Which grandparent told the grandchild the holocaust wa exaggerated?

I think it was the WASP uncle, Talbot, not Laszlo. He mentioned working with some very right-wing emigres from Eastern Europe, some of them in fact war criminals, during his time with the CIA and probably would not have been totally surprised to learn Laszlo was implicated in Arrow Cross atrocities, as becomes clear. The Cold War meant that anti-Communists were potentially welcome in the USA, but quite a few from Europe had been Nazis or Nazi collaborators. It extended into quite a few areas - The German Wernher von Braun had helped with the development of the V2 rocket, and concentration camp labour was used to build V2 manufacture sites, but the USA wanted Nazi rocket technology, so they did not question people like von Braun too hard about what they and others had done. People like Talbot might have been involved in shipping them over and would be inclined to play down what they had done before.

"Chicken soup - with a *beep* straw."

I think it was Grandpa Laszlo. The grandson rushed in to defend Laszlo with a tremendous amount of emotion. If it really had been Grandpa Talbot, the grandson would have calmly explained it was the other grandfather. He probably got scared that Laszlo is going to punish him somehow because he spilled the beans on their little secret. Grandpa Talbot being a lawyer, would know better than to say something that controversial to a kid, who can't be trusted to keep career-ruining secrets.