from the s.e.c. complaint, let me put up a very important timeline of the securities selection process, who was the portfolio selector. let's go back to january 9th, 2007, from the s.e.c. complaint -- goldman sentence e-mail to aca titled "paulson portfol portfolio." it contained a list of tranches selected by paulson for the abacus 2007 reference portfolio. is sends 123 choices. then we go to january 22nd, 2007. aca sends the e-mail for fabrice tourre and others at goldman, including 55 of the 123 selected by paulson. now, that means -- let me just pause here. this is very important. goldman maintains that aca was in fact the portfolio selector. come back with me. i want to stay on the full screen. goldman says they were independent, they were the selector. there's no reason to deny that. they rejected 68 of paulson's recommendations, okay? they accepted 55 and the list at this point was 86. let's go to the third point on the timeline. this gets us into february 2nd, 2007. after meetings with paulson

the s.e.c. says that goldman structured a portfolio of what turned out the to be toxic mortgages hand picked by a hedge fund manager run by john paulson. and the s.e.c. says that goldman did not disclose that paulson not only had picked the mortgages, but that he was betting against those mortgages in 2007 as the housing market was about to come undone. goldman sachs today says it will vigorously fight the charges and work to restore its reputation, a reputation that today is very much under fire. here is the s.e.c. chief of enforcement speaking today in new orleans. >> there is a fundamental difference between somebody being short on a synthetic cdings o or taking a view that the assets will perform poorly and a world of difference between thoo and letting that person being involved in the selection process of the portfolio. >> that person being john paulson of john paulson and company, the big hedge fund company and more to the point, the concern is that investors were not made aware of that an

if the s.e.c. is going to say that's what happened, then all these 2007 deals would have to be revealed. >> we believe in hindsight that paulson was the greatest thing since sliced bread. i was the victim of a letter-writing campaign six months after this piece of paper was filed, because i said it would go down dramatically. there are two sides to every single piece of paper. why couldn't the german bank short this piece of paper? was there someone who was running that bank from within goldman? we have to be careful about what goldman did and didn't. yes, i worked there. yes, i am not proud of the way they handled this particular period, but this may be a situation where goldman is being overrun, and i think will ultimately win. the s.e.c. does not win every case it brings. they do not win every case. >> jim, i want to give you a chance to disagree, but you said to me you think goldman will not win this case. >> yes -- you're right, jim, bt this is a new division not s.e.c., a new thing. if they're

well, the s.e.c. reportedly investigating other mortgage deals by wall street's biggest firms after accusing goldman sachs of fraud. now we are going to be joined by senator kay bailey hutchison, republican member of the senate banking committee. she was obviously with us last week, and well, a lot of things have happened since then. senator hutchison, good to have you with us. we appreciate it. >> thank you, erin. good to be with you and mark. >> what's your perspective here on the goldman sachs situation? i know you probably had a chance to look at the s.e.c. filing as well. do you think there's something there or do you think this is politics? what's your view? >> oh, i wouldn't want to venture an opinion on it because i think it's a little too early, but certainly, we've got to make sure that what we do is the right amount. i want to regulate to avoid fraud, certainly, but we've got to also have the capability for our companies to be able to compete in the global marketplace. >> so, is anything goi

the road. even after s.e.c. lawyers told goldman in writing they were prepared to file a federal suit, the firm gave no ground, declining to ask for a settlement according to people familiar with the case. the agency could prolong negotiations in hope of reaching a deal goldman would accept-- as the s.e.c. had often done in previous cases... or take the bank to court." so they basically said we're not get anything feedback, goldman shows no interest in wanting to settle this so therefore we're going to court which is a little different than you said. >> it is. and i don't know what the facts are. i read that story and i read contrary stories. only goldman sachs and the s.e.c. know who blindsided who. but i do think that this is a situation in which the s.e.c. wanted to send a signal for its own purposes, for the administration purposes. i think this was a desire to make a point not just resolve a particular case. >> rose: michael, do you think-- and this is one of those grand questions that i like-- this that thi

the s.e.c. pending with other civil litigation out there, it is not possible for anyone from goldman sachs to talk substantively about the actual allegations that have been made against goalman sacks. we may hear testimony about some of the more global issues, ethics, policy, but as far as the allegationses of the case, i seriously doubt it. >> is a lot of the questioning from the committee going to center around whether or not they were short the mblth? and how do they address the fact that that is not against the law? >> well, i think exactly as you and joe were discussing it at the beginning of this hour, which is what we're really doing right now is looking everything from hindsight, also that's shorting the market is a legitimate force within a free market system. and what we're talking about is what was going on at the most significant markets. and i think the biggest problem is, that's easy for those in the industry to you understand and we were talking about is goldman going to have a bru

tavis: how many times did you reach out to the s.e.c. before they actually pay attention to your filings? >> too many to count. there was five major submissions, many minor ones along the way. it was repeated over an 8 1/2-year period and i gave them the information. they looked at it and didn't comprehend it. i put it in the back of my book and i talk to readers. they don't have any mathematical backgrounds or finance backgrounds. they understood that there was something fishy going on that was easy to spot. tavis: so it seems to me, now that bernie madoff is in jail, that clearly a lot of attention, most of the attention has been focused on him. what say you about where that spotlight really ought to shine beyond this single guy, to your point, he couldn't do all this by himself. >> well, he didn't. he had a lot of help. he had 339 different companies around the globe helping him. they were in 40 different countries. he was very big in europe, certainly big in latin america, certainly big in north america. his next final frontier would

the s.e.c. is coming back at lehman brothers. >> what are they asking lehman brothers, and will this -- obviously, some of these executives may not have jobs at this point. i'm wondering what the inclination is of lehman to actually divulge information which might make life a lot harder for some of the other banks that still exist. >> well, they're focused on mortgage-backed securities. repo 105, hiding assets. something i talk about in my book, qualified special purpose entities. you could actually hide mortgages not just in cdos but you can hide them in the cayman islands in other types of entities. >> larry,ish it sounds like some of the stuff lehman was doing is far more egregious than what happened here at goldman sachs. true or false? >> true. 100% true. the only thing that's interesting with goldman is the credit default protection since last wednesday has almost doubled in price. so if you're going to try to buy default protection in goldman sachs, it traded today at a higher level than e

the s.e.c. has charged goldman with fraud for failing to disclose paulson's involvement in a short position. if i'm an investor, that's something that i'd like to know. the e-mails remind me of henry blodgett at merrill lynch saying the stocks were junk while they're telling investors it's great. i think it's a good case. >> are you talking about if you're an investor in goldman stock or you're an investor in those cdo products? >> if i'm an investor in abacus, i would want to know what paulson's doing, and they didn't disclose that. >> is it your view -- i mean, jake, if you can put it in context, i know you referred to henry blodgett and those infamous e-mails. but is this just as bad as any other sort of crisis that we've seen on wall street to date, or is this something different? >> i think this is different. what the heart of this case is is goldman's conflict of interest, that they're telling their investors that this is a great fund to invest in when they know that paulson is going short

even if you do prove the s.e.c. timed its release, which they say they didn't, even if you did prove it, it isn't material to what people are concerned about. the reason it's a very big deal is it shows what these wall street banks were doing. it shows how they were playing the game and shows how much they were rigging it, or at least it appears to do so, based on the s.e.c.'s case. so even if the s.e.c. is trying to hype their findings here, that's really, really getting a little bit off track when what the country is worried about is looking at the guy who's crashed the economy and we were letting them do this sort of thing. this is how it was working. >> and the effort to finally start to fix that begins monday night. senators are supposed to voets on whether to move forward on the wall street reform bill. this past week it looked like a deal was inevitable, republicans realized they need to be on the winning side of the issue. now democrats have to make concessions, what's happening with the bill? >> one thing i

now some lawmakers want to know if the s.e.c. filed suit against goldman on friday in part to bury the i.g.'s critical report on the stanford case which it got on march 31. >> we will be looking into the question why did the s.e.c. file during the day and on the same day, a scathing i.g. report comes out that very much says the s.e.c. is not going their job but rather going after exactly things like goldman sachs. >> reporter: s.e.c. chairman sh mary schapiro responded. >> you get fired up over these. >> i do get fired up. this is amazing. a lot at stake for taxpayers. >> bret: we'll follow it. thank you, peter. stocks were up today. the dow gained 25. the s&p 500 rose 9 2/3. the nasdaq finished ahead 20 1/5. do you think you have the right to a vacation? to have someone else pay for it? we talk about that in the grapevine. up next, is this a form of protected speech? those are pit bulls. the supreme couououououou i'm an adult with adhd. i'm getting treatment but sometimes i still have a hard time focusing and paying attention. it

looks very weak. >> but the s.e.c. -- sorry, joe. the s.e.c. really in this situation, what do they literally expect from the markets, first of all? what do they expect from miss schapiro, who both times has been independent but seems to be ruling in these last couple cases with the white house? so she's i'm sure independent. and i'm sure absolutely this reaffirmation of that makes her feel better. but the reality is that the timing doesn't play well with financial reform that is barreling down the pike. so this is what the markets think and this is the reaction you're going to get. >> and i think the reality is you asked at the beginning of the show did apple ring the top on the market? i think last week with goldman sachs, the events surrounding goldman sachs, you have to just think about what the effect is on the market. in the market you lost some confidence, you lost some trust, and you lost the return of the retail investor. and i think that is very important. i don't think the retail investor's coming back. you now tie that in to getting

second aspect is not just the s.e.c. to determine the viability of the accounting rules, but work with corporation america to find something functioning. >> and also with the board and shareholders to understand what they are doing. >> well, we bring back the draft. and remember the military draft, and bring back the draft, and let's have, draft some people from goldman sachs, the highest level of accounting skills in the country and bring them over to the s.e.c. and the fbi, and we need talent at the regulatory side. >> all kidding aside, the s.e.c. has been through a rebuilding of the team as you want to make reference to it like the yankees. they have mayry schapiro in there, and they are coming up with more people in the vertical alignments where people can specialize and when i was there, my focus on the 40 act, and so i spent all of my time working with the investment advisers and companies and going back to that model, and it worked back then. >> well, mary schapiro is doing a great job. we thank you both for joini

the s.e.c.'s charges against the bank and phone calls to clients. one person tells the s.e.c. that blankfein is out to kill them and the s.e.c. suit hurts america. blankfein and other execs will testify on tuesday. the s.e.c. complaint was cited by a german public bank sector byron lb as it cut ties with goldman. democrats plan to seek a key financial reform today. they need 60 votes to block the republican filibuster, which would essentially prevent formal debate from starting on the measure. democrats are targeting monday for a final vote and the congressional office says that the dodd bill would cut the u.s. deficit by $2 is 1 billion over the next decade. ross. >>> meantime, athens could be preparing to tap the joint eu/imf aid package. the greek prime minister, george papandreou says his country will make a decision soon and he's concerned there will be no more austerity packages later this year for the company. >>> euro control estimates 80% of flights will operate today. but apart from the logistical nightmare, the battle for who picks up the estimated $177 billion tap

the s.e.c. alleged goldman did not disclose it was marketing sub-prime mortgage securities while, at the same time, betting against them through a large hedge fund. investors in those securities lost more than $1 billion when the housing market crashed. in response, goldman called the charges "completely unfounded." it is the most prominent case brought by the government thus far in response to the financial crisis. zachary goldfarb is covering the story for "the washington post." zachary, welcome. >> thank you. >> lehrer: in the simplest of terms, what is it exactly that the government has said goldlman sachs did? >> the government has said goldlman sachs defraud its investors by omitting key details about investment products that goldman was selling them. in essence, the government has said that goldman allowed a fund that was betting against these products to create the products, and then sell the investment to investors without telling them that someone who is betting against them had come up

the associated press learn the that the s.e.c. inspector general conducted 33 probes of employees over the last five years. one senior attorney spent up to eight hours per day downloading pornography. another account was blocked from websites month are than 16,000 times in one month. employees were at a senior level earning up to $222,000 a year. some of the staffers have resigned or have been suspended. >>> president obama is pushing wall street rephenomenform. he says his plan is not a ticket to endless bailouts but to prevent another financial meltdown. he will need to persuade at least one republican to join the cause. tracie potts reports. >> i want to urge you to join us instead of fighting us in this effort. >> reporter: president obama is taking on wall street head on. some bankers say it's unfair. the president flatly denies republican claims that his financial reforms will once again leave taxpayers holding the bill. >> this is a permanent wall street bailout. >> a vote for reform is a vote to put a stop to taxpayer-funde

at the s.e.c. and immediately referred to the inspector general. so the s.e.c. -- >> brian: it's just now we're beginning to hear about it. thank you, nicole. good work. >>> the tea party political movement has gotten a lot of attention lately. our news fox news opinion dynamics poll shed light on what americans think of it. one of six people we polled, 17% said they consider themselves a part of the tea party movement. 56% of those people said the tea party should be taken seriously. as a political movement, as opposed to 27% who saw it as a fringe group and 11% who they just weren't sure. our next guest has been pretty clear on his thoughts on this topic. pennsylvania governor ed rendell says the movement has been blown out by proportion by the media and suggests democrats may have had a hand in all of this. the governor, also a former chairman of the democratic national committee joins me from philadelphia. governor, you're a good friend of this program and we are happy to have you back. right he

what the s.e.c. is saying here is that actually john paulson, a prominent hedge fund manager, and he was negative on the housing market, he had a role in designing this vehicle, and so he had every incentive to put in bonds in there, and the bonds from goldman put in that that would be very poor performers, and so the s.e.c. is saying investors should have known that this bond was not designed by an independent firm on its own. host: why is this a civil suit and not a criminal suit? guest: the s.e.c. brings civil suits. but this can be referred or taken up by criminal prosecutors f. they do take it up, there will be an even higher bar that they have to prove. they have to prove intent to defraud, which is harder to prove in any case. but certainly, you know, you can bet that a lot of different prosecutors are looking at it. >> was john paulson -- tell us a little bit more about him and how he was able to get the people at goldman sachs to buy into this plan. guest: this guy john paulson -- let me note

the s.e.c. sed goldman of defrauding investors by failing to disclose that it was marketing sub prime mortgage securities while at the same time betting against them through a large hedge fund. essentially the agency claims goldman was setting up some clients in a bet that was designed to fail. the s.e.c. said hedge fund manager john paulsen helped create the securities and made millions on the deal himself. in washington, the case quickly entered the debate on financial regulation reform. senate kban beinging committee chair christopher dodd. >> our bill would have prevented that kind of an event from happening in my view. that's what the public needs to know. >> reporter: meanwhile scrutiny of goldman moved beyond the u.s., british and german authorities said they would investigate further whether their banks were victims of wrongdoing. >> brown: more on this now from john singer, an attorney with the law firm more now from john singer, an attorney with the law firm singer deutsch, who's repres

so, really, the bottom line tonight, lester, from the s.e.c. to wall street, watch out. >> trish regan with that late update. thank you. >>> when "nightly news" continues, a look at what iceland's volcano may be doing to the air we breathe. >>> and up next, we met him here on this broadcast. a man making a difference for some d.c. school kids. how could his story have taken such a tragic turn? he checks it out. good thing. turns out... my urinary symptoms -- such as going frequently, trouble going, flow starts and stops... and going often at night -- are due to bph, also called enlarged prostate. 's............ like prostate cancer. do not donate blood until 6 months after stopping avodart. tell your doctor if you have liver disease. rarely sexual side effects, swelling or tenderness... of the breasts can occur. avodart is for men only. women should not take or handle avodart... due to risk of a specific birth defect. today's the day to talk to your doctor... about your urinary symptoms and find out... if avodart is right for you. bad cholestero

but i do have confidence with regard to the s.e.c. under miss shapiro, and i think that the vote the other day, the 3-2 vote to proceed with this matter, says a lot. i leave it to their expertise. but the main thing that we have to concentrate on, and i think goldman should welcome this examination, is that we have to have a clear, transparent and accountable market because in the long run if we do not have that, people will not be investing. people need to know that when they invest their funds they are investing into a fair and honest system. >> just briefly, congressman, before i let you go, the -- what nancy pelosi has just said about the influence of money at her weekly briefing just to bring you up to date, she has said that the democrats are there for middle-class families, republicans are there for special interests, but when asked about all the money that flows into both political parties from wall street and leading democrats were up there raising money only, you know, days ago, as were republicans, of course, she said they d

the s.e.c. ell, the complaints were filed yesterday in new york state supreme court. goldman's officers and the entire board of directors breached their duties by their alleged link to subprime mortgages. the s.e.c. accused goldman sachs of failing to reveal conflicts of interest which led to $1 billion loss for investors. >>> the s.e.c. is in some hot water of its own. an internal investigation found s.e.c. employees and contractors were cruising porn sites on government computers. apparently this was happening at the peak of the country's financial crisis to add to it. a staff accountant tried to access pornographic websites nearly 1,800 times over a two-week period. a spokesman says the employees involved have been or are being disciplined. some of have been suspended or fired. >>> gunmen ambushed and killed seven mexican police officers in the border town of ciudad juarez. now, so far no arrests have been made. more than 5,000 people have been killed in juarezjuarez since a war erupted two ye

i'm not sure the s.e.c. d this from the get-go. >> what a courtroom it would be. have a good day, everybody. >> thanks a lot. >> donny deutsch. thank you so much for coming. >> sweet thing. >> just to sit at the table with george will and andrew ross sorkin, sandwiched between these intellectuals, i'm like the spam in the middle of intellectual white bread. >> not going to debate that point. quickly, which team are you on? are you on sorkin's team? you can't be on both. >> i'm always on sorkin's. >> i've got a tank top that says team sorkin. coming up, is baseball still america's pasttime or is football taking over that title? we'll ask columnist george will. take a look inside his new book next on "morning joe." >> this is the best-selling book on baseball. ah! silver one. that's not a volkswagen. ♪ [ tires screech ] ♪ [ sighs ] that's two for doubting. [ chuckles ] you hit like my sister. really? i'd like to meet her. [ male announcer ] the volkswagen cc. award-winning design for just $299 a month. it's a w

the current chair, mary schapiro, said the s.e.c. now is investigating whether other large banks are using a similar accounting move. >> we've sent a letter and demanded information from the largest financial institutions to explain to us exactly how they're using repos, how they're accounting for them and disclosing repos, and the impact on their balance sheet, whether they've changed their accounting models over the last three years. and, importantly, what has been their average debt balances over the period, so that we don't just have them dress up the balance sheet for quarter-end, and then have dramatic increases during the course of the quarter. >> holman: as the day went on, the committee dug into details of the federal bankruptcy examiner's report. and ultimately, the former head of lehman brothers was called to answer the accusations of accounting gimmicks and hidden debt. the court-appointed examiner, anton valukas, discussed the findings from a report that ran 2,200 pages. he said warning signs were there, but no one acted

but it's also mary schapiro and the s.e.c. fell down on radar, this is a big feather in the likes of the cap for the s.e.c. they may understand who was behind it. >> no doubt they've been asleep for a couple of years. maybe this is them waking up. this will definitely -- from a prchl r. standpoint, this helps democrats in terms of getting some sort of regulation. >> listen, there's no question this helps the democrats. that's why president obama is coming to new york on thursday and beat up on wall street. chris dodd, barney frank have all jumped on this. they've going to use it. the feel of the question is did the s.e.c. move in a convenient tyke. what we also learned today was at the s.e.c. itself, there are five votes, three democrats who voted to bring the charges in, two republicans who oppose that. when the market heard that, they began to think, thab these charges won't stick. i think michael is right. there's something about this that smells. until we know the facts, i think it's unair to vilify or judge goldman sachs o

. >> and do you think maybe we've just finally figured out why the s.e.c. missed the whole maddow thing where we now have an internal report that says they found some of the people at the s.e.c. on pornography sites for thousands and thousands of hours, sometimes as much as eight hours a day? >> i think that is the factor, but how do people get there? the culture of the s.e.c., and here, you have to get political in the voter's sense. the republican philosophy was one that said, do not regulate. let the market do it better. we had a hearing earlier this week on the lehman brothers issue where the s.e.c. was found by the bankruptcy examiner to have been clearly deficient in 2006 and 2007 and the examiner said the s.e.c. didn't do its job. my republican colleagues said yeah, but we don't need the change the regulation. that was a conscious policy preference by the people that empowered, namely to defer to the market in almost every instance and underregulate. >> thank you very much. enjoy your weekend while the senate fights over financial services. thanks a l

as the s.e.c. tries to take on a giant. is there any question in your mind that goldman sachs is the most powerful investment bank on wall street? >> none whatsoever. >> reporter: in a letter to clients, goldman sachs calls the s.e.c. probe unfounded. the ceo leaving a voicemail on employees' phones. this is lloyd, the message said. i want you to know that we have been taking all appropriate steps to protect the firm and its reputation. the s.e.c. claims that the bank told investors a product that another investor thought would fail. the hedge fund sheet john paulson made $1 billion. investors lost $1 billion. a lot of people are going to ask if this is the first shoe to drop? >> regulators, politicians, and others are on for scalps. >> reporter: the only goldman employee singled out in the flying, the vice president, is now taking time off from work. the stanford-educated frenchman, we're told, is a employee. the s.e.c. said he knew what he was doing wrong. and bragged in a 2007 e-mail to a friend, quote, the whole building

every time they have to defend themselves against a new allegation, whether it's this charge by the s.e.c., whether it's the situation with cit, aig, they are having to face down the notion that perhaps they have a corporate culture that puts clients second. guys, know they're keenly aware to this, because their letter to shareholders this year referred to clients 56 times and lloyd

meanwhile, a bombshell at the s.e.c. today. critics have accused the agency of being asleep at the wheel when the financial crisis unfolded. but a new report found 31 s.e.c. employees were wide awake spending many hours at the office watching internet porn. nancy cordes has more. >> reporter: the s.e.c.'s inspector general found some of the violators spent more time watching porn than watching the markets. even, critics say, as the agency was turning a blind eye to bernie madoff's fraud scheme and the looming financial crisis. >> you read about federal employees doing that, you think it's another example of the waste of taxpayers' money. >> reporter: more than half of the 31 offenders were highly paid staffers making between $100,000 and $225,000 a year. including a senior attorney whose s.e.c. laptop contained 775 inappropriate images. an accountant who tried to access sexual or pornographic web sites 16,000 times in one month. and another senior attorney who admitted to spending up to eight hours a day downloading porn-- even

the more i think about the s.e.c. lawsuit against goldman sachs, this thing is going to unravel in ways that none of us can possibly predict now. that's the point that i want to make. now, let's go to today's stock market headlines. apple had a blowout, 90% profit rise. mcintosh and the iphone sales. the s&p 500 climbed for the eighth time in nine days. it was up about 1%. the dow was up modestly. goldman sachs had blowout earnings but the stock fell 2%. now here is this evening's question. are there 25 reasons for a v-shaped bull market economic recovery? the portfolio manager from macro portfolio advisers and the managing director at formula capital. you wrote this in the new york post and elsewhere. 25 reasons. summarize. we don't have time for 25, james. there it is. rally believing it. do you feel that the stock market has significant upside potential from here as a consequence of your 25 reasons for a v-shaped recovery? >> absolutely. we are only seeing the very beginning of the inventory rebuild that's been caus

they want a credit bureau, a bubble bureau, and also to beef up the s.e.c. row more money and more people at it, but who knows. >> at least you know for this hour. >>> rock star-turned reality star bret michaels hospitalized after suffering a brain hemorrhage. >>> and the state of our oceans and that recent move by the obama administration to expand offshore drilling. ♪ [ male announcer ] there's one reason why over the past 100 years generations of men have trusted gillette. when it comes to shaving, we've given them our best. and on june 6th, we'll give them something even better. [ speaking native language ] [ moans ] [ speaking native language ] ♪ [ speaking native language ] [ male announcer ] doctors have been saying it forever. let's take a look. [ male announcer ] but they've never actually been able to do it like this. let's take a look. [ male announcer ] v-scan from ge healthcare. a pocket sized imaging device that will help change the way doctors see patients. that's better health for more people. ♪ but it can't have... can't have about half a day

how does the s.e.c. avoid not reacting to this? >> reporter: but s.e.c. commissioners were divided over filing the goldman suit. two republican commissioners voted against and two democratic members in favor. it was chairman mary shapiro-- appointed by president obama-- who broke the tie. >> chairman shapiro, was this political pressure in the goldman sachs case? >> absolutely not. >> the fact that they wanted the case to come out now doesn't mean it's a bad case or there's anything improper. >> reporter: former new york state attorney general eliot spitzer knows how to play hard ball with wall street. can you explain what the strategy of that is? why do you get this aggressive with a company? >> because you have to. the reality is, if you look at the last two years, most people would draw the conclusion that wall street doesn't get the degree to which their behavior destroyed jobs, wealth. until they get it, you just have to play tougher and tougher. >> reporter: both the british and german financial regulators announced they will also open investigations

inside goldman, but i think the standard operating procedure is when someone's been fingered by the s.e.c. you give them a paid leave of absence. they're probably not throwing him under the bus as much as you think. it's just they're getting legal advice from their litigation staff. as to how to properly handle this case. subpoena and that's standard operating procedure, to put the guy on the sidelines and give him a paid leave of absence. >> all right, anthony, we're going to leave it there. thank you very much. anthony scaramucci of skybridge capital. let's take a quick check on shares of goldman sachs in the after-hours action to see if they are in fact moving. it's interesting that anthony said he didn't think -- that goldman would be essentially worried still even though the

as the leadership of the s.e.c. continues its historic mission of revitalizing that institution and making it clear to all on wall street there's a new cop on the beat. also last week, our colleague, chairman carl levin, ranking member tom coburn, and the staff of the permanent subcommittee on investigations began a series of hearings on the causes of the financial crisis. it is a testament to the professionalism and dedication of chairman levin that he has brought the subcommittee's resources to bear in such an effective and thorough manner. i also want to commend ranking member tom coburn for his dedication to the effort as a partner in this effort. chairman levin and the subcommittee staff deserve credit and our deep appreciation for the work that they have put into this series of hearings on wall street and the financial crisis. since november 2008, subcommittee investigators have gathered millions -- millions -- of pages of documents, conducted over a hundred interviews and depositions, and consulted with dozens

. >> susie: from the trader at the heart of the s.e.c.'s case against goldman, fabrice tourre, to the company's c.e.o., lloyd blankfein, senate lawmakers took hours with the testimony. we're over eight hours in, and the hearing is still going on. >> the biggest surprise came a short while ago after c.e.o. lloyd blankfein was sworn in. committee chairman levin dove right in. >> my question is, is there not a conflict when you sell something to somebody and then are determined to bet against that same security and you don't disclose that to the person you're selling it to? >> 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 institutional clients we have wouldn't care what our views are. they shouldn't care. >> susie: blankfein's testimony came after senators had grilled half a dozen goldman execu

gretchen, along with louise story, the first-to-break news of the s.e.c. fraud accusations against goldman sachs. it's a pleasure to be seeing you. >> i'm so leap to be here, dylan. >> here's my question for you -- do you believe that the goldman sachs fraud case, forget whether it has merit or not or what its outcome is. is indicative of the type of business practices that were common at merrill lynch? deutsche bank, ubs, lehman brothers, and the rest of goldman sachs, who were the firms that were the most aggressive with this type of trading and security in general? do you believe that there is, if we once we start pulling, we're going to see a lot more of this? >> this is certainly not an isolated example, dylan. i mean i think that some of these securities that were underwritten by all the firms that you mentioned, might be different in little nuanced ways. but what we're talking about is, yes, a really overarching effort to figure out a way to short the mortgage market. to bet against the mortgage market. not only for their customers in some cases, lik

president told you that there's no connection between his push for financial reform and the timing of the s.e.co, this is responding to the charge from the republicans' side in the hill especially that he sort of went into cahoots with the s.e.c. and said let's score some political points in going after goldman sachs. let's listen to his response. >> i gave a speech about financial regulatory reform in 2007 before our current crisis, in 2008 before we fully knew what this crisis was going to be. we released financial reform as a package over a year ago. and so we're not johnny come latelies to this thing. we've been pushing this hard throughout and the s.e.c. is an entirely independent agency that we have no day-to-day control over. and they never discussed with us anything with respect to the charge that will be brought. so this notion that somehow there would be any attempt to interfere in an independent agency is completely false. >> okay, john harwood, help me out here. why would it look bad for any politician to say let's get tough with these bad guys to any regulatory agency? i guess i do

they put together a special unit at the s.e.c., so i see a bunch of young guys running around looking to make their mark. >> can i make a quick aside before mark jumps in? and that is, andrew cuomo has been incredibly silent. we've been calling him and there's been no statement, nothing. i don't know what to read into that, but he has not been responsive yet. >> my guess -- >> i would guess an announcement's coming, then. >> maybe. i don't know. he has not been on our air, by the way, in a long time, mark to begin with. some thought maybe that because of his broader political agen aspirations, but a lot of people want to hear from him. >> i have no inside knowledge, but my guess would be he has asked to see the evidence. >> maybe so. maybe that's what it is. >> and his staff will go over the evidence, because it's not enough just to look at the complaint. he's got to look at the evidence. >> right. >> and remember -- >> e-mails -- >> and remember, too, just to take a quick leap of aside.

against this mistrust in the country, and one of the things that people might point to, we'll see how the s.e.c.'s case turns out but greg craig, is now going to represent goldman. and if you are of a mind, as a lot of people are on the right, the left, to distrust the bonus was government you may say hey, wait a minute, maybe that case was setup. >> yeah, let me ask savannah about the politics. it seems like during health care we all know this that it was kind a murky situation in terms of the public reaction. it was, at best, a 50/50 proposition in terms of an immediate crowd appeal. it seems like this time the president is dancing on a floor that people want to see him on, which going after the wealthy people that may have misused their power on wall street. does he have a little lighter step right now, is he a happier guy going up to wall street than he was for fighting for health care? >> reporter: yeah, i think that they've recognized the populist feeling that's going on in the country right now is with them, anti-wall street. so they're also happy because they have a good economic story

the congressmen wants the s.e.c. recoup funds from goldman if anything happened. >>> a mishap with a motorcade ended with just a few dirt looks. a motor bike slid into the last police car in the motorcade. the rider dusted himself off and then glared at the police officer. the officer then glared back. and the man on the motor bike drove away. >>> maryland governor will begin his re-election campaign next week in baltimore. hi campaign manager says the governor will kick off a thee-day tour of the state a week from tomorrow visiting 11 locations. this year's election will likely face the same candidates as the 2006 race although their roles will be reversed. o'malley expected to face former governor bob ehrlich in november. o'malley beat ehrlich four years ago. >>> a golf game that turned to celebration for two cousins. >> the cousins average day on the green ended at the par 3 fifth hole. after the celebration of the hole in one, cody was nervous about how to follow that. >> i pulled 6. i hit it. i strike it to the

a google search of the terms s.e.c. and goldman sachs yields a paid advertisement for barackobama.com and today senate democrats pressed their plan in the face of uniformed opposition. >> this comes down to a basic question, whose side are you on? >> reporter: the democrats' proposal would create a new consumer protection agency, require government scrutiny of complex financial transactions and require big firms to have more capital on hand and less debt. republicans have argued a $50 billion fund to be used in case large firms fail amounts to a bailout. >> the very existence of this fund would perpetuate the risky behavior that led to the last crisis. >> reporter: democrats point out the fund would be paid for by the financial firms themselves, not taxpayers and in his weekend address the president slammed the republican leader. >> he made the cynical and deceptive assertion that reform would mean future bailouts when he knows it would do exactly the opposite. >> reporter: americans are expressing disgust with governmen

>> the s.e.c. ut and charged this big -- it almost seemed this firm was impeshus to some of the arrows. it made money when the rest of the company was reeling. now, the s.e.c. says this company committed fraud when it made a derivatives contract and stu stuffed it with mortgages that were likely to decline and let somebody who was going to bet against that vehicle help hand pick what was going to go in there. they sold it to investors. they did not say who helped pick moe e. the s.e.c. said fraud and illegal. goldman sachs says the s.e.c. charges were completely unfounded in law and fact and vigorously contest them and defend the firm and its reputation. a quick note here. the company got hammered on friday on the stock market. it fell so sharply that it wiped out $12 billion of the value of this company. that is more than it received in bailout money in the heat of the crisis. i think it got $10 billion in bailout money and paid it back. the market punished on friday by a tune of the tune of $12 bi

the report suggests that the s.e.c. for months now about this transaction. i have a great deal of confidence they are trying to enforce the law and frankly, had this been done in a previous administration, we would not be in the position we're in today. strong enforcement is appropriate. >> all right. senator jack reed on the banking committee. senator, good luck getting some republicans on board. thanks so much for joining us. >> thank you. >>> and we mentioned the developing news today about the earnings doubling, but is green good? donny deutsch is going to host a special today called "america the angry" at 3:00 p.m. eastern. [ female announcer ] sometimes you need tomorrow to finish what you started today. for the aches and sleeplessness in between, there's new motrin pm. no other medicine, not even advil pm, is more effective for pain and sleeplessness. new motrin pm. right now, walmart has rolled back prices on top lawn care brands like poulan pro, brute by briggs & stratton, pennington, scotts and spectracide. al

but that's because of the unfortunate way that the s.e.c. game is played. let's go to eric in texas. eric! >> caller: ba-ba-ba-boo-yah from houston, texas, jim. >> stuttering boo-yah to start the show. and i always like that. it makes me feel good. how can i help? >> caller: hey, jim, given the breaking news from the s.e.c. on goldman sachs today, how do you think some of their competitors such as deutsche bank and citi are feeling, and do you think they will see more cases brought against them? >> i think that the government likes to bring a string of cases, but where they go first is their best shot. although we saw that against bear stearns. it didn't work. the justice department lost. do i think that goldman will lose clients over this? i think anytime there's something bad you're going to lose a client or two. but you know what the clients are motivated about? making money. and if goldman provides moneymaking ideas, business flows right back. it's the nature of the beast. don in my home state of pennsylvania. don. donald, speak to me. >> caller: i'll gi