newshour captioning sponsored by macneil/lehrer productions >> woodruff: good evening. i'm judy woodruff. federal agents arrested three people today allegedly linked to the suspect in the failed car bombing in times square. >> brown: and i'm jeffrey brown. on the newshour tonight, the men reportedly provided money for the attack. we get the latest from devlin barrett of the "wall street journal." >> woodruff: then, in an exclusive interview, general stanley mcchrystal, commander of the u.s. and nato forces in afghanistan, talks about president karzai and the war. >> nobody is winning, at this point. where the insurgents, i think,

felt that they had momentum a year ago, felt that they were making clear progress, i think that's stopped. >> brown: amid deadly clashes between anti-government protesters and security forces in thailand today, we talk to patrick winn of "global post" in bangkok. >> woodruff: dave iverson of kqed san francisco reports on aid groups in haiti stepping in where the government has failed to help. >> brown: and paul solman talks to economist simon johnson about past presidents who took on big banks and won. >> f.d.r. really changed fundamentally the infrastructure of this country. both the physical infrastructure and the financial infrastructure and did a really good job. nothing lasts forever. we have to go out and do it again. >> woodruff: that's all ahead on tonight's newshour. major funding for the pbs newshour has been provided by:

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 fbi staged a series of raids across the northeast united states today connected to the investigation into the times square bomb plot. attorney general eric holder said the three people now in custody are tied to the main suspect in the case.

in one of the raids, police cordoned off a small house in watertown, massachusetts, a suburb of boston. law enforcement officials said the suspects were from pakistan and likely provided money to the alleged mastermind of the times square plot, faisal shahzad. authorities have accused the 30- year-old shahzad of leaving an suv loaded with gasoline, propane and fireworks parked in a heavily-trafficked alley earlier this month, but the bomb failed to go off. shahzad was arrested two days later at new york's jfk airport aboard a flight bound for dubai. he has not been seen in public since, but is reportedly cooperating with officials. authorities today also raided a mobil gas station in brookline, massachusetts, another boston suburb. a silver honda in the parking lot was searched and agents were seen taking items from the vehicle.

search warrants were also executed at homes on long island and several locations in new jersey. in washington, attorney general eric holder confirmed the raids, but said there was no immediate danger. >> several individuals who were encountered during the searches have been taken into federal custody for alleged immigration violations. these searches are the product of evidence that has been gathered in the investigation since the attempted times square bombing, and do not relate to any known immediate threat to the public or active plot against the united states. >> woodruff: massachusetts governor deval patrick tried to calm the public's fears. >> based on all the information and the very, very careful coordination through the joint terrorism task force, there is no basis for believing that there is a threat to the people of massachusetts. >> woodruff: authorities today said the suspects arrested had been under surveillance for some time, but would not say how long. and for more, we are joined now by devlin barrett. he's been covering the story for "the wall street journal." thanks for being with us.

what led the authorities to these people in these locations? >> well, part of what brought them there was mr. that s.a.d.d. himself. he's been cooperating pretty much from the moment of his capture and part of what led them to these people's doors is information that mr. that s.a.d.d. provided by. but they've also gotten some corroboration from other things besides just mr. that s.a.d.d. >> do you know what that is? >> most cases if a suspect tells you they look for phone records to prove it . my guess is they found other things in mr. shazad's belongings that they know anything about that claim. >> couric: do we know what else they found? >> people who arrange financial movements within the immigrant community. there's different ways to do that, money remittences. there's other ways as well

. they helped mr. shazad get thousands of dollars. i was told perhaps slightly more than $10,000 total. and what they want to understand now is did those people who helped him get that money have any idea what the actual source of the money was and did they have any idea what the intent of that money was. >> woodruff: and the attorney general eric holder said that was something they were working on finding out. >> right . they are still working to piece together, follow the money trail from the u.s. back to oversees. >> woodruff: what are they charging these individuals with? >> they haven't been charged with anything. they're being held on suspicion of immigration immigration violations. that's something that's vague and gives them the opportunity to detain them and question them on the time square cases which is what they're most concerned about. >> >> woodruff: is it known, devlin barrett, where this money was coming from?

>> that's a big part of the case they're trying to nail down. they know-- they think they know-- that these men arranged the money to go to mr. shazad but that was essentially how they were viewed in the immigrant community they really want to know well who gave the money originally to get to him? >> is it known that these... were these individuals already nobody to authorities... known to authorities? because the authorities know that there are these kinds of, as you say, immigrant financial transactions going on. >> woodruff: the way it's been described to me, these folks were not necessarily on investigators' radar before this case. but one of the things that investigators always looking if ... for is okay, if we've learned of a few people maybe doing something wrong or on the shady side, let's say, let's see what else they're doing and see if there are any other activities that we need to be concerned about. >> woodruff: we heard several assurances from governor patrick and others that people don't have anything to be worried about.

how confident are they of that? >> the basic premise of what they did today is they don't really know ultimate... they don't have any evidence to say these men knew they were helping a terrorist plot a attack. so they have no reason to think at this point that these people are themselves dangerous. but they have a lot more investigating to do. >> woodruff: and based on everything you've been able to find out, how important a piece of the putz is this? >> financing is very important for understanding the full breadth of this case . remember there's a belief that the pakistan taliban is ultimately the origin of this plot and a big part of the question they have to answer is, well, did they pay for it? did someone else pay for it? and if someone else paid for it, why did they pay for it? did they know what they were paying for? >> woodruff: did you get any sense in your reporting today or earlier that they're going to be more raids like this?

that they've got more leads that they're tpol stphroeg. >> there are definitely more leads that they're following. i think whether or not there are more raids depends on what they learn today from all the evidence they seize and from the people they talk to that they've detained. >> woodruff: and how much are authorities talking . >> well, they're not talking about people that they they want to look further at. we don't know the names of the three people tpreups . so they're being tight-lipped on a number of parts because they have a lot of work to do. this case has gone at warp speed compared to a lot of terrorism investigations. >> woodruff: all right, devlin barrett with the "wall street journal." thanks very much. >> thank you. >> brown: now, to the other news of the day. here's hari sreenivasan in our newsroom. >> sreenivasan: b.p. announced it will try and use a smaller pipe to stem the oil leak in the gulf of mexico.

a company spokesman said the plan is to insert a six-inch tube into the jagged pipe where the oil is gushing, and siphon it to a tanker waiting on the surface. that work is set to begin tonight. b.p. put off plans to deploy a smaller containment dome over the leak until next week. meanwhile, the owner of the rig, transocean, sought to limit its liability for the spill to $27 million. the company filed a petition in u.s. district court in houston today. in economic news, there were signs the foreclosure crisis could be easing. realtytrac, a foreclosure listing firm, reported the number of american households facing foreclosure is down 2% from a year ago. that marks the first annual decline in five years. at the same time, mortgage rates dropped to their lowest level so far this year. mortgage corporation freddie mac attributed the decline to a high demand for u.s. government securities. on the jobs front, the labor department reported new claims for unemployment dipped, but only slightly. it's the fourth straight weekly drop, indicating employers are hiring again, but not at levels to reduce the jobless rate.

president obama addressed the unemployment issue today in buffalo, new york. he acknowledged many families are still struggling to pay their bills, but insisted the economy is improving, courtesy of the recovery act. >> we can say beyond a shadow of a doubt today we are headed in the right direction. (applause) we are headed in the right direction. (applause) all those tough steps we took, they're working. despite all the naysayers who were predicting failure a year ago, our economy is growing again. >> sreenivasan: the president also pressed congress to take fast action on a new round of jobs legislation. the measures are aimed at strengthening small businesses. the new unemployment numbers sent stocks sliding on wall street today. the dow jones industrial average lost nearly 114 points to close just under 10,783. the nasdaq fell more than 30 points to close at 2,394. those are some of the day's major stories. now, back to jeff. >> brown: still to come on the

newshour: bloodshed in the streets of bangkok; a history lesson about presidents who took on big banks; and aid groups stepping in for the government in haiti. but first, our conversation with general stanley mcchrystal, his only television interview during afghan president karzai's washington visit this week. with general stanley mcchrystal by his side, afghan president hamid karzai visited the graves at arlington national cemetery's section 60 this morning. that's where the u.s. soldiers killed in afghanistan are buried. the trip to arlington capped off karzai's four-day visit to washington. mcchrystal has been a key participant, including at meetings aimed at patching up strained relations between the two countries. mcchrystal, who has a background in special operations, took over command of u.s. and nato forces in afghanistan less than a year ago. since then, he and karzai have said they share a good working relationship.

mcchrystal has put restrictions on when u.s. forces can fire at suspected militants, in an effort to reduce civilian casualties. and he's presided over a big military expansion in afghanistan, which will reach a peak of 98,000 u.s. forces by the end of the summer. the president's current plan is to begin bringing troops home in july 2011. a test of mcchrystal's counterinsurgency strategy took place in the town of marjah in february. the next offensive is already in its beginning stages. in june, mcchrystal will lead a military and political effort to secure kandahar province. i sat down with general stanley mcchrystal at the pentagon this afternoon. general mcchrystal, welcome. >> thank you. >> brown: as we sit here now, is the u.s. along with its allies winning the war in afghanistan? >> well, i think that in the last year we've made a lot of progress. i think i'd be prepared to say

nobody is winning at this point. where the insurgents, i think, felt that they had momentum a year ago, felt that they were making clear progress, i think that's stopped. >> brown: what was what is your assessment of the insurgency. there was a pentagon report that looked back at the last six months that said things were getting better but it's still alive and even stronger in some areas of the country. what's your assessment? >> i think this insurgency is serious and it's serious because it has a relative reach around the country and it's got a fair number of fighters involve sod it can bring a lot of violence on the afghan people. it's also not popular. it's not popular with afghans, we see that in polling and i certainly see that as i speak with afghans. so it's not a movement that is fulfilling the wishes of afghan people. in fact, it is moving by coercion. but it is going to be a challenge to stop it and the government of afghanistan is going to have to take very effective measures to bring it to a halt . >> brown: earlier this year,

you went into marjah, it was touted as a great success at the time, kicking out the taliban. months later there is still reports of violence there. perhaps even more talk about a lack of good governance in the area. is that a successful model at this point? >> well, i think it's counterinsurgency and i think that people need to understand counterinsurgency to judge success or failure. i think that marjah is an absolute success. but they are part of a process as opposed to a single event. what i mean is, in an area that's been controlled by insurgents for many months or in this case many years, they have had control of security, they've eliminated government control for governance and they've arrested development, except in this case largely poppy production. for the government to come back in, reestablishing security, pushing out the insurgents is one thing that happens. but then those insurgents have got to be keptut. the most important aspect, though, is the people, because what they've experienced for

years in this case has become what they know to be their reality. to change their sense of reality means that we must change those factors of security, governance, and development over time. we must make a credible, proven effort to show them that things are chained and that that change is permanent. >> brown: at the time you were quoted as saying there was a... the words you used was "government in a box" ready to bring into marjah to provide this government, good governance. does that now seem a little overly optimistic? >> no, it seems to me that it's a process. the school is open, the bazaars are open, the police forces being retrained, it had gotten very, very corrupt and controlled by power brokers. this is a process that takes an extensive period of time. i think not even... we were not at about 90 days. i expect it will take many months into the future before it becomes durable and permanent. >> brown: what do you tell

president karzai and others in the afghan government that they h *us do to show that there is real progress being made? and to what extent does our military success there depend on the afghan people believing that they have a strong and effective government? >> i think it's very... our success is very dependent upon the people believing in the future. now, they don't have to believe that the government that they have today is perfect. what they have to believe is that the government we are working towards is better than what an alternative would be. they have to believe in the future and therefore they have to support that progress to it. their government will be challenged for many years, like governments are around the world. their security will be challenged. but if they believe in the future, they believe that they can make it better and that this government and this constitution and this security force apparatus that they are creating along with their partnership with the coalition and particularly the united states

is something that leads to a better future, than their support becomes strong. and that's the key point. >> brown: and you're said to be close to president karzai working closely with him. it's been reported that you pushed to have public officials be more respectful of him publicly. to be more positive. were you feeling that the tenor had become too negative and that was impacting his abilities to work with us? you believed that he could be a good partner that n that? : i believe he's a good partner to me already. as a military commander i think of him as a wartime leader for whom essentially i work. we have a very strong relationship not only on personal issues but really on substantive issues. i'm candid with him, i believe he's candid with me and i believe we build on that when we go forward. >> brown: one of the issues president karzai is talking about is reconciliation with elements of the taliban. bringing them back into society or even possibly into government, i suppose.

can something like that work? these would be people that you perhaps have been fighting all along. >> i think alling wars must end in a political settlement. and i believe that this must be an afghan political settlement. that afghans feel comfortable about. i believe that they are committed to designing a process that is as inclusive as possible so all parts of the population feel like they have the ability to participate if they're willing to abide by the constitution, if they're willing to renounce violence, if they're willing to renounce things like al qaeda. >> brown: is there any evidence that you see that there are elements of the taliban that would live up to those expectations or hopes? >> i believe there are absolutely elements of the taliban that would do that. i think there's some other groups that have indicated that interest as well. afghanistan's been at war for 31 years and although we tend to think of groups that are in

opposition as a nameless, faceless innee is evil to the core, in fact, it's all people. and people get tired and people have dreams and they have desire for a future and a future for their children and i think that's true of people on all sides. >> brown: your next big move, to be very clear, is in kandahar. much bigger city, much bigger area than what you experienced with marjah. how difficult will that be? what kind of a military operation do you foresee? >> kandahar is not under enemy control. the taliban don't run it. its' a working city. i walked the streets last week with the governor and with david petraeus and others. >> brown: although there are... we read about the taliban's ability toll move lout the city. >> absolutely. security inside kandahar and the areas around it is not what it needs to be for the life of the people to go forward. so it's important we improve security there. so what we are working to do-- and we're not calling it an operation, we're calling it an

effort to what we do, we call it a rising tide of security, increasing police capacity inside the city and then securing the areas around the city to include the... what we call the environs, the district around it. so that the area's not members in n.a.s.d. by insurgents. ... menaced by insurgents and then let life go on and let governance be matured. >> brown: i was just at the briefing briefing where you talked about knowing how this is going in kandahar by the end of the year. you said you might know earlier. but what will tell you whether it's working in kandahar? >> it's really going to be how kandaharis feel. whether they are willing to invest in the future. whether they are willing to open business. whether they feel safer as they go around. it won't be the number of violent events. it won't be even anything as crude as a single pole. it will be pulling all these together that convinces the kandaharis the future is going to be better.

if they believe that next week is going to be better than this week, it's almost like investing in the stock market. they will invest in kandahar. >> brown: much talk about the corruption problem in afghanistan and the afghan government sometimes says it's not all about what we do, it's going to suppliers and contractors and we don't know how that system works. what is your sense of that have? >> i sense that there's a lot of accuracy in that. what has happened after 31 years of war is afghan society has been torn asunder. and so as we come in with an international community, well-intentioned as it is, and bring a lot of resources, we do a lot of things which causes many problems as they solve. in some cases, it leads to corruption. it gives opportunity and people take advantage of that. some of that's been taken advantage by international community actors. in many cases afghans talk about aid money that never reaches afghanistan.

it is siphoned off and goes elsewhere and there's reality. we need do a much better job of bringing the many, many contracts that are in execution in kandahar into a more regular and more transparent situation. they've been done starting in 2001 with good intentions but in many cases they were expedient rather than deliberate and i think we need to start sorting that out. that's part of helping afghanistan sort out the things that lead the corruption in their society. >> brown: july, 2011, is really not that far away, the point at which the president said that we would at least begin to draw down our commitment in afghanistan. realistically, what can be accomplished by that date? >> i think an awful lot can be accomplished, but i'd start by saying what the president first said and what i believe he reiterated to president karzai this week is america has offered and afghanistan has agreed to a long-term strategic partnership.

and that means much further than july, 2011. >> brown: what does it mean to you? >> i think that it phaoerpbs that america-- which has relative military power-- is helping to guarantee afghanistan's sovereignty well into the future. it doesn't mean that we have an inappropriate relation, it means we are partners. and it means that afghanistan knows that it has an ally on whom they can trust. i believe that if you then come back from that kind of assured relationship to july, 2011, and put it against a backdrop of a growing afghan national security force capacity, then the ability to start to reduce u.s. forces is very realistic. and i think that it will be at a pace that president obama determines reflects conditions on the ground. >> brown: but do you think americans need to be prepared for some kind of long-term commitment? >> i think americans have offered and need to be expecting a long-term commitment. but i don't think a long-term u.s. military combat forces are

the future intoer in afghanistan. i think it's afghan defense capacity. but i think for a significant period of time, assistance to that capacity and governance and development assistance is probably to be expected. >> brown: finally, general, i understand that you're something of a student of history. alexander the great was in afghanistan. he founded the city of kandahar. the british were there. the soviets were there. no one left, i don't think, feeling that they had done all they had wanted and some left in real defeat. what gives you confidence that the american experience will be different? >> i think what we want is very different. i think that when people talk about graveyards of empires, we're not an empire and we don't desire anything for afghanistan except afghan sovereignty and i think that changes everything. what we want is an afghanistan that can defend itself, an afghanistan that can develop its own resources, human and

physical, and so it goes back to strategic partnership. and i think that that allows us a tremendous opportunity to be successful. >> brown: general stanley mcchrystal, thanks for talking to us. >> thanks for your time, i appreciate it. >> woodruff: now, anti- government protests took a deadly turn in thailand today. there were gunshots and explosions in the capital, bangkok. the military moved to seal off an area where thousands of protestors have been camped out. shouting protesters lifted the anti-government leader's listless body moments after he was shot in the head in bangkok tonight. "new york times" reporter thomas fuller was interviewing 58-year- old khattiya sawasdiphol seconds before the shooting. >> i was among a group of

reporters who were talking with him. the other reporters left, i was there with my interpreter, and i asked him a question. he was halfway through answering it, and then a shot rang out and he dropped to the ground. i don't think anything went through my mind, except for just the... just the idea that this bullet probably passed over my head and hit him in the forehead. >> woodruff: the former military major general-- now labeled a terrorist by the government-- was hurried to a nearby hospital where his stretcher barely squeezed through a crush of reporters. in the chaos afterward, soldiers reportedly shot a second person in the head, as projectiles lit up the night sky and people ran for cover. today's violence came as the thai army was preparing to encircle anti-government protesters who've occupied part of central bangkok for two months. >> ( translated ): if the government doesn't quit, i will not leave. i will fight until i die. everyone is ready to sacrifice their lives today. >> woodruff: thailand's latest

political crisis began march 12, when thousands of so-called "red shirt" protesters swarmed bangkok and took over an upscale commercial neighborhood of the capital. they accuse prime minister abhisit vejjajiva of rising to power illegitimately, and have called for early elections. khattiya, a renegade army general suspended from the military in january, led the protesters' security force. hours before the shooting, the thai military issued this warning. >> ( translated ): the military is allowed to shoot anyone armed with weapons, which could be anything from handguns to assault rifles to grenades or bombs. these armed people could be threats to others and are deemed terrorists. >> woodruff: violence between the red shirts and government forces flared up last month when clashes broke out, killing 25. in recent weeks, tensions seemed to be waning as the red shirts

neared a compromise to support early elections in november. but khattiya reportedly resisted that plan and the deal with the prime minister fell apart. >> ( translated ): the election date is entirely up to me. it no longer has to be november 14, because there is no response from the red shirts, which has created the instability and has prolonged the conflict. >> woodruff: many of the red shirts are supporters of former prime minister thaksin shinawatra. he was ousted in a 2006 military coup. for more, we turn to patrick winn of global post, an internet news web site. i talked with him from bangkok a short time ago. patrick winn, it's early in the morning there in bangkok. can you tell us what the situation is now at this encampment where the protestors are? >> yes, the encompment actually is right behind me now and it's pretty tense. there have been some serious

violent incidents tonight. the army at long last is going in for a serious crackdown. this has been some of the most intense violence since an april 10 crackdown that left about 25 people dead. >> brown: >> couric: >> woodruff: what's the condition of this dissident general who was shot in the head? >> he appears to be in a coma at this point. it's a small miracle he didn't die. he took what appeared to be a sniper rifle bullet to his temple. he was captured on video slumping over and bleeding and his followers, his disciples who pretty much take his orders and consider him their leader took him to the hospital and made sure that he got care. >> woodruff: do you have any more information act exactly what happened, who the gunman was? what they were aiming at? >> well, it appears that this

dissident general was the person who was targeted. it's a bit unclear exactly who fired the shot. this is a man that has many enemies, both in... among the military because he is... he disobeys his superiors and people that simply don't like the protestors who he claims to defend . the government has come out and said tonight that they did not fire the shoot or order the shooting. at this point chaos and confusion is reigning. it's going to remain unclear who fired the shot. >> woodruff: remind us who these red shirt protestors are. what are they protesting? >> the red shirt protestors feel that they've been shortchanged. they call themselves peasants and commoners and they're seeking fresh elections some of them are loyal to an exprime

minister who was deposed in the military coupe in 2006. his political parties which they back won several elections after that but they were dissolved for fraud. so these are people that feel like they can't get a fair shake and they feel like the current power has risen illegitimately . >> woodruff: and what triggered this latest round of violence? it appeared things calming down. >> it did, judy. it looked like the protestors were coming to a settlement. the prime minister offered to cut his term short by more than a year and have elections this november. this that's more or less in line with the protestors' goal to force new elections in exchange, of course, they would go home. but when the protestors started pushing and push ing and asking for criminal charges against the prime minister and his deputy who they think masterminded some of the army raids that killed

their brethren, things fell apart. and now you see what we've got here the government has said they no longer take the red shirts seriously, that they weren't really negotiating for peace and they were just stalling and had ulterior motives and thus the crack down we had last night. >> woodruff: what do you think will happen next? because the government has rescinded the idea of early elections. what do people expect now. >> the idea of early elections is now on the rocks. the red shirts tonight are going to fight until the very end. and they often employ this fight-to-the death style stage rhetoric. so that's nothing new but it takes on an added dimension given that some of their people have been killed tonight. at this point it looks like they're going to stick it out. the army has several choke points around their encompment to prevent new reinforcements from coming in. and the army seems to be now taking more seriously the idea

of cutting off the supply routes to the encampment, which is in the middle of bangkok in a ver glitzyup market shopping area. power is cut to some of these parts and it's very difficult to get in if you're not a journalist or someone that can prove they're a resident of the immediate area. >> woodruff: patrick winn, we are going to leave it there, thank you very much for talking with us. >> thank you, judy. >> brown: next, the aftermath of the earthquake in haiti, where the government still struggles to operate, and private international aid groups work to fill the gap. here's the first of two reports from correspondent dave iverson of public station kqed san francisco. >> reporter: in post-earthquake haiti, the u.n. and international relief agencies are everywhere

. clearing rubble, providing energy supplies, even guarding the ruined presidential palace . their prominent in part because of what isn't here-- haiti's government . all that's left of the government health ministry, for example, are these skeletal remains. four months after the quake and haitians like daniel tillias know they can't count on much government help. >> people are in need for jobs. they're in need for food. they're in need for the very basic needs. so they don't see this coming from the government. because for them, they don't have a government . >> reporter: but haiti's governmental short comings are also nothing new. the most recent collapse is part of a long saga of coupes, corruption, and violence.

indeed, long before the earthquake, the n.g.o.s were already providing what government normally provides, which is precisedly problem. there are more n.g.o.s per capita in haiti than in any other nation on earth. so many that sometimes this nation is called "the republic of n.g.o.s." >> in the last 50 years, n.g.o.s have very often stood in place of government institutions that were not functioning. >> reporter: bill holbrook directs the efforts of mercy corps in haiti. >> the fail ruhr to invest in government capacity resulted in a country in which there was literally no government cape tonight respond to the kind of devastation this earthquake caused. and so the task for government is not only to rebuild, it's to restore its authority. >> (translated): you have to good and the bad.

>> reporter: dr. alex larson is the minister of health. he believes that for all their good work, n.g.o.s have undermined haiti, foster ago dependence on aid and operating as a kind of unaccountable shadow government. sometimes haiti is called the republic of n.g.o.s . what do you think of that phrase ? >> (translated): we do have many n.g.o.s-- national and international. and many operate outside of government control. their programs do not correspond to the needs of the people. >> reporter: many haitians say that big n.g.o.s tend to act first and listen later. >> you know, some people don't listen at all because they have their agenda, you know? before they come to haiti, they know what they are going to do. >> reporter: josette per regard runs an organization called the lambe fund of haiti.

she's grateful to the overwhelming response to the quake but she says that el straits part of the problem. >> i saw the way they are giving some food relief to the people. they make the people stay on line in the sun when you can work the community in the camp and distribute it to the people. i think this is a lack of respect. >> reporter: here's another example of the kind of thing that can drive haitians crazy. while we were filming, translator daniel tillias noticed people were being moved from one camp to another using buses acquired from the dominican republic instead of local buses, called tap-taps. >> when i saw the buses, i had in mind that it would be so much nicer to see beautiful tap-taps taking these people to make, like, a little money and it doesn't make sense. because we're talking about

haiti that has, like, all these people with no more jobs. we're talking about haiti that needs to survive from this. too often you feel that for n.g.o.s it's about them, it's not about haiti. >> it's absolutely correct. it applies to all of us. >> reporter: nigel fisher is the deputy special representative of the united nations stabilization mission in haiti. >> we had several consultations with haitian civil society members, women's group, human rights group, grass-roots organizations. and the phrase i heard most commonly was "we have a governance system with two sides of the brain. one side is the government, our own, which doesn't work, the other side is largely international n.g.o. community, which is not accountable to anybody. and it's time to change. >> reporter: it's a message that echoed across the recent international donors' conversation in new york where countries pledged not only $10 billion in aid but promised to

deliver it in a new way. >> this is not only a conference about what financially we pledge to haiti, we also have to pledge our best efforts to do better ourselves. to offer our support in a smarter way, a more effective way that produces real results for the people of haiti . >> reporter: and that's the primary concern, improving upon the tangled record of the past. since 2000, the united states alone has spent over a billion dollars on aid to haiti. yet haiti remains the poorest nation in the western hemisphere the u.n.'s nigel fisher. >> this is going to be a long-term challenge. one to clear out thes me of the past and second to build a new haiti. >> reporter: and building a new haiti starts not so much with the buildings you see but with the life you hear. listening to people doing

whatever they can to make a living on the buckled streets of port-au-prince. >> it's the way to see haiti. what i call, like, a little bit of more haitianity. we need to change the way they see themselves, the way they see the future and the way they see haiti that can tell the world something different. >> reporter: telling the world something different and having the world listen in return may be the framework upon which a new haiti can be built. >> brown: dave's next story will look at the problem of getting food to the haitian people. >> woodruff: finally tonight, breaking up big banks. it's an idea that's been discussed and debated in the current battle to craft new laws regulating financial institutions. and it's an idea that past presidents have pushed. the newshour's economics correspondent paul solman has our story. it's part of his ongoing reporting on "making sense of

financial news." >> reporter: president obama, all over new york recently. his much-publicized mission-- to talk turkey to wall street. >> a vote for reform is a vote to put a stop to taxpayer-funded bailouts. that's the truth, end of story. ( applause ) >> reporter: but bailouts won't end, says economist and frequent newshour guest simon johnson, unless the big banks are made significantly smaller. >> it's worse than it was before the crash of september 2008. the biggest banks became bigger, they got these very big bailouts-- unconditional bailouts. the obama administration said it had no alternative, but that by itself is an extraordinary admission. and our attempts to reform the system, our attempts to pass some legislation that will rein in the power of the biggest banks, the strongest banks-- that's j.p. morgan chase, citi group, bank of america, wells fargo, goldman sachs, morgan stanley-- those efforts, i think, are going to amount to, unfortunately, not enough.

>> reporter: johnson's new book with co-author james kwak argues that america's big banks have conspired to become too big to fail, and government must therefore break them up. an amendment to the senate financial reform bill that would have done just that-- tougher terms than the president's-- was voted down last week. with the president and his proposals looming large over this city, johnson took us on tour of manhattan to talk about past presidents who took on too- big-to-fail and won. first up, in a new musical at the public theater, an unlikely hero, given his antipathy to native and african americans-- >> ♪ 'cause its the early 19th century ♪ we'll take the land back from the indians... >> reporter: but jackson's targets also included big banking, a hot issue in the early days of the republic. >> ♪ so we'll ruin the banks and we'll cripple the courts ♪ and we'll take on the world, for america's sake... >> reporter: a little backstory

here. the united states gets started as a great power because of this guy, the guy on the $10 bill, in some sense. alexander hamilton, first bank of the united states-- we need a large enough bank to make us one country, and to stabilize our economy and direct it in useful ways, no? >> there was a big debate between hamilton and jefferson at the beginning of the republic on how should we organize financing for commerce and for business and for agriculture. hamilton says you need to have a big bank, and jefferson said, no, that would be dangerous. jefferson said its the political power of the financial aristocracy that we're going to create that we should fear, and he was right on that. >> reporter: but there's the other side to it, which is the hamiltonian side, if you will, which is you do need concentrated power of some sort,

financial power, in order to finance the growth of what has, after all, become the richest and most prosperous country in the history of the world. >> well, that's not what this guy thought-- andrew jackson. >> reporter: oh, you've got a... >> i've got a $20, and my $20 is bigger than your $10, and jackson said that the second bank of the united states, which was what they were onto by the time jackson came in in the early 1830s-- in particular, the second bank of the united states had become far too powerful. the existence of that power and that ability to control commerce, to control credit, to buy votes in congress, and to really, he felt, distort the economy-- that was unacceptable, and jackson took on the second bank of the united states and broke it, and put it out of business, actually. and we built the entire 19th century on a much more decentralized financial system and much smaller banks, actually, than hamilton had envisaged. >> reporter: but big banks and big business were not down for long, says johnson, who pressed his case at new york's american museum of natural history, built by, among others, the father of president theodore roosevelt-- out front today, flanked by a clearly subordinate native and

african american. t.r. as a johnson hero? >> i'm not proposing teddy roosevelt for president today, don't get me wrong. a lot of the attitudes of that era feel, you know, very alien to us now, with good reason. but roosevelt certainly didn't like the part about concentrated financial power and the way that challenged democracy. so he took j.p. morgan to the supreme court, and everyone thought he was going to lose, because the senate was called "the millionaires club" for a reason. and he only won in the supreme court vote five to four, the narrowest of possible margins. that's what started modern thinking about anti-trust. >> reporter: so teddy roosevelt wins against the great financier j.p. morgan, against the standard oil trust. how long does that then become the reigning paradigm in american government business relations? >> well, teddy roosevelt beats the industrial trust and the railroad trust, and he shifts the consensus, paul, so that, by 1912, everyone thinks if you run a massive oil company, that could be dangerous to society. but teddy roosevelt didn't really fix the banks. the federal reserve was a compromise between the government and the big, powerful

players in the private sector. the bank that came out of that was not particularly in favor of constraining the power of the big bankers, and they came back in the 1920s with a vengeance. they had a great boom-- it was a fantastic party, but then it ended badly. >> reporter: in the stock market crash of 1929, that is, and the great depression that followed, a crisis that johnson credits franklin delano roosevelt with resolving. and where to commemorate him? this is the fdr drive in downtown lower manhattan. >> so, fdr really changed fundamentally the infrastructure of this country-- both physical infrastructure and the financial infrastructure-- and did a really good job. the country had a very good 50 years, but the physical infrastructure got a little bit overwhelmed and it needs rebuilding, to some degree. so does the financial infrastructure. it's the same point-- nothing lasts forever. fdr did a great job. we now have to go out and do it again. >> reporter: what's the financial infrastructure that he built? >> well, he really created a

modern framework... legal framework that reigned in the big powerhouses on wall street. so he got the securities... two securities acts, with the glass- steagall banking restrictions as part of that. specifically, it said there is something called commercial banking, which is basically handling payments around the economy and making very simple loans to consumers and families; and there is something called investment banking, which is about raising money for firms and helping firms manage their money in a sensible manner. we're going to separate these two activities out. they've become very co-mingled, and investment banks had really been driving a lot of stock market speculation in the 1920s. so they thought if we make this split, we'll keep the families safe and the firms can go out and do things a little more exciting, because they know what they're doing, but it won't affect the economy in a big bad way like it did in 1929. >> reporter: that split, between commercial and investment banking, was repealed in 1999, when banks were deregulated, laying the groundwork, some say, for the current crisis. president obama would restore the split, in a measure now being debated in congress.

>> banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers. >> reporter: a necessary reform, says simon johnson, at our last, rather obvious stop. but along with the overall reform bill the president is still backing, he says its not sufficient. >> look, the reform bill, it has some good ideas and i support the consumer protection part. i think the derivative proposals, hopefully, will be sensible. these are things we need. but the bill, unfortunately, does not get sufficiently to the heart of the problem, which is the size and the power of the biggest six banks in our economy. it's only six banks! fixing this problem will not be hard, but they're very powerful banks. their executives are everywhere, their lobbying money is phenomenal, and they will fight very hard and probably block attempts to amend the financial reform bill so as to constrain the power of the biggest banks. >> reporter: that's the nub of the fight on the bill as of today. >> woodruff: again, the major

developments of the day: federal agents arrested three people in the northeast with alleged links to the suspect in the failed car bombing in times square. late today president obama praised new york city police officers who responded to the may first bombing. he told the officers their efforts are a model for the rest of the country. in an interview with the newshour, general stanley mcchrystal, commander of u.s. and nato forces in afghanistan, said he sees progress but said no one is winning at this point. and b.p. announced it will try to use a smaller pipe to stem the oil leak in the gulf of mexico. the company expects to begin moving the six-inch pipe into place sometime tonight. the newshour is always online. hari sreenivasan, in our newsroom, previews what's there. hari. >> sreenivasan: there's more from simon johnson about misleading messages in the fight for financial reform on paul solman's "making sense" page. hear all of our interview with "new york times" reporter thomas fuller about today's shooting of a dissident thai general in bangkok.

on "art beat," singer/songwriter josh ritter describes how literary characters influence his new album. and on "the rundown", don't forget you can use our interactive widget to monitor the rate at which oil is gushing into the gulf of mexico. all that and more is on our web site, newshour.pbs.org. judy. >> woodruff: and again to our honor roll of american service personnel killed in the iraq and afghanistan conflicts. we add them as their deaths are made official and photographs become available. here, in silence, are ten more.

>> woodruff: and that's the newshour for tonight. i'm judy woodruff. >> brown: and i'm jeffrey brown.

we'll see you online, 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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