captioning by vitac, underwritten by fireman's fund captioning by vitac, underwritten by fireman's fund >>> what will it take to fix a broken state? californians are searching for ways to end partisan wrangling and to make government actually work. >> too much time bickering and arguing. they don't get anything done. >> there are some new ideas on the table. tonight, mending broken california. >>> good evening and welcome to broken california, a special edition of "this week in northern california." i'm spencer michels sitting in for belva davis. the recent elections in california will be followed by a dose of political realty. the crucial relationship between local and state governments. tonight we'll explore why california's government is so dysfunctional and what can be done to fix it. we have a panel of people who should know. susan kennedy a democrat was governor schwarzenegger's chief of staff. don perata led the state senate for four years. dan schnur is a republican strategist and teaches at usc. and mark paul is an author of "california crackup." we'll be back with our guests?

the event was underwritten by some of the most powerful companies, labor unions, and lobbying interests in california. it happened at a time when the state faced major budget cuts. on cbs 5 morning edition today, we asked one bay area legislator who did not attend the conference about the influence of lobbyists. >> it's not an accident that california is the only state that does not have an oil extraction fee. alaska does, texas does, but california doesn't. every time that issue comes up, where we're going to add, which could bring in a billion dollars in revenue a year, the oil companies -- they say the economy's bad, gas drivers are going to pay, you know, going to cost more to drive in california. >> he says he was invited to the conference, but preferred to spend time with his constituents. >>> it's a problem that won't go away. it's especially difficult at this time of year for families with children. tonight, 60 minutes takes a look at the lives of homeless kids. >> this is the home of the metzger family. ariel, 15. her brother austin, 13. their mother died when they were very yo

. >> this is underwritten by the most powerful companies and powerful labor unions in california. it's hard to convince people that you are doing what is in the average person's interest. all expenses paid and the reality is, that you have to evaluate legislation. quite frankly, there's not a group here that i haven't had serious disagreements with. >> can you ask them to see what's going on? >> but we never got in. so where does the independent voter project get the money to pay for all this? it's funded by big companies like pacific gas and electric. chevron, cigarette maker, southern california edison, and big labor groups like the powerful state prison guards union. about 50 donors in all. special interests charge who expect special favors in return from the state legislators. >> why are people paying their way? because people think they will get something in return and that is access, information, and getting to know these legislators. >> former state legislator is the leader of the independent voter project. >> why isn't the news media invited? >> you're here. >> we crashed

. >> this is as it is underwritten by some of the most powerful companies in california.s hard to convince people you are doing what is in the average person's interest. all expenses paid. >> reality is, you have to evaluate legislation on merits. quite frankly, there's not a group i had serious disagreements with. >> can you ask them to see what is going on? >> absolutely. >> but we never got in. so where does the independent voter project get the money to pay for all this? well, it's funded by big companies like pacific gas and electric, chevron, cigarette maker, southern california edison and big labor groups like the powerful state prison guards union. about 50 donors in all. special interests who expect special favors in return from the state legislators. >> why are people paying their way? because the people think they will get something in return and that is access, information, and getting to know these legislators. >> former state legislator is the leader of the independent voter project. >> why isn't the news media invited? >> you're here. >> we crashed the part

the american banking system, both in loans, and in credit default swaps derivatives that they've underwritten and investors because of assets they've hold in investments over there and then of course, to bank liquidity in america. >> neil: john, i could turn that around and say what ails them could help them. there might be a flight to quality in our currency, anything dollar denominated, anything american and we would benefit by their misery or-- >> the benefit would be short-term. in other words, in a sinking ship those that go to the part that are not sinking just like the "titanic" those benefitted, but there's going to be a surge in the dollar as everyone flies out of the euro, but then people will question the currency paper, saying this isn't worth anything and then the massive flight to gold and silver. which will be the real problem. and measuring cannot benefit by a recession. >> neil: all right, buddy, thank you very much. >> recession and riots. >> neil: i think we were able to go to rome smoothly to athens smoothly, florida, that's dicey. all right. meanwhile, the president's tri

some progress made behind the scenes, even speculation 30% of european sovereign bonds could be underwrittenct by governments but we really need to see exactly what is going to happen. meanwhile, i think what's ruining the market is a lot of speculation, a lot of media reports, some of which are denied and some of which are not even confirmed, christine. >> a lot of headlines fatigue. people say we're still talking about -- explain to us again why it is so incredibly important for europe to really -- these leaders to fix this? i mean, it's not overstating it to say that the consequences could be dire. >> no, i think you're absolutely right. if we look at the much, much bigger question here, the effect we're seeing is it's going to be -- of course, you have -- what we're looking at is the problem of commercial banks, if commercial banks suffer an enormous default on spain or italy and can't rule either of those out, if they suffer that they will be in a situation where they would effectively be forced into bankruptcy. in the banks are forced into bankruptcies, we could see runs on bank and th

. >> reporter: this event is underwritten by some of the most powerful companies and labor unions, lobbying interests in california. it's hard to convince people that you're doing what's in the average person's interests when you spend a week here many of the members all end expenses paid. >> and the reality is you have to evaluate legislation on the merits. there is not a group here who i haven't had serious disagreements with. >> reporter: can you ask them to let us come in and see what's going on? >> i'll ask them. >> reporter: everybody should be above board. >> absolutely will ask them. >> reporter: we never got in. so where does the independent voter project get the money to pay? it's funded by big companies like pg&e, chevron, a cigarette makerrer southern california edison and big labor groups like the powerful state prisons guard union about 50 donors at all special interests who expect special favors in return from the state legislators, it's charged. >> why are people paying their way? because the people paying the way think they will get something in return and that is access, i

. >> rose: episode one of th dharl charlie rose brain series 2 underwritten by the symons fodation coming up. captioning sponsor by rose communications from our studios in new york city, this is charlie rose. >> rose: it has been said that the brain will be to the 21st century what the at tom was to the 20th century. tonight we continue our explo ration of this fascinating organ with our second charlie rose brain series. in our first season we studied brain science. this year we expand our journey to pro i would have a parallel view of brain disorders. for each program and disorder, scientists and researchers have studied the disease from both a medical and scientific perspective will join us. we will discuss disorders with patients, some are physicians. and finally we'll explore our increasing knowledge of brain disorders and how it has enriched our understanding of e human mind. for tonight's inaugural episode, we study how neurological, psychiatric and addictive disorders result from disturbances in different neural systems. our understanding of brain disorders has evolved greatly thro

bailout fatigue that's really set in on the part of germany and france, which have essentially underwritten the bailout for greece and other countries that may come along as well. italy has huge issues it is sitting on $2.5 trillion of debt. the way the market sees this is a huge worry because where does this leave italy if there is no financial assistance? you are seeing that worry play out in the numbers, dow plunging 385 points now, the vix, the fear index, it measures that volatility that fear that investors have right now, that is spiking 30%. don? >> and alison, berlusconi said woe step down, the market rallied. why suspect that happening now? >> you know what it is, it is reality setting in at this point. there is a sense the resignation will wind up opening up a set of new problems and this realization that the problems in yurng the debt problems, aren't going away any time soon, you see italy carrying a debt load six times bigger than greece, that's just huge at this point and it is very overwhelming to any investor this would directly affect u.s. because europe is one of our bigge

>> fannie mae and freddie mac do not have 3 million underwritten mortgages. you are quite right. we have had discussions discussing the program and its opportunity to assist borrowers to be able to refinance. when i made the announcement regarding the changes to the program, i said we would have the directives out to the servicers, the people who service mortgages, we would have the guidance regarding it out to them by november 15. that was to it. that went up yesterday afternoon. -- that was yesterday. that went out yesterday afternoon. they have the updated guidance, what the changes are, what that means operationally. as of today, they have that information. they should be implementing the changes. >> i can say that you can go into any bank, any of the big five, and ask them to refinance your loan and if one will not do it another one will? >> we are trying to encourage services to reach out to borrowers to let them know this opportunity is available. institutions are going to need a different amount of time to make the changes. they have known it was coming. the big ones have

those are generally underwritten by bankers. they're not as much credit- scored. they will take a close look at how your business is doing and what your projections are for the next year or so. host: we're talking about small business loans this morning. we have lines for democrats, republicans, and independents. we want to hear from small business owners. alan is a democrat from hawaii. go ahead. caller: i am calling because i have a solar business in what you. they have these grants for rural development. they are connected to the sba. the biggest issue is that a lot of people want them to the complexity of the paperwork is insane. a lot of times, people have to try not to go for the loan part of it because it adds even more complexity. the grant is difficult enough. it is competitive with in the state. is also competitive between the states. i do not know if that is true. if they sign up for the sba component of it, they may be exploited. it is difficult to get accurate answers from the usda about the sba component of it. guest: i cannot speak to the agricultur

the choice of not getting the federal dollars or making changes as to freddie and fannie and fha underwritten homes, they would make changes necessary to help your we've never been asked. and so i would help that you would really look, use your general counsels, some of those 3000 hours, and please give to us where the problems are because we are the committee that happens to also on intergovernmental relations, all of the state come all the cities are, in fact, within our portfolio to try to help them help you and help all of us. >> thank you, mr. chairman. i will have the team followed up with you. i will say the state of california has one of the faster processes and i believe that's actually help certain markets in california to recover better and faster. >> thank you. recognize the ranking member. >> one clarification. the chairman asked for agreements, with regard to cessation of agreements and certain information. and i just want to make sure that we are talking about those executives named in the sec filing come is that i? >> i believe that's what we are talking about. >> number two,

business as usual of taking more money from the taxpayers or underwritten by the taxpayers fully and causing an agenda of getting more people into homes they cannot afford has not been authorized by congress. i now recognize the ranking member for his opening statement. >> thank you very much for calling today's hearing. thank you for agreeing to my request to invite mr. demarco. mr. demarco and i have been involved in high-level meetings for the last several months. several have been heated but others have been very constructive. i appreciate his willingness to appear before us and look forward to our continuing discussions. executive compensation is a worthwhile topic for this committee to address. in my opinion we should examine not only the compensation of executives at fannie mae and freddie mac but also at wall street firms that put the short-term financial interests of the executives at long-term interest of shareholders and the public. in reviewing the conversation packages of fannie mae and freddie mac executives we will have tough questions for our witnesses about how they

dollars, $100, almost $200 billion of your money tied up and the rest of trillions of dollars underwrittenas private fund or a bank and, of course, there are losses of tens of millions of dollars not just this year but for many years to come is somehow the equivalent of for profit entity where bonuses come with success. >> right. exactly. and they've been really good so far at losing billions of our dollars. now they need, what, they need $6 billion more to continue operations but they need something like $10 million more just for big ceo and executive compensation. bonuses. and there are people, congressman, who are absolutely furious that while they lose money, they need more money. >> well, you're exactly right, steve, and the 35 or so million dollars paid in bonuses to the top few executives, although small relative to the intersurprisinter-- enterprises, send the wrong message. the message that business as usual, these professionals many who have been their whole career, and got us into this trouble, you get these big bonuses in spite of huge losses and no end in sight. >> here's the

in other words, there seems to be an underwritten theme here that is necessary, but not yet appalled. so it's a very paradoxical reaction with what we have seen. let me talk about two countries. first of all, talking about rocco because morocco in many ways is a really interesting example because then morocco, the king has tried to stay within two weeks on february 20th. they announced a new constitution for you set up a committee to start the new constitution and then the prosecution came out with a few months to prepare the constitution, so it was presented to the king done, which was probably easily given the fact that it was the representative body by this small community. and the constitution was overwhelmingly approved by the population. i think the moroccan government may have gotten a bit carried away when they announce it was 98.5% of which that kind of saying anything by 1945%. but there is no doubt that the support for the new constitution was relied because people weren't supported the king. the king presented the constitution. the problem -- so essentially they moved very

and that's been underwritten by the united states. let me give you an example.a have all sorts of tensions. that's kept in the bottle by the u.s. military in asia. look 10, 20 years down the track, china won't want the u.s. protecting the sea lanes around china anymore. china won't want u.s. troops in japan, korea, australia, the philippin philippines, perhaps vietnam. so, you know, this is the start of a long, unfaulting long-term drama and competition between u.s. and china in asia. it's very exciting and, you know, holds great dangers, as well. >> is there a level of paranoia within the government and beijing toward the united states? if so, what does it have to do with? >> well, there's a level of paranoia in china. once again foreigners, westerners are trying to contain china, lock china in. look from a chinese perspective. as u.s. troops in korea, japan, vietnam of all countries is inviting the u.s. back in because they want to hedge against china. the philippines, which threw u.s. troops out about 10, 15 years ago also wants the u.s. back. you're actually

given the choice of not getting the federal dollars for making changes as to freddie and fannie underwritten homes, they would make changes necessary to help. we have never been asked. so i would hope that you would really look, use your general counsel, some of those 3000 hours, and please, give to us where the problems are. we are the committee that happens to also own intergovernment relations. all the states, the cities are within our portfolio to try to help them help you and help all of us. >> thank you, mr. chairman. i will say the state of california has one of the faster processes. i believe that has helped certain markets in california to recover better and faster. >> thank you. >> one clarification, the chairman has asked for agreement with regard to compensation agreements and certain information. i just want to make sure that we're talking about those executives named in the sec filings. is that right? >> i believe that is what we're talking about. if it is more, we will certainly clarify. >> second, a lot of these -- you mentioned with regard to those law firms dealing with for