policy. but it was also about the future of britain's two-party political system now that a third candidate is threatening massive change. >> brown: margaret warner has the story of five americans awaiting trial in pakistan on terrorism charges. >> woodruff: dave iverson of kqed san francisco updates relief efforts in haiti, 100 days after the earthquake. >> brown: and, we look at a big man on the basketball court, making his mark with an art show. >> i named this show "size does matter" because when something is so big and beautiful you have to stop and take a second look. >> woodruff: that's all ahead on tonight's "newshour." major funding for the pbs newshour has been provided by: when someone you count on is not responsive, bad things could monsanto. producing more. conserving more. improving farmers' lives. that's sustainable agriculture. more at producemoreconservemore.com. >> and by the bill and melinda gates foundation. dedicated to the idea that all people deserve the chance to live a healthy productive life. and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> woodruff: the president's message today was part rebuke, part appeal for help, to prevent another financial meltdown. he made it in new york city to leaders of the financial community, as a showdown looms in the u.s. senate. >> woodruff: mr. obama chose cooper union college as his venue-- just a short ride from wall street. the speech was sharply worded, taking the financial sector to task for the meltdown of 2008. >> a free market was never meant to be a free license to take whatever you can get, however you can get it. that's what happened too often in the years leading up to this crisis. some-- and let me be clear, not all, but some on wall street forgot that behind every dollar traded or leveraged, there's a family looking to buy a house, or pay for an education, or open a business, save for retirement. what happens on wall street has real consequences across the country, across our economy. >> woodruff: the president then made his case for what he called "updated, common sense" regulations, as envisioned in the senate democrats' bill. they include: limits on the risks that banks take; reforms for executive compensation; new transparency rules for derivatives and other complicated financial instruments, and a new consumer protection agency. the plan also creates a fund with money collected from banks, to help dismantle large institutions on the brink of collapse. the president insisted it would put a stop to federal bailouts. >> the goal is to make certain that taxpayers are never again on the hook because a firm is deemed too big to fail. >> woodruff: but mr. obama charged that industry lobbyists are engaged in "furious efforts" to thwart the legislation. >> i'm sure that some of those lobbyists work for you and they're doing what they are being paid to do. but i'm here today, specifically, when i speak to the titans of industry here, because i want to urge you to join us instead of fighting us in this effort. >> woodruff: sitting in the audience were major players, including lloyd blankfein, chief of goldman sachs. last week, the u.s. securities and exchange commission accused the investment bank of defrauding investors. the president's other audience was back in washington, where efforts continued to fashion a senate compromise. but shortly before the president spoke, senate republican leader mitch mcconnell, said the public still has hard questions about bailouts and other issues. >> it should come as no surprise to anyone that when we're talking about a giant regulatory reform bill, the american people aren't all that inclined to take our word for it when we say, it doesn't allow for bailouts, or that it won't kill jobs, or that it won't enable the administration to pick winners or losers. they've heard all that before, and they've been burned. this time they want us to prove it. >> woodruff: senate democrats moved today to limit debate on the bill and aim for final action next week. a crucial test vote is set for monday afternoon. a separate financial reform bill has already passed the house. >> brown: we'll have more on the push for financial reform after the other news of the day. for that, here's hari sreenivasan in our newsroom. >> sreenivasan: air traffic over europe returned to near normal levels today. airlines labored to recover after volcanic ash forced them to cancel more than 100,000 flights in the last week. a normal day would see 28,000 flights over europe, and virtually all were taking off today, fully loaded. planes were packed as airlines tried to jam in passengers who've been stuck for days. >> ( translated ): my mother died in brazil and i was supposed to be there three days ago. costs have increased but i'm happy to get there now and that's all that matters. >> sreenivasan: carriers added more flights and larger planes, but they acknowledged there was no quick solution to the backlog. in the meantime, some travelers were treated to luxury. a chartered cruise ship picked up britons stranded in spain, for the trip back home. >> we've had so much trauma! wondering whether you go one day, and then we've been promised the next day. so it's absolutely wonderful. >> sreenivasan: but the volcano in iceland that caused the trouble was still erupting. officials in scandanavia and scotland were forced to close airports again today, after shifting winds sent a new ash cloud into their air space. that will only add to the staggering losses facing the airlines, now expected to reach $2 billion. an offshore oil platform sank in the gulf of mexico today, raising fears of a major oil spill. the rig exploded into flames yesterday and had been burning ever since, 50 miles off the coast of louisiana. it finally went under today, with 11 workers still missing and feared dead. the coast guard said the damaged well could spill up to 8,000 barrels of crude oil a day. another roman catholic bishop has resigned in europe, amid the growing child sex abuse scandal. today, bishop james moriarty became the third high ranking church official in ireland to step down. he said he failed to challenge the culture of covering up for priests. the scandal also prompted apologies from catholic bishops in england and wales. they admitted terrible crimes were committed over the years. new trouble today in bangkok, thailand. five grenades killed at least one person and injured more than 70 others. the grenades exploded near the site where anti-government protesters have camped in the city's business district. the deputy prime minister said the weapons were launched from inside the camp. protest leaders denied they were behind the incident-- the latest in a standoff that has lasted weeks. the government of israel will not heed u.s. calls to stop building new settlements in east jerusalem. prime minister benjamin netanyahu made that clear today in an interview on israeli television. >> sreenivasan: netanyahu's comments were broadcast shortly after u.s. mideast envoy george mitchell arrived in tel aviv. he's trying to restart peace talks between israel and the palestinians. a state department spokesman said mitchell would not have gone unless he thought there was hope of moving things forward. in iraq, a u.s. military jury acquitted a navy seal in the beating of an iraqi prisoner. petty officer first class julio huertas was accused of failing to stop another seal from assaulting the iraqi. the prisoner was the alleged organizer of a brutal attack on four american security guards in 2004. this was the 40th anniversary of earth day. events were held worldwide to raise awareness of the need to protect the environment. a major rally is also planned for sunday on the national mall in washington. its focus will be on urging congress to pass climate change legislation. on wall street today, stocks rallied late, after being down most of the day. the dow jones industrial average gained nine points to close at 11,134. the nasdaq rose 14 points to close at 2,519. those are some of the day's main stories. i'll be back at the end of the program with a preview of what you'll find tonight on the newshour's web site. but for now, back to jeff. >> brown: still to come on the "newshour": a british debate on foreign policy; americans accused of terrorism in pakistan; haiti readying for rain and "sizing up" sports and art. but first: back to back interviews on the president's financial reform plan. we start with white house economic adviser lawrence summers. i spoke with him this afternoon at the executive office building. lawrence summers, thank you for joining us. the president said today a free market was never meant to be a free license to take what you can get. does he see wall street as the cause of the financial... wall street's greed as the cause of the financial meltdown? >> mitt stakes on wall street led these problems. mistakes on wall street in the mortgage area led to the subprime bubble that led to houses appreciate that lead to the situation where millions of people got loans that they're no longer able to service and faced foreclosure . credit errors made on wall street brought financial institutions to the brink of insolve vennsy, that left no choice but to commit taxpayer funds. >> brown: but today he was going to wall street in fairly tough language saying... >> ... yeah, there's no question that things that happened on wall street are the reason we had this financial crisis and we've got to do everything we can to make sure it doesn't happen again. >> brown: one of the critiques is that the current approaches towards reform rely on the same regulators and agencies that missed what happened in first place. so do you see specific changes that would have prevented the meltdown we had and that would prevent one in the future? >> i do. a consumer-oriented regulator rather than a bank-oriented regulator would have stopped the predatory subprime lending. derivatives on exchanges would have meant that it wasn't taxpayers problem when a company made the kind of mistakes that a.i.g. did. comprehensive authority for the federal reserve would have meant that you didn't have institutions trading in the shadows hundreds of billions of dollars of money that it turned out that they didn't have. higher capital requirements, lower degrees of borrowing, leverage, would have meant that even if there were losses they would have been absorbed by shareholders rather than pushed out to the rest of the economy. >> brown: regulators could haven't done in n the past? higher capital requirements? >> regulators didn't have the specific mandates if for consumer. regulators didn't have authority to, for example, oversee the derivatives activity at a.i.g. regulators didn't have the authority in a comprehensive way to monitor the derivatives market which caused so much mischief in this place. so this is an important expansion in authority, probably the most important expansion since the invention of deposit insurance in the 1930s. >> brown: you also fears on wall street and from some republicans and mitch mcconnell repeated today that new regulations, new fees on banks can hurt business, can hurt jobs, and specifically at a time when people really are hurting, and that's the wrong approach to take right now. >> you know, there's something ironic about banks who got themselves into problems that to the large credit collapse in 75 years, that drove millions of people into unemployment worried that somehow it's oversight that's going to cause the problem for their lending when so much of what could have been lent was dissipateed on misguided trading of various kinds. we are very mindful of the importance of increased lending. we understand very well the importance of business confidence. but i cannot imagine a measure that would do more to impair confidence than to leave our financial system as it stood before this crisis. >> brown: "too big to fail" issue. why not go further? why not just limit the size of banks? >> jeff, that was the approach america took to banking before the depression. that was the approach that america took to lending in the thrift sector before we had the s&l crisis . observers study this believe that to try to break banks up into a lot of little pieces would hurt our ability to serve large companies and hurt the competitiveness of the united states. but that's not the important issue. they believe that it would actually make us less stable. because the individual banks would be less diversified and therefore at greater risk of failing because they would haven't profits in one area to turn to when a different area got in trouble. and most observeers believe that dealing with the simultaneous failure of many small institutions would actually generate more need for bailouts and reliance on taxpayers than the current economic environment >> brown: the president talk today of failure of responsibility on wall street and washington. and i wonder how you see your own responsibility going back to days in the clinton administration, the 2000 act that a lot of people still look to now as having loosen it had reigns on the regulatory regime for derivatives and other parts of the financial market. >> you know, the situation's changed hugely, jeff, since 2000. credit defaults, which is really the center of the issue now, barely exist at that time. and so people were actually focused on a very different set of issues. if you look at the context of right now, i think there's no real question but that we need to propose much more regulation of derivatives, that we need to do what we actually pushed for in 2000 that established permissive authority for but were not able to cover come congressional opposition and establish a requirement for, which was the clearing houses that would establish collective liability and would promote transparency. >> brown: but a failure to nor see what would happen, what would come out of that 2000 act. >> a fill your to perceive fully-- which i think was very, very widespread at that time-- what the spread of credit default swaps would mean. and i think what was unfortunate was that as credit default swaps mushed after 2000, nothing was done. >> brown: you expect to get legislation with republican support? >> i can't imagine that at the end of the day anybody's going to find it a very attractive position to defend the status quo on wall street. to defend the status quo in terms of how we watch over financial institutions. and so i think it's very likely that we're going to come together around strong legislation that has a strong mandate. >> brown: okay. lawrence summers, thank you very much. >> thank you. >> woodruff: now, a view from the world of the wall street. it comes from robert kelly, chairman and c.e.o. of b.n.y. mellon, a global financial services firm, formerly known as bank of new york-mellon. he is also chairman of "the financial services forum," a non-partisan financial policy group comprised of the country's 19 largest financial institutions. mr. kelly, thank you for being with us. first off, what is your take on what the president said today and what the administration's trying to do? >> well, hi, judy, and thank you for allowing me to do this today, a pleasure to be here. i largely agree with the president and so do most of my counterparts. we are pro-reform. we think changes do need to be made in reform and regulatory reform in the united states and we should get it done this year. and, frankly, in spite of what you're hearing, we actually agree with 80% or 90% of the proposals, but we want to make sure we get the details right so that we don't have to come back to this three years from now or five years if now and make further changes. >> woodruff: so when the says that your sector, the phenomenon sector, is spending million and millions of dollars to lobby against that, is that right or wrong? >> we are clearly focused on the smaller details to make sure we get this right. but when you think about it, when step back, the president said let's be sure that no bank should be too big to fail. we totally agree. banks should be allowed to fail if they mess up and they should disappear and it shouldn't cost the taxpayers anything. we actually agree with need a windup authority so that we don't have another lehman-type event which almost created a complete freeze in the credit cycle and ultimately it could have created a national depression for the nation and around the world. we are very supportive, for example, of having a systemic risk council so that we can think about the larger risks in the economy. and we're very supportive of strong consumer protections as well. but we're focused on getting the details right. and i think that's the right thing to do right now as we create what is legitimately the biggest changes in financial sector laws in several generations. >> woodruff: well, let's talk about just a couple of those details. one, i think, are the capital requirement it is administration is talking about. banks having more capital on hand. it's my understanding this is an issue for you and others and i guess the administration's point is it was a lack of authority to make sure those capital levels or requirements were there that led to the crisis that the country went through. >> well, there are proposals that are being made not just in the united states but around the world so that all the major banks in the western industrialized nations have more capital and have more liquidity. i.e., that's to say they have more cash hand so that we can meet the needs of depositors and lenders. that's going to happen. on average, i think there were a lot of firms that did not have enough capital or enough liquidity. and i am very comfortable on average our industry should have more capital. but the key is we have to make sure that we do it with international coordination so that the united states banks are not at a competitive disadvantage to, for example, our european competitors. >> woodruff: but you don't argue with the premise that that was a big part of what led to the problem? >> well, the single-biggest problem that happened in the united states is not being dealt with in this package. the single-biggest problem was the residential mortgage product in the united states and the role of fanny and freddie and the g.s.e.s. we have a mortgage system that's completely broken in the united states and that's not scheduled to be dealt with until next year. so that was the single-biggest issue. and that is not on the table at this point. >> woodruff: and the administration... >> but beyond that, when you step back from it, we do agree that on average there were a number of banks that did not have enough capital or cash on hand to be able to deal with the problems. when you look back to the banks that did fail and the mortgage companies that did fail, they failed mainly they didn't have enough cash on hand and to a secondary degree because they did not have enough capital to support very large balance sheets. and that should change in the future and those rules will be changed. and they should be changed. >> woodruff: just quickly, another important part of this is the so-called volcker rule. that would limit proprietary trading, allowing institutions to trade in their own assets, their own stock, i guess you would call it. and they want to put limits on the size of what banks... not only on the size of banks but limits on speculative risks. how do you see what they're trying to do here? >> well, i do have some concerns about the volcker rule proposals. firstly, i think our country... we are huge a huge country and we do need large national champions that are well manag