BILL MOYERS: Welcome to the Journal.

For months now, revelations of the wholesale greed and blatant transgressions of Wall Street have reminded us that "The Best Way to Rob a Bank Is to Own One." In fact, the man you're about to meet wrote a book with just that title. It was based upon his experience as a tough regulator during one of the darkest chapters in our financial history: the savings and loan scandal in the late 1980s.

WILLIAM K. BLACK: These numbers as large as they are, vastly understate the problem of fraud.

BILL MOYERS: Bill Black was in New York this week for a conference at the John Jay College of Criminal Justice where scholars and journalists gathered to ask the question, "How do they get away with it?" Well, no one has asked that question more often than Bill Black.

The former Director of the Institute for Fraud Prevention now teaches Economics and Law at the University of Missouri, Kansas City. During the savings and loan crisis, it was Black who accused then-house speaker Jim Wright and five US Senators, including John Glenn and John McCain, of doing favors for the S&L's in exchange for contributions and other perks. The senators got off with a slap on the wrist, but so enraged was one of those bankers, Charles Keating — after whom the senate's so-called "Keating Five" were named — he sent a memo that read, in part, "get Black — kill him dead." Metaphorically, of course. Of course.

Now Black is focused on an even greater scandal, and he spares no one — not even the President he worked hard to elect, Barack Obama. But his main targets are the Wall Street barons, heirs of an earlier generation whose scandalous rip-offs of wealth back in the 1930s earned them comparison to Al Capone and the mob, and the nickname "banksters."

Bill Black, welcome to the Journal.

WILLIAM K. BLACK: Thank you.

BILL MOYERS: I was taken with your candor at the conference here in New York to hear you say that this crisis we're going through, this economic and financial meltdown is driven by fraud. What's your definition of fraud?

WILLIAM K. BLACK: Fraud is deceit. And the essence of fraud is, "I create trust in you, and then I betray that trust, and get you to give me something of value." And as a result, there's no more effective acid against trust than fraud, especially fraud by top elites, and that's what we have.

BILL MOYERS: In your book, you make it clear that calculated dishonesty by people in charge is at the heart of most large corporate failures and scandals, including, of course, the S&L, but is that true? Is that what you're saying here, that it was in the boardrooms and the CEO offices where this fraud began?

WILLIAM K. BLACK: Absolutely.

BILL MOYERS: How did they do it? What do you mean?

WILLIAM K. BLACK: Well, the way that you do it is to make really bad loans, because they pay better. Then you grow extremely rapidly, in other words, you're a Ponzi-like scheme. And the third thing you do is we call it leverage. That just means borrowing a lot of money, and the combination creates a situation where you have guaranteed record profits in the early years. That makes you rich, through the bonuses that modern executive compensation has produced. It also makes it inevitable that there's going to be a disaster down the road.

BILL MOYERS: So you're suggesting, saying that CEOs of some of these banks and mortgage firms in order to increase their own personal income, deliberately set out to make bad loans?

WILLIAM K. BLACK: Yes.

BILL MOYERS: How do they get away with it? I mean, what about their own checks and balances in the company? What about their accounting divisions?

WILLIAM K. BLACK: All of those checks and balances report to the CEO, so if the CEO goes bad, all of the checks and balances are easily overcome. And the art form is not simply to defeat those internal controls, but to suborn them, to turn them into your greatest allies. And the bonus programs are exactly how you do that.

BILL MOYERS: If I wanted to go looking for the parties to this, with a good bird dog, where would you send me?

WILLIAM K. BLACK: Well, that's exactly what hasn't happened. We haven't looked, all right? The Bush Administration essentially got rid of regulation, so if nobody was looking, you were able to do this with impunity and that's exactly what happened. Where would you look? You'd look at the specialty lenders. The lenders that did almost all of their work in the sub-prime and what's called Alt-A, liars' loans.

BILL MOYERS: Yeah. Liars' loans--

WILLIAM K. BLACK: Liars' loans.

BILL MOYERS: Why did they call them liars' loans?

WILLIAM K. BLACK: Because they were liars' loans.

BILL MOYERS: And they knew it?

WILLIAM K. BLACK: They knew it. They knew that they were frauds.

WILLIAM K. BLACK: Liars' loans mean that we don't check. You tell us what your income is. You tell us what your job is. You tell us what your assets are, and we agree to believe you. We won't check on any of those things. And by the way, you get a better deal if you inflate your income and your job history and your assets.

BILL MOYERS: You think they really said that to borrowers?

WILLIAM K. BLACK: We know that they said that to borrowers. In fact, they were also called, in the trade, ninja loans.

BILL MOYERS: Ninja?

WILLIAM K. BLACK: Yeah, because no income verification, no job verification, no asset verification.

BILL MOYERS: You're talking about significant American companies.

WILLIAM K. BLACK: Huge! One company produced as many losses as the entire Savings and Loan debacle.

BILL MOYERS: Which company?

WILLIAM K. BLACK: IndyMac specialized in making liars' loans. In 2006 alone, it sold $80 billion dollars of liars' loans to other companies. $80 billion.

BILL MOYERS: And was this happening exclusively in this sub-prime mortgage business?

WILLIAM K. BLACK: No, and that's a big part of the story as well. Even prime loans began to have non-verification. Even Ronald Reagan, you know, said, "Trust, but verify." They just gutted the verification process. We know that will produce enormous fraud, under economic theory, criminology theory, and two thousand years of life experience.

BILL MOYERS: Is it possible that these complex instruments were deliberately created so swindlers could exploit them?

WILLIAM K. BLACK: Oh, absolutely. This stuff, the exotic stuff that you're talking about was created out of things like liars' loans, that were known to be extraordinarily bad. And now it was getting triple-A ratings. Now a triple-A rating is supposed to mean there is zero credit risk. So you take something that not only has significant, it has crushing risk. That's why it's toxic. And you create this fiction that it has zero risk. That itself, of course, is a fraudulent exercise. And again, there was nobody looking, during the Bush years. So finally, only a year ago, we started to have a Congressional investigation of some of these rating agencies, and it's scandalous what came out. What we know now is that the rating agencies never looked at a single loan file. When they finally did look, after the markets had completely collapsed, they found, and I'm quoting Fitch, the smallest of the rating agencies, "the results were disconcerting, in that there was the appearance of fraud in nearly every file we examined."

BILL MOYERS: So if your assumption is correct, your evidence is sound, the bank, the lending company, created a fraud. And the ratings agency that is supposed to test the value of these assets knowingly entered into the fraud. Both parties are committing fraud by intention.

WILLIAM K. BLACK: Right, and the investment banker that — we call it pooling — puts together these bad mortgages, these liars' loans, and creates the toxic waste of these derivatives. All of them do that. And then they sell it to the world and the world just thinks because it has a triple-A rating it must actually be safe. Well, instead, there are 60 and 80 percent losses on these things, because of course they, in reality, are toxic waste.

BILL MOYERS: You're describing what Bernie Madoff did to a limited number of people. But you're saying it's systemic, a systemic Ponzi scheme.

WILLIAM K. BLACK: Oh, Bernie was a piker. He doesn't even get into the front ranks of a Ponzi scheme...

BILL MOYERS: But you're saying our system became a Ponzi scheme.

WILLIAM K. BLACK: Our system...

BILL MOYERS: Our financial system...

WILLIAM K. BLACK: Became a Ponzi scheme. Everybody was buying a pig in the poke. But they were buying a pig in the poke with a pretty pink ribbon, and the pink ribbon said, "Triple-A."

BILL MOYERS: Is there a law against liars' loans?

WILLIAM K. BLACK: Not directly, but there, of course, many laws against fraud, and liars' loans are fraudulent.

BILL MOYERS: Because...

WILLIAM K. BLACK: Because they're not going to be repaid and because they had false representations. They involve deceit, which is the essence of fraud.

BILL MOYERS: Why is it so hard to prosecute? Why hasn't anyone been brought to justice over this?

WILLIAM K. BLACK: Because they didn't even begin to investigate the major lenders until the market had actually collapsed, which is completely contrary to what we did successfully in the Savings and Loan crisis, right? Even while the institutions were reporting they were the most profitable savings and loan in America, we knew they were frauds. And we were moving to close them down. Here, the Justice Department, even though it very appropriately warned, in 2004, that there was an epidemic...

BILL MOYERS: Who did?

WILLIAM K. BLACK: The FBI publicly warned, in September 2004 that there was an epidemic of mortgage fraud, that if it was allowed to continue it would produce a crisis at least as large as the Savings and Loan debacle. And that they were going to make sure that they didn't let that happen. So what goes wrong? After 9/11, the attacks, the Justice Department transfers 500 white-collar specialists in the FBI to national terrorism. Well, we can all understand that. But then, the Bush administration refused to replace the missing 500 agents. So even today, again, as you say, this crisis is 1000 times worse, perhaps, certainly 100 times worse, than the Savings and Loan crisis. There are one-fifth as many FBI agents as worked the Savings and Loan crisis.

BILL MOYERS: You talk about the Bush administration. Of course, there's that famous photograph of some of the regulators in 2003, who come to a press conference with a chainsaw suggesting that they're going to slash, cut business loose from regulation, right?

WILLIAM K. BLACK: Well, they succeeded. And in that picture, by the way, the other — three of the other guys with pruning shears are the...

BILL MOYERS: That's right.

WILLIAM K. BLACK: They're the trade representatives. They're the lobbyists for the bankers. And everybody's grinning. The government's working together with the industry to destroy regulation. Well, we now know what happens when you destroy regulation. You get the biggest financial calamity of anybody under the age of 80.

BILL MOYERS: But I can point you to statements by Larry Summers, who was then Bill Clinton's Secretary of the Treasury, or the other Clinton Secretary of the Treasury, Rubin. I can point you to suspects in both parties, right?

WILLIAM K. BLACK: There were two really big things, under the Clinton administration. One, they got rid of the law that came out of the real-world disasters of the Great Depression. We learned a lot of things in the Great Depression. And one is we had to separate what's called commercial banking from investment banking. That's the Glass-Steagall law. But we thought we were much smarter, supposedly. So we got rid of that law, and that was bipartisan. And the other thing is we passed a law, because there was a very good regulator, Brooksley Born, that everybody should know about and probably doesn't. She tried to do the right thing to regulate one of these exotic derivatives that you're talking about. We call them C.D.F.S. And Summers, Rubin, and Phil Gramm came together to say not only will we block this particular regulation. We will pass a law that says you can't regulate. And it's this type of derivative that is most involved in the AIG scandal. AIG all by itself, cost the same as the entire Savings and Loan debacle.

BILL MOYERS: What did AIG contribute? What did they do wrong?

WILLIAM K. BLACK: They made bad loans. Their type of loan was to sell a guarantee, right? And they charged a lot of fees up front. So, they booked a lot of income. Paid enormous bonuses. The bonuses we're thinking about now, they're much smaller than these bonuses that were also the product of accounting fraud. And they got very, very rich. But, of course, then they had guaranteed this toxic waste. These liars' loans. Well, we've just gone through why those toxic waste, those liars' loans, are going to have enormous losses. And so, you have to pay the guarantee on those enormous losses. And you go bankrupt. Except that you don't in the modern world, because you've come to the United States, and the taxpayers play the fool. Under Secretary Geithner and under Secretary Paulson before him... we took $5 billion dollars, for example, in U.S. taxpayer money. And sent it to a huge Swiss Bank called UBS. At the same time that that bank was defrauding the taxpayers of America. And we were bringing a criminal case against them. We eventually get them to pay a $780 million fine, but wait, we gave them $5 billion. So, the taxpayers of America paid the fine of a Swiss Bank. And why are we bailing out somebody who that is defrauding us?

BILL MOYERS: And why...

WILLIAM K. BLACK: How mad is this?

BILL MOYERS: What is your explanation for why the bankers who created this mess are still calling the shots?

WILLIAM K. BLACK: Well, that, especially after what's just happened at G.M., that's... it's scandalous.

BILL MOYERS: Why are they firing the president of G.M. and not firing the head of all these banks that are involved?

WILLIAM K. BLACK: There are two reasons. One, they're much closer to the bankers. These are people from the banking industry. And they have a lot more sympathy. In fact, they're outright hostile to autoworkers, as you can see. They want to bash all of their contracts. But when they get to banking, they say, ‘contracts, sacred.' But the other element of your question is we don't want to change the bankers, because if we do, if we put honest people in, who didn't cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up.

BILL MOYERS: The cover up?

WILLIAM K. BLACK: Sure. The cover up.

BILL MOYERS: That's a serious charge.

WILLIAM K. BLACK: Of course.

BILL MOYERS: Who's covering up?

WILLIAM K. BLACK: Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it's going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have masses losses, and that they're fine.

These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed, not because...

BILL MOYERS: What do you mean?

WILLIAM K. BLACK: Well, Geithner has, was one of our nation's top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he's a failed legacy regulator.

BILL MOYERS: But he denies that he was a regulator. Let me show you some of his testimony before Congress. Take a look at this.

TIMOTHY GEITHNER: I've never been a regulator, for better or worse. And I think you're right to say that we have to be very skeptical that regulation can solve all of these problems. We have parts of our system that are overwhelmed by regulation.

Overwhelmed by regulation! It wasn't the absence of regulation that was the problem, it was despite the presence of regulation you've got huge risks that build up.

WILLIAM K. BLACK: Well, he may be right that he never regulated, but his job was to regulate. That was his mission statement.

BILL MOYERS: As?

WILLIAM K. BLACK: As president of the Federal Reserve Bank of New York, which is responsible for regulating most of the largest bank holding companies in America. And he's completely wrong that we had too much regulation in some of these areas. I mean, he gives no details, obviously. But that's just plain wrong.

BILL MOYERS: How is this happening? I mean why is it happening?

WILLIAM K. BLACK: Until you get the facts, it's harder to blow all this up. And, of course, the entire strategy is to keep people from getting the facts.

BILL MOYERS: What facts?

WILLIAM K. BLACK: The facts about how bad the condition of the banks is. So, as long as I keep the old CEO who caused the problems, is he going to go vigorously around finding the problems? Finding the frauds?

BILL MOYERS: You--

WILLIAM K. BLACK: Taking away people's bonuses?

BILL MOYERS: To hear you say this is unusual because you supported Barack Obama, during the campaign. But you're seeming disillusioned now.

WILLIAM K. BLACK: Well, certainly in the financial sphere, I am. I think, first, the policies are substantively bad. Second, I think they completely lack integrity. Third, they violate the rule of law. This is being done just like Secretary Paulson did it. In violation of the law. We adopted a law after the Savings and Loan crisis, called the Prompt Corrective Action Law. And it requires them to close these institutions. And they're refusing to obey the law.

BILL MOYERS: In other words, they could have closed these banks without nationalizing them?

WILLIAM K. BLACK: Well, you do a receivership. No one -- Ronald Reagan did receiverships. Nobody called it nationalization.

BILL MOYERS: And that's a law?

WILLIAM K. BLACK: That's the law.

BILL MOYERS: So, Paulson could have done this? Geithner could do this?

WILLIAM K. BLACK: Not could. Was mandated--

BILL MOYERS: By the law.

WILLIAM K. BLACK: By the law.

BILL MOYERS: This law, you're talking about.

WILLIAM K. BLACK: Yes.

BILL MOYERS: What the reason they give for not doing it?

WILLIAM K. BLACK: They ignore it. And nobody calls them on it.

BILL MOYERS: Well, where's Congress? Where's the press? Where--

WILLIAM K. BLACK: Well, where's the Pecora investigation?

BILL MOYERS: The what?

WILLIAM K. BLACK: The Pecora investigation. The Great Depression, we said, "Hey, we have to learn the facts. What caused this disaster, so that we can take steps, like pass the Glass-Steagall law, that will prevent future disasters?" Where's our investigation?

What would happen if after a plane crashes, we said, "Oh, we don't want to look in the past. We want to be forward looking. Many people might have been, you know, we don't want to pass blame. No. We have a nonpartisan, skilled inquiry. We spend lots of money on, get really bright people. And we find out, to the best of our ability, what caused every single major plane crash in America. And because of that, aviation has an extraordinarily good safety record. We ought to follow the same policies in the financial sphere. We have to find out what caused the disasters, or we will keep reliving them. And here, we've got a double tragedy. It isn't just that we are failing to learn from the mistakes of the past. We're failing to learn from the successes of the past.

BILL MOYERS: What do you mean?

WILLIAM K. BLACK: In the Savings and Loan debacle, we developed excellent ways for dealing with the frauds, and for dealing with the failed institutions. And for 15 years after the Savings and Loan crisis, didn't matter which party was in power, the U.S. Treasury Secretary would fly over to Tokyo and tell the Japanese, "You ought to do things the way we did in the Savings and Loan crisis, because it worked really well. Instead you're covering up the bank losses, because you know, you say you need confidence. And so, we have to lie to the people to create confidence. And it doesn't work. You will cause your recession to continue and continue." And the Japanese call it the lost decade. That was the result. So, now we get in trouble, and what do we do? We adopt the Japanese approach of lying about the assets. And you know what? It's working just as well as it did in Japan.

BILL MOYERS: Yeah. Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?

WILLIAM K. BLACK: Absolutely.

BILL MOYERS: You are.

WILLIAM K. BLACK: Absolutely, because they are scared to death. All right? They're scared to death of a collapse. They're afraid that if they admit the truth, that many of the large banks are insolvent. They think Americans are a bunch of cowards, and that we'll run screaming to the exits. And we won't rely on deposit insurance. And, by the way, you can rely on deposit insurance. And it's foolishness. All right? Now, it may be worse than that. You can impute more cynical motives. But I think they are sincerely just panicked about, "We just can't let the big banks fail." That's wrong.

BILL MOYERS: But what might happen, at this point, if in fact they keep from us the true health of the banks?

WILLIAM K. BLACK: Well, then the banks will, as they did in Japan, either stay enormously weak, or Treasury will be forced to increasingly absurd giveaways of taxpayer money. We've seen how horrific AIG -- and remember, they kept secrets from everyone.

BILL MOYERS: A.I.G. did?

WILLIAM K. BLACK: What we're doing with -- no, Treasury and both administrations. The Bush administration and now the Obama administration kept secret from us what was being done with AIG. AIG was being used secretly to bail out favored banks like UBS and like Goldman Sachs. Secretary Paulson's firm, that he had come from being CEO. It got the largest amount of money. $12.9 billion. And they didn't want us to know that. And it was only Congressional pressure, and not Congressional pressure, by the way, on Geithner, but Congressional pressure on AIG.

Where Congress said, "We will not give you a single penny more unless we know who received the money." And, you know, when he was Treasury Secretary, Paulson created a recommendation group to tell Treasury what they ought to do with AIG. And he put Goldman Sachs on it.

BILL MOYERS: Even though Goldman Sachs had a big vested stake.

WILLIAM K. BLACK: Massive stake. And even though he had just been CEO of Goldman Sachs before becoming Treasury Secretary. Now, in most stages in American history, that would be a scandal of such proportions that he wouldn't be allowed in civilized society.

BILL MOYERS: Yeah, like a conflict of interest, it seems.

WILLIAM K. BLACK: Massive conflict of interests.

BILL MOYERS: So, how did he get away with it?

WILLIAM K. BLACK: I don't know whether we've lost our capability of outrage. Or whether the cover up has been so successful that people just don't have the facts to react to it.

BILL MOYERS: Who's going to get the facts?

WILLIAM K. BLACK: We need some chairmen or chairwomen--

BILL MOYERS: In Congress.

WILLIAM K. BLACK: --in Congress, to hold the necessary hearings. And we can blast this out. But if you leave the failed CEOs in place, it isn't just that they're terrible business people, though they are. It isn't just that they lack integrity, though they do. Because they were engaged in these frauds. But they're not going to disclose the truth about the assets.

BILL MOYERS: And we have to know that, in order to know what?

WILLIAM K. BLACK: To know everything. To know who committed the frauds. Whose bonuses we should recover. How much the assets are worth. How much they should be sold for. Is the bank insolvent, such that we should resolve it in this way? It's the predicate, right? You need to know the facts to make intelligent decisions. And they're deliberately leaving in place the people that caused the problem, because they don't want the facts. And this is not new. The Reagan Administration's central priority, at all times, during the Savings and Loan crisis, was covering up the losses.

BILL MOYERS: So, you're saying that people in power, political power, and financial power, act in concert when their own behinds are in the ringer, right?

WILLIAM K. BLACK: That's right. And it's particularly a crisis that brings this out, because then the class of the banker says, "You've got to keep the information away from the public or everything will collapse. If they understand how bad it is, they'll run for the exits."

BILL MOYERS: Yeah, and this week in New York, at this conference, you described this as more than a financial crisis. You called it a moral crisis.

WILLIAM K. BLACK: Yes.

BILL MOYERS: Why?

WILLIAM K. BLACK: Because it is a fundamental lack of integrity. But also because, if you look back at crises, an economist who is also a presidential appointee, as a regulator in the Savings and Loan industry, right here in New York, Larry White, wrote a book about the Savings and Loan crisis. And he said, you know, one of the most interesting questions is why so few people engaged in fraud? Because objectively, you could have gotten away with it. But only about ten percent of the CEOs, engaged in fraud. So, 90 percent of them were restrained by ethics and integrity. So, far more than law or by F.B.I. agents, it's our integrity that often prevents the greatest abuses. And what we had in this crisis, instead of the Savings and Loan, is the most elite institutions in America engaging or facilitating fraud.

BILL MOYERS: This wound that you say has been inflicted on American life. The loss of worker's income. And security and pensions and future happened, because of the misconduct of a relatively few, very well-heeled people, in very well-decorated corporate suites, right?

WILLIAM K. BLACK: Right.

BILL MOYERS: It was relatively a handful of people.

WILLIAM K. BLACK: And their ideologies, which swept away regulation. So, in the example, regulation means that cheaters don't prosper. So, instead of being bad for capitalism, it's what saves capitalism. "Honest purveyors prosper" is what we want. And you need regulation and law enforcement to be able to do this. The tragedy of this crisis is it didn't need to happen at all.

BILL MOYERS: When you wake in the middle of the night, thinking about your work, what do you make of that? What do you tell yourself?

WILLIAM K. BLACK: There's a saying that we took great comfort in. It's actually by the Dutch, who were fighting this impossible war for independence against what was then the most powerful nation in the world, Spain. And their motto was, "It is not necessary to hope in order to persevere."

Now, going forward, get rid of the people that have caused the problems. That's a pretty straightforward thing, as well. Why would we keep CEOs and CFOs and other senior officers, that caused the problems? That's facially nuts. That's our current system.

So stop that current system. We're hiding the losses, instead of trying to find out the real losses. Stop that, because you need good information to make good decisions, right? Follow what works instead of what's failed. Start appointing people who have records of success, instead of records of failure. That would be another nice place to start. There are lots of things we can do. Even today, as late as it is. Even though they've had a terrible start to the administration. They could change, and they could change within weeks. And by the way, the folks who are the better regulators, they paid their taxes. So, you can get them through the vetting process a lot quicker.

BILL MOYERS: William Black, thank you very much for being with me on the Journal.

WILLIAM K. BLACK: Thank you so much.

BILL MOYERS: One of the great reporters of the 20th century, I.F. Stone, told journalism students never to forget that "All governments lie." He could speak with authority, having spent seven decades exposing deception and official lies by digging deep into government documents and transcripts. He gained his greatest fame and impact publishing the newsletter called "I.F. Stone's Weekly," taking on McCarthyism, racism in the military, and the Vietnam War. "In this age of corporation men," he wrote in 1963, "I am an independent capitalist, the owner of my own enterprise." This critically acclaimed documentary, produced in1973, offered an inside look at how Izzy Stone worked.

I.F. STONE: To be able to spit in their eye and do what you think is right and report the news and have enough readers to make some impact is such a pleasure that you forget, you forget what you are writing about. It becomes, you know, it like, you are like a journalistic Nero fiddling while Rome burns and having a hell of a good time or like a small boy covering a hell of a big fire. It's just wonderful and exciting. You are a cub reporter and God has given you big fire to cover. And you forget, you forget it is really burning.

BILL MOYERS: This week, twenty years after Stone's death, the Park Center for Independent Media at Ithaca College in upstate New York presented the first annual Izzy Award to two journalists it describes as "pillars of alternative journalism," honored "for their courage and persistence."

Stone's son Jeremy spoke at the ceremony:

JEREMY STONE: His capacity for thinking independently, and acting on principle, isolated him from just about everyone. He often said he was so happy in his work that he should be arrested. But the truth is the consequences for him of speaking truth to power, was for a number of decades, loneliness.

BILL MOYERS: The recipients of the first Izzy are with me now.

Amy Goodman is the executive producer and co-host of DEMOCRACY NOW! a daily television and radio news program that airs on more than 750 outlets and is streamed on the internet. Her latest book, "Standing up to the Madness: Ordinary Heroes in Extraordinary Times," co-authored with her brother David, is out in paperback this week.

Glenn Greenwald is a constitutional lawyer until he turned to journalism after 9/11. His blog, "Unclaimed Territory," on Salon.com is one of the most widely read on the internet. His books include this one, a best seller, "How Would a Patriot Act? Defending American Values from a President Run Amok."

Welcome to both of you.

AMY GOODMAN: It's great to be with you.

BILL MOYERS: And congratulations to both of you.

GLENN GREENWALD: Thank you.

BILL MOYERS: Glenn, you were too young to know Izzy Stone, but do you feel, as he said about himself, lonely and marginalized for being independent?

GLENN GREENWALD: Yes and no. In one sense, it's clearly the case that if you are a critic of political power and the media establishment that there are going to be lots of opportunities that you end up not being able to take advantage of. There are going to be lots of invitations that ordinarily you might receive that you end up not getting. Lots of people who shun you. Particularly the targets of your critique. I think that's quite natural. And so, in that sense, I think if you tip, if you purposely remain on the outside of establishment power, in order to critique it, there are going to be lots of episodes that produce a form of loneliness. Which I think is actually quite gratifying and rewarding, and a hallmark of the fact that you're doing the right thing.

But I think one thing that has changed is that there are now lots of other mechanisms, certainly as compared as to when he was writing, that enable like-minded people who are dissatisfied and angry with the establishment to find one another. And to realize that they're not nearly as rare, in terms of what it is that they think, as perhaps even 10, 15 years ago, when there was a monopoly on political discourse.

AMY GOODMAN: You're not alone when you think about the awesome responsibility we have as journalists. With a microphone going to where the silence is. Going to where most people would want to go to ask questions and they can't. So, all of those people are there. And then standing on the shoulders of people like Izzy Stone, I.F. Stone, and all those who feel it's so critical that we have a sacred mission as journalists. There's a reason why our profession, journalism, is the only one explicitly protected by the U.S. Constitution. Because we're supposed to be the check and balance on power. That's our job.

GLENN GREENWALD: Well, what I think is interesting is to look at what journalists, establishment journalists, who work in the largest corporations in the country, in the media division, say about what their role is. In order to understand how the reporting on Iraq was done. How it's done on the financial crisis. Last month Howard Fineman, the "Newsweek" reporter, and MSNBC contributor, wrote an article in which a column, in which he said that the establishment is now worried that Barack Obama is not up to the job. And he made clear that he was speaking on behalf of the establishment, as a member of it. And he said that the establishment, to the extent it exists in America, is now comprised of three stools. The financiers on Wall Street, political elites in Washington, and media stars in the New York/Washington corridor. And there's a "Newsweek" cover story by Evan Thomas, who's a long time Washington insider reporter. And it's concerning Paul Krugman's status as a critic of Obama from the Left. And in this article Evan Thomas, I thought quite revealingly declared himself, as well, like Howard Fineman did, to be a member of the establishment persuasion, as he called it. And what he said was that, by definition, members of the establishment are devoted to preserving the existing order. The prevailing status quo. Keeping things the way they are.

BILL MOYERS: Yeah, actually.

GLENN GREENWALD: Defending institutional prerogatives.

BILL MOYERS: I actually brought his quote. "Protecting traditional institutions, can be healthy and useful, stabilizing, and reassuring." I admire his honesty, but I can't imagine either of you saying anything like that.

GLENN GREENWALD: If you only speak to a very narrow slice of people. If you spend most of your time in Washington only speaking to political elites in both parties, or corporate executives and lobbyists, you have a very distorted picture of what public opinion is. I mean, a lot of times both political parties will agree on a certain position that a huge number of Americans, often even majorities actually reject. And yet, if all you're doing is talking to people in political power and political and financial elite, you will believe that the range of opinion is much narrower than it actually is. And so, it's not even some sort of Machiavellian or conspiratorial effort, sometimes, to exclude certain opinions. It's actually the fact that reporters and media stars and corporate and establishment journalists are so embedded into the establishment as a cultural and sociological matter. That they're so completely insular and out of touch from what public opinion actually is. And polls show that huge numbers of issues and positions that are held by large numbers of Americans are ones that are virtually never heard in our media discussions.

AMY GOODMAN: I think the way the media works is they show the spectrum of opinion between the Democrats and the Republicans in Washington. Often that is very narrow. You look at the lead up to the invasion in Iraq, the core, the major Democrats joined with the Republicans in enabling that. And you look at now with health care, the same thing. But the fact is, the majority of Americans fall outside of that opinion. And it's our role in the media not just to bring you that spectrum, but to, well, provide — I see the media as a huge kitchen table that we all sit around and debate and discuss these critical issues. To open up. That's what the American people want. And it's our responsibility to do it.

BILL MOYERS: When Tim Russert died, the long time and very popular moderator of "Meet the Press," and a friend of mine, by the way. The political and media elites in Washington turned out for him in mass. Do you realize that's not going to happen to you when your time comes?

GLENN GREENWALD: Yeah, but, you know, I'm actually, I consider that to be a good thing. I mean, I found it almost oxymoronic. That Tim Russert was constantly held up as the symbol of what an adversarial journalist would be. That he was supposedly this great thorn in the side of power. And yet, his celebrity was so great that when he died it was almost treated as though it was a death of Princess Diana, and everyone rushed forward in order to from the highest political elites to media stars to treat him as what he, in fact, was. Which was a celebrity. And if you look at what Tim Russert actually did there were a couple of actually interesting episodes where not his image, but the reality of what he did was unmasked, during the Lewis Libby trial, in particular. The trial of Dick Cheney's Chief of Staff for obstruction of justice. That involved a lot of journalists, because they were participants in the effort to unmask Valerie Plame Wilson and to smear Joe Wilson. And what he said during that trial, under oath, was they asked him, well, when you have a conversation with one of your sources, with the government official, when is it that you decide that it's confidential. And when is it that you can report it? And what he said was, well, actually, when I have a conversation with the government official, I consider that conversation presumptively confidential. And I will disclose it only if they authorize me to do so. And it was it was an extraordinary revelation, because if you talk to government officials, and you only disclose to the public things that you know, when they allow you or give you permission to do so, what you're really describing is the role of a propagandist, not of a journalist. And yet, that was what you know, Tim Russert in many ways was. That's what his celebrity was based in.

BILL MOYERS: In fact, Dick Cheney's P.R. fellow said that "Meet the Press" was the ideal format for Cheney to control the message. What does that tell you about government and the media inside Washington?

AMY GOODMAN: That media is broken right now. And I think the embedding process has brought the media to an all time low. You have reporters embedded in the front lines of troops in Iraq and Afghanistan. What about being embedded in Iraqi hospitals and Afghan communities? In the peace movement around the world? And not only the problem of embedding in troops. But the problem is being embedded in the establishment.

We occupy an uncomfortable position. We're supposed to be outside. It's not one that gets a lot of perks, it's one that makes journalism so important to the functioning of a democratic society. Now, I'll tell you, especially around issues around war. And we see just the failing, once again, in the press, not bringing up questions about the expansion of war in Afghanistan. And the same way that questions weren't asked in the lead up to the invasion of Iraq.

BILL MOYERS: Watching the news over the over the last two days, while Obama, President Obama, is in London. Watching all of the demonstrators there, some of them violent and militant, but thousands of them not. Marching to a bank, and protesting. I thought of something you wrote recently. You said that for the magnitude of this financial crisis, there should be a lot more popular rage in this country. Why do you think there isn't? Because the taxi driver this morning, coming down here, to me, was angry as hell.

GLENN GREENWALD: Well, it's interesting. I think there actually is a lot more rage, and a lot more anger, and a lot more dissatisfaction. I mean, even before this financial crisis. If you looked the polling data in America, it was really extraordinary. They would ask citizens, do you think the country is on the right track or on the wrong track? Profoundly or mildly? And it was something like 85 percent of Americans said that the government was profoundly off course. Institutions across the board have fallen, almost collapsed, in terms of the esteem with which the public holds them. And so, I think there is a very pervasive anger on the part of the citizenry. Not with a particular political party, or a particular politician, or a particular ideology, but with the way in which fundamentally the government and the elites, what we've been calling the establishment, are functioning in a self interested manner, in which they're operating. And I think one of the reasons why that is diminished and obscured is precisely, because, if you look at what the quote from Evan Thomas says. And there's lot of others, from media stars, where they say the same thing. They are not on the outside of the establishment, they are members of the establishment. They work for the largest corporations. They live in Washington. Socio-economically, their colleagues and partners and family members are people within the government, within the establishment. And what they want to do is to protect and defend the establishment, more than anything else. To protect the idea that the establishment is functioning properly. And so, their interest is to minimize the public anger and the public rage.

BILL MOYERS: When Tim Russert died, I thought they should ask Jon Stewart to take over at "Meet the Press" because he would go after the elites, and liberated everybody else in Washington would follow suit, and break up that cozy game.

AMY GOODMAN: I mean, look, what is it that Jon Stewart and Stephen Colbert represent? They represent what Izzy Stone said. Governments lie. And every day, as they make us laugh, and also make you cry when you think about the reality of it. They are exposing what the hypocrites are saying. And we accept it, because it's considered comedy. But it is a, it's so important, when you look at it compared to the mainstream press.

GLENN GREENWALD: Let me just....

BILL MOYERS; Yes. No please.

GLENN GREENWALD: The idea that Jon Stewart would be his replacement is something that would never happen. Why? Because one of the focal points of Jon Stewart's commentary is how corrupt the media is, in particular cable news television shows are. So, NBC will never broadcast a fundamental media criticism because they are implicated by it. Why would General Electric, the corporation that owns NBC News want to put on their air somebody who makes an eloquent and articulate case against the military state and imperialistic and aggressive foreign policies from which they benefit so greatly or be a fundamental critic of the government, the federal government, on whom General Electric relies? It's contrary to their interest.

BILL MOYERS: After President Obama's recent and second primetime news conference, I had a wonderful letter from a viewer saying that she just does not think that the President should exercise the privilege of calling on the reporters. That the reporters should get together, they should meet, and choose one of their own to call on the reporters. It's never going to happen.

AMY GOODMAN: Oh, I mean, I think that's very important. And I think independent media has to be well represented right there. I think there's a reason why independent media is growing all over this country. And it was when President Bush could not find weapons of mass destruction, it exposed more than President Bush. People said, how did the media get it so wrong? And they started looking for other sources. I think that's why DEMOCRACY NOW! is growing so much, and why independent media, community radio and television, and, of course, the internet as well. People are looking for alternative sources of information. Looking abroad, too, at all of the different forms of information access to information we can get.

BILL MOYERS: But you know, you talk about independent media, and it is growing, as you say. But Jon Stewart and Steve Colbert, do not work for independent media. They work for a mega-media conglomerate. And yet, they get away with what no one else gets away with. How do you explain that? Is it simply the use of humor to reach the core of truth that goes down with a little more taste than it would if we.

AMY GOODMAN: And that they're making them more money. And yeah, and...

BILL MOYERS: Well, that's true, too.

AMY GOODMAN: That plays a key role.

GLENN GREENWALD: I think you're absolutely right. And I think you're absolutely right that their voices, which are often quite subversive. I mean, I think the speech that Stephen Colbert gave to the 2006 White House Correspondent's Dinner, with George Bush sitting there, where he essentially mocked the entire press core to their face.

BILL MOYERS: And when Jon Stewart went on CROSSFIRE and said you guys are hurting America.

GLENN GREENWALD: I think the reason they get away with that, and are invited on those shows is because they're treated as comedians. And so, the sort of safe guards are lowered a little bit.

BILL MOYERS: Fortunately, there are a lot of mainstream journalists who cover not just what politicians say, but what they do. I think of people like Charlie Savage at the BOSTON GLOBE now the NEW YORK TIMES. I think of Thomas Ricks at the WASHINGTON POST. I think of Gretchen Morgenson, Floyd Norris of the NEW YORK TIMES. Joe Nocera. I think about McClatchy Bureau in Washington which was very ahead of the curve on the build up to the Iraq War and to the financial crisis. Why aren't there not more of them?

AMY GOODMAN: I think people know what will make them rise in the corporate ladder, and will get them marginalized. You know, at the Republican Convention I was arrested along with my colleagues at DEMOCRACY NOW! And we were not alone. More than 40 reporters--

BILL MOYERS: For what? Why you were arrested?

AMY GOODMAN: Well, it was the first day of the convention. And two of our producers, Nicole Salazar and Sharif Abdel Kouddous, were out covering a protest. We had all covered it in the morning. I'd gone into the convention floor. I got a text, a call on my cell phone that our producers were being arrested, that they were hurt. I raced to the big parking lot, where they were covering a protest. The riot police had the whole area contained. I went up. They could see I had all the credentials that allowed me to interview Presidents and Vice Presidents. I said I need to have our two reporters released now. You can see they have credentials. They ripped me through the line, pulled my arms back, slapped those rigid plastic handcuffs on, pushed me against the wall, and put me on the ground.

POLICE AT REPUBLICAN NATIONAL CONVENTION: Back up! Back up!

AMY GOODMAN: I wasn't able to find Nicole right away. I saw Sharif. They brought me to him. We were standing with our credentials, yet we were handcuffed. I was loudly protesting, saying, you know we're journalists. You must release us, whereupon the Secret Service came over and ripped the credentials from around our necks. Now, we were charged with misdemeanor. I was charged with misdemeanor. They were facing P.C. felony riot charges. Ultimately, we were released after hours, because the video online of our arrest went viral, watched more in the first two days of the convention than any other video on YouTube. And that's what freed us. It was the grassroots outcry.

WOMAN: Press! Press!

AMY GOODMAN: And when I was brought into the convention center to tell this story to the networks, one of the reporters for the network said, "How come I didn't get arrested?" And I said, "Oh, were you out covering the protests?" And he said, "No." And, you know, like Woody Allen says, 90 percent of life is just showing up. You got to get out there. And if the problem with this... It's not just a violation of freedom of the press, Bill. It's a violation of the public's right to know. If they're just inside the convention, they get one message. The orchestrated message. And that's important to cover. You got to get into the corporate suites. Who's funding all of this? And you have to get into the streets. Democracy's a messy thing. And all of these voices must be heard.

BILL MOYERS: Glenn, what stories are you covering that you think are being ignored by mainstream press?

GLENN GREENWALD: Well, let's start with the fact that there is a very widespread perception, one that's growing with more and more revelations, by the day. That what the United States did over the last eight years, in terms of how we detained people, how we interrogated people, how we tortured people and kidnapped them, and shipped them off to black sites, where they were completely disappeared is something that is not only disgraceful, and a fundamental violation of what we claim our political values to be but are crimes. Very serious war crimes. If you look at political discussions that take place on most major television no shows, about that. What you'll find is this implied consensus that Americans don't want their political leaders spending time on investigations and looking to the past. And that's absolutely false. It's a case where public opinion is distorted. Polls show that large numbers of Americans, even 50 percent believe that there should be investigations into whether or not crimes were committed. Because if we don't investigate when our political leaders break the law, it means that there's no rule of law. Look at our policy toward Israel, and this continuous blind support for whatever the Israeli government does. Something that's about to get even more harmful to our interests now that there's a very right wing extremist party with racist factions within the government in Israel. Polls show that if you ask Americans do you think the U.S. Government should be on the side of Israel, on the side of the Palestinians, or should be even-handed? Seventy percent, seven out of ten, will say that the government should be even-handed in that conflict. And yet, that is an opinion that is virtually never heard. Debates about our policy toward Israel is something that is essentially frozen out. You can go across those issues, and find the same dynamic.

BILL MOYERS: I sometimes sense some frustration in both of your voices. And I know that I.F. Stone was often frustrated. I mean, no one dug deeper into government documents than he did. And he saw the difference between the official view of reality, and the reality on the ground. And yet, for all of his exposure of these lies and deceptions and horrors, the Vietnam War raged on another ten years. Do you ever feel futile over the results of what you do?

GLENN GREENWALD: Personally, I actually don't. And, you know, I do think there is a difference. I think that the advent of technology the internet, in particular. And also the collapse of trust that so many Americans have now placed in the political and media institutions, as Amy was saying earlier. Largely, though not exclusively, as a result of how transparent the lies were over Iraq. Have really caused so many more citizens than ever before to question the kind of establishment instruments that have been used for so long to propagandize the citizenry. And to seek out alternative sources of truth. You know, change of this type is always extremely incremental. And it can be kind of imperceptible and very frustratingly slow. But I think it clearly is happening. And the more profound and transparent are the failures of the institutions. The more the citizenry will be open to alternative ways of thinking. The greater the crises are, I think, the more people will seek out opinions that may even five, ten years ago have been entirely excluded. And so, I think when you combine those events with the potency of technology, the advent of bloggers, and alternative media, like what Amy is doing, and the growth of it. I actually feel rather optimistic that the work that we do is paying off.

BILL MOYERS: What exactly are you doing? You came in here from Ithaca and you're on your way to Boston? You're on a tour of 70.

AMY GOODMAN: A 70 city tour. And.

BILL MOYERS: All over the country.

AMY GOODMAN: Shoring up people.

BILL MOYERS: What are you doing?

AMY GOODMAN: Shoring up stations, community, radio, and television. Public radio and television stations all over this country. It is essential that these forums for independent voices survive. We're on a "Standing up to the Madness" tour. We broadcast from different cities every day. And insure that the voices of people at the grassroots be heard.

BILL MOYERS: What are you hearing?

AMY GOODMAN: Oh. In Seattle, we brought in people from Nickelsville. Named for the Mayor of Seattle. Who were in a tent city. And we're seeing the...

BILL MOYERS: Poor people. Homeless people.

AMY GOODMAN: Poor people, who are homeless. Who are and we're seeing this all over the country. Hearing their voices, and talking about how people are organizing around health care, all over this country. Seeing the mechanism of social change, bringing on the voices of community, social movement groups, all over this country. And all over the world. I the media should be connecting the dots. That's where the experts are. In their communities, working on the critical issues that people confront at a local level that have global implications.

BILL MOYERS: Amy Goodman, Glenn Greenwald, thank for being with me on the Journal.

AMY GOODMAN: Thanks, Bill.

GLENN GREENWALD: Pleasure.

BILL MOYERS: That's it for this edition of the Journal. Next week, we'll present a special edition. Abraham Lincoln revealed...

SAM WATERSTON: See this man. He was one of you and yet he became Abraham Lincoln.

BILL MOYERS: "Law and Order's" Sam Waterston.

HAROLD HOLZER: We cannot escape history.

BILL MOYERS: And historian Harold Holzer recall our greatest president.

SAM WATERSTON: Let the rail splitter awake! Let Abraham come back, let his old yeast rise...

BILL MOYERS: In this Bicentennial of his birth, they tell his story.

SAM WATERSTON: But they killed him in his kindness, in their madness and their blindness. And they killed him from behind.

BILL MOYERS: That's next week on the Journal. In the meantime, for additional analysis from Glenn Greenwald and Amy Goodman, and to explore the life and legacy of I.F. Stone, go to the Moyers website at pbs.org. I'm Bill Moyers and I'll see you next week.

For Educators    About the Series    Bill Moyers on PBS