captioning sponsored by macneil/lehrer productions >> ifill: good eveing. i'm gwen ifill. senators scolded goldman sachs executives today, accusing the investment firm of wreaking havoc on the economy. >> brown: and i'm jeffrey brown. on the newshour tonight, company officials denied any wrongdoing and said they did not mislead investors. we hear excerpts from today's hearing, and get perspective from two financial writers. >> ifill: then, margaret warner has an exclusive interview with vatican cardinal william levada about the global child sex abuse scandals.

>> priests are ordained to be good shepherds. this is anything but being a good shepherd when you abuse children and you violate their innocence and their persons. >> brown: fred de sam lazaro tells the story of vietnamese- american entrepreneurs, returning to their homeland to do business. >> 35 years after the south fell and became part of the socialist republic of vietnam, the capitalists are back. >> ifill: and we close with an update on the financial crisis roiling another continent, europe, where markets plunged after greece saw its debt downgraded today to junk status. 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. >> brown: leaders of goldman sachs were called to account by irate senators today, but the executives defended their conduct in the financial meltdown. the tone was pointed, the exchanges heated at times. >> you think you are so smart-- any street gambler would never

place a bet with a bookie or a house with the record that is revealed in the documents this panel has gathered. >> brown: the senate panel charged today that goldman sachs plotted multiple strategies to profit from the impending housing meltdown, without disclosing its moves to investors, ultimately reaping billions of dollars itself. at the outset, senator after senator, on both sides of the aisle, voiced outrage. republican john mccain: >> mr. chairman, i don't know if goldman sachs has done anything illegal, but from reading of these emails and the information this committee has uncovered, there is no doubt their behavior was unethical. the american people will render judgement, as well as the courts. >> brown: committee chairman carl levin, a democrat, said the company's behavior called into question the conduct of all of wall street. >> wall street is on the wrong

side of this fight. it insists that reining in those excesses would unduly restrict a free market that is the engine of american progress. but this market of ours isn't free of self-dealing or conflict of interest. it is not free of gambling debts that taxpayers end up paying. >> brown: with that, the first panel of current and former goldman sachs executives got their say. >> the culture at goldman sachs was one in which excellence and integrity are expected. >> we provided significant liquidity to our customers in a difficult and challengixng market, while also managing to post a profit during this period. >> brown: fabrice tourre was the only goldman employee directly accused in a securities and exchange commission civil suit alleging fraud. the s.e.c. claimed he marketed investments designed to lose value. but tour insisted today that was not the case.

>> i deny, categorically, the s.e.c.'s allegation. and i will defend myself in court against this false claim. i appreciate the opportunity to appear before the subcommittee to answer these false charges. i wish to repeat-- i did not mislead i.k.b. or a.c.a., two of the most sophisticated institutional investors in these products anywhere in the world. >> brown: tourre did say he regretted internal emails in which he called himself "the fabulous fab" and boasted of his financial exploits. later, in a tense exchange, chairman levin asked dan sparks, the former head of goldman's mortgage department, whether he should have told clients when he was betting against their trades. levin quoted a goldman email that used an obscenity. >> june 22 is the date of this email. "boy, that timberwolf was one ( bleep ) deal." how much of that ( bleep ) deal did you sell to your clients after june 22, 2007?

>> mr. chairman, i don't know the answer to that, but the price would have reflected levels that they wanted to invest in. >> oh, of course, but they didn't know... you didn't tell them that you thought it was a ( bleep ) deal. >> i didn't say that. >> no, who did? your people, internally. you knew it was a ( bleep ) deal, and that's what your email shows. >> i think the context, the message that i took from the email from mr. montag, was that my performance on that deal wasn't good. >> how about the fact that you sold hundreds of millions of that deal after your people knew that it was a ( bleep ) deal? does that bother you at all, that you sold a customer something... >> i don't recall selling hundreds of millions of that deal after that. >> brown: michael swenson, currently a managing director at goldman, was asked by arkansas senator mark pryor if goldman contributed to the larger collapse. >> i do not think that we did anything wrong. there's things that we wish we could have done better in hindsight, but at the times we

made the decisions, i didn't think we did anything wrong. >> my sense is that people feel like you are betting with other people's money and other people's future because, for example, in the real estate area, someone gets a mortgage and that gets sold, and that gets chopped up and bounced around, and instead of wall street, it looks more like las vegas. >> brown: when it was his turn, republican john ensign of nevada took issue with pryor's comparison. >> senator pryor, i think most people in las vegas would take offense at having wall street compared to las vegas, because in las vegas, actually, people know that the odds are against them; they play anyway. on wall street, they manipulate the odds while you're playing the game. >> brown: after five hours, a second panel took its turn at the witness table; this one featuring goldman's chief financial officer, david viniar, and craig broderick, the firm's risk officer.

senator levin bore in again on viniar, saying goldman bet against the housing market, known as "shorting" its position, while telling the public something else. >> didn't you make a decision in december of 2006 to basically head in a different direction? you were much too long and you wanted to go short? is that not true? >> no, in december 2006, we made a decision to reduce risk. that decision was not directional, it did not say that we should go long or go short-- it didn't say we shouldn't and it didn't say we should take no risk, but it said that we should reduce risk. >> brown: viniar argued goldman took heavy losses from the housing market, so its profits were held down. >> overall, across the year, our portfolio was short. that's why we were profitable, but it was just not very large. >> well, "large" is in the eyes of the beholder. billions seem large to a lot of people who've lost their homes. >> brown: for his part, broderick, goldman's risk manager, said the firm had attempted to flatten risk, to in effect "even out" its exposure

in the mortgage market. >> particularly in light of events of the last two years, it's clear that no approach to risk management was foolproof, and we have all learned valuable lessons from recent experiences. however, we believe that the core elements that make up our risk management framework were broadly effective, despite the unprecedented turmoil in the markets. >> brown: lloyd blankfein, the c.e.o. and public face of goldman, was last on the scheduled list of witnesses. >> in the context of market making that is not a conflict. what clients are buying or customers are buying is they're buying an exposure. the thing that we are selling to them is supposed to give them the risk they want. they are not coming to us to

represent what our views are. they probably the institution plans clients we have wouldn't care what our views are. they shouldn't care. >> brown: that claim will be central to the bank's defense in the s.e.c. fraud investigation. two writers with recent books on the financial crisis help us parse what happened at today's hearing. roger lowenstein is author of "the end of wall street." he's a columnist for bloomberg news. gregory zuckerman is a reporter for "the wall street journal," and author of "the greatest trade ever," a book about hedge fund manager john paulson and his bet against the housing boom. roger lowenstein, that line from senator learn early on that we heard about the conduct of all wall street being in question, how much of this was about goldman, how much about a larger picture? what did you hear going on today? >> jim, i really think that leaven hit the nail on the head. it is a question about all of wall street. it's not whether goldman defrauded its customers so much. the courts will decide that. it's not even goldman's

reputation which presumably in time will recover, but goldman, like other firms, structured tens of billions of securities that added absolutely nothing to the economy. they contributed nothing to real estate. them didn't put a single american in their homes... in new homes. they just allowed people to take bets. when the mortgage bubble collapsed, they greatly aggravated the losses and the damage done. these firms are running what were in fact casinos. they were off-track betting parlors for the american mortgage industry. the question for congress is, which has been posed now for 12 years and have been ignored, will they finally get these derivative instruments under regulation. >> brown: there were many variations on a constant theme theme here. questions like who exactly is goldman serving. who and what are these trades for? what is your responsibility to your client? and on and on. what were they really trying to get at here? >> goldman like many other firms has transformed from investment banning banninging

firm to trading to a real trading house with banking on the side. america gets to see the real goldman sachs today which is an... a firm that will sell many things to clients, even things even securities that itself doesn't believe in. the argument is, well, it's like someone comes in for an ugly suit, if they want to buy it, we'll sell it to them. store owner doesn't look so great and goldman sachs doesn't come off looking so good today either. >> brown: too say with you on that, greg. they weren't giving much way in their responses in trying to explain what it is they do. what did you make of the responses from the goldman officials? >> well, they were playing rope a dope a little bit. they were taking punches and trying to avoid the big knockout blow. i think they did actually. i don't think that they landed the congressmen laned any kind of knockout blow. goeldman does not come off looking great here. they come off as a firm that will serve clients but not always equally. a firm that sometimes will take a negative bet on the

very securities that it is selling to its clients. legally they're in the clear. on a lot of this stuff. i think what it shows is a lot of the practice on wall street over the past few years has been legal but maybe improper or at least can be seen especially with the benefit of hindsight of what happened in this country to be improper. >> brown: that, roger lowenstein, we heard from senator mccain and a lot of people actually that line of legality, morality,eth knicks, responsibility. what did you make of the responses from the goldman officials pretty much holding the line and not giving too much away on what they were being asked about? >> well, as greg said, they did play rope a dope. i think they had to play rope a dope because they really had two battles to fight. one was the reputational battle. for reputational purposes i think they would have liked to have said and it would have behooved them to have said we should have told you more, our customers. we should have told you that we in some cases were short, that we were working very closely with a powerful short seller, john paulsen.

but they couldn't make that point because they are also, of course, fighting a legal battle. to have given away reputationally and fessed up a little bit would not have looked so good in court. >> brown: roger, i think it was you who said earlier about congress is another, of course, big player here. they've been responsible for the regulatory system in which these guys operate in the past and now here they are debating some kind of new system now. so to what degree are they part of the theater and the reality that we were watching today? >> well, they're all shocked shocked today, right? like louis in casablanca. particularly i thought of that when i heard senator mccain because, of course, his party is filibustering the financial reform bill and the really main element of that bill, the strongest element, the newest element would be to take derivatives and regulate them. we've had a very good system in this country for regulating securities on balance sheet assets with the securities and exchange commission but

derivatives are the type that groe aig down and were involved in the trade are very loosely regulated and loosely disclosed. so instead of standing there saying they're shocked the senators ought to go along and vote this bill through if they mean it. >> brown: greg zuckerman, what did you take from congress today? >> well, to extend roger's point, clearly people on wall street and the larger banking industry made mistake after mistake, fell in love with securities that they shouldn't have. we all kind of suffered because we to step in to help them out. but congress has as much guilt as anybody on wall street. i mean to take a step back. the years in which we encourage congress encouraged fannie mae and freddie mac to buy up sub prime loans to the extent that both sides of the republicans and the democrats have a lot of guilt. the republicans encouraged deregulation and let sub prime lenders do all kinds of loans they shouldn't have. it's a little bit ironic for a congress to be pointing a finger at wall street when just as a finger can be pointed at congress as well.

>> brown: greg, there is a legal case to come with the s.e.c., but do you expect this sort of public debate through congress in this case to continue? i mean, at this kind of level of what is it exactly that wall street is about? >> i do think so because it reflects the discourse i hear among citizens around the country. i frankly think that it will leave a little bit of an impression on wall street going forward for at least the short term anyway. i don't know about the long term. but in the short term i think people will think twice about doing a deal that maybe is technically legal but could look in some ways as improper. so it sends a message along that regard maybe that's a good thing from the hearing. >> brown: greg zuckerman and roger lowenstein, thank you both very much. >> thank you. >> ifill: still to come on the newshour: a top vatican cardinal on the sex abuse scandals; vietnamese americans going home; and greece's mounting debt crisis.

but first, with the other news of the day, here's hari sreenivasan in our newsroom. >> sreenivasan: senate democrats failed again today to limit debate on financial reform. for a second day, they fell short of getting the 60 votes needed. negotiations continued, but republicans and democrats sparred on the senate floor over how to proceed. >> we want to bring our bill to the floor so we can discuss it, debate it, amend it, improve it. we want to do it in the open. after all, if we're not debating, the senators refuse to let the senate do it job, what are we doing here. >> the americans don't understand why we vote a about ill that doesn't meet the basic test of reform. in what other line of work is it acceptable to show up to a big meeting with an unfinished product? >> sreenivasan: democrats said they plan to hold another vote tomorrow. wall street took a beating as debt problems in greece and portugal grew worse. the dow jones industrial average lost 213 points to close just under 10,992. the nasdaq fell 51 points to close at 2,471.

shares of ford motor company also fell, even after it made $2 billion in the first quarter. the auto maker acknowledged it might not do as well in the rest of the year. an oil slick off louisiana kept spreading today, a week after a floating rig exploded and sank. satellite photos showed the oil some 30 miles from islands that form a national wildlife refuge. coast guard crews worked to contain the spill, which now measures about 48 miles long and 80 miles wide. their efforts were helped by wind blowing the oil away from the shore. so far, robot subs have failed to shut off the leak at the ocean floor. the oil company b.p. said today it will start drilling another well to ease the pressure feeding the spill. that process could take three months. the federal agency that oversees coal mines will start flexing its legal muscles to stop repeated safety violations. that word came at a senate hearing today after the west virginia mine explosion that killed 29 men. joe main of the mine and safety health administration, or msha, said going to federal court is

one option. he also asked for beefed-up powers. >> unlike other agencies, that enforce federal law, msha lacks the authority to subpoena testimony and documents as part of its investigative process. its criminal penalties must be enhanced so that the threat of jail is real for the worst offenders. violations of key standard laws or key safety laws should be felonies and not misdemeanors. >> sreenivasan: massey energy, he operator of the west virginia mine, had numerous safety violations. the cause of the fatal blast is still under investigation. the drug maker astra-zeneca has agreed to pay more than half a billion dollars to settle a federal case. it involved the anti-psychotic drug seroquel, used to treat schizophrenia and bipolar disorder. the food and drug administration charged the company promoted the drug for insomnia and other uses that had not been approved. sales of the medicine totaled nearly $5 billion last year.

another major drug maker, merck, lost a case before the u.s. supreme court today. the high court agreed to let investors pursue a class-action suit over losses from vioxx. merck stopped selling the popular painkiller in 2004, after it was linked to heart attacks and strokes. the president's deficit commission held its first meeting today and heard a new warning. federal reserve chairman ben bernanke pointed to last year's record red ink of $1.4 trillion. he made his most urgent appeal yet for the president and congress to take action now. >> it contains many difficult trade-offs and choices but postponing those choices and failing to put the nation's finances on a sustainable long run trajectory would ultimately do great damage to our economy. >> sreenivasan: at the white house, president obama said he's not ruling out any options, for now. that includes the possibility of tax increases. the federal government may take the state of arizona to court over its new law on immigration. attorney general eric holder

said today a legal challenge is under consideration. the arizona law orders police to ask for documentation if there is reasonable suspicion to believe someone is in the country illegally. a brawl erupted in ukraine's parliament today over letting the russian navy use a black sea port until 2042. the russians' current lease at sevastopol, on the crimean peninsula, had been set to expire in 2017. today, opposition lawmakers threw eggs, set off smoke bombs and came to blows. they argued the russian presence amounts to military occupation. in the end, the lease extension passed, in a victory for president viktor yanukovych, who is seen as pro-russian. 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 gwen. >> ifill: now to our exclusive interview with cardinal william levada. he heads the congregation for the doctrine of the faith, the vatican department overseeing sexual abuse cases. that's the job benedict xvi held for 23 years before becoming pope.

margaret warner met levada at the vatican for his first, and so far only, u.s. television interview since assuming that post in 2005. >> warner: thank you for having us. >> you're welcome. it's my pleasure. i'll a big fan of the newshour. >> warner: thank you. i apologize for my voice. last week, the pope accepted the resignation of two prominent bishops in europe. another bishop tendered his resignation in this clergy sex abuse scandal. are there going to be more? >> i don't think there's anyway to predict that. there have been several in the past, over the past ten years, let's say, for various reasons. there's no one of predicting that. but i wouldn't be surprised. >> warner: is there a new test really a new standard for bishops to meet in the way they handle clergy sex abuse cases? >> i think the standard is not new but it's being applied

more rigorously than in the past. >> warner: were all of these resignations voluntary? >> yes, they were. >> warner: would this pope in these sorts of cases consider asking for resignations? >> yes, he would. >> we've had people say to us that this is the worst crisis the church has faced in a couple hundred years. do you see it that way? >> it's a big crisis. i think no one should try to diminish that. i think the crisis is particularly grave because priests are ordained to be good shepherds. we have good shepherd sunday this last sunday. this is anything but being a good shepherd when you abuse children and you violate their innocence and their persons. and they are too young to be able to respond on their own. so this is a crisis, if you will, that i think caught most of us by surprise. one bishop told me this isn't

the cruise i signed up for. but that's in fact what has happened. i think the pope is not... that was not his training and background but i think he is the right man to be guiding the church at this time. >> warner: now many people we've spoken to certainly in the states and the church are surprised that you all here seem surprised by this new wave. after all the american church went through this eight years ago. wasn't painfully had to come to a new way of operating afl many revelations. why was the vatican not more prepared? why is this a surprise? >> i think there are two things involved in the current media attention. i think one is the situation in ireland. where the report on the archdiocese of dublin triggered a lot of attention

not only in ireland but in europe then i think throughout the world. the second frankly i think is a certain media bias. i don't want to scapegoat anybody or have a conspiracy theory but i do think that the american media in particular has been... the question has been driven by information given by the plaintiffs' attorneys who are looking for ways to involve the pope somehow in a court process or something like that. i think that's bound to be futile. nevertheless i think that has driven a fair amount of the media coverage if i may say so. >> warner: do you think some of the media are out to get the pope or the church? >> the media likes a good story but i think that by reasonable standards i think they have not been fair in giving a balanced picture in context. >> warner: what is that picture?

what is that context that isn't being reported? >> i haven't seen any reporting much attention given to what the united states church has done. the bishops, it's true to media attention, constant media attention in 2002 met and took very concrete action. when you see the programs that have been developed, the educational programs for parents, for children, for all church workers including priests and teachers, there's a real success story that i personally, i think, we ought to be proud of and say this also can be a model. we're not proud that we had to create it but it can be a model for public schools, boy scouts, some of the other groups where we're seeing now they don't get the media attention the church has, we see a huge punitive damage

case in oregon was reported today for the boy scouts. i think that's one aspect of it. >> warner: you don't think it's appropriate that people hold the church to a higher standard? there's more focus on the church? >> that's a fair question. i think we should hold ourselves to a higher standard in the sense that this is not something that one would have expected, that the bishop or anybody in the church-- parents, none of us would have expected this. but i think the causes we will see go back to changes in society that as a church and priests we're not prepared for. particularly changes involving how to be a sell bait person in a time of a sexual revolutions. that's one of the causes i'd say. >> warner: the focus seems to be in this way very much less on the individual cases and more on how the church hierarchy handled it. and the overall charges that

the church for decades seemed more concern with protecting priests and the image of the church than in protecting children. do you think that is is a fair reading of it? >> i think it's... i think it misses another aspect of... that has to be taken into account. again it's an aspect that applies to the church and to society at large. that it has been a learning process. the learning process has not finished in society certainly. i was named a bishop in 1983. i can say to you at that time i had never heard of a case of a priest abusing a child. in what we've seen reported, it was going on. it was going on behind closed doors. nobody was reporting it. and it took us a lot of time, i think, to understand how to deal with this.

it took a lot of time to understand how much damage is done to victims, to children by this kind of behavior. >> warner: you didn't think that was apparent? the damage that's done to a young child? >> of course it's apparent. but how... when you first hear of a case or you think those are isolated cases you don't realize that there are going to be other cases being reported on a yearly or every six-month basis. that's what we had to learn about and learn how to deal with that in a more effective way. >> warner: you were an archbishop for 20 years first in portland oregon and then in san francisco. i gather you did have to deal with cases. >> exactly. i had to deal with many cases but it was learning by doing. i can tell you that. >> warner: so in retrospect, do you have any regrets the way you handled them? do you think that you were part of a culture that was slow to recognize the damage that it did?

and the need to move assertively to get children out of the reach of priests like this? >> well, i examine my own conscience with the help of media and lawyers in oregon and california. so i could... i could honestly say that i could have done some things better than i did. >> warner: now the pope himself has also been criticized for the way he handled cases as archbishop in munich and as cardinal ratzinger when he had your job. is he going to address those himself? explain whatever he did or didn't do and accept responsibility? publicly? >> well, i can't speak for him. but i mean in my analysis of those two instances that you bring up, i think his case in munich does not strike me as unusual behavior for a bishop in those circumstances.

to let whoever is in charge of that particular work and office in the archdiocese to make the decisions about a particular priest. i think that was the case in munich. with regard to the work of the pope here at the congregation, those criticisms i think were basically unfair criticisms. these were cases that went back 20 and 30 years before. they were not dealing with children in harm's way at the time. i don't think that there was... that the pope can be rightly criticized in those cases. >> warner: earlier this month you posted on a website a new guideline for bishops saying if there are credible suspected cases of abuse, you must report them to the police if that's what the law requires. i would ask why it took so long to post that kind of guideline? >> i would answer that to say

that has been the guideline that i observed and that the bishops of the united states have observed certainly since the time of the charter in 2002. but it's been commented on, why doesn't the church have a rule about this ? aren't bishops required to do this? it seemed to us good to put this in writing and at least to put it out as guidance for bishops people we've spoken to hear including ordinary catholics we've spoken to on the street and victims' groups as well, what they want to see is the opening of the files. they want to know how this process has handled , the 3,000 cases that have come to your attention. how many times were the priests in fact guilty? how many times were priests transferred to another parish rather than completely relieved of their duties? is that something this office would do? >> well, the question about how many times priests were transferred is not something that we have here. it may be included in the file

or it may not. that's a part of an information... what we deal with here is the guilt of priests for crimes committed. what punishment they should receive. >> warner: would you ever publicize the names of those? >> the names are public. i mean they're public in the diocese. the priests are known, you know, published by their bishops. we're really here to assist the bishops who have the primary responsibility in this care of the safeguarding of children. >> warner: finally just a couple of questions about the pope himself because you meet with him weekly. is he aware of how this issue is being seen in the outside world? >> i'm sure he is. he's writing a letter, a beautiful letter to the church

in ireland which i found personally very moving. he's meeting with victims. that's an example to bishops. there's nothing that helps bishops or priests learn about this prob lem better than meeting with the victims and hearing their stories. >> warner: there are reports that the pope is going to make a general apology next june, a public apology at the conclusion of a jubilee here. are those accurate? if so, what kind of apology? >> you know, i'm not a good prophet. the pope, he's pope. i'm the head of this congregation. i tell him what i'm doing but he doesn't tell me everything he's going to do. whether he's going to do that or not, we'll have to wait and see. but i wouldn't be surprised. >> warner: meanwhile almost every day there's the steady drip, drip of a new case and a new revelation.

how great a danger do you see that if this pope, this vatican does get out ahead of it that it's going to severely undermine the trust that people have, catholic and non-catholic alike in the church? >> well, i think that you've made a... that's a good point. i don't know ... i don't think there's any way that you can tell a victim when to come forward. many of them are living with what happened to them for 20, 30, 40 years. so that's a very individual thing. but i think the united states can rightly offer a model , and i will look forward to helping my brother bishops around the world see what can be done. if you take good concrete steps, put things out on the table, make sure that you've got a program to educate your

priests and screen for any problem areas and have a good program for safe environment. i think those are key things that make our people feel secure since that's happened in the united states and it should be something that can be done throughout the church. >> warner: cardinal levada, thank you so much. >> you're welcome, margaret. nice to be with you. nice to have you here in our office. >> warner: thank you. >> ifill: margaret will have more from rome later this week. >> brown: it was 35 years ago this week that the united states left vietnam. now, some vietnamese-americans are making a return. we have a report from special correspondent fred de sam lazaro. >> reporter: from his office, software entrepreneur victor luu has a view of the saigon

airport, a reminder of how he escaped from his native country at the end of the vietnam war. >> there were two taxiways. i took off from that taxiway. >> reporter: on april 28, 1975, 23-year-old luu was in the scramble to evacuate, on the last remaining american military aircraft, hours before north vietnamese soldiers took the city and unified a divided nation into the socialist republic of vietnam. >> the pilot had to zigzag on the taxiway. >> reporter: like tens of thousands of vietnamese loyal to the american-backed south who fled after the war ended, victor luu became a refugee in america. he never dreamed he'd be back so soon, he says, but the soviet union collapsed and the internet began shrinking the world. >> the third thing is that vietnam opened up and joined the w.t.o.

>> reporter: vietnam's entry into the world trade organization in 2007 capped a 15-year transition from a soviet-style socialized economy. it sparked robust growth-- over 7% for several years-- until the global recession in 2009. luu got a six-year tax break from the vietnamese government to move some of his california- based business here. he found a wealth of capable, educated workers who adapted quickly to a capitalist, global system. >> they are very quick learner, and they have a lot of phds. they went to russia and studied, and came back with very high degree in math, artificial intelligence, and these are the people that end up in our company. >> reporter: one floor down from luu's office, in another vietnamese-american-owned firm, 100 video game artists and engineers program games that will soon show up on american and european store shelves. the workers are a postwar generation. >> most of our people here,

average age, born after 1975 and have no idea about the conflict. ( laughs ) >> reporter: those who do have an idea about the conflict-- the victorious communist-led government-- used to brand those who fled as traitors. but today, those who return are welcomed back, many as investors. andrew lam was 11 when he left with his family in 1975. he's now a san francisco-based journalist and author of a book on the overseas vietnamese experience. >> the people who belong to so- called the... the losing side are connected internationally-- you know, uncle will send money home and the son will start a little shop. if he's good, it might turn into a chain, especially when vietnam was very impoverished. you know, there's been estimated which, you know, vietnamese overseas sends back money that was, at one point, considered about 16% of the gnp. >> reporter: overseas vietnamese may be welcomed for their business acumen and american education. but vietnam remains a tightly

controlled society, with reminders everywhere that the communist party remains all- powerful. nguyen qui duc, from a prominent south vietnamese family, fled when he was 17. he became a journalist and had come back over the years to report from vietnam. but when he decided to move here permanently three years ago, he discovered what he calls extreme suspicion. >> i never got a journalist visa. they assumed that you must work for a spy agency if you speak english, and because i speak other languages, i've lived overseas in many parts of the world. >> reporter: nguyen decided to stay on, anyway. like an estimated 3,000 other overseas vietnamese, he opened a business. nguyen opened a bar in hanoi, a venue for music and book readings, a hangout for many vietnamese americans. >> you were born in the states, right? >> yes. >> reporter: benny tran works here for the clinton foundation on h.i.v. issues. his brother, ben, a college

professor in tennessee, is a frequent visitor. >> the irony is we know vietnam better than our parents, because they'd never been outside of saigon. >> my parents didn't want anything to do with this regime, yet it's their children who play a central role in changing vietnam. >> reporter: yet there's growing concern that much of this investment is taking place in the big cities, and creating an elite increasingly removed from the rural areas, where 70% of the population lives. it's in those rural areas that social entrepreneur diep vuong found her calling. she's trying to protect young women from being sold into prostitution. although the poverty rate has

dropped significantly, to 12%, vietnam remains a major source of women trafficked into the sex trade in southeast asia. vuong started a foundation to educate women like these to make them less vulnerable to traffickers. this group is among 25 who have been housed and trained in culinary school in ho chi minh city, formerly saigon. and near vietnam's border with cambodia, vuong's staff runs a shelter and provides hundreds of scholarships to keep girls in school. they also watch out for families in crisis that might be exploited. the day we visited, vuong dropped by the home of one scholarship recipient, 14-year- old nyugen and her six-year-old sister, who live with their elderly grandparents. these girls' widowed mother works in a factory in the city. she's away most of the year, a common occurrence in poor rural households.

vuong is worried that these girls have been going to see their mother during the school holidays. >> ( translated ): there are a lot of kidnappings there. you cannot let them go to the city. the mother, being 36, maybe not at risk, but the little girl, going to saigon where the mother has no time to take care of her, will be at extreme risk. >> reporter: of being kidnapped and trafficked? >> of being kidnapped and tricked and trafficked, yes. >> reporter: she warned the grandparents of the dangers, and is trying to find a way to bring the girls' mother home more often. vuong raises most of the money to support her foundation in the united states, where she landed as a high school kid in 1980, fleeing vietnam with her family on a boat. >> i did relatively well in school and whatnot, and i realize that that few month of

statelessness was enough for me to want to do something. >> reporter: a good student from a well-to-do family, vuong went on to a harvard education and a prosperous career in silicon valley with her husband. she considers herself american, but has a strong tug to vietnam. >> i always remember my mother saying to us that we were born vietnamese for a reason, and it is up to us to find out what that reason is. >> reporter: nguyen plans to stay in vietnam, and in his own small way, says he pushes for more open exchanges of political ideas, something that he says has attracted the attention of authorities. >> i have people coming in here ranging from the diplomatic community, ambassadors coming to here. i've had people work on human rights issues come in here. so they give me a bit of extra attention. i live with that, and i don't

let it bother me too much. but i think i am pushing some envelopes. i am talking about issues that are generally not talked about. >> like democracy, multi- parties. >> reporter: software entrepreneur luu stays at arms- length from such issues. but he hears other people wondering what path vietnam should take. >> people around here also look at a place like thailand. "they have democracy and it's a big mess." that is something that the next generation has to decide. >> reporter: journalist lam worries that the only ideology being offered the new generation is that making money is what it's all about. >> i think that for a country that is ruled by materialism, it inevitably loses its moral compass. and vietnam has always been a spiritual country. this is how they fought against the french, the chinese. it's a kind of sacrifice for the greater good, and that has completely disappeared.

>> reporter: on vietnam's streets, the communist era slogans continue to praise workers and peasants, signature of the party elders still in charge, the last generation with ties to the war. but the most prominent-- unseen- -sign says, "open for business." >> ifill: finally tonight, a financial crisis far from wall street that's reverberating around the world. after months of financial turmoil, greece's credit rating was downgraded to junk status today. that, in turn, sent markets tumbling throughout europe and in the u.s. just days ago, greece asked european governments and the international monetary fund for $60 billion in rescue aid. but germany has resisted. to help us understand why the debt crisis in greece is having such far reaching effects, we turn to eswar prasad, a professor of trade policy at cornell university and senior fellow at the brookings institution. he previously worked at the

i.m.f. welcome. >> good evening. >> ifill: how significant is it that these... this downgrading happened today? >> this is very significant for a variety of parties. first of all it's very significant for greece because it means that they're going to have a great deal of trouble refinancing their debt. they'll they're almost certainly going to have to require a rescue package from the imf and the european union. there are countries equally vulnerable like portugal and spain that are going to come under a lot of pressure. >> ifill: portugal had its ratings downgraded as well. >> indeed. it has implications as well. there are questions about whether many of these countries... whether it's sustainable. there are concerns overall about sovereign debt in the small industrial countries as well as in emerging market countries. this is leading to a potential flow of capital away from those countries toward the u.s. so the implications come to the u.s. shores as well. because as money comes to the

u.s. it makes it easier to finance our deficit but pushes that exchange rate up. >> ifill: when you talk about the euro area, we're talking about all the european nations who have the single currency. has that created a domino effect when one country suffers everybody else feels the effect more keenly. >> it makes it much more important that investors take a closer look at the economy. the problem of the euro area was built on the premise that it would impose disdiscipline on those countries. each country in the ear european union was supposed to have debt levels less than 60% of g.d.p.. many countries have blown that away completely. and now investors around the world are going to take a much closer look at all the euro area countrys to see whether their numbers add up. >> is that what merckel is worried about. she's taken a hard line in giving greece any more support unless they have a plan to prove they can get out of this debt. >> greece has been able to

borrow a lot at relatively low interest rates. now the problems of the greek economy is in serious trouble. they have a very high level of spending. not much tax revenues coming in. they have a labor market that is is not working very well. they have a huge and bloated public sector. so the question naturally arises in germany. if germany and the rest of the european union help greece out, if greece is going to do what is necessary to get its economy back on track or will it simply set up a situation where the rest of europe will support greece? that's why germany wants tough conditions imposed on greece. >> there are politics involved in germany as well because they're having their own problems. what effect does this have on the u.s. dollar some. >> this is likely to prop up the u.s. dollar because what happens is that this crisis is going to create a certain amount of concern in investors' minds about debt issued by emerging markets and also the small industrial countries. the safe haven in the u.s.... in the world still remains the u.s. dollar. so any time there is concern

about investments abroad, money starts flowing in to the u.s. because the u.s. government bonds are still considered the safest instruments in the world despite the rising u.s. debt. as money comes into the u.s. it keeps u.s. interest race low and helps us finance the deficit more easily. it will push up the u.s. exchange rate and make the dollar much stronger than the euro and other currencies. >> ifill: that's good news if you're a tourist going to europe. it's bad news if you're a u.s. exporter. >> that's exactly right. this will implications for the u.s. recovery because it will make imports cheaper which means we might import more. it will make exports less abroad. the possibility that we can use exports in order to generate employment is not going to work out very well. so this is not necessarily a plus. but on the other hand it will keep interest rates low in the u.s. because now that there is this money coming in and most of this money is going to go toward u.s. treasury bonds because they're considered safe and liquid.

at least there will be a relatively low interest rate that will help. >> ifill: there's a big meeting of the imf coming up that everyone is wait to go see whether there will be announcement made of a greek rescue plan. does greece have as far as you know a plan that it's going to present about... that it can use to convince people, yeah, we can get out of this debt and you should help us. >> it will be very hard because already we have seen the effects of the greek government trying to impose any sort of austerity measures. we have people out on the streets and a number of strikes so it will be very difficult given the size of the public sector and the sort of benefit that public sector employees get to pull them back because there is a sense on the greek street. this problem is not caused by them but bi- the greek government 's inestness and also by speculators and so on. the reality is that greece has been living beyond its means. they're going to have to cut back. the big question is whether greece can come up with a credible plan that they can sell to their public and that will convince markets that they've got it right.

the imf will impose conditions over a three-year period with very specific benchmarks about what greece needs to do. whether they can do it, i doubt and the markets doubt as well. >> ifill: maybe that is what we're seeing today. thank you so much for help us. >> my pleasure. >> brown: again the other major developments of the day. >> brown: again, the other major developments of the day. at a senate hearing, goldman sachs executives defended their conduct in the financial meltdown. senate republicans again blocked a move to limit debate on financial reform. and the head of the vatican department overseeing sexual abuse cases suggested the pope may issue an apology. cardinal william levada told newshour he "wouldn't be surprised" if it happens at a june conference. the newshour is always online. hari sreenivasan, in our newsroom, previews what's there. hari. >> sreenivasan: fred de sam lazaro stopped by the rundown this week to tell us more about his reporting from vietnam. paul solman and economist simon johnson blogged the goldman sachs hearings today. politico's andy barr explains why arizona's new immigration

law is restarting a much larger debate. plus, jim lehrer sent a new dispatch from his cross-country book tour. you can watch his interview with our pbs colleagues at wttw chicago. all that and more is on our web site, newshour.pbs.org. gwen. >> ifill: and that's the newshour for tonight. i'm gwen ifill. >> brown: and i'm jeffrey brown. we'll see you online, and again here tomorrow evening. thank you and good night. 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. captioning sponsored by macneil/lehrer productions captioned by media access group at wgbh access.wgbh.org