerpiece of what is election tomorrow is all about. >> that's right. you have the 99% who are playing by the rules but scuffling to make ends meet, to put food on the table, to send their kids to school. then you have the top 1% in this country, and that divide is growing and growing. they're trying to get more power. they're trying to gain more wealth. i believe people are now saying, enough is enough. that's not the kind of country we want to live in. they're fighting back and making their voices heard. >> eliot: do you wish president obama had been there? president obama had been more of a physical and potent presence

in wisconsin? he seems notable by his absence as i watch this unfold. >> i'm convinced of this, eliot i think that this is a fight that we're having in wisconsin. it clearly has national implications, but the people that are effected directly are those who are the badgers in wisconsin. that's why we're developing all of these it was ticks and moving this grassroots in this state. this will be one won by actions based upon activity and involvement. we're confident, very confident that tomorrow we're going to have victory come 8:00, 9:00 tomorrow night. >> eliot: let me ask you the hard question, then, certainly i think there are many folks who are hoping this is correct but what if it turns out the other way? what is game plan-b in the event that we don't win? how do we recess resuscitate the public's understanding that we need to reorganize.

>> we need to reorganize educate and not only labor movement but middle class families and the importance of labor unions in this country. this mainstream movement is going to continue. wisconsin was a spark. when scott walker came after us we were able to develop coalitions and fight back, but we're fighting back in ohio where we beat back the attempt to steal our voices away from us. we fought back in florida. we're fighting back in state after state after state. 99% gets it, and this fight will continue past june 5th. >> eliot: that is right. win or lose this battle does continue. one of the quotations in your book. it's right in the beginning, it's in the beginning of the book. it's president reagan who says, where flee unions and collective bargaining are big and freedom is lost. here is ronald reagan in 1980 saying that unions are needed.

what has happened that it has veered so far right. >> i think they're being controlled by folks who do not live on the same planet that we live on to be quite honest with you, eliot. they don't believe in the same issues, they don't see that this country should be a kind for all, a strong middle class, a country that provides opportunity for everyone who wants to take advantage of those opportunities. this is about power. this is a power play pure and simple. they want more wealth. they want more power they want to take it away from the 99% who wants to play by the walls. >> eliot: i think you're exactly right. power is a zero-sum game. it's better to win than to lose. coauthor of the "main street moment," great to have you on the program. >> good talking to you eliot. >> eliot: republicans and democrats are fighting over jobs numbers, but it's really part of a bigger fight. we'll talk about a divided

america. that's "viewpoint" after the break. >> we're not through just yet, mr. vice president. >> they're swimming against the tides. (vo) brought to you by pradaxa. i have the most common type of atrial fibrillation, or afib. it's not caused by a heart valve problem. i was taking warfarin, but my doctor put me on pradaxa instead to reduce my risk of stroke. in a clinical trial, pradaxa® (dabigatran etexilate mesylate) reduced stroke risk 35% better than warfarin. and unlike warfarin, with pradaxa, there's no need for regular blood tests. that's really important to me. pradaxa can cause serious, sometimes fatal, bleeding. don't take pradaxa if you have abnormal bleeding and seek immediate medical care for unexpected signs of bleeding, like unusual bruising. pradaxa may increase your bleeding risk if you're 75 or older, have a bleeding condition like stomach ulcers, or take aspirin, nsaids, or blood thinners, or if you have kidney problems

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>> eliot: we all believe in paying people what they're worth, but only if they're really worth it. which bring us to the number of the day 349-point million dollars. that's how much verizon communications paid it's top executives over the past five years. that's an average of $14 million a year for each executive. i don't know who these executives are, but they're not worth it. there is no way you need to pay $14 million to fill the top slots at a phone company. not in the system with real competition. $14 million a year isn't fair compensation. it's the product of a broken- broken-down crony system. that's too bad for the verizon

workers who aren't cronies, and too bad for the customers as well. because to make matters worse the company is laying off 1,700 employees, cutting a full 1% of its nationwide workforce. in fact, over the entire five years verizon handed out these multi-million dollar salaries, they've been slashing tens of thousands of jobs, a total of 236,000 in 2008, and 13,000 more in 2010. normally you could assume they're down sizing to become more efficient as they cut back on traditional landline service, but you can't claim the high ground unefficientcy and demand sacrifice across the board when you're paying your top five people $350 million. something in the system is broken. what's wrong. i want this show to move past that. i love creative people, and with all the vexing problems we have we need creative thinking. >>(narrator) with interviews with notables from silicon

valley, hollywood, and beyond. >>at the end of the day this show's simple. it's about ideas. ideas are the best politics. ideas can bring us together. >>(narrator) the gavin newsom show. friday at 11 eastern/8 pacific. only on current tv. jennifer granholm is politically direct on current tv. >>the dominoes are starting to fall. (vo) granholm is live in the war room. >> what should women be doing? >> electing women to office. (vo) she's a political trailblazer. >>republicans of course didn't let facts get in the way of spin. >>do it, for america. >> eliot: the game commence the minute the dismal job numbers were out on friday. live to how both sides try to

spin it on the sunday talk shows. >> what was striking about what happened on friday is how quick the leaders of congress were out there wringing their hands. these are the architects of obstruction and now they're complaining about the pace of the recovery. >> there are a million jobs sitting on that table in congress that they could move on, they need to get off their hands and stop rooting for failure. >> it's not that this president is not trying. he is but his policies are not working. >> this is a hostile environment for job creation in our country. the only thing that will change it is changing our policies that means changing the person in the white house. >> eliot: citing weakening numbers, president obama continued in an ad describing romney's economic policies in that state as a failure. let's bring in one of the most persuasive voices e.j.s is

great to see you. thanks for taking the time to be on the show. >> thank you. >> eliot: it seems to be in the context of the dismal and these were dismal job numbers on friday. the president seems to have a to-prongedtwo-pronged approach. one is to attack romney, job creation and his tenure as governor was mediocre in that regard, and then to attack congress as a do-nothing congresse vocativ of truman's campaign several years back. >> it's hard to talk change when you're the incumbent, and the economy is in a deep hole, and it has not responded as fast as we wanted. i think he does have to go bigger and talk about what he would do to get us back to work in the long run. i think the criticisms of romney

as governor and his work are totally legitimate. the first president bush did very well running against a governor of massachusetts mike dukakis who was quite a good governor of massachusetts that's why i grew up. but dukakis' record was fair game, and it was widespread then, and so i think romney's record is fair game. bain capital as the centerpiece of his efforts to be president it's fair to bring emphasis about it. the idea that things would slow down, or things would go wrong in europe or else elsewhere, for example, to help state and local governments. i thought after the 2010 elections, he should have quoted

a republican president obama made richard nixon and said we need revenue sharing for as long as this crisis is upon us. nonetheless, i think it's a fair argument to say he did bring up a pretty substantial jobs bill and only a third of it has been enacted upon. it's a fair argument, but he has oh to get to a bigger one. >> eliot: it is a fair target for discussion. the president, i think through his surrogates would be better to are permit the surrogates to attack romney and the president could be left to make the affirmative argument. and the affirmative argument would be a contract between gm he's private equity investment versus bain capital. there i think the president could claim i'm better at precisely what you say you're good at. i bring back jobs and bring back an entire sector and bring back jobs to states that were suffering. that would be more of a high minded argument instead of just the critique of the attack, and i would like to hear more about

that the g.m. investment that worked in a spectacular way. >> one of the points i make in my book is that we're at a division point as a country. i think for 100 years we've been a government of what i call "a long consensus." we've been torn between love of individualism and affection for community, and we've always seen a role for the heroic individual. but we have also always seen a role for the things we needed to do together. the first word of the constitution is not i "i," it's "we "as in we the people. there is a need to act together, hold business accountable and check an centralized and accessible private power. he has made it periodically, but

i don't think he should be reluctant to root this election in the long trajectory of our national store story. in the end we're a country of balance. to get rid of government and throw everything on the individual is not the traditional american balance. >> eliot: that's why your book is so fascinating. we'll turn to that in just a couple of moments but the tension between the dynamics between vividdismbetween individualism and one last question about the immediacy of the election. in some of the swing states the numbers are actually looking pretty good, which is--in virginia, if my numbers are right, you have the unemployment rate of 5.6%. ohio, 7.2, not good objectively but better than it has been. do you think perhaps there is a glimmer of hope? is there a glimmer of hope for

the white house? >> i joked with someone in the administration a few weeks ago that they had concentrated all the unemployment in the non-swing states. it's true if you look at the swing states, they are--they are better off on the whole. there are a couple of exceptions like nevada. this should help him some. i don't think it's entirely grasping at straws, but i think historically people vote on a more general sense about how the economy is doing so when you get a jobs report like you got last week, that just can't help them. they know that. >> eliot: yes. >> so yes it helps a little bit, but he still needs to get people feeling more confident about the economy nationwide and where it's going. >> eliot: there is a conspiracy theorist who believes that the white house is creating employment only in the states-- >> absolutely. >> eliot: we'll return right before this quick break.

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>> eliot: we're back with e.j.dionne, author of "our divided political heart." great book. you should read it. designed to begin a constructive debate, and i want to quote one line. you say in here, the conservatives seem to believe that the rich will work harder if which give them more, and the poor will work harder if we give them less. that captures so much of the underlying hypocrisy in their ideology. where did you begin with such a debate when we begin with such fundamentally different premises. >> you did a little bit in that verizon piece before i came up where somewhere we have to keep piling benefits on the wealthy. if you raise their taxes just a little bit they're not going to want to invest and make more money. i have more respect for wealthy people than that. the only way to get the poor to work is reduce them to penary

and then they'll take any job that comes along? when, in fact, if you give poor people more opportunities to rise and give them decent pay it's a powerful incentive. i do think we can have a decent argument in the country because--and i think we should have a real argument in the country about inequality. do we do better as a country when we have widening inequality inequality? the evidence is we don't do very well. the last time we were this unequal in the distribution of wealth and income was right before the great depression. there was an trickle up economic that has worked much better in our history where average people did well, poor people came up, and rich people did well, too. it seems to me that's the argument that we want to have at the heart of this campaign. >> eliot: 70% of our gdp is the consumption if the middle class can't spend more and drive demand, they won't hire.

we need to survive demand and middle class need more money and they need higher wages. in this article you say the whole tax reform debate should not begin until people are willing to specify what tax loopholes they're willing to close. in another show, name your loophole, the conservatives are not willing to do it. what would be your favorite loophole to close? then we'll talk about your book for a minute. >> i would like to redo the whole corporate tax code and even the playing field among companies. in terms of personal income tax i think you could put a lid on the homeowner deduction but we're not going to get rid of that, especially in the time of crisis in the housing market. over time you might want to change the way we do healthcare, but you don't want to end the

healthcare market and we don't want to end deduction that because would hurt states who are trying to solve their problems. i'm a skeptic who says we can raise money from tax reform. >> eliot: you are right in terms of the politics and you're right in terms of where the numbers come from. let's talk about your book. people really should read it. you talk about the individualism of the marlboro man and bruce springsteen. is this a historical pendulum swing that is part of our entire history? >> it is part of our entire history. the period where we really seem to embrace radical individualism. it was a small part of our history.

from the gilded age from the civil war to the presidency after mckinley died. it was during that period where we got a lot of court decisions that we're still living with. that's when corporations were declared people. it was at the tail end that have where we got the lochner, and decision. what i argue is that it was not some radical innovation that came out of nowhere. it's a restoration of what we began to do in the beginning when hamilton, clay and lincoln all saw that government needed to play an important role, and that it could build the country. it's not about creating dependency. it's not about sort of waste. it's about very constructive things that government did like, .

>> eliot: e.j. you're so correct on this. there has not been a clarion voice in senior elective office willing to make that case for government. and bill clinton's famous line the year of big government is over when just the opposite is needed. e.j. dionne, author of the book" our divided political heart," thank you for being here tonight is it. >> thank you. >> eliot: i'll be joined by al gore for the entire hour. we'll talk about wisconsin citizens united and much, much more. that's tomorrow night on you "viewpoint." who takes fox serious whichly? certainly not the viewfinder. that's next. mr. vice president. >> they're swimming against the tides. gaeme inc. thank

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>> eliot: still to come, the argument for stimulus. i'll offer my view. but first palin talks pipelines fox and friends talks retirement and a classic feud moment with the best game-show host there ever was richard dawson. when it doesn't fit anywhere else, we put it in the viewfinder. >> do you think women are depicted in movies and on television in an accurate and positive way and please give us an example. >> i think it depends on the movie. i think there are some movies that depict women in a very positive role, and some movies that puts them in a little bit more negative role. >> the bugden is the touch dinner, dine with donald. they were looking for a celebrity. then they have the biggest celebrity, it's trump. >> when did they realize that our nation is woven together with pipeline.

i don't think our environment is sane and sound at all with its argument against keystone. >> are you our fan of the week? >> probably not. >> he has more freedom to be black in public than barack obama. >> the celtics and heat in game four of the eastern conference finals. i guess the game just ended in a tie. >> has it come down to this? the retirement age could be 80? [singing] >> thank you. welcome to the art world. >> a beverage you stir before drinking. >> water. [laughing] >> thank you.

will you still love me when the applaud signs goes out, that's what i want to know. >> eliot: that was a great show. he was a great host. bank of america did not tell shareholders the entire story when it boat merrill lynch four years ago. and $20 billion later people want answers. that's on "viewpoint." stick around. that's the focus. we want to focus on solutions and ways of bringing people together. that's the only way we're going to solve the world's great vexing problems. >>(narrator) the gavin newsom show friday at 11 eastern/8 pacific on current tv.

polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans? >> eliot: how can we create jobs maybe by doing the opposite of what republicans have been saying. but first let's check in with jennifer granholm out west in the war room. what is on the show tonight, governor? >> eliot, tomorrow is going to be a nail biter for political junkies, and we haven't got a war room angle on wisconsin. everyone wants to know exactly what is happening on the ground there to get out the vote. we're going to be talking to the

director of "we are wisconsin," the organization doing the mobilization, and the head of the wisconsin afcio which is knee-deep in political turnout. we have larry sabido, and all of that is at the top of the hour. >> eliot: i can't wait to be watching. more "viewpoint" coming up next. hear until it grabs you and won't let go. we push, we prod until the truth reveals itself. we are fearless, independent trendsetters, problem solvers, and above all, we are politically direct. the young turks with cenk uygur at 7, viewpoint with eliot spitzer at 8, the war room with jennifer granholm at 9, the gavin newsom show fridays at 11. and there's only one place you'll find us: weeknights on ñqóx!q right? [ laughter ] >> 46 minutes after the hour, right back on the "stephanie miller show."

>> eliot: now what? after the dismal jobs report friday, fair-minded people of all political stripes are asking what tools are left for revving up the economy. it feels like we've done most of what can be done, and yet we're still failing. but that feel something wrong. one thing that could help is a big, old-fashioned keynesian stimulus. first, realize that we've tried the republican approach. as paul krugman and others point out, taxes have been cut and government spending has fallen once you adjust for population and inflation. in fact, it is not fallen this quickly since the demobilization

after the korean war. so it's no surprise that public sector employment is way down. but private sector job growth is only moving up in fits and starts. we've already driven real interest rates down to zero and beyond. so it's hard to see how another tiny move in private-sector interest costs will stimulate a whole lot of investment at this point. in the private sector can't start hiring until they know that customers are coming, but there is an answer. any businessman can see it. this is the best time for the u.s. government to borrow more money. people want to lend us money. even at zero or negative rates. in a slack worldwide economy the dollar and u.s. t-bills are still points of safety. never mind the can saundra-like claims of the right that borrowing will drive up interest costs or ignite inflation. we have bothers a lot in the last few years and just the opposite has happened, rates are

zero and inplace is low. so the government should do what larry summers and paul krugman has suggested, borrow and invest, for infrastructure, pay for research and hire back for teachers and cops we need. a myriad of invests can future future growth and create jobs right now. we could even have a modern wpa for kids coming out of high school and college who desperately need jobs. these programs would pay for themselves in the long run. the irony is that the stimulus in round one worked but was too small. this time do it right. that's my view. the new slogan should be "we own wall street." that's my view.

break the ice

with breath-freshening cooling crystals. ice breakers. >> eliot: a wall street ceo withholds information from shareholders, and only do the shareholders oh lose money but taxpayers are forced into another bailout, this one to the tune of $20 billion. if this sounds like an old story, that's because it is. according to court documents filed this weekend in a

shareholder lawsuit, days before the bank of america shareholders approve the $50 billion purchase of merrill lynch in december of of 2008, bank of america ceo ken lewis disclose this? of course not. hair shoulders voted on old bad information. once the deal was done and the actual magnitude of the loss, shareholders were out $50 billion, and the taxpayer had to step in so salvage the bank. join asking me now, a column u.s. for bloomberg view and author of "money and power," how goldman sacks came to rule the world, thank you for joining us. didn't the sec dig into this? >> the sec dug into this. there was a settlement involved with this. i wrote. >> eliot: you wrote a great article about it. >> what is interesting about this, you have the shareholders

suing for the first time and depositions appearing in court transcribed depositions of ken lewis who said yes i knew the losses were greater and i did not report it to shareholders and she voted on wrong information. >> eliot: he's underwrought finally admitting that yes, when the shareholders were asked to go thumbs up or thumbs down on the transaction, they have what you and i would call materially false information. >> they really deprived shareholders of really the knowledge that they needed to make this informed decision. by the way they also didn't inform the shareholders about the billions of dollars of bonuses they were paying to merrill lynch business. >> eliot: keeping the material facts away from the people who not only own the bank but are at risk. >> this is incredibly outrageous

outrageous. >> eliot: speculate for a minute. did the sec understand all this when they gave a slap on the wrist. >> i was beyond outrage when i came across this. i would say the sec had to know this. why they let them slither away like they let so many slither away, i don't know the answer to that. >> eliot: it's a no-win proposition for the sec. either they knew, or they should have known. >> there's no way they couldn't have known that this had happened. they had the materials, they had the disclosure, they should have-- >> eliot: i rarely disagree with you. you're one of my favorite wall street emigres but never underestimate the sec. >> you're right, unfortunately. >> eliot: the defense of ken lewis is a bizarre one. one of the preeminent law enforcement, they told me i didn't have to disclose this. make sense of that?

>> eliot, i wish i could. i worked with them over the years when i was a banker. they always made me look smarter than i am or was i give them credit for that. but i don't see how if you're in possession of this material, they need to have it to make--we're talking about change of control transaction. >> eliot: billions of dollars of losses. >> well, look, let's be fair to everyone. without the $29 a share deal from bank of america which valued merrill lynch at $50 billion. without that shareholder vote, without that deal merrill lynch was goinging to bankrupt. >> eliot: and they were hosed up the-- >> eliot: they were the ones tell us about. >> georgia it seems to me that wactel has never failed to rationalize what it's client wants it to do. am i right about that? >> look, lawyers are very good

at doing what their clients want. wactel, don't forget in the jp morgan bear sternes i would not be surprised if wactel was doing what they were told to do. >> eliot: that's what lawyers do. they paper over what rational people would want to know and provide a back stop so when people are sued, they say well, my lawyers told me. >> that's what a cynic would say, based on the number of things that you see over and over again yes that way ken lewis can say, don't blame me. i was just doing what advice of my council told me to do. >> eliot: the treasury department and federal reserve both pushing to get this deal done, did they know about the magnitude of the merrill lynch's losses. >> again, i wasn't there, but how could they not have known?

it was in the e-mails. it was in the documents. when i wrote the story i had these documents and i had the e-mails which describe the magnitude of the losses and the failure that they did not disclosure. >> eliot: if the fed and treasury knew about the magnitude of the loss they had to know that the proxy statement was false. >> they had to know. >> eliot: everyone knew but the shareholders. >> again, they're the ones who took this on the chin, big time. >> eliot: the other people who took it on the chin who didn't flow, the tax pair because at the end of the day we were being set up by the fed and treasury to back stop a deal that everybody knew was a bad deal. they wanted to get through, maybe for good reason for the economy, but the taxpayer and shareholder were going to take the losses and they lied about it. >> clearly by this time the fed and the treasury new that massive bailouts had to be coming. the $700 billion tarp bailout came soon there after. they had to know something like this was necessary.

so maybe they thought, look, we can't have another lehman brothers. we can't have another aig. the effect was have been to big. it's better to solve it this way. >> eliot: they rammed it through, and everybody said just cover your eyes and get it done. if we have to cut the corners here and there, so be it. >> and we'll live with the consequences afterwards. so far there have been no consequences for ken lewis, no consequences for his board. no consequences for joe price the qto or the general counsel. he raised this, and of course he gets fired. >> eliot: confirming everything we suspected of wall street and that little intrigue at the top. >> i don't why this keeps happening over and over again. you know as well i there are people who need to be prosecuted. >> eliot: because no one is being held accountable. bill cohan thank you for your time