captioning sponsored by macneil/lehrer productions >> woodruff: good evening. i'm judy woodruff. president obama scolded wall street executives today for fighting financial reform efforts. >> brown: and i'm jeffrey brown. on the "newshour" tonight: the president called on industry leaders to back new regulations on banks. we hear from white house economic advisor lawrence summers and the head of a major bank, robert kelly. >> woodruff: then, simon marks reports from london on the second televised debate in britain's too-close-to-call election. >> reporter: tonight's discussion was all about foreign

policy. but it was also about the future of britain's two-party political system now that a third candidate is threatening massive change. >> brown: margaret warner has the story of five americans awaiting trial in pakistan on terrorism charges. >> woodruff: dave iverson of kqed san francisco updates relief efforts in haiti, 100 days after the earthquake. >> brown: and, we look at a big man on the basketball court, making his mark with an art show. >> i named this show "size does matter" because when something is so big and beautiful you have to stop and take a second look. >> woodruff: that's all ahead on tonight's "newshour." major funding for the pbs newshour has been provided by:

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>> and by the bill and melinda gates foundation. dedicated to the idea that all people deserve the chance to live a healthy productive life. and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> woodruff: the president's message today was part rebuke, part appeal for help, to prevent another financial meltdown. he made it in new york city to leaders of the financial community, as a showdown looms in the u.s. senate. >> woodruff: mr. obama chose cooper union college as his venue-- just a short ride from wall street. the speech was sharply worded,

taking the financial sector to task for the meltdown of 2008. >> a free market was never meant to be a free license to take whatever you can get, however you can get it. that's what happened too often in the years leading up to this crisis. some-- and let me be clear, not all, but some on wall street forgot that behind every dollar traded or leveraged, there's a family looking to buy a house, or pay for an education, or open a business, save for retirement. what happens on wall street has real consequences across the country, across our economy. >> woodruff: the president then made his case for what he called "updated, common sense" regulations, as envisioned in the senate democrats' bill. they include: limits on the risks that banks take; reforms for executive compensation; new transparency rules for derivatives and other

complicated financial instruments, and a new consumer protection agency. the plan also creates a fund with money collected from banks, to help dismantle large institutions on the brink of collapse. the president insisted it would put a stop to federal bailouts. >> the goal is to make certain that taxpayers are never again on the hook because a firm is deemed too big to fail. >> woodruff: but mr. obama charged that industry lobbyists are engaged in "furious efforts" to thwart the legislation. >> i'm sure that some of those lobbyists work for you and they're doing what they are being paid to do. but i'm here today, specifically, when i speak to the titans of industry here, because i want to urge you to join us instead of fighting us in this effort. >> woodruff: sitting in the audience were major players, including lloyd blankfein, chief of goldman sachs. last week, the u.s. securities and exchange commission accused the investment bank of

defrauding investors. the president's other audience was back in washington, where efforts continued to fashion a senate compromise. but shortly before the president spoke, senate republican leader mitch mcconnell, said the public still has hard questions about bailouts and other issues. >> it should come as no surprise to anyone that when we're talking about a giant regulatory reform bill, the american people aren't all that inclined to take our word for it when we say, it doesn't allow for bailouts, or that it won't kill jobs, or that it won't enable the administration to pick winners or losers. they've heard all that before, and they've been burned. this time they want us to prove it. >> woodruff: senate democrats moved today to limit debate on the bill and aim for final action next week.

a crucial test vote is set for monday afternoon. a separate financial reform bill has already passed the house. >> brown: we'll have more on the push for financial reform after the other news of the day. for that, here's hari sreenivasan in our newsroom. >> sreenivasan: air traffic over europe returned to near normal levels today. airlines labored to recover after volcanic ash forced them to cancel more than 100,000 flights in the last week. a normal day would see 28,000 flights over europe, and virtually all were taking off today, fully loaded. planes were packed as airlines tried to jam in passengers who've been stuck for days. >> ( translated ): my mother died in brazil and i was supposed to be there three days ago. costs have increased but i'm happy to get there now and that's all that matters. >> sreenivasan: carriers added more flights and larger planes, but they acknowledged there was no quick solution to the backlog. in the meantime, some travelers were treated to luxury. a chartered cruise ship picked up britons stranded in spain,

for the trip back home. >> we've had so much trauma! wondering whether you go one day, and then we've been promised the next day. so it's absolutely wonderful. >> sreenivasan: but the volcano in iceland that caused the trouble was still erupting. officials in scandanavia and scotland were forced to close airports again today, after shifting winds sent a new ash cloud into their air space. that will only add to the staggering losses facing the airlines, now expected to reach $2 billion. an offshore oil platform sank in the gulf of mexico today, raising fears of a major oil spill. the rig exploded into flames yesterday and had been burning ever since, 50 miles off the coast of louisiana. it finally went under today, with 11 workers still missing and feared dead. the coast guard said the damaged well could spill up to 8,000 barrels of crude oil a day. another roman catholic bishop has resigned in europe, amid the growing child sex abuse scandal. today, bishop james moriarty became the third high ranking

church official in ireland to step down. he said he failed to challenge the culture of covering up for priests. the scandal also prompted apologies from catholic bishops in england and wales. they admitted terrible crimes were committed over the years. new trouble today in bangkok, thailand. five grenades killed at least one person and injured more than 70 others. the grenades exploded near the site where anti-government protesters have camped in the city's business district. the deputy prime minister said the weapons were launched from inside the camp. protest leaders denied they were behind the incident-- the latest in a standoff that has lasted weeks. the government of israel will not heed u.s. calls to stop building new settlements in east jerusalem. prime minister benjamin netanyahu made that clear today in an interview on israeli television.

>> sreenivasan: netanyahu's comments were broadcast shortly after u.s. mideast envoy george mitchell arrived in tel aviv. he's trying to restart peace talks between israel and the palestinians. a state department spokesman said mitchell would not have gone unless he thought there was hope of moving things forward. in iraq, a u.s. military jury acquitted a navy seal in the beating of an iraqi prisoner. petty officer first class julio huertas was accused of failing to stop another seal from assaulting the iraqi. the prisoner was the alleged organizer of a brutal attack on four american security guards in 2004. this was the 40th anniversary of earth day. events were held worldwide to raise awareness of the need to protect the environment. a major rally is also planned for sunday on the national mall in washington. its focus will be on urging congress to pass climate change legislation. on wall street today, stocks rallied late, after being down most of the day. the dow jones industrial average gained nine points to close at 11,134.

the nasdaq rose 14 points to close at 2,519. those are some of the day's main stories. i'll be back at the end of the program with a preview of what you'll find tonight on the newshour's web site. but for now, back to jeff. >> brown: still to come on the "newshour": a british debate on foreign policy; americans accused of terrorism in pakistan; haiti readying for rain and "sizing up" sports and art. but first: back to back interviews on the president's financial reform plan. we start with white house economic adviser lawrence summers. i spoke with him this afternoon at the executive office building. lawrence summers, thank you for joining us. the president said today a free market was never meant to be a free license to take what you can get. does he see wall street as the cause of the financial... wall street's greed as the cause of the financial meltdown? >> mitt stakes on wall street led these problems. mistakes on wall street in the

mortgage area led to the subprime bubble that led to houses appreciate that lead to the situation where millions of people got loans that they're no longer able to service and faced foreclosure . credit errors made on wall street brought financial institutions to the brink of insolve vennsy, that left no choice but to commit taxpayer funds. >> brown: but today he was going to wall street in fairly tough language saying... >> ... yeah, there's no question that things that happened on wall street are the reason we had this financial crisis and we've got to do everything we can to make sure it doesn't happen again. >> brown: one of the critiques is that the current approaches towards reform rely on the same regulators and agencies that missed what happened in first place. so do you see specific changes that would have prevented the meltdown we had and that would prevent one in the future?

>> i do. a consumer-oriented regulator rather than a bank-oriented regulator would have stopped the predatory subprime lending. derivatives on exchanges would have meant that it wasn't taxpayers problem when a company made the kind of mistakes that a.i.g. did. comprehensive authority for the federal reserve would have meant that you didn't have institutions trading in the shadows hundreds of billions of dollars of money that it turned out that they didn't have. higher capital requirements, lower degrees of borrowing, leverage, would have meant that even if there were losses they would have been absorbed by shareholders rather than pushed out to the rest of the economy. >> brown: regulators could haven't done in n the past? higher capital requirements? >> regulators didn't have the specific mandates if for consumer. regulators didn't have authority

to, for example, oversee the derivatives activity at a.i.g. regulators didn't have the authority in a comprehensive way to monitor the derivatives market which caused so much mischief in this place. so this is an important expansion in authority, probably the most important expansion since the invention of deposit insurance in the 1930s. >> brown: you also fears on wall street and from some republicans and mitch mcconnell repeated today that new regulations, new fees on banks can hurt business, can hurt jobs, and specifically at a time when people really are hurting, and that's the wrong approach to take right now. >> you know, there's something ironic about banks who got themselves into problems that to

the large credit collapse in 75 years, that drove millions of people into unemployment worried that somehow it's oversight that's going to cause the problem for their lending when so much of what could have been lent was dissipateed on misguided trading of various kinds. we are very mindful of the importance of increased lending. we understand very well the importance of business confidence. but i cannot imagine a measure that would do more to impair confidence than to leave our financial system as it stood before this crisis. >> brown: "too big to fail" issue. why not go further? why not just limit the size of banks? >> jeff, that was the approach

america took to banking before the depression. that was the approach that america took to lending in the thrift sector before we had the s&l crisis . observers study this believe that to try to break banks up into a lot of little pieces would hurt our ability to serve large companies and hurt the competitiveness of the united states. but that's not the important issue. they believe that it would actually make us less stable. because the individual banks would be less diversified and therefore at greater risk of failing because they would haven't profits in one area to turn to when a different area got in trouble. and most observeers believe that dealing with the simultaneous

failure of many small institutions would actually generate more need for bailouts and reliance on taxpayers than the current economic environment >> brown: the president talk today of failure of responsibility on wall street and washington. and i wonder how you see your own responsibility going back to days in the clinton administration, the 2000 act that a lot of people still look to now as having loosen it had reigns on the regulatory regime for derivatives and other parts of the financial market. >> you know, the situation's changed hugely, jeff, since 2000. credit defaults, which is really the center of the issue now, barely exist at that time. and so people were actually focused on a very different set of issues. if you look at the context of

right now, i think there's no real question but that we need to propose much more regulation of derivatives, that we need to do what we actually pushed for in 2000 that established permissive authority for but were not able to cover come congressional opposition and establish a requirement for, which was the clearing houses that would establish collective liability and would promote transparency. >> brown: but a failure to nor see what would happen, what would come out of that 2000 act. >> a fill your to perceive fully-- which i think was very, very widespread at that time-- what the spread of credit default swaps would mean. and i think what was unfortunate was that as credit default swaps mushed after 2000, nothing was done. >> brown: you expect to get

legislation with republican support? >> i can't imagine that at the end of the day anybody's going to find it a very attractive position to defend the status quo on wall street. to defend the status quo in terms of how we watch over financial institutions. and so i think it's very likely that we're going to come together around strong legislation that has a strong mandate. >> brown: okay. lawrence summers, thank you very much. >> thank you. >> woodruff: now, a view from the world of the wall street. it comes from robert kelly, chairman and c.e.o. of b.n.y. mellon, a global financial services firm, formerly known as bank of new york-mellon. he is also chairman of "the financial services forum," a non-partisan financial policy group comprised of the country's 19 largest financial institutions. mr. kelly, thank you for being with us. first off, what is your take on what the president said today and what the administration's

trying to do? >> well, hi, judy, and thank you for allowing me to do this today, a pleasure to be here. i largely agree with the president and so do most of my counterparts. we are pro-reform. we think changes do need to be made in reform and regulatory reform in the united states and we should get it done this year. and, frankly, in spite of what you're hearing, we actually agree with 80% or 90% of the proposals, but we want to make sure we get the details right so that we don't have to come back to this three years from now or five years if now and make further changes. >> woodruff: so when the says that your sector, the phenomenon sector, is spending million and millions of dollars to lobby against that, is that right or wrong? >> we are clearly focused on the smaller details to make sure we get this right. but when you think about it, when step back, the president said let's be sure that no bank should be too big to fail. we totally agree. banks should be allowed to fail if they mess up and they should

disappear and it shouldn't cost the taxpayers anything. we actually agree with need a windup authority so that we don't have another lehman-type event which almost created a complete freeze in the credit cycle and ultimately it could have created a national depression for the nation and around the world. we are very supportive, for example, of having a systemic risk council so that we can think about the larger risks in the economy. and we're very supportive of strong consumer protections as well. but we're focused on getting the details right. and i think that's the right thing to do right now as we create what is legitimately the biggest changes in financial sector laws in several generations. >> woodruff: well, let's talk about just a couple of those details. one, i think, are the capital requirement it is administration is talking about. banks having more capital on hand. it's my understanding this is an issue for you and others and i guess the administration's point

is it was a lack of authority to make sure those capital levels or requirements were there that led to the crisis that the country went through. >> well, there are proposals that are being made not just in the united states but around the world so that all the major banks in the western industrialized nations have more capital and have more liquidity. i.e., that's to say they have more cash hand so that we can meet the needs of depositors and lenders. that's going to happen. on average, i think there were a lot of firms that did not have enough capital or enough liquidity. and i am very comfortable on average our industry should have more capital. but the key is we have to make sure that we do it with international coordination so that the united states banks are not at a competitive disadvantage to, for example, our european competitors. >> woodruff: but you don't argue with the premise that that was a big part of what led to the problem? >> well, the single-biggest problem that happened in the

united states is not being dealt with in this package. the single-biggest problem was the residential mortgage product in the united states and the role of fanny and freddie and the g.s.e.s. we have a mortgage system that's completely broken in the united states and that's not scheduled to be dealt with until next year. so that was the single-biggest issue. and that is not on the table at this point. >> woodruff: and the administration... >> but beyond that, when you step back from it, we do agree that on average there were a number of banks that did not have enough capital or cash on hand to be able to deal with the problems. when you look back to the banks that did fail and the mortgage companies that did fail, they failed mainly they didn't have enough cash on hand and to a secondary degree because they did not have enough capital to support very large balance sheets. and that should change in the future and those rules will be changed. and they should be changed. >> woodruff: just quickly, another important part of this is the so-called volcker rule.

that would limit proprietary trading, allowing institutions to trade in their own assets, their own stock, i guess you would call it. and they want to put limits on the size of what banks... not only on the size of banks but limits on speculative risks. how do you see what they're trying to do here? >> well, i do have some concerns about the volcker rule proposals. firstly, i think our country... we are huge a huge country and we do need large national champions that are well managed. we need large banks that have very, very sophisticated product capabilities. we have big companies in the united states that want to raise capital in, say, europe or asia or china or india. and american banks should be providing that versus foreign banks. i do worry that if activities are limited from american banks, the europeans will pick it up. there's no talk about this point of any of the products or services that we have on the

table for potentially disappearing. there's no talk in europe, for example, of that happening. and i would worry a lot about the fact that we are the financial capital of the planet and i would hate to see unnecessarily i would hate to see a situation where we lose a lot of business to banks. >> woodruff: another... >> please, judy. i'd also mention, too, that proprietary trading, if you think about the last two or three years, it wasn't actually at the root of the problem, nor was a lot of the derivatives activity that took place. >> wdruff: it's interesting you say that just heard larry summers who advises the president talk about the fact that there was no ability on the part of the government to regulate derivatives. that this trading was done in the dark. i think as the president put it, in the shadows, which led to so much of the crisis in the first place. >> right. well, the tkr *euf i have thes markets have been around for a long time. foreign exchange, for example,

has been around for 300 years. rate swaps has been around for 30 years, it's never been a problem. in fact, it wasn't a problem during the downturn. but mr. summers did point out that credit default swaps were a big problem, and they were. and we need to do a much better job of regulating them and putting them through clearing houses but they are 2% or 3% of the entire derivatives market. having said that, let's make all of our derivatives more transparent and iing a actual supportive of having clearing houses for derivatives generally because overall it will reduce risk to the economy as long as it's just the plain vanilla type derivatives that is the majority of the activity of the banking system. >> woodruff: two questions. one is i want to clear something up. we hearing a number of the republican congressional leadership say that what the administration's doing is basically a big bailout for banks, for institutions like yours. do you agree with that assessment?

>> i don't think so. i don't know how it could be, judy, when we say that no banks should be too big to fail. if banks get in trouble, matterr what their size, they should be allowed to be taken over by a government entity and slowly wound down so that they could not infect the rest of the financial system or the global economy. that is why we need a resolution authority to allow us be able to take over a lehman-type business and slowly wind it down and say good-bye to it and sell off the pieces without hurting the country. or without costing the taxpayers any money at all. and no one wants a bailout and we have never said-- and certainly i would never support-- a system whereby the taxpayers should be on the hook for paying for a bank failure. in fact, if you look at what has transpired over the last couple of years, and with all the tarp money that has been given out, we received tarp money, we received $3 billion. we had it four six months only and we repaid it as soon as we

could. and we provided a very nice return to the taxpayers of about 12%. >> woodruff: so while the republicans are saying this is a bailout for the banks, too much help for the banks, on the other hand, are you concerned by the president's language? that the... the language the president's using? in essence do you worry he's beating you have so much on the financial sector on the... on the industry that you here in that it could hurt the health of your industry and ultimately hurt the health of this economy? >> what i worry more about than anything else is that we get our country back on its feet and we start creating jobs again. we're just starting to do it. i feel comfortable that we're not going to have a double-dip recession. but we've got to get the details right here. we've got to get financial reform actually passed. we've got to have a wind-up authority. that's absolutely critical. and i do worry about... there's a proposal that we should

prefund a windup authority that's $50 billion. and there's a proposed bank fee of $19 billion, that's $140 billion. i worry if the banks have to start paying out big, big fees over an extended period of time that that could actually affect their ability to lend and their ability to create jobs in this nation. >> woodruff: bob kelly, the c.e.o. of b.n.y. mellon. thank you very much for talking with us. we appreciate it. >> my pleasure. thank you. >> brown: now, the british learn an american political lesson: debates can change the momentum of a campaign. simon marks fills us in from london. >> it's clear from last week's debate that the country wants change. >> so your vote matters. please use it. it's the most important and decisive election for years because our future depends on how you vote in the next few weeks. >> reporter: as britain's

second-ever televised election debate took to the airwaves tonight, all eyes were on the leader of the country's traditionally third-rated political party. >> we don't simply need to choose from the old choices of the past. we don't need to repeat the miss of the past. >> reporter: his name is nick clegg, and until a week ago he was a relative unknown on the national stage. not any more: today, he is center-stage in the battle to win the country's may 6 election and with it the keys to the prime minister's office, number ten downing street. >> the more i hear them argue, the more i think they're the same. >> reporter: it was clegg's firebrand performance in the first debate last week that catapulted him to prominence and threatened to overturn the political apple cart here. for more than 100 years, british politics has been the realm of just two major parties-- labor, now in government and led by prime minister gordon brown, and the conservatives, whose

leader david cameron was-- until recently-- widely tipped to win next month's election with ease. but nick clegg has complicated all that. his liberal democrats are now leading the election in some polls. the debate, screened by cable network "sky news," focused on foreign policy, and that gave gordon brown and david cameron an opening. they argue his plan to abandon unilaterally britain's arsenal of trident nuclear missiles would leave the country vulnerable to nuclear threats and acts of terrorism. >> i think it's one of the biggest decisions any prime minister would have to take. and we've got to get this right. >> president obama said last week i think quite rightly that now greatest threat is not the cold war threats of old, it's terrorists getting hold of dirty bombs. trident isn't going to help you with that. >> i have to deal with these decisions everyday and i say to you, nick, get real. get real. because iran, you're saying might be able to have a nuclear weapon and you wouldn't take action against them but you're

saying we've got to give up our trident submarines. get real about the danger tkaeue face if we have north korea, iran and other countries with nuclear weapons. >> this is extraordinary. to say get real. what is dangerous is to commit to spend a whole lot of money that we night not have on a system which almost certainly won't help, where the world is changed and we're facing new threats. >> reporter: but nick clegg found his feet tonight when the talk turned >> reporter: but nick clegg found his feet tonight when the talk turned to afghanistan and the future of british military involvement in a war that is growing increasingly unpopular here. >> we've done in the a manner where i don't think we've pursued the right strategy. we haven't given the right equipment to our troops. we haven't had proper international coordination on the ground in afghanistan. we haven't worked properly with other countries in the region to do so. i think if you put soldiers into harm's way, you either do the job properly or you don't do it at all. so if we ever take that decision again, let's make sure we got the right equipment, the right strategy so that they can come back having done the job we've asked them to do with their

heads held high knowing they've done the job well. >> reporter: gordon brown and david cameron are not relying on their >> reporter: gordon brown and david cameron are not relying on their own political wiles to halt the advance of nick clegg and his liberal democrats. they're also relying on their friends. the front pages of britain's newspapers this morning were dominated by headlines attacking nick clegg, accusing him of committing financial irregularities, espousing radical liberal policies and enjoying the fruits of a privileged upbringing. >> british politics isn't used to dealing with three parties. >> reporter: political analyst alex stevenson says the media onslaught is no coincidence. >> right-wing newspapers were so used to the idea that david cameron's conservatives would be forming the next government, that it's come as a big surprise to them. so they're doing everything they can to level the playing field a bit. left-wing newspapers know that labour have a huge battle on their hands dealing with the conservatives. with the liberal democrats threat, it makes it even harder for them. whether the nick clegg bubble will burst before the election

in two weeks time is now one of the central questions in this campaign. another is whether his own charismatic television performances will really make that much of a difference, in a system in which voters choose between local candidates for parliament, and do not directly elect the country's prime minister. a strong showing by clegg and his liberal democrats could reshape the british political landscape, an outcome labor and landscape, an outcome labour and the conservatives are urgently trying to derail. >> woodruff: next, americans on trial in pakistan. margaret warner has the story. >> reporter: the arrest of five young americans on terrorism charges last december-- at this house in eastern pakistan-- shocked the muslim-american community in northern virginia. >> this is indeed a wake up

call. it is a wake up call involving our youth. >> reporter: the five men, ages 18 to 24, had become friends at this mosque in a suburb of washington, d.c. worshipers there said they were good kids, who studied hard and never expressed extremist views. mustafa abu maryam runs the mosque's youth group. >> our group discussions never talked about politics, never talked about ongoing conflicts, never talked about fighting against anyone indirectly or directly. on the contrary, we always promoted compassion toward others and being good stewards of humanity. >> reporter: but in late november, the five-- ahmed abdullah minni, umar chaudhry, waqar khan, aman hassan yemer and ramy zamzam-- disappeared, without telling family or freinds of their plans. friends of their plans. amal khalifa, ramy zamzam's mother, said he did tell her he was going away to baltimore.

he disappeared what in late november? >> i can't say he disappeared. he told me before he leave he's going somewhere and he takes two sets of clothes, a lot of jeans and shirts, to spare shampoos so everything and he says i'm going out, be out for a few days. >> reporter: did you believe him? >> i thought he may be going farther than baltimore, like florida, new york, you know, like young men this age. >> reporter: zamzam had been a promising dental student. but after the young men disappeared, a video was discovered featuring him. speaking to the camera. it prompted parents of the other youths to notify the fbi. the video is now in the hands of law enforcement, but officials have said it also showed scenes of war and declared "muslims must be defended." nihad awad, cair's executive director, saw the video and said he found it troubling. >> i recall the video is about

11 minutes. and it's like a farewell. and they didn't specify what they will be doing. but just hearing and seeing videos similar on the internet, it just made me uncomfortable. >> reporter: amal khalifa didn't see it until the parents' meeting with the fbi. and so did you watch it? >> yes. >> reporter: what did you think? >> it's normal mild talk, this is not something to worry about or to even think about. >> reporter: pieced-together accounts suggest they traveled first to karachi, pakistan, moving on to three other cities, before ending up in the town of sargodha, where umar chaudhry had family. the young men told people they were there for a wedding. but on december 8, they were arrested by pakistani authorities. they're now on trial for

plotting terrorist attacks within pakistan, afghanistan and the u.s. prosecutors told reporters the young men made internet contact with a militant tied to al-qaida and the taliban. they say evidence from the suspects' computers and belongings includes maps of possible attack sites, phone records and e-mails. prosecutors also say the men have confessed to the charges. zamzam's mother, who recently visited her son in jail, insists pakistani authorities have trumped up the charges. >> so far, though, the case is very weak and the lawyer proved so far everything is being fabricated and is not true. >> reporter: what's more, she says, whatever confessions they gave were coerced. >> they beat the hell out of them over there. tortured them and keep them he said as much as a count of 36 hours with no food, water or

sleep, and they beat the hell out of them. they wanted them to say the tourism, and they came here for terrorism reason. >> reporter: pakistani embassy spokesman nadeem kiani denies the charge, saying the men were "at no point did they complain of being tortured, and they did not show any physical signs of being tortured," he said. "that was the time to make the complaint. they did not." state department spokesman p.j. crowley supported the pakistanis' account. "we've been meeting with them from the first days they were in custody," he said, "and have not seen any evidence of mistreatment." a state department observer is attending the trial, which held its first hearing march 31. but reporters can't attend the closed-door proceeding, overseen by a judge, not a jury. tariq asad is the americans' lawyer. >> if you see what is the chance of winning the case, there is nothing in the case, nothing in the case. they have done nothing. >> reporter: amal khalifa is clinging to the hope that her son's lawyer is right.

he might have gone to pakistan hoping to join up with radical groups? >> if you want me to swear on that, i'll swear that he's not. >> reporter: so no doubt in your mind. >> no, zero. never crossed my mind. >> reporter: but he has gotten himself in trouble. >> he don't got himself in trouble, he got in trouble accidentally. >> reporter: if the trouble leads to a conviction, zamzam and his friends could face life in prison. pakistani officials say, however, they will have the right to appeal. >> reporter: for decades, ethiopia has been synonymous

with famine and hunger. even today at least five million people depend on food aid to survive. but a growing number of foreign investors are discovering a little-known fact about this east african nation: ethiopia has fast acres of fertile arable land. >> i want to welcome you all, our guests from japan and pakistan and india. >> reporter: recently in the capital addis ababa, local investors for a pseudodi investor announced a partnership to expand a commercial farm in western ethiopia aiming to produce a million tons of rice per year. >> for us, it is a cornerstone. i think others will follow as well. >> reporter: others will likely come and still others have already come. over the past two years, by some estimates 50 million acres of african farm land was leased to foreigners. most from the middle east and asia, for up to 99 years. that's about twice the arable

land in all of germany. the cost to lease land in ethiopia is cheap and there's lots of it. so why aren't local farmers growing more? this man, with the government's agriculture investment agency, says they use only a fraction of the 180 million acres of land and lack the technology needed. >> the productivity is very low due to technology. most of our farmers are plowing with ox. >> reporter: that's in sharp contrast to the carefully irrigated and fertilized commercial farms like this one owned by a saudi group. it raises specialized crops, melons, green beans, radishes; artichokes. 300 people work here, most are subsistence farmers themselves. the employment has improved life even allowed for a bit of dreaming.

>> ( translated ): previously we couldnt afford vegetables. it used to be a novelty, now we eat them regularly. >> ( translated ): i'm continuing to receive if im lucky enough to get married, start a family and hopefully with some seed money start a farm like this one. >> reporter: there's one big problem that some economists and government opponents see with all this. they say the benefit to ordinary ethiopians is minimal. to begin, all of the produce is intended for supermarkets in rich countries, in this case dubai. merara gudina is political science professor and member of the opposition omoro peoples party. he says the government of prime minister meles zenawi, who took power in 1992 has given land

away to favored investors. country's own food needs or the it hasn't looked after the country's own food needs or the welfare of ordinary ethiopians, >> for example proper compensation to the local people; in terms of bringing development to the local people, in terms of bringing real employment to the local employment to the local people. >> reporter: instead, he says commercial farms displace small peasant growers and herders. he cited a 17,000 acre farm near the western town of bako. it's been leased to an indian company, which is planting corn. these small farmers say this development has come entirely at their expense. how many people used to farm on land that's now on the commercial farm?

>> ( translated ): this land has been in our families for centuries, we were growing oil seeds, taif and grain for our animals, to sustain ourselves. they offered jobs only to those >> reporter: that wage-fairly common on commercial farms-is well below a dollar a day. and even though its more than most subsistence farmers earn, these men say its hardly enough to improve life in their impoverished community. >> ( translated ): they swindled us, they promised roads, schools, water and what not. but the only evidence we saw is when they wanted this piece of land for a road, they came in with excavators and created huge mounds. it was extremely muddy and it was hard to get around. >> reporter: the company declined to participate in this story. however, the governments kebede took strong issue with allegations that people are kicked off their land. kebede says for the most part

the government is leasing acres that have never been farmed. he also argues that the open market already has caused some wages to rise. and he doesn't think it's realistic to expect private investors to solve community problems or to sell some of their produce at prices ethiopians can afford. >> because you know the investor has not come in from heaven. they are coming for profit. our problem is resolved by our community, our problem is resolved by our government. the development is coming jointly its the community, its government and the investor >> reporter: nebiyu samuel, spokesman for a prominent saudi investor sheikh al moudy, agrees >> i'll be very frank. at the outset i said we are here you know to do business. and uh, business has their own, you know its own principles.

>> reporter: however, he says his company's investments will bring lots of development benefits: new infrastructure, for example, in a country that sorely needs it. >> people are going to get involved in that sector. and then other attending jobs you know around that, the fuel suppliers, the food suppliers, the restaurants man, the hotel man, i mean its immense in terms of employment and job and this is, this is where opportunities. and this is, this is where people can really think positive rather than saying oh, moneys coming from outside... >> reporter: many experts say africa's vast pastures-could be the worlds next bread basket. they say the worlds supply of arable land is dwindling due to urban development, climate changes and soil degradation. lamourdia thambiano of the uns food and agriculture organization so this is a potential win-win situation?

>> absolutely. >> reporter: but he says the history deals for natural resources in africa is not reassuring. >> in sub saharan africa you have a number of cases where pieces of forest allocated to foreigners, they don't respect for instance indigenous living conditions, they don't treat people in this land appropriately, all timber and goods removed from forests, destroying the environment, >> reporter: his agency is drawing up a code of conduct to make such farmland deals more equitable to all parties. the document will merely be advisory, but he says it will shine a spotlight on the biggest scramble for african land since the continent was colonized. >> brown: finally tonight, he dunks, he rebounds, and now, he curates an art exhibition.

for sports fans, these are familiar sights. shaquille o'neal, now with the cleveland cavaliers, is one of the greatest basketball players of all time: a four-time n.b.a. champion and 15-time all-star known for the size of his talent on the court and of his personality off it. >> from this day forward, i'd like to be known as the big aristotle. >> from this day on, i'd like to be known as the big aristotle. >> shaq, you tier greater of the universe. >> >> brown: "shaq," the name he's best known by, has been an actor... ♪ if the fact that shaq could leave a cold trap ♪ >> brown: and even trained for what he sometimes says is a future in law enforcement. but a curator of contemporary art? >> a lot of people don't know that i love art. >> brown: shaq recently agreed to curate an exhibition put on by the flagg art foundation in new york. he picked the artworks-- from images provided by the gallery-- and the show's name: "size does matter." remember, this is a man who

wears size 23 shoes. >> i named this show "size does matter," because when something is so big and beautiful you have to stop and take a second look. >> brown: a gimmick? sure. but for the foundation, a non- profit that presents thematic exhibitions free to the public. it was a chance to use shaq's celebrity to bring more people to art. >> what we originally thought of was a theme that somehow addressed the idea of size in contemporary art, so when we we're going through this theme we thought who would be this representation of size not only physically but in terms of how he views life and his approach. of course, shaq immediately came to mind and he was number one on our list. >> brown: "size does matter" includes works by 44 artists. from the very small, like maurizio cattelan's elevators, and tomoaki suzuki's wooden sculptures. to the very large, like robert therrien's table and six chairs, and "big man" by ron mueck.

>> this one right, it's titled "big man." of course, but if you look at it you could always say, "big miserable man. man that's thinking. big man, what are you looking at?" but i like this piece because it makes me feel small. see, i'm 7'1", 350, this guy's about 9 feet 780, so it makes me feel small. plus, it's beautiful. >> brown: one well-known artist who participated, chuck close, liked the focus on size. >> i am interested in extremes, you know. i always thought, why wouldn't you want to make something big and why wouldn't you want to make something really small? the juxtapositions make a lot of sense, given the premise, size matters. >> brown: british artist willard wigan went small for shaq's show. very small, with microscopic sculptures made from fibers that fit inside the eye of a needle, including one he called "micro- shaq." >> there is an old saying, less

is more, and i sort of wanted to bring that to this exhibition. "micro-shaq" took me about seven weeks to complete. the painting was very difficult because i had to pull out one of the very fine eyelashes from the corner of my eye and i had to place onto the end of a needle with a piece of superglue. i have to slow down my heartbeat to do it. i had to paint so gently without making a mistake. >> when i first saw it, he told me how he did it, i was like, there's no way he did that. i mean, if you think about a little pin, a little pin is very small. a lot people have to lick the thing. and put it through so you know, he had to-- you know, that's art right there. >> brown: not the language an art critic might use, perhaps. but chuck close, for one, says shaq scored as a curator. >> i am really very pleasantly surprised. i think he put together an interesting selection of work and he did a whole hell of a lot

better figuring out what to put in here than i would get shooting hoops. >> have you thought of an art themed nickname yet? >> not yet. shaqasso! >> brown: as it happens, just as the exhibition opened, that doesn't mean he's turning full time to art: o'neal is hoping to make it back to the basketball court in time for the playoffs. >> woodruff: he's tall. again, the major developments of the day: president obama upbraided wall street leaders for risky behavior in the past. and he appealed for their support in reforming financial regulations. air traffic over europe returned to near normal levels. and an offshore oil platform sank in the gulf of mexico, raising fears of a major oil spill. the "newshour" is always online. hari sreenivasan, in our newsroom, previews what's there. hari? >> sreenivasan: on "art beat," see more from our interviews about the "size does matter" exhibit.

use our "patchwork nation" map to see where members of the tea party movement live. we talk to technology blog gizmodo on their sneak peek at the next iphone on our "newshour" plus series on science. and learn how countries around the world are marking the 40th earth day. plus find a lesson plan for teachers on analyzing energy consumption in the classroom. all that and more is on our web site, newshour.pbs.org. judy? >> woodruff: and that's the "newshour" for tonight. i'm judy woodruff. >> brown: and i'm jeffrey brown. we'll see you on-line. and again here tomorrow evening with mark shields and david brooks, among others. thank you and good night. major funding for the pbs newshour has been provided by:

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what did you do that for? i've been wondering whether i'd like it. what's the decision? i don't know yet. you can have another c you know what they are?