>> charlie: welcome to our program. the tonight steve rattner talks about his legal difficulties with the attorney general's office, the attorney general and governor andrew cuomo. >> based on every precedent the way the attorney general handled this case there was no settlement in monetary terms. i already settled through the sec and that money probably actually comes back to new york state. but i've already settled in exactly the same fashion that every one of these dozen other firms have settled in. so everything else is just frankly close to extortion. >> charlie: also this evening, the secretary of homeland security, janet napolitano tony. >> the tighter we get on aviation, we have to also be thinking about going on to mass transit or to maritime.

what do we do to strengthen our protections there? and then i think what we as a country need to be thinking about is what is the role in prevention. >> charlie: rattner and napolitano when we continue. maybe you want school kids to have more exposure to the arts. maybe you want to provide meals for the needy. or maybe you want to help when the unexpected happens. whatever you want to do, members project from american express can help you take the first step. vote, volunteer, or donate for the causes you believe in

at membersproject.com. take charge of making a difference. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> charlie: steve rattner's been the subject of much praise for his role in saving general motors. he wrote about that in his book overhaul. he is the subject of much credit seizal for his role in the new york pension fund where serve people plead guilty and had their reputations tarnished. he made a role in politics as a

major fund raiser. he's a friend of president obama, forker president bill clinton. he worked for mayor bloomberg and the bloomberg found east. this show has a buys relationship with with the bloomberg company. steve is my friend. he was former chairman of the board of channel 13, the public television station in new york that presents this program. he and his wife have supported the program. my role here is not to defend or prosecute him, it is to ask questions that i and others want to know about his story. this has been a story that has been on the front page of "the new york times" and other newspapers. it is about a man who was the subject of a recent profile in vanity fair magazine. last thursday rattner agreed to pay the sec $6.2 million to settle civil charges and accept a two-year ban from working as an investment advisers or broker dealer. the same day the new york attorney general incoming governor andrew cuomo sued rattner as well seeking at least $26 million and his immediate

lifetime ban from new york securities industry. in the statement attorney general cuomo said this. rattner was willing to do whatever it took to get his hand on pension fund money, orchestrating a movie deal and funneling campaign contributions. through these lawsuits he will recover his ill gotten gains and hold rattner accountable. rattner replied in a statement while settling with the sec begins a process of putting this matter behind me, i will not be bullied simply because the attorney general's office prefers political considerations instead of a reasoned assessment of the facts. this episode is the first time during 35 years in business that anyone has questioned my ethics or integrity and i certainly did not violate the martin act. that's why i intend to clear my name against this politically motivated lawsuit. all this comes at a time which should have been about triumph and whether circumstances might have led to even greater height in the obama administration. it could be one of those great stories in america life where a

man despite all odds protests his innocence until he clears his name or it could be a great tragedy where someone has a tarnish and a great dream stopped because of bad choices, perhaps illegal choices. it has all those elements. i many pleased to have steve rattner on this program at this time to offer his perspective on what happened and what might happen. with that i say welcome and thank you. >> thanks for having me, charlie. >> charlie: when you were last here, i want to include for this audience this conversation. you came here to talk about this book overhaul which was about the industry and of course after that time this story was known. here it is. >> i've been in business for 35 years. i've never before had my integrity questioned. i've had a lot of people criticize me for one thing or another but not fundamental honesty. this has been the most painful episode of my professional career. when the time is right i hope you'll have me back and have me talk about it but unfortunately my lawyers have for the moment said -- >> charlie: what is the impediment from the lawyers speaking about it so that you

can speak to both the issue as well as the agony? >> the impedestrian many is essentially some resolution or some -- remember nothing has happened. nothing has happened. i have not been formally charged with anything, i haven't been convicted of anything i haven't settled anything. as we sit here today we're dealing with a lot of press stuff. i'm not saying there aren't serious issues here, there are. until they are resolved up or door either i get sued or i settle or throughs some outcome any smart lawyer is going to tell any smart client why would you start talking publicly about this until we get to your adversaries. >> i was able to reach a settlement which was acceptable to me in the spirit of getting on with my life and trying to put this behind me. you also sewed? your introduction for whatever set of reasons andrew cuomo looking at the same set of facts and same body of evidence as the sec chose not to settle and

chose to sue me asking for in my view ridiculous recompense and other damages. >> charlie: $26 million, and a lifetime ban. >> so it is said. >> charlie: there have been negotiations with him which weren't acceptable to either you or the attorney general's office. >> we tried our hardest to reach an acceptable resolution. i would like to get on with my life. i have no interest in being in litigation let alone the attorney general or the incoming governor of neck. there are rights and laws in this situation and i'm not going to agree to settle to something that's not fair and doesn't reflect the facts and circumstances. >> charlie: i want to talk about rights and wrongs and what is and what is not fair. tell me what happened. what are the facts that got you and quadrangle, your former firm, in this mess in the first place? >> what happened was that we, along with a dozen or more other firms, made a decision to hire as a placement agent to raise money for us a man called hank

morris, someone who i actually knew pretty well through politics, who i knew or plead at the time to be honest, who came to us highly recommended by people whose judgment i trusted, who unlike many people who money for funds like ours, was registered, had gone through the whole process with the sec of becoming registered and affiliating with a licensed broker dealer. his engagement was signed and vetted and drafted by our then counsel very carefully. and we believed we were going into business with an honest man who could raise money on our behalf not in just in new york but various places around the country. he is someone who is building a business and raising money for funds like owrlz which is a legal business then and a legal business today. >> charlie: so when what happens? >> then what was one day i awake unin february of this year to find mr. morris and one of his colleagues, not a colleague but a member of the new york state controllers office had been indictment on something like 123 counts and it turned out

according to the indictment that they had done a number of things that were potentially illegal none of what we were aware but involving kickbacks and influence pedaling. i'm not a lawyer i can't even tell you the exact charges. clearly they were in a lot of hot water. since then both mr. morris and others have pled guilty to at least one charge in each case. >> charlie: you have said you have done nothing wrong in any of this. >> i want to be clear that when i settle with the sec, part of that settlement prohibits me from either admitting or denying or even talking about the sec piece of it so i would like to confine my comments to the attorney general's lawsuit against me and the charges he's made. >> charlie: were they different in terms of what the accusations had been that led to the settlement in the sec case versus the attorney general's case? >> everyone can read that and reach their own judgment. i don't know that's any stubsive difference i can identify for you. so let's talk about the attorney general. so the attorney general had a different view as to what the

rights and the wrongs of this were and decided to sue me. >> charlie: the acquisition is that there was, that mr. morris and mr. herisy received help in making, distributing a movie and part of that was in consideration of them giving you which resulted in $150 million for your fund, these you gave them something in order for them to give you and that's called a kick back or bribe. and that's the problem. >> well, there's a couple of potential issues. one is simply the hiring of hank morris which i just told you i plead and was told by my lawyers was legal then, legal now and done properly. the second you just raised is the question of whether we at quadrangle or myself individually did anything to help this movie get made that influenced the outcome of the

investment decision by new york state. i would say one, did i introduce steve to a company that quadrangle controlled to see if there was a potential dvd distribution deal, yes, i did. two, did i ever tell that company to distribute dvd or insisted they distribute. no, they made that decision entirely on their in. and third there's not a scintilla of evidence including in hank morris' plea bargain today that that movie had anything to do with, anything to do in any way, shape or form why quadrangle god money for our fund. >> charlie: so no one to your knowledge has ever engaged in a quid pro quo, helped you with the movie but you know that, if he helps you with the movie we'll get the money coming to the fund at a time that the fund, let's assume that quadrangle needed a commitment from the new york pension fund. >> i fundamentally reject the notion that the attorney general has put forward that there was any kind of a quid pro quo

involved in either hiring mr. morris or helping steve get introduction. there's not a scintilla of evidence to the contrary. in the course of this litigation everyone will find that out. >> charlie: are there e-mails that suggest there was some resistance to making, to distributing the film? do e-mails exist that suggest some people weren't crazy about the idea of distributing this dvd. >> there are e-mails in every direction. people who were for it, people who are against it. what's clear from the e-mails is i never told good times to make this movie. what's also clear from these e moilsz is that one day i e-mails the ceo of good times just to find out what was going on, she said i don't know i'll get back to you. the next thing she forwarded me an e-mail that went acid and decided to make this movie unbeknownst to me and the ceo of good times. >> charlie: the character of that is why did you know that knowing you're a smart guy, that somebody there thought this would be a nice thing to do and

you passed it along in whatever manner? >> i've been in business for a long time. part of business is relationships. part of relationships is helping people introductions, things that are entirely legal and appropriate. i'm sure you made introductions with people, i made many many. i asked people to make them for me much i believed i was making an introduction for someone to someone not in the context of trying to have that, make us get money or anything of that sort. but simply in the broadest sense of relationship building and that was all. if you say to me in retrospect do i wish i hadn't done it? of course i hadn't done it because it's brought me all this aggregation. in retrospect do i think i was doing anything ill 4r5e8, did i ever tell them to make the money, did it have anything with us getting the money? no, i don't believe it did and evidence will come out to support that. >> charlie: you had encouraged the company to do it, that would have been either wrong, illegal or unethical. >> i was very clear with the eco of that cult i said to her repeatedly i do not want you are to make this movie because i'm saying so, i want you to do

what's in good times interest. if i wanted her to make that movie all i had to do was tell her to make that movie, we control that company. if you read all the e-mails you will not find one saying that. you will see e-mails from her saying we don't know which way we're going on this. it would be the simplest thing in the world for me to tell her to make that movie. >> charlie: no urging or encouragement to do this. >> i asked her to take a careful look at it, treat this gentleman carefully because hf otherwise brother's relationship to us potentially but i never told her to make the movie in any way shape or form. >> charlie: did hank morris say it was special to him. >> hank 340ers introduced me to this fellow several years earlier when hank morris wasn't working for us in the contest of somebody who he thought i might be able to help with something. i don't remember him ever telling me it was important. >> charlie: you settled with the sec, negotiated with the attorney general but didn't settle. what's the difference here?

>> the difference is that andrew cuomo decide that his as i said in stay statement that you red in the beginning, for whatever reason, the politics of press, his own emotions and people's emotions were such that he would prefer to sue than settle. i don't get it. it doesn't serve the people of new york well. i will reach a settle. but i'm not going to be bullied by andrew cuomo and not settle with something that's not fair all things taken into account. >> charlie: i haven't talked to anybody from his office or him so i don't know. but it seems in reading things that there is a change that took place because he realized there was information that he didn't know about earlier. >> one of the things i've learned from this is prosecutors generally take the view of seeing the worst in people and believing the least and doubting the most. and that seems to be their attitude toward me. my instructions to our lawyers and to the people who are in charge how far turning over

information, turning over material was to cooperate fully, turn over every little bit that was required, make sure we did exactly what was supposed to have happened. along the way, there were things that were turned over in batches and my lawyers believed completely legal and appropriately. my lawyers don't believe any of the later material in any way contradicted what i said fundamentally in terms of the substance of what happened. andrew cuomo may have a different view but look, i don't think as a prosecutor you should let emotion get in the way. you should deal with facts. the sec looked at facts and came to a set of conclusions. andrew cuomo chose instead to rely on his emotions. >> charlie: is it possible he learned additional information when the e-mails were presented to him that he had not seen before so it's not some, it's partly the emotion of feeling like there was new information that i didn't know about and that i would have expensed to seen rather than given it. >> he may well have thought that but again i'm not a lawyer, i'm not a prosecutor but it would seem to me that you look at the entirety of the information and then reach a judgment as to what

the facts and circumstances are. most of all it would seem to me that the prosecutor should recognize that i'm not in charge how far seeking out which e-mails to turn over when or document production. my instructions to our lawyers are very clear fully cooperative. beyond that. >> charlie: he did take note that you took the fifth amendment which is a basic american right. 6 times. to point that out suggests some ... >> well that shouldn't be so surprising because over the most 15 months, we have been subjected, i have been subjected to every kind of threat of prosecution and punishment known to man practically. and therefore my lawyers advise me on that basis when these threats were still hovering over me that i would be well advised to take the fifth amendment and so i did. it is not suggested, it is not intended as any kind of admission that i felt that i broke the law, broke the new york state law in any way, shape or form. >> charlie: the attorney general governor elect cuomo

says you were not cooperate tifer or stone walled him you would say what. >> absolutely not. by the way this interview where you referred to i took the fifth 68 times alleged lay this was my third or fourth interview with them. it was not as if there was information they did not receive previously that they were now hoping to privilege. every single question they attempted to ask me in that interview had been asked in preinterviews. that interview was really a charade to be able to do exactly what they've done here which is to say steve rattner took the fifth 68 times so he must have done something wrong. >> charlie: you were friends you and the attorney general. >> no. >> charlie: you were not friends. >> i would characterize it as a distant relationship. i was never part of the andrew cuomo fan club. we new each other from democratic politics. he certainly tried to cut valuate my support going back to when he was at hud and had me in the secretary's dining room but it's never present of his fan club or even a charter member. >> charlie: have you

financially supported him. >> i believe my wife did at the request of one of his major fund raisers did support him once. i don't believe i ever supported him >> charlie: do you wish you had settled this with him. >> andrew cuomo side said there was no financial settlement possible. they wanted greater things. i don't know what they would have been and they went fants without even hearing from emthis. they he dragged this on. in the middle of october we were about to announce the settlement. 59 clock the night before andrew cuomo's people asked the sec to hold off because they wanted to get this past the election. andrew cuomo wanted to drag this out. i've been willing to settle this all along on reasonable terms but i'm not going to settle them on term that makes no sense. >> charlie: other people say to me this will be settled in the end. that's the way these things work out. >> i would settle it today, i would settle it tomorrow, i would settle it in six months on terms that make sense and are fair and reasonable. if not then we'll continue to litigate and the conduct of the

attorney general's office in my opinion as a non-lawyer throughout this will raise, will be raised in the course of this litigation. there have been remeet exam pulls of suggestions of threats as recently as last wednesday. the attorney general himself getting ready to be governor suggested to my lawyers if they raised any more questions about irregularities that there might be a disciplinary referral to the bars from my lawyers. trs not the behavior we want out of the attorney general or governor. >> charlie: are there other examples in terms of the attitude and behavior of the attorney general and his staff and the attorney general is office. >> there have been, yet. >> charlie: what are we talking about. >> i don't want to go into all of them at this moment. the time will come to go into them but there have been remeet threats, remeet suggestions of dire consequences if we did do x or y. >> charlie: dire consequences meaning. >> fire greater punishment. >> charlie: if you don't settle on their terms. >> correct. >> charlie: can you say to me

in the negotiate between you, your attorneys and the attorney general is office, have they come down to $26 million for example. did they show any give in what they were demanding in the negotiations that took place? >> i would say that they did show some give. i would concede in that. i will be honest and truthful about that but not an asks that they would have been willing to settle what i viewed as a reason. remember one thing charlie, under new york law the only payment that new york attorney general can receive other than a couple thousand dollar fine is the return of the gain that you got from the investment. and every one of these other subtlement, the attorney general has settled with more than a dozen other firms. every other settlement has been based on the return of the gain that the firm got from the investment. i've already returned that gain through the sec's settlement. it's actually three win. inside that six million is the return of what the sec calculated to be my three million of gain.

based on every precedent for the way the attorney general's has not doubled this case there would be no settlement in monetary terms. i already settled in monetary terms through the sec and matt money comes back to new york state. i already settled in exactly the same fashion that every one of these dozen other firms have settled in. so everything else is just frankly close to extortion. >> charlie: the attorney general's done is close to extortion. >> i believe so. >> charlie: because? >> because he is basically threatened me all along the way that if i don't do what he wants me to do, he will prosecute me to the ends of the earth basically. >> charlie: let's talk logic for a second. does it make sense for the attorney general to be doing the thing that you're suggesting? why is it necessary, this is a man who -- he had an easy election to become governor. he didn't need a political scalp in order to become governor. >> it doesn't make a scintilla of sense to me. he could have settled with me at the same time that the sec settled.

i certainly would have been willing -- >> charlie: did you expect, did you think that was going to happen. >> i would be in negotiations for 35 years. i think i know a lot about negotiations. this is one that i have been consistently unable to predict. it doesn't proceed according to any known rules of engagement that i am familiar with. but my point is he could have done exactly what you said and i would have done exactly what you said. he chose basically to force it to this place. not me. >> charlie: according to what i understand that after he gave you immunity he discovered new facts that he didn't know and he feels like that he approached this thinking that there are other people really are the principal targets of this and then as the more he learned, the more he became concerned. >> all i can say is my lawyers who handled the production of the documents and the e-mails and supervise my testimony to not believe that anything has come along that fundamentally contradicts what i told him back at the time that he gave me immunity. he can have a different view if he wants but that's not my

lawyers or my view. there's no theory of the case behind $26 million. it doesn't comport with any other settlement or anything else he's done with anybody else who has been involved with this whatsoever. >> charlie: it is true is it not he did settle with the former firm for $12 million. >> correct. 12 million that was paid to both, that's a combination of to him and to the sec in washington. and again it related to the benefit that the firm got. i only got a fraction of the firm's benefit because i was by far less than the majority partner and i would happily give him the same proportion of my benefit as what the firm gave him but that's what he's unwilling to accept. that doesn't get you to 26 million or 13 million or any number like that. >> charlie: these are the people you went into business with who settled. mr. rattner's actions were inappropriate, wrong and unethical. these are your partners. >> that was one of the most hurtful things that's ever happened to me. i've worked with these people for most of my career in one case 20 years, in one case 15

years and another case 10 years. and i could not believe that they would throw me overboard to i true to save the firm themselves. i was stunned by it, i was shocked beyond belief. i don't know what i could say beyond that. >> charlie: you can say why you think they did it. did they say themselves anything because they had to pay $12 million from the firm. i mean, did they somehow -- the characterization is maybe you, i don't remember exactly, they gave my scalp in order to save themselves. is that your characterizations. >> that was one of my spokeman's characterizations. by throwing me overbod, that judgment seemed to have been proven wrong. the firm is going to an unwind

mode. they threw mow overboard and got nothing for it. >> charlie: don't you have a suit against him. >> i do because they have damaged my reputation and i intend to show during the course of the arbitration i didn't do any of those things that you read off. plus they held substantial sums of money i'm owed. look i hate litigation. i don't think i've ever been yofd in a substantive piece of litigation before in any life but i'm going to see this one through. >> charlie: whatever the attorney general is, it seems to me based on the way he read his statement. he was willing to do whatever it took to get his hands on pension fund money including paying kickbacks. i mean, that's ... >> that's his opinion. i disagree with him >> charlie: that's the reason he says these charges. ill gotten gains. held accountable >> if you read what he said with every other money manager during the course of this he said the

same thing about all of them yet he's not demanding what he is demanding of me. is it emotions, is it politics, what is it? i don't know. >> charlie: i come back to the question too. tell me why you think what it is about the attorney general in your case that is different from the other cases as you see it. >> i don't think, there is different always inevitably slightly different facts. when i look at these cases and i've been over them and over them i don't believe that i did anything worse than the rest of these people or different even particularly. i think it comes down, nor do i believe i broke the law or even did anything wrong. i explained to you about the hiring was completely illegal. i told you i never told good times to make that dvd. this comes down honestly my supposition you should get the attorney general in here and ask him it comes down to emotion and politics. i don't know how else to account for this. >> charlie: why would he need this. >> i don't know why he needs

anything. i gave you trying to predict. i think the logical thing would be for him to settle this thing. i could turn around and say why didn't he settle me what's the point otherwise. maybe it's emotion. they ran a lot of ads saying good over steve rattner. maybe i felt some need not to answer those questions for the rest of his days. i don't know charlie, you're asking the wrong guy. all i can do is tell you that i didn't break the law, new york state law. i didn't do anything wrong hiring hank morris and i never told good times to make the dvd. >> charlie: it also is clear you have decided to mount an aggressive defense of yourself and your reputation. >> as you said in your introduction, i've been blessed by a lot of success in my career. i think i've had until now an unimpeachable reputation at least integrity. as i said in that clip people have not criticized me, i get

that, that's part of life but nobody's ever questioned my honesty and i'm not going to let andrew cuomo do that without answering it. so i do intend to fight back vigorously and to defend myself and now is the first time i can speak about this and in the course of litigation a lot more evidence will come out that i think will be very persuasive. >> charlie: what kind of evidence? >> the fact there's not a scintilla of evidence that this dvd had anything whatsoever to do with why quadrangle got money from the new york common fund. the fact there's not a scintilla of evidence and in fact there's evidence to the contemporary. there's not a scintilla of evidence that people at quadrangle, they would like the world to think it was just me. it was not just me. >> charlie: you're guilty of this, then they're guilty too even though they have made a settlement with the attorney general. and perhaps they acknowledge their guilt by, they may be acknowledging their guilt by their settlement with the attorney general. >> you ask them. the fact is the hiring of hank

more was a firm-wide project. i was certainly was the one who spoke to the them, it was widely known in the firm that good time was considering making this dvd. so i don't remember where we left this point. >> charlie: but people say that there's an e-mail chain here that is awfully damaging to you. do you simply say that's not true? there's no e-mail out there that has come out either from the firm or from a subpoena that is damaging to me or subject to misinterpretation. >> i wouldn't argue that there are e-mails that are subject to misinterpretation and if they're misinterpreted i wouldn't argue they're potentially damaging to me from a reputational point of view. if you take the time to go through these e-mails one by one and see what was happening, you will see that i never told good times to make hat dvd. honey deed the whole reason there's a chain of e-mails back and fort is they were thinking about it and we were enter

acting about it. if they wanted to make it i said make it. as i said at the beginning of this there are e-mails making clear that good times decided to make that dvd on its own. >> charlie: which e-mail do you wish you hadn't written. >> happily i haven't memorized the e-mails. there are e-mails that could be read the wrong way. i wish i hadn't done that to the extent they are being read the wrong way. but it's very clear that i never told good times to make this dvd. i told them to do what was in their commercial interest. >> charlie: we talked about the partners in your firm. i mean you left and put together your own firm, quadrangle. you brought in people who i think you obviously thought these were men and women i like to work with, yes. >> correct. >> charlie: how mainful can that be. >> it's unbelievably painful. i went to a 50th birthday party

friday night and he was surrounded by people from every aspect of his life including people who had been his partners for 20 years and i sat there thinking to myself, i'm going to have a 60th birthday party in a couple years and i wish i had partners sitting with me who had been my partners for 20 years. it was extraordinarily painful. i would have never imagined in years my partners would behave this way. >> charlie: the book overhaul is there. general motors as i mentioned had a very successful ipo. this was to be your moment. and all of a sudden you are fighting, fighting for your reputation. and whatever aspirations you have had may very well be damaged in order to go to washington to use a phrase. >> in one of the dark days of this long process, my wife who works for richard holbrook and was in pakistan or afghanistan

or some place, was in despair, she couldn't reach me on the phone and she was really upset about this and i sent her an e-mail and i said i have the best wife in the world. i have four wonderful children, everybody is healthy. we're financially secure and nothing else matters. and that's how i think about this. at the end of the day, i have the four things that most matter to me and whatever else happens in my career, will happen. i'm proud of the work i've done over 35 years in the business. i hope to do more, particular me in the non-profit areas but i have the things that most matter to me. >> charlie: and you continue with your employment with mayor bloomberg. >> i continue to do what i've done for mayor bloomberg. >> charlie: thank you for coming. >> thanks for having me. >> charlie: steve rattner. the attorney general soon me governor will come here or someone else. this is an interesting story about politics and ambition, it's a story about technology that exists today.

it's a story about money, it's a story about people who have found themselves in not just steve but also others finding themselves in a place where they never imagined they might be. it is the drama of human life. back in a moment. stay with us. >> charlie: janet napolitano is here ranging from the coast guard to the secret service. counter terrorism, border controls. she saw issues including the failed christmas day bombing and responding to the bp oil spill. in october, two men into this country were discovered in air cargo planes. new security was put in place. the controversial members

including body scanning and invasive security pat downs. speaking in trenton new jersey, napolitano launched a security campaign, see something, say something ahead of the thanksgiving holiday. >> now as we head into this year's busy holiday traveling season, we're here also to ask and talk about the important role that each individual can play in helping keep us safe and security. and to remind the traveling public to maintain a sense of vigilance of awareness. if you're traveling by train, my mass transit, by air or other mains. >> charlie: president obama spoke about the means for increased security in a meeting in portugal over the weekend. >> one of the frustrating aspects of this fight against terrorism is that it has created a whole security apparatus

around us that cause a huge inconvenience for all of us. but at this point, psa in consultation with our counter terrorism experts have indicated to me that the procedures they've been putting in place are the only ones like now that they consider to be effect stiff against the -- effective against the threat we saw during the christmas day bombing. >> charlie: i'm pleased to have janet napolitano back at this table. welcome. >> thank you. >> charlie: where are we tend of this day with pat downs and eye scanning? >> well, the new imaging technology has been in the process of being installed in air ports throughout the country. actually since 20 07 but you've seen a rapid acceleration of that installation since last christmas. the pat down procedures were piloted beginning in august of

this past year but now of course it's moved more broadly across the country and that has been what is causing some of the public concern particularly as we head into the holiday travel season. >> charlie: what does the secretary think of the concern? >> well i can understand why people wonder what is this all b what does it mean for me, i'm a travel, do i have to be in a long line, am i really safer. what i say is the threat is real. we know that from last christmas. the threat is to bring powders or liquids or gels on the play to use as an explosive. the new machines give us a much better chance of finding those kinds of things and the revised pat down procedure helps us to make sure that something appears that the really can't tell what it is that we can't resolve that anomaly. the end result it means that you are safer getting on the plane

and you can have greater confidence that the other people on the plane with you have been properly screened. >> charlie: at the same time i understand there's some reconsideration of these procedures just to look at them because you're listening to where the public is concerned. you're not going to be any less secure but you are at least going to examine the procedure. >> that's right. and that's, i think there's a nuance there that's important to have. the procedures themselves and the need to make sure that we are maximizing our chance to find and remove passenger who want to bring destructive material on to a plane and blow it up, these procedures will by and large remain the same. but there will be some tweaks or some changes as we go through, as we learn how to better streamline perhaps or as we learn some things to improve the procedures. >> do we believe that there is

going to be a series of them over the thanksgiving holiday. >> i think we believe that that sort of precision is not known. but that with the number of flights, the number of people traveling, the fact that it was over the holiday season, the intel that we're actually receiving, the intel that gave the state department cause to put a travel advisory on for person europe that goes to the end of january, that to be safe and to be secure the things that we're doing now are necessary. >> charlie: what's changed in terms of the attitude of people who want to engage in terrorists acts against the united states. are they more intense, are they having new methods and means, are they more of them, are they using people who have a u.s.

passport? >> right. well a couple things. i think we can think that the big long term conspiracy by lots of players who are in the conspiracy like 911, that has changed. why? because our adversaries have figured out we've gotten good with large conspiracies. so attacks that are planned or being contemplated are one person, two person, not high tech but low tech. not getting into a plane and flying out into the world trade center but getting a bit of explosive on to a plane and seeing if it with below a hole into it side of it. so that has changed. there's all kind of al-qaeda groups so that has changed. more types of groups.

>> charlie: are they dangerous because we know less about them. >> the amount of information about them of them is not as robust. commons sense tells you we don't know as much about some of them as others. the growth or home grown terrorists, u.s. citizens, u.s. persons who become radicalized to the point of violence, they may go over to somalia, to yemen, learn trade craft, learn how to build some of these things, learn how to operate or how to perform one of these operations and then return to the united states. so all of these things are now in the mix. >> charlie: how would you assess our intelligence. >> i think that our intelligence now is better than it was two months ago. and two months ago is better than it was two months before that. >> charlie: because? >> i think that we have first of all very good relationship with

our international partners, sharing information. that's what gave rise to us pursuing intelligence about the october 29th attempts to sneak bombs aboard cargo planes. exactly right. and i think that without going into any specifics but our mains of collecting intelligence are very good and why are people, you know, know where to look is more robust. so i think, you know, like i said, as i suggested before, every day is better than the previous one but the risk is still there, threats are still present and the security measures we need to take are necessary. >> charlie: would we discover bombs without saudi intelligence. >> hard to say but i think very doubtful. these were very carefully concealed devices. >> charlie: printers or something like that. >> yes.

in fact they looked like they were part of the printers. but i think it's also important to say that those tips from the saudis are part of the system. in other words it's not just luck that they're sharing information, it's because sharing information is the first layer on how we build the protection of the entirety. >> charlie: and also it is argued because they realize there's a threat against them as well. they have self interest, it's not just to help the united states and discover that al-qaeda was against them as well. >> and to be sure, flight 253 last christmas, there were passengers on board that flight from 17 plus countries all who would have parished. so this attack is really an attack against the whole globe and the whole global aviation system and that's why after

christmas the united nations wing took action with five global summits around the world were at all five of those and reached a general assembly resolution in september strengthening world aviation security standards. and that's record time for the un on a matter of this magnitude. why? because every nation has a stake in it. >> charlie: is it more to say something or see something, say something. >> that's right. the principal underlying it is that security is a sharedrnment can do so much, the private sector has a very important role to play, international partners have a role to play. community, states, towns have roles to plays and individuals have a role to play and that's really expressed with the four s's, see something, say something. >> charlie: when you took this job, that day, and after being confirmed and moving in

versus today, what is the most surprising thing you know that you didn't know about the threat to the united states? >> before i took this job, i was in the midst of my second term as the arizona governor. before then it's elected attorney general and before then i was a united states attorney. so i've been at this for quite a while. when you're at something for quite a while you think you know a lot. and one of the things i've come to appreciate is how the threats to the united states are perhaps more serious from any directions than the public at large understands or appreciates. and that there are many things that we do, i use aviation as an example, where right now consternation and the concerns now are about what's happening at the reports. the fact of the matter is that

what happens at the airport at the gate is the last layer in a many layered set of activities that occur all designed to make sure that somebody can't get on a plane and blow it up. >> charlie: and then more effort put at the site where they depart from wherever they're coming from. >> that's right, that's right. and exchange of information about passengers and routes and the like. and without getting into all the detail, these are all costs now being borne by the system. and as president obama was indicating in the clip, this is part of the security apparatus that we have because of the ever changing nature of the security threat we have. >> charlie: you said a very interesting thing. part of your job is to know what they'll be thinking in the future. what will they be thinking in the future? >> well, i think they're going to continue to probe the system

and try to find a way through. i think the tighter we get on aviation, we have to also be thinking now about going on to mass transit or to train or maritime. so what do we need to be doing to strengthen our protections there? and then i think what we also, what we as a country need to be thinking about is what is the role in prevention. in other words, what is the process by which a young man in the united states goes from becoming radicalized to becoming radicalized to the point of going to a camp somewhere or whatever and then coming back with the intent of -- i think

that's where we need and can do more work. when i speak with my colleagues in other countries, i think we all believe that understanding that process better is important. >> charlie: one of the misconceptions you've had to deal with and one of the thing that scare you about the process. >> well i think that question we could discuss for hours. >> charlie: but it is the important question you just said in terms of the long term struggle. >> how do we get out of this, hang ever increasing apparatus because of the fear of terrorist attack. i think having a better understanding of what causes someone to become a terrorist would be helpful. >> charlie: what do we know now. tell me what we know now. >> we don't know much.

if you ever try to divide tim plate about what connects sshh terrorist to this terrorist and how they were raised and what school they went to and their socio-economic status or this or that, it's all over the map. >> charlie: we only have the resources to do that, shouldn't we. and the contacts to do that and the intelligence to do that. i mean information. >> i think there's some important work that's being done on that. >> charlie: is it slow, is it not fast enough, is it secretary of homeland security not have the insight she needs. >> the secretary of homeland security cannot wait for that. my job, the job of our department has to do everything we can to prevent, to identify to prevent and mitigate risk. and to do that in a variety of environments. the men and women in our department have dedicated that

and that's what we do. 9 -- the answer to your questin about long term i think long term understanding and better understanding of what causes someone to go from radicalization to violence is something that's worth study. >> charlie: eventual wouldn't you say. >> very important. >> charlie: if you can get into the country from mexico, isn't that a place that should scare us with respect to future terrorism? >> i know that border very very well. >> charlie: that's why i asked you. >> that's why you're asking me the question. and the fact of the matter is that you cannot seal, it's too birks it's so vast. both borders, southern and northern. what you can do is make it more difficult to cross. and to try to force more and more people through your ports where you have the potential of

picking up somebody who is trying to cross illegally and that's really the strategy that we have followed. and the plain fact of the mattr is where borders are concerned and securing borders, we have seen over the last two years more manpower technology, more seizures of drugs, of cash, fewer attempts at illegal immigration than at years upon years upon years. i mean everything that needs to go down is going down. every measure that needs to go up is going up. >> charlie: we're making progress with respect to the southwest borders. >> absolutely. and not only that we're also making progress on enforcement because we have really focused on identifying and moving from the country illegally who have committed other crimes as well. that turn of the strategy in

prioritizing that removal has resulted in the fact we've actually removed from the country more people here illegally than any two-year period in our nation's history. and we're going to remove more this next year as well. >> charlie: cyber security. how big is the threat. we had deputies of the defense here. how do you see it. >> i'll give you a little bit of background. we department was to break it into five different missionaries and one of them is the protection of cyberspace. we were the first major department of the federal government to identify as a missionary signer security. and we have it on the domestic side of the federal government,

the military side obviously. we obviously have the connection with the private sector which controls 85% of the infrastructure of the country which most of which is cyber dependent. >> charlie: if it was invaded it could have -- >> this summer, the secretary of defense and i we have it where cyber security is concern and we reached really a historic agreement with respect to how our departments would interact and how we both use the nsa and how we would leverage each other's capabilities in the right way. obviously on the civilian side we have privily and civil liberties concerns from the very beginning to make sure we are moving how the of cyber security. but i will share with you i think that's probably the

fastest evolving sorts of threats that we have. >> charlie: how do they play out? >> a variety of ways. you've got the hacker, the denial of service attacks, you've got the viruses of all different types of dimensions. so in the cyber world you see a whole variety of activity. >> charlie: so what's next for you? once you give this job up are you going to go back and run for office? >> i'll tell you, this job is such a big one, it's hard to anticipate the next thing. >> charlie: maybe being attorney general because you have a legal background. >> being attorney general that's a great job as well but these are great big important public service jobs. i said when i was in college when i was asked what i wanted to do i said go into public service and that's where i'm at. >> charlie: thank you for coming. >> thank you. >> charlie: a pleasure to have you.