>>harlie: welcome to the broadcast. e headlines this morning are that there are two giantsn wall seet who emerged as huge financl vict turs. they're j.p morgan chase and goldman chs. we'll talk about what it mea in terms of the sector and the econy with floyd norris of "the new york times" dennis berman o the wall street journal. this is a phenomenally good time tobe ruing bank. phenomenallyood. competition is dow spreads are up. e people who want to borrow don't have much choice b to accept what you're offering. they've been ablto raise their fees on credit cards and other places. the nebusiness is likel to be

extremely profitable. >> it's the rhetorical divide between wall stree and main street. it's sti having effect on washington's need to bring in wall street to solve some of its own problems. hedge funds don' want to get inlved, don't wt to touch it. >> charlie: then a look to present obama's speec bstitute naacp last night. we talked to the president of th naacp, bjamin jealous. >>e talked about passi about the school system across the country,e talked compassionately abt the juice system and healthcare and you have a sense tha sobody who a former civil rights lawyer, former commity ornizer as president and that's what peoplneeded to hear because these are tough times and wh gives themope is whe they fl like the presidt gets it and he's going to fht for th. >> charlie: final where is crises in iran going.

talked to moshe who teache at duke universities. >> we c see the aroach of e leader and the approach of the second man in public an thr journey. 's different. there is a gap again the government in iran. >> charlie: the econo, president obama on rac and a friday rmon when we continue.

captioning sponsored by rose communicaons from our studios in new yo city, this icharlie rose. >> charlie two wall street git firms report a substtial earnings thiweek, goldman sachs has a quarterly profit of $3.4 billion theargest in the bank's 140ear history. j.p.organ chase flowed by reportina $2.7 bilon profit in the arter. both banks received billions in government loansast year but the funds were recently repa. despite the gains toelp the rest of th banking sector remains in qution as the recessionontinues. the banks have ceived billions in government aid such as citioup. joinin me is floyd norri of the walltreetimes and nnis berman of the wa street journal. m pleased to have th of them

at this table. everybody is tking about this. tell me the gnificance of these two firms. >> this is a phenomelly good me to be running a time, phenomenally good. competition is down. spreads are up. the ople whoant toorrow don't have much choic but to accept what y're offering. they've been able to rai their fees o credit cards. they've raed their fees in lots of aces. so the business they're doing now, the new business is likely to be extreme profitable. now t troub i the old siness. if you wen't stuck with the d business, this would be a wonderful me to be a bank. i wish could become a big bank instantly with , you know, with no hiorical assets. yocan just do so wl right now. >> chaie: so what's that mean >> unfortunatelyplaces like bancf america and citigroup have a l of bad assets

both o tm reported profits, thanks to selling asset and doing interesting als that dot have ything to with operations or with continuing things. the numbers they put o were really pretty scouraging. >> crlie: what do you think about these eaings and what do you think out bofnd citigroup. >> mosstriking really was thr discussion aboutthe loss in commercial loans, commerci real estateloans. we've talked two yearsbouthe residential losses and the mortga space. now bankruptciescross the country, the loss are really ling up on the commercial sector. so companies going bankrupt loans going bad. and most distressing part of it was those commercia realstate loans. th oice buildings around this country are getting big and they have the potential to be ry ry big. for b of a maybe less so siti but b of a is big as for

regional banks thaade a lot of loan to those coercial projects or the last few year i'm with floyd here. we're sitng on the green roo and we were not happyampers. the discussion, even thgh the sitive parts ofhe rests are so riddled with modifiers, it's like an elish teher's delight to see how these guys structurtheir hopeful seences. i can readne of them for you if you'd like. itas such a grea example of obfuscatoin. basically edit card losses. he said some of what we're seeing in early stage delinquency probay has a seasonal component. there are two modifiers right there, were cauously optimistic that the tres, if sustained, could eventlly staini losses. >> charlie: fiv modifiers >>boutive orix. this is the ray of hope.

that's the stement. >> charl: so is golan just simp doing everying right and doing everything better than everody else and folled byj.p. morgan or as well as j.p. morg. >> well keye off what floyd was saying, they wereble to extract themselve in the sub-prime marketarlier than e rest of their miors and ey don't have a consumer lending business they're not a exposed to the nsumer. so they can help companies write their de, charge nice big fees on that because there not much compition and make a lot of mone i thinkhe threat for golan going forward remeer they brought their levera down. if you recall the whole system was ilt on the high amount of leverage. goldmacut items leverage i out half. in the ality for companies and thgovernment issued debt declines over me, goldman is going to hav a harr time making money in the futur >> charlie: graham bally wrote -- the worse cses ... a

come of victs towering...is that the reali, these two banks will four over the rest o the financiasector. >> of the big banks, they're th on that look the best now. there' no qstion about that. anwe suspect, we've seen -- no j.p.morgan has substantial real state export and substantialcredit cardexposure and they discussed that this week and those numbers sounded a little scary out in the future. the belief right now is of the management those t firms, managed to get enough right that they're gog to be able to do very well in the current environment and the historic assets are not goin to prove to be good proble. >> charlie: a goldman sac traders taking the sameind of rick as theyere before. listen to a columnist in your paper. goldman is very good at what it does. founately what it does is

batted f america. secondly i shows that wall street's b habits that has cause the nancial crises he nogone away. third it shows that we're rescuing a financial system without reforming it. washington has done nothingo protecus from a new crises a in factas made another crises more likely. do y agree with that. >> i don't agree with that by any means. i don't think we've rescued the financial syst. we kept the bks from faing. at we don't have is a functioning nancial system right now that can pvide the minimally nessary credit for this economy, without gernment guartees. there are ry few home mortgagebeing issued now tha are n purchased bfannie or freddie which ar owned by the governmentnow. there is very little securitization of any kind going on that is not some way

backed by the gernment. need to find a way to get private credit functioning well and we haven't so f. it was better than it was during lehman broers and that's a nice ost to the econy. but it's not clear yet that they have anythin to do to fix it. >> maybe we can turn e focus back to the goldman question. there is an answer a the answ is that they are taking greater risks. e whole coept of value -- >> charlie: than they did before or than the rest of the financial sector. >> than goldman did before. >> crlie: greater ris than before. >> it' a technical indicat of how much a financial company i takingn a given day. goldman'was higher than it was before. so they're taking bigger risks and ey're makingigger profit now, what ugman says, i tnk there's sometng to i right. we're not reforming at the te

thate are callin back on some of these things but keep in nd what happenedfter the great depression. the securities actsware reign in 193 and 1934. great depression starts ou of therash in 1929. so that's four t five years after thoccurrence. thers something to be sai for taking a little bit of time d making an enghtened decision with a bit of hindsight because i think we saw in sarbanes-oxley in 2002 a quick rush for companies to report iormation and i thi e result o that has en pretty nic >> charlie: ty should wait and the should think carefully abt what they're going to do. they shouldn't hav a sense of urgency aboureform. >> therehould be an urgency but i don'think wehould necearily have a complete plan in place less tha a yearince the lehman blow . but there is no doubt in my mind that there neeto be major reform and i don't think yone -- >> charl: what would that major reform entai >> well, the capital risks taken

by banks. is actually is a hidden threat of the banks. that's not being discuss the much right now. that threat is that the regulatorsill say hey, you got this much capital, you know, our model going forward is that you're going to have t have more capital on reserve. there cod be internional regulations thatuggest that. so icould be to the bks that they just ha to squirrel more away. they have to have the compensation system. i don't know if you want a government mandate to it but a comprehensive industryay of making sure people's inctives are alned. that's critical. and i think refo -- you c go on and on. reform of the ratings agencies is another place totart. one of the is a discreet multear project so expect the governnt to have reformed it. >> charlie: don't u think at's what volker isocusing on. >> i think hs all over the place. >> i've tald to him in rent

weeks. one of the thing that came out ofthis was a feeling of some kind of a system rk regulator. and the obama adnistration wants tobe the feral reserve. there's a lot of resistance. >> charlie: half their powers. >> give e fed moreower. some pple say ll the fed had two jobs. it had to regulate ban and it ha to do monetary policy. and in th lastycle, you can arguwhether it didne of them rsethan the other vice versa. but it clearly dn't do either of themvery well. and so why do yo want to give them more power. at's an argument tt is basically named by someone on the hill. itas made one of the reform commsions running around now headin by the forme chairman of the scc. i'm noture how that's going to comeut. there's a lot of litt squabbles goin on in the details. >> crlie: let me raise a broader questio where e we in terms of the

recovery, to economic recovery? >>here's lot of optimismow that we've hit bottom. m not at all sure it'true. i think what happene is you had a recession tha had arrived due to a lot factors. and then suddenly we have lehman hit. andlehman produce a total credit crunch and worsened the recession dramatically. the credit has sed a little bit now. andthat, ifyou will,foot on the throat has been removed. which lps but it doesn't bring you back tohe health -- it doesn't get rid o the health proble you had bore they put your foot on the throat. therefe i don't think wre about to g under recery, ceainly notan impressive recovery. >> unless have those traing wheels i d't think recovery can be called. because people are notwilling

to take ris on thr in. particularly in the banks tha are issuinis really keyto the confiden and thelow of the system. so kp an eye on those traing wheels. >> charl: how do they know when to retract the training wheels. >>ell presumably when there's enough demand the private maet where thei deals are getting done that don't require that government help. there was one de which was do, i believe lateast week that wasort of thgreen shute of wall street but that was one deal. >> chaie: which deal was that. >> it was a deal to securitize, i think it was a bunch of o, ry old prime mortgages that was done by cret suie. >> generally mortgage are okay. >> i thinkhere might have bee 2003 2004. >> the general perception is loans made in 2004 or rlier we generally okay. charlie: what arehese banks doing about the toxic

assets? >> well first they go congress to for the regulors tolet them conceal h bad the were. >> charlie: they got congress to alwhem to cceal ... >> right they put pressure on the accoting regulators. a committee owing wonderful bipartisanship. we approved bipartisansh and they callethe head of the financial accounting standds boarand every congressman in theoom, republican, democra man, woman, every onef them screamed a the fasb people and told themhey musthange tir les so that the banks wouldn't have towrite their assets down to what e banks deemed to be unreasonably low levels. and fasb dn't cave quite as much as the banks wantethem to but ey caved. so now we're seein-- andone of the frustrations is youcan see itonly in the quarter report you couldn't seet in the numbers thatame out this wk, you got to wait until they file

the sec. they were able to usethis to admit loans were worth a whole loless thanthey're carrying em for but not take th declinon to the balce sheet or the income stement. to do that they have to make sure the loans don'ttrade very much and to some extent it's frozen the market for data asss which is a very bad thing. the troublis we don' know how bad thes assets are. we don't know what people would payor them. the governm ent'effort to get a rket going appears to be failing. >>harlie: the public/private finance. >> pipipp. my favorite acronym. >> charlie: why are ty failing. >> well e bank don't want to sell. >> charlie: at the prices they're offering. >> well the bks don't want to sell and the buyers premably hedge fus who are being with government throagz -- throwing cash at them, they don't want to

be hauledp in front of congress two yea hence and said is it true you made a billion dollars tradi off americ bad fortune, is that true mr. hedge fund. wh's been reay intesting laly is the rhetorical divide between wall street a main street is still having an effect on washington's needo bring wall seet to sol some of its own problems hem funds don't wantto get involved don't want to touch it. >> they've given t banks enough money they don't have to sell. they receive so many blions that they can carry this stuff for awhile. was a mista to give all this money to the bank. without arranging to do something about the tox asts, in retrospectt may have been. >> charlie: becau nobody's seen anything like thi therefore they d no place to for arecedent, right.

having said that, whatbout a stimulus,for example. do we need newtimulus program. the economy hasn't absorbed what was sposed to beoming, first of all. and secondf all, were in a position whe even if you added the stimulus to the econo, pt the threatso the confidence and the federal buet could bring terest rates how the of whack that would have its own inful effect. people stay stulus and mbe krug krman is arguingor stimulus now. charlie: he is. >> on the earth edge ofhe precipice with fear thatit's going to grow to a terrible oportion othe gdp people won't nt to lend to us. >> chaie: that's e issue -- >> we're down -- >> i have a suspicion tt's a longer term issue.

e stimulus pl when they designed it, it was fairlyclear that they didn't do it very well. >>harlie: they being the congress. >> they being the cgress. ey put pork into it, they put prram that weren't going to spend money quickly into it. so as a result, a lot of it hasn't come in, but i continu to think th really important issue is getng the financial system fed whichthey haven't. ce you'reoing to do that, you aren't going to get rapid grow anyway. this ssive overload debt that many of us have is going take time to work off. andtimulus won't change that. >> charlie: so no one expects anythi good to hapn in 2010. >> oh, people thi we'll have growth in 2010. >> charlie: what level of growth? >> not high. >> higr than we're having now. >> charlie: china is reporting 8 >> china repted a good second quarter is week. one of the remarkable things

about the chinese dat is that it used to be that their electrity usage ptty well trked their gdp. and now gdp doing a lot beer than electricity usage. >> charlie: what does tha y. >> some people think it says they makepdp money. >> charlie: oh. >> here are a couple things to keep an eye out for. people need to think about ge catal. this is a large capital. >> crlie: reported earnings yesterday >> the ge capitabusiness did not do wel peop think about ge as an industrial company but insid it's one the country's largest banks. charlie: more than 50% of returns or something. >> yes. that's an important thing, to focus on. theoverall budget numbers, the budget projections and the unemployment projectionsre all facting into obama's rep

rep -- reputation of running the country andhat he's ing. >> charlie isn't creating the job. >>here are questions opening up about the credibility of his projections. we all want the -- >> charlie: rojections having do trefore with the credibility of his assumptions. >> actually,hey were wdfully rased. he prosed to create or save a certain numberf jobs. now we can count the number of new jobs. we cannot counthe number jobs that would have bn lost but for his actions. d that's the savings. what a we sing in the employnt numbers is the nuer of people sing jobs is down. but the number of peop getting jobs is also down. unemployment,if you're unemployed now, y're probly on avera, you've been unemoyed foronger than any time since world war ii. long term unemployment is

becoming a real problem and it's beuse nobody wants to hi. d of course late last year we had the problem thatredit was so tight, that a company that wanted to hire probably couldn't find the money to do it anyy. so it's, you know, again, the issue right now is less jobs lost than the faile of new searches. >> there's one hope. >> charlie: let hear it. >> things have ne so badly for long, one bad occurrence after the next. the roll of the dice that comes craps, right. maybe 're due for a posive piece of economic new >> charlie: what would that be. >> a real change. well, you could have the unemployment fures show a sharp reversal. you could have businesspending pi up. you could have better sense on a

budg, perhaps a better word out ofashington about a more realistibudget. somethinthat says h, it cannot be that bad f that long. maybe we're just due for an upside rprise. so maybe not - >> excuse me. we did have thiseekor a little while, intel which has hiory of being optimistic put out some optimistic. eir business is grong and the stock market is near the top of its recent range. it's not showi great fears. >> charlie: what does that say? >> peoe think that the recovery is coming. >> charlie: but are they right. >> i have my doubts about it, but i'll go along wit that. >> chaie: this is the wall stre journal cit client scramble to secure life lines with credit markets still

frozen,it shops for investors. so what's happeng to cit? >> the thing these happening to cit, this weekend there going to lock everyone in the room and say -- well the nd holders, the dt holders at c and the company itself. the governmentas apparently waed their hands, we'll see if they come in and help or not. they're going to try to savehe company. cit is a important bit of potical theatre for washington. yes suggest say b of a but we drewhe line at cit. they're not as systemically as important to th to the economy. if you go dow to seven avenue here in manhatt in the rment district where lots of people have small sinesses sell and trade, selling and trading clhes, those people rely on t. they use t if factor their

inventory so they g money now for inventory coming in late thereill be pockets of ecosystems of industrieshat suer quite mightily. >> charlie: why. >> retailers, fuiture manucturers, people like that. >> thether side thgh is cit has be in trouble for quite while. and th've been cting back on their newending very heavily. they've been cutting a lot of these peop off already. so i'm not sur how much additionalamage there is left to do but it's quite clear that the cit was recess in tir nding. it's also etty clear they were not as reckles as aig was but aig had the good jument to be reckless in a way that could destroy the economy and cit simply didn't gure out how to do that. >>hey had the go fortune to big enough -- >> notonly tobe big enough but to be doing it to enough other

important people. one more garment nufacturer going der doesn't scare the economy too mu. every big banksoing under. yes, goldma sachsoing under, yes, that ares me. aig picked well. >> when y form your bank, you should me sure youhave a lot of important cnterparties. >> wll hire you to help out >> charlie: tha you floyd. thank you dennis. back in a ment. stay with . >> charlie: presint obama addressed a 100th anniversary celebration of the naacp. he stod as potent symbo be a roaring crowd the president adessed thebarrier that african americans sti faceoday but headded that the pa of discrimination is felt allcross america. african american women pay less r doing e same rk as colleagu of a different color

and a different expwrernd. lanos are made to feel unwelcome in the own country. by muslim americans viewed with suspion simply because they neal -- kneelown to pray to their god. still denied their rights. >> charlie: the president singled out education as a civil rights issue ofpecial importance. devoting the half of h speech to that topi >> african amecan students are laggg behind white classmates in reading and mh. an achievement gap thatis growing in states that once led the way in the civil rights movent. overalf ofll african american students a dropping out of school in some plas. there areovercrowding classrooms andrumb ling schools and rridors ofhame in america,ild with po children not just my children, brown and

whe children asell. the ste of our schools is not an african american proble it is an amecan problem. because if blackand brown childr cannot cmittee, then america cannot compete. >> charlie: oining me is benjam jealous, the youngest person to lead the civilrights organization. m pleased to have him at this tabl thank you. analyze thepeech fore from your perspective. >> what was powerful and wh didn't geteportedn all of the papersas he spe the bulk of tha speech talking about the structural iqualities in r society. >> charlie: we heard me of those in the clip. >> right. was reported here. it didn't make it intoll the papers. >> charl: right. >> he lked about the fact that blacks are iarcerated five times t rates of white. and d so with passion, whh a good sign becau sort of

the silent kille if you will of this generation of black peop who are growg up is that mass incarration. myeneration was told young man, youngoman, all the big victories have been n. your job is to work hard, play anywhere andto prosper. we cameo age toind oselves in the most incarcerated generation in this plat and the most murdered generatioin the country. and to have a sitting president talk with passion out that issue and the need to address the disparities i the justice system is important. >> charlie: you have a strong feeling that that ought be top of the agenda. >> yes. in part -- right now, state budgets are all shrinking. bu the rock is what we ent on

prisons, what we spent onails. that part esn't shrink. inhe state of california rit now,hey spend $250,000 per ild for the califnia auority. think abouthat for a second. it's absolutely insa. but until we can stop using prisons to solve socia problems,ere in new york when they dropped theock and got rid of the rockefeller drug lords, start nding poor dicts to rehab instead of to prison, you kn, then w won't see that, you know, ankly we just won't hav the dolrs for scols. >> charlie: onnect the first rican american present to is speech. significance shong whe his head is, showing where his hea is showinghe same kind of aching the country as he did

in his race speech. >> hcame there last night and he spoke to a room full of people who care deeply abou civil rights, abo human rights. it'shere black butot exusively black. and he spoke like somebo who ge it in his heart. he could hav at one point, when i drive through harlem a i see men on the streetorner ihink to myself therefore but the graceof god go i. and soust in thatimple statement acknowledg the power that high rates of joblessness in our communitiesave on the destiny ofhe people onhe street corners. talked wh passion about the school systems and how they're failing kids across this country, tk about passion with thjustice system andtalked withassion about the needor healthre and you got sense that w really do have somody to form a civil rights lawyer, rmer communi organizer as esident. and that's what peopl needed to

he because these are tough times and what gives themhope is when they feel like the esident gets it and is going to fight for them. >> charl: here's the lea com, "the new yo times" put the pictureere and basically said he encouraged pents to teach their children that your deiny is in your hands and don't you fort that. >> rig. now 20% of the speech. if you read u today,hey actually talked abou his speech in equalies. at was their subhead. >> chaie: he's the lead paraaph of the new york sometimes, sharyl stoleberg. esident obama delivered a fiery sermon to black america on thursday nig warning black parents that they must accept their own responsibiliti by puttg away the xox and putting oukids to bedt a reasonle hour and telling black childr that growing up poor is no reasono get bad grades. lead paragraph. >> exactly. all that's true, but in s speech that came out about, you know, two thirds down through thepeech as rt of, y know,

an important secondary or tertiary note. and the fixation of many of muc of the maitream isort of the flip sidof the negive sties that they run on black kids all the time. >> charlie: why do you thin at is. what iit you think th majority of the prs, what's the why for wha you say is the reality. >> because i think part of that is that, you know, that's the easy sto to write. partf that fits right i with the stereypes. and gives a reporter -- then you don't haveo engage at's wrong in ts society. you don't have to engage the urgent need for change. the presidt talked about that for the fit twothirds or thre quarters of th speech. healked about the structura inualities in our society and need to enge em and diantel them. anfor us to take responsibility f ourselves and our childr. all of which isvery true, all ofhich is very good but that

wasn't the main sty last night. >> charlie: so is there, i mean did you ce away with this that he has a deepcommitment to keep race at the forefrontf change? >> what we ce away with is he s a to keep cnge at the forefrt of his work and change the forefront of what the congress aten to do. what he's very clear about, i u fix the problem tha most afflict black and brown people, you actually fix the countrys a whe. we have fght for, to raise the floor in this society. we have fght for blk people because historicly that flow was defined by the way that black pele were treated. but each time weraised the flor we actuallyimproved the country for allpeople. just take our first issue, right. 100 years ago we were founded

here in manhattan, to end lynch mob justice. when we shamedhe country o of that practice, we made life better for blacks,or tholics who were the second most diriminate, for jews, cowboys that's partlyhat he was talking about last night. we engage thesessues and most december prettil afflict black anbrown people and life gets better for all ople and the couny as a whole. >> charlie: jessjackson saidhat's the last years of fighting for equity and accession i think becomes t xt century struggle. >> and he's very right. wee at a moment where we're shifting froa century old civil rights struggle to aush that is as much aut realizing

hun rights ait is enforcing civil rits. right no all black kid can go to the same school. too ofn it's the same bad school. so we're fighting for the gd hools. black peop canworkherever they want eoretically, but the reality is tt we havemillions of children in thisountry who e neglected not because the parents dot have a job but theyave too many jobs. t within each of tho, the way that black people are treated is often despere. so principal it's easier in this country for a white man with a criminal recorto get a job than a blackan with mday. pager wrote a bookalled marx, a professor at princet, that was the conclusi. ree years ago a book came o, a report ce out fm ucla, most black men for all employe

do criminal backgund checks on all pele who apply because most black men are criminals but most employe think all are so for him to also talk about the pain conversation an t ally validate that, there's a lot of pple who wantto say, you know, we he a bck president, get him over. and the reality is that we're real just getting started. i mean we may end is problem within the next hundred years. 've got a long way to go. people can permane ate the barrier but theoal is for there to be no more barriers. >> chaie: so what actions does the naacp, most african amerans want from this president? >> we want him to make sure that we get this economy turne around. all of us do. that there are more jobs. and we also want to ensure that

there are good jobs. right now we'r pushingo support the eloyee for choice act for instance because the reality ov the last decade is mosteople's wages did not go up and yetthe cost of living did. we're pushin for good schools want to see child lef bend. some people say we need schl reform, some people say we need more dollars for schools. we need both. we want no child left behind to live up to its name. he talke last night about the disparits and crack caine versus pder cocaine. and e needto change it. blacpeople are 13% of the people in this country who use ack cocaine. 13, 14%. 85% of theeople locked up for

having small antityities, they're locked up for e. >> charlie: afran american >> yes. and the punishment is a hundred times different than i is f wder. get the same punish maniment foaving half a kilo of powder you ha to have trocks of crack. it'snsane, it's insane. he talked abo that. we're pushing for sething called end racial profiling age because this president knows and all people ofcolor in this couny know we're just t treated fairly. charlie: is it fair to say that this sech reassured the african american community fro alpectrum that he understd that hwas of them and that he d not forgten that agend >> thisspeech assuredll peoplef color, a people who suffer discriminion, including e gay community tha he cares about right that he cares about discrimition, that he's going to do, you know to

rebuild the civilrights division. but he's going to deal with the structal inequalities. at's part of his motation. it's easy,ounow, the sort of unployment rate that the country's seeing now we going on in the black community two years ag so w want some assurce if yore going to dump billions of llar in this community, you fix -- you don't bail out mai stet, you sort of help out the country right no we want to see the disparities reduced. and to hear the president talk about that with pax is exactly rit on. >> charlie: this is the personalesponsibility aspect of it that you spoke to earli. roll tape. >> government progms alone won't get our chiren to the prised land. weeed new mind set, new set of attudes, becauseone of

the most dable and dtructive legacies o discrimination is the way we've internalized a sense of limitation. how so many in o cmunity have come to expect so little from the rld and from thselves. >> charl: you don't disagree with any of that. it's importanto y that. yore just saying therere these institutional issues tt have to be addresse >> that's rit. that should he beenaragraph not paragraph one. >>harlie: in theew york times. >> yes exactly. prident and ceo of the naacp at 36. >> yes, thankou. >> charlie thank you. back in a moment. st with us. the cses in the aftermath last mth's dispute electio. today rmer nger president

challenged theountry's leade in a sermon at tehran university. it said the governme had lost the trust of its people and called for the release of deined protesters candidat muvavi attend the prayers in his first public aparance since the election. he's a key fire in iranian politics. there's a report that was number o peopl are arrested. joing me now isoshe katabar. he joins me from duke uversity where he teaes and i'mpleased to have him on thisroadcast forhe first time. welce. >> thank you. >> charlie: so tl me wha youthinkf sanjani sermon and what does the suggest to . >> it was one of his best sermons i have heard fro him. i remember that he had also two

othe seons before inupport of hotony analso another -- of e supreme leaderefore. it was the st one. and i think the majority iranians dez -- h. what i hear from his sermon emphasize the release of all prisoners, and alsohe emphasize the that th majorityf irania are dbtful about t results of this eleion, this evenal election. and we need to make the confent to this election, to th results ofthislection. this eleion began in aood way that has been finished in ve bad way. i think he suggested that see

government, the persisters below the law. and also he emphasized the righ of the people and he mentioned that the prophet mohammed said to one of his best cpanions, you are n supported by the majority o muslims, it means that you can not be e ruler. he said direly to theeader that if you feel tt you a tsupported by the majoritof citize according to the prophet, acrding to islamic rule it means you have some difficulty, you are in a crises so i think he suppted the grn movement iran regarding to his restriction asthe governme. he was the last reminder of the

companioof ayatollah khomeini and the governmen i think he had his heart exam today. >> charl: is it a direct challenge to the ayatollah for control in iran, for control amon the erics inran. >> thesupreme leader in his last friday's sermon emasize that erything is finished. and the election should be ended. but he continued and he criticed the ro of guardiship guardianip consul and he said they are doubtfu so we can see very clearly, have t approaches to islam republican. thapproach of sueme leader d approach ofthe second man

in islamic republican, ayatollah sunjani. it's a gap betwee tse t seniorovernment in iran. >> charlie: how willit be decided? >> it dends on my factors, including the le of -- >> charlie: rig. >> and also pends on the situation of other governments. and also therotesters. becausas you know, the majority of iranians participate in thi last mth's and also theyant to continue thi way. and they ask where is our vote. ihink it's a very clear questionnd the supreeader and the regime should answer the th clear question. charlie: do you believe iran is heade to amilitary

dictatorship. it is two choicesn front of the regim the first one needs -- and the other is different. it's theay that sunjani and also before he advised the regi please listen to the protesters, please hear thei voice. andot so late. i think if the supreme leade list to theays of the protesrs and also the adsors, or ayatollah, i think it's the secondhoice will be happen and i hope for the second choice, not the fst choice. >>harlie: do youelieve theocratic vernment has failed in iran. this form of government failed in iran, yes. i mean by this form of

theocratic government is the guardianship -the supreme leader imagine divine right for himself and believe inbsolute authority, poweror himself, that is above the constution and all e governments should obey him absoluty, i tnk this is style, thi formf regime, aucratic regime has been failed. the name of the regime is someing else. sunjani mentiod today it's not sure -- superficial wn we call it islamic republican, it has two terms, islam republic.

anthe interpretation of islam and ignored the send pt of this regime. i mean by the second part the republican part. and the protester emphasize and highlight the republic part, i mean by th republic part of the regime. so if we don't regard the republic demracy in iran, it means that it will become,it ll shift from islamic replic to islamic gernment that wl be some kind of islamic kalife and not islamic repuic. >> charlie: what should the united staso? >> it a hard quesonbecause maybe ter thelection, the posion of iranian governme will be wea because they're no

supported by the majityof iranians andhich regime will bein front of you, you can have a lot of befit in his behalf. from anotr point of vie i think that iranians expect that all, from the all countes in the world, that ease do not cut ahmadinejad as the iranian president. he's not ourresident. >> chaie: so the united states should notecognize him. >>es. i thinit's the desire the majority of iranians. not from only united states, but from al of the world. >> charlie: sohe world should get together and dlare the election and the results unacceptab and they will not deal with irani vernment?

>> it's also, as you know, the demand o t leader of the presters mousavi, he sai the results of this selection is not accepted and ahmadinejad is not our esident. heasllegitimate and we ed re-electn. so i thi also karobe emphasiz this point andi thin theesire of majori of iranians. >> charlie: what would happen if you would go back. you ask very difficult question. i would be with my friends, with th majority ofy friends,hat arin jail. >> charl: you would be with your frien in jail. >> i think so. >>harlie: do u think this protest will get those peop ou of jail or will lead to more

repression? >>t depends on the situation of the regime. after this sermonoday, friday sermon today, if they listen to the suggestis, i think all the political prisonershould be releed very soon. anin they do not listen to themnd they want to continu and rest their irritable position, i think after that the crises will continue. >>harlie: h much ds ayatollah has. >> i says i hear. it's a constitution, iranian constitution says i should be

the father of all irani citizens regardless of their opinions, their political opinio and so wha i said that fridays not ght. it not right. and i want to correc it d i listen i hear your voice and i think thatit could have the election and the result of the election will remindhe future of the iran is the first choe. but the secon choice is, he can say that what sunjani sd was wrong. he was under influencef the warriors and ias inhe right y and i wl continue. and it means that the ises will be ctinued by the second choice. >> charl: i thank you for coming. it's a are pleasureto meet you

and hope we can do this again >> yes, tha you so much. it was myleasure too. caioning sponsored by rose communications captned by media cess group at wgbh access.wgbh.org