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Will Eliot Spitzer Resign?; Obama and Clinton Battle For Mississippi; CENTCOM Commander Announces Resignation
Aired March 11, 2008 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BETTY NGUYEN, CNN ANCHOR: Coming up on the top of the hour and we want to get you straight to the news room and CNN's T.J. Holmes, who is working a developing story.
What do you have, T.J.?
T.J. HOLMES, CNN ANCHOR: Just want to bring you a picture out of Tacoma, Washington, right now, where they have got a mess going on, on the highway out there, I-5 in Tacoma, where there's been at least 15 cars by the count we have been given involved in an accident out there described as a pileup, not really piled up as you see in this picture, but, still, 15 cars involved in this accident.
We haven't gotten word on what caused this accident, but we do know certainly it's typical out in that area, a lot of rain. It's also windy, wind gusts up to 30 miles an hour. Don't know if that had anything to do with it, but a 15-mile -- and you see here -- it's in this picture, Betty -- one of those vehicles on its side there.
We don't know the word on injuries, possible injuries, or the severity of any possible injuries right now, and no word on any -- certainly any casualties or anything like that related to this. But we do know 15 cars involved in this pileup on I-5. The Department of Transportation out there now saying now that they believe three right lanes, or three lanes of this highway will be shut down for the next two hours.
Still right around noontime out there in that area right now, so maybe get this cleaned up before the rush hour. But they got kind of a mess out there. You can tell by the pictures it's pretty wet, pretty rainy. Again, as is typical, and certainly as Chad Myers just gave me the word, 30-mile-per-hour wind gusts.
Don't know if any of that really contributed to this, but those were the conditions at the time of the accident. You see folks, the emergency officials, still working that accident. So, we don't really know about any injuries. Hopefully, everybody made it through OK, but kind of a mess out there, 15 cars involved in an accident. And that's a big deal -- Betty.
NGUYEN: And we don't want to speculate, but it may have just been a chain reaction. You know how that goes.
HOLMES: That happens all ...
NGUYEN: One car slides ... (CROSSTALK)
HOLMES: Those slick roads, yes.
NGUYEN: All right, T.J., we do appreciate it.
HOLMES: All right, Betty.
DON LEMON, CNN ANCHOR: It's now been 24 hours since Eliot Spitzer's deep, dark secret, became, well, front-page news. And the shock, the shock still hasn't worn off.
Here's what we know today. Transition talks are under way between aides to Spitzer and to New York's Lieutenant Governor, David Paterson. Also, no one expects Spitzer to try to hang on, but, if he does, a top state Republican is threatening impeachment.
NGUYEN: Well, you know, it's also unclear whether he will be charged, and if so, when, and with what. The investigation started with money transfers that caught the eye of the feds. Spitzer has hired a legal team, including his former top deputy when he was the New York attorney general.
LEMON: And, Betty, let's go now to CNN's Allan Chernoff.
He is in New York, where calls for the resignation are getting louder, Allan.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Yes, indeed, tremendous pressure on Governor Eliot Spitzer to step down. And, of course, we have all seen politicians actually survive sex scandals, but in this case, it's particularly jarring to the people of New York, because Eliot Spitzer built his entire political career on being Mr. Clean, on being the ethical politician, the attorney general for eight years, who cleaned up so many industries, who even attacked the prostitution business -- two major prostitution rings attacked by the Attorney General Eliot Spitzer.
He won election by a record amount to become the governor of the state of New York, and now this. So, the pressure is very intense.
I spoke earlier this afternoon with State Senator Bill Perkins, who represents Harlem. He told me that everyone in Albany is anticipating that Governor Spitzer will be stepping down. He said to me, "Everyone's anticipating that. In that anticipation, there's smiles, not groans. There's a sense of relief and appreciation."
Now, he's also referring to the fact that Lieutenant Governor David Petraeus would actually step in to become governor. Mr. Paterson is very well-liked by both Democrats and Republicans. He has spent many years up in Albany. He had been the minority leader, actually, in the Senate.
And so he has lots of experience dealing with the Republicans and the Democrats, both sides, well-liked, as I said. And he's exceptional in that he's legally blind, so, really, an exceptional human being.
But let's move on and talk a little bit more about the situation confronting the governor, because even the Republicans up in Albany are threatening, if he does not resign, to actually bring articles of impeachment.
We have a sound bite. Let's have a listen right now.
(BEGIN VIDEO CLIP)
JAMES TEDISCO (R), NEW YORK ASSEMBLY MINORITY LEADER: We have asked that the governor resign as soon as possible. And we have said that within 24 to 48 hours, if he does not resign and remove this distraction, So Lieutenant Governor Paterson can take that position and move us forward, that we would put forth a resolution for articles of impeachment.
(END VIDEO CLIP)
CHERNOFF: And that is the minority leader of the state assembly. So, really, tremendous pressure on the governor right now, and, frankly, just a real tragedy for the family -- back to you.
LEMON: CNN's Allan Chernoff -- Allan, thank you.
NGUYEN: In the Democratic battle for the White House, the focus today, all eyes on Mississippi, the last stop before a six-week break in the election calendar.
Barack Obama hopes to pad his delegate lead over Hillary Clinton before the attention moves to Pennsylvania next month. From Clinton, though, she says, not so fast. She, too, hopes to pick up more delegates in today's primary. Mississippi hasn't voted for a Democrat in the general election since Jimmy Carter back in 1976.
Well, it is a small state with a big political role today. Voting in Mississippi's presidential primaries has been under way for about six hours. And -- you guessed it -- all the excitement is on the Democratic side.
Our Sean Callebs stopped at a polling place in Terry, Mississippi, just outside of Jackson.
(BEGIN VIDEOTAPE)
SEAN CALLEBS, CNN CORRESPONDENT: Many expected voter turnout in this state would be extremely heavy today. Right now, the secretary of state's office tells us that it's light to moderate here in this precinct in Terry.
They are seeing about 100 people an hour come through. Now, this is a state that has voted for the Republican presidential candidate every year since 1976 in the general election. And only once in the last 50 years did they support a Democrat, that being Jimmy Carter in 1976. However, the Democrats say that they are targeting blue-collar Republicans this year, people they say work for a living. They say with a sour economy and an unpopular war, that perhaps this is the time that those voters may be willing to make a statement.
Sean Callebs, CNN, in Jackson, Mississippi.
(END VIDEOTAPE)
LEMON: Leading our political ticker, controversial comments from a big Hillary Clinton supporter. Geraldine Ferraro tells a California newspaper Barack Obama would not be in the position he's in, a major presidential contender, if he were a white man.
Ferraro was the Democratic Party's vice presidential nominee back in 1984. A senior adviser with the Obama campaign is calling on Clinton to repudiate those comments.
Barack Obama's campaign aims new jabs at Hillary Clinton. At issue, her claims of experience. In a memo given to reporters today, a former State Department official in the Bill Clinton administration suggests the New York senator uses, "false charges and exaggerated claims to play politics with national security." That memo is from Greg Craig, who supports Obama.
The Republican Party's presumptive nominee, John McCain, is getting set for a trip. He's going abroad. His office says he will lead a congressional delegation to Europe and the Middle East next week. Stops include London, Paris, and Jerusalem. Also going, McCain backer and independent Senator Joe Lieberman, who was a Democratic vice presidential nominee back in 2000.
Get analysis and results from the Mississippi primary from the best political team on television. Join us in the CNN "ELECTION CENTER" tonight at 8:00 p.m. Eastern.
NGUYEN: Well, Chapel Hill police have released some new security photos of a person of interest in the killing of the University of North Carolina student body president.
They say he was the only customer in this convenience store when Eve Carson's bank card was used to make a purchase. Take a look. It appears to be the same man seen in earlier stills at an ATM with a possible passenger in the back seat. Police are still working to further enhance those photos.
Eve Carson was fatally shot near the UNC campus early Wednesday. Her cell phone turned up soon after about a mile-and-a-half from the scene.
LEMON: The suspect in Auburn student Lauren Burk's murder allegedly attacked her for her bank card and maybe an iPod. Details came out yesterday in Courtney Lockhart's first court appearance. Police affidavits containing his alleged confession were read. One of them states Lockhart shot Burk during or after a rape attempt. He also faces charges in a string of robberies in Alabama and West Georgia. This footage from a Wal-Mart security camera allegedly shows Lockhart bailing out of a car, a carjacked vehicle. Just hours later, he was arrested after a police chase.
Even as Lauren Burk's death was being described in court yesterday, her life was the focus of a memorial on Auburn's campus. Some 6,000 students and faculty heard about the freshman's energy, her charity work and her easy smile.
NGUYEN: Well, investigators are trying to comb through the details of a couple's life more than a week after they disappeared.
John and Elizabeth Calvert were last seen March 3 in Hilton Head, South Carolina, where they live part-time on a yacht. Sniffer dogs have searched the boat, and divers have searched the waters, but so far they have not found them. The couple's car was found Friday a few miles away and is undergoing forensic testing.
Friends say the Calverts had no financial or marital problems or known enemies. A prayer vigil is planned in Hilton Head tonight.
LEMON: Eliot Spitzer didn't wind up in the jam of his life because of sex. Money led the feds to the New York governor's door, or at least to his bank. We will follow the dollars with a former New York prosecutor.
(COMMERCIAL BREAK)
NGUYEN: Well, it is 12 past the hour. Here are three of the stories that we are working on in the CNN NEWSROOM.
Two attacks marked the deadliest day in six months for U.S. troops. Three soldiers were killed late yesterday by a roadside bomb north of Baghdad. And earlier in the day, five soldiers on foot patrol in Baghdad were killed when a suicide bomber detonated his vest.
Coming up this hour, we are going to hear from the commander of U.S. troops in Iraq. Kyra Phillips will join us from Baghdad.
Too much fog? Too much speed? Authorities in the United Arab Emirates say the combination -- look at this -- is to blame for a massive and fatal highway pileup. So far, six people are reported dead, about 40 hurt. Some 200 vehicles were involved.
And here's a new record that sounds more like a broken record. Gas prices, they are up yet again another half-cent over Monday. Average cost of a gallon of regular unleaded, that it will get you $3.23, just a hair above the record high from last May.
LEMON: All right, indictment, prosecution, prison aren't the only things Eliot Spitzer has to worry about, but they are high, you can imagine, on his list.
As of now, Spitzer hasn't been charged with anything, let alone convicted. Still, he has lawyers standing by, and so do we. Paul Callan is a former New York prosecutor who can tell us what Spitzer might be up against.
Obviously, this is going to boil down -- Paul, first of all, thanks for joining us.
PAUL CALLAN, MEDIA LAW PROFESSOR, SETON HALL UNIVERSITY: Nice to be here, Don.
LEMON: This is going to boil down to whether or not he actually committed a crime or is charged with a crime, correct?
CALLAN: Well, yes. And I think from -- if we can believe press reports -- that federal prosecutors can clearly make out a case against him. There's the Mann Act, first of all, which prohibits intrastate trafficking in prostitutes.
There's taped testimony indicating that he paid money for her, the prostitute, to go from Penn Station in New York to Washington, D.C. So, they seem to have him dead to rights on that statute. And there are also money-laundering offenses being investigated and maybe even political corruption.
LEMON: OK. So, they have him dead to rights on that. If he is indeed charged with this and convicted, what does he face, possibly?
CALLAN: Well, under the Mann Act, the maximum penalty is five years in prison, and there's a substantial fine that's also involved. But I have to say, Don, it's very, very unusual that this statute is used.
You know, it was passed at the turn of the century. The prosecutions under the Mann Act have been very, very rare, usually celebrities, by the way. Charlie Manson was prosecuted under it, Charlie Chaplin, a number of other celebrities.
(CROSSTALK)
LEMON: Why isn't it used so much?
CALLAN: Well, I think it's not used because, as a general rule, prosecutors prosecute the people who run prostitution rings. They very rarely prosecute the men who participate and purchase the services.
And all the Mann Act did was, it made it a federal crime for someone to procure a prostitution -- a prostitute and have her go across state lines. So, it's very, very rarely been used...
(CROSSTALK)
LEMON: So, you think that, on this Mann Act, they have him dead to rights on that?
CALLAN: Yes. LEMON: Any other things? What about the other things? What about this whole thing that began -- it seemed like a routine tax inquiry, that these implements were set into place, these triggers were set into place in case there was something weird happening with the money, and then the bank would be notified or what have you.
What about this angle of it that we're hearing about, the revelations began with a routine tax inquiry?
CALLAN: Well, it's very interesting how the feds stumbled into this. They were investigating something called structuring. And basically federal law says that, if anybody deposits more than $10,000 into a bank account, the bank has to report it.
LEMON: But that's not necessarily illegal, though, is it?
(CROSSTALK)
CALLAN: Oh, no, it's not illegal, but it's just reportable, because the feds may want to look at where all that cash came from.
LEMON: So, they -- because of that, they found the -- that led them to the prostitution ring. The prostitution ring didn't lead them to that.
CALLAN: Exactly. And they didn't even see, by the way, a $10,000 contribution. What they saw was, people put smaller amounts into bank accounts and try to get around the $10,000 rule. And they found that Eliot Spitzer was making a lot of suspicious deposits into what they thought were shell corporations and bank accounts. And it looked suspicious.
So, they suspected maybe political corruption here. Maybe he was being bribed. And they started to investigate. And lo and behold, the trail leads them to prostitution, not political corruption.
LEMON: So, Paul, where do you see this going? I mean, is it going to be the Mann Act, or is it going to be something else to do with prostitution? Where do you see this particular case going with Eliot Spitzer?
CALLAN: Well, Don, their strongest case is the Mann Act, but, frankly, I don't even see it going in that direction. I see his lawyers negotiating with federal prosecutors and saying the following, saying, Eliot Spitzer is willing to give up the governorship of New York. His personal life has been shattered. His professional life has been shattered. That is punishment enough for this crime.
And they, of course, his attorneys, are trying to convince prosecutors not to proceed with criminal charges at all. And I think they can make a compelling argument that his being forced to give up the highest office in New York is adequate punishment for this crime.
LEMON: You think they will buy it?
(CROSSTALK) CALLAN: Yes, I think they may. There's certainly precedent for it. We have seen senators, mayors, governors of other states trade their office for a dismissal of federal offenses. I mean, the most recent example, Governor McGreevey in New Jersey, the feds had him...
LEMON: Right.
CALLAN: ... on a case and he resigned as governor and the feds walked away from it, so there's certainly adequate precedent.
LEMON: OK. Yes, and they are telling me to wrap it up. But I want to get this. Do you see him walking? Is he going to walk, do you think?
CALLAN: Yes, I do think he's going to walk. I think it's highly unlikely that he would do jail time, and, by the way, not at all unusual in cases involving prostitutions. It's very, very rare that the "John" gets jail time in a prostitution case. Here, he's the governor of the state of New York, but, nonetheless, I think it would be unusual if he went to jail.
LEMON: Very interesting considering because he prosecuted these same sort of crimes.
CALLAN: Yes, very, very strange. And the hypocrisy just stares you right in the face.
LEMON: Paul Callan, a former attorney for New York State -- a New York City prosecutor, I should say, thank you so much for joining us today.
CALLAN: Nice to be with you, Don.
NGUYEN: Mississippi voters weigh in on the big battle between Hillary Clinton and Barack Obama. We're going to hear what our political roundtable has to say.
And the Vatican updates the seven mortal sins. We will tell you what made the list.
(COMMERCIAL BREAK)
NGUYEN: Looking at the Pentagon right now, and this live picture. We are expecting an unscheduled briefing by Defense Secretary Robert Gates any moment now. And, of course, when that happens, we will bring it to you live.
Again, this is a live picture of the Pentagon, where we're expecting a briefing by Robert Gates, again, not knowing exactly what is on the agenda, but it is an unscheduled briefing. And as soon as we have live pictures of the defense secretary standing in front of that microphone, we will bring that straight to you.
LEMON: Not often that they call an unscheduled briefing, so it's got to be something very serious that is going to happen here.
NGUYEN: Absolutely.
LEMON: So, stay tuned. You don't want to miss that. We don't know what is going to go on. But, again, they don't often call for an unscheduled briefing.
Move over sloth, envy, gluttony, and the rest. The Vatican has issued a new version of the so-called seven deadly sins. They are meant to remind Roman Catholics that their actions and vices affect others, not just themselves.
So, the mortal sins of today, according to the Vatican. You ready? You ready, Betty?
NGUYEN: Yes, actually, we want to take you now to the Pentagon, where we are seeing Defense Secretary Robert Gates...
(JOINED IN PROGRESS)
ROBERT GATES, SECRETARY OF DEFENSE: ... at this moment issuing a statement announcing that he's asked my approval to step down from his current duties as commander of U.S. Central Command and retire. Admiral Fallon advised me of his decision early this morning.
He told me that, "The current embarrassing situation, public perception of differences between my views and administration policy, and the distraction this causes from the mission make this the right thing to do."
I have approved Admiral Fallon's request to retire with reluctance and regret. Effective March 31st, Lieutenant General Martin Dempsey, deputy commander of U.S. Central Command, will serve as acting commander. He will serve in that capacity until such time as permanent relief can be nominated and confirmed.
Admiral Fallon has served his nation well throughout a distinguished military career. For over 40 years, first in the Navy and then at the helm of two of the most important and dynamic operational commands, Pacific and Central Command, Fox has led our nation and hundreds of thousands of men and women in uniform with conviction, strategic vision, integrity and courage.
Admiral Fallon fought bravely in the skies over Vietnam, commanded an air wing during Desert Storm, and then went on to lead at the highest levels of U.S. armed forces. As commander of CENTCOM...
NGUYEN: We are going to break away for just a moment and bring in our Kyra Phillips, who joins us now live from Baghdad.
I understand, Kyra, you have the full statement on this resignation.
KYRA PHILLIPS, CNN ANCHOR: Yes. I was trying to get up here and get live before the secretary of defense stepped up to that camera.
I was able to confirm that this happened or was going to happen about 15 minutes ago. I did confirm with Admiral Fallon. I have a statement from him right now.
This is coming directly from him: "Admiral William J. Fallon, commander of U.S. Central Command, announcing to plan his retirement from the U.S. Navy as of right now, as of today. Admiral Fallon has requested that the secretary of defense allow him to step down as U.S. CENTCOM commander. He has cited the disrespect of the president in a recent magazine article, the resulting embarrassment, perceptions of differences between the views and administration policies, and the resulting distraction from CENTCOM missions."
That article being this "Esquire" article that we will talk about in just a second that was very controversial, a big subject matter actually at the White House and the Pentagon briefing just the other day.
The quote says: "Recent press reports suggesting a disconnect between my views" -- this coming from Admiral Fallon -- "and the president's policy objectives have become a distraction at a critical time and hamper efforts in the CENTCOM region. And although I don't believe there have ever been any differences about the objectives of our policy in the Central Command area of responsibility, the simple perception that there is makes it difficult for me to effectively serve America's interests there" -- this coming from Bill Fallon.
"I have therefore concluded that it would be best to step aside and allow the secretary and our military leaders to move beyond this distraction and focus on the achievement of our strategic objectives in the region. I have submitted my request to retire to the secretary of defense."
It goes on to say Fallon's request is subject to the approval of the secretary defense, Robert Gates.
Obviously, you just heard from the secretary there. His retirement ends nearly 42 years of service to the United States and the U.S. Navy. He did make a comment on his career, Betty. This is what he concluded.
This was his final statement that I confirmed with him: "I am grateful for having had this opportunity to serve with the outstanding service personnel and civilians of Central Command. It has been my high honor to have served my nation and the Navy for four decades. And I thank all of you who continue to serve. Thank you" -- obviously, this just coming through moments ago just prior to the secretary of defense stepping up to the mikes.
Once again, this is the "Esquire" article that was published and created such a controversy, things concerning Iran in particular, even the author of this article pointing out in this article, talking about Fallon -- quote -- "getting away with brazenly challenging his commander in chief. The answer is that he might not get away with it much longer. President Bush is not accustomed to a subordinate who speaks his mind as freely as Fallon does, and the president may have had enough."
It's interesting. This article comes out, and just days later the head of Central Command, the head man of this region and other parts of the Middle East, now announcing his retirement -- Betty.
NGUYEN: It's really interesting how you point out the language, because, as you were reading that statement there, saying disrespect of the president, disconnect between my views and the president's objectives, obviously, there was a lot going on between the two.
But my question to you is this: Why did he let the secretary of defense make this resignation statement? Why wouldn't he come out on his own and say this?
PHILLIPS: Well, that's how it goes, Betty. It's very political. Obviously, there's different levels of protocol here. I can tell you that Admiral Fallon, this is hard for him. It's disheartening. This was a position that he took very seriously. He has tried to build relations, obviously, with the leaders here in Iraq.
He has made controversial comments about Iran. That has been a big part of this "Esquire" article about where the Bush administration stands on strategy in Iran and where Admiral Fallon stands on strategy with Iran.
You know, this is a guy that was all about diplomatic relationships. He liked to travel, meet with leaders, and try and negotiate peaceful resolutions to situations throughout this region.
In particular, he was very well known for his relationships with China. He made headway there, also with Hosni Mubarak, another controversial trip that he with regard to his idea of relationships and what the president had idea of with regard to relationships with that country.
So, this is how it goes. There are -- there are conversations that happen in private, and this is how it is officially done. The secretary of defense comes forward and makes this announcement.
But I will tell you, it's tough right now for the head of Central Command now announcing his retirement. He's actually here in Iraq right now. And he plans on finishing off his responsibilities here and just taking one day at a time.
NGUYEN: All right, CNN's Kyra Phillips joining us live. We knew it was an unscheduled briefing, we knew something big was going to be announced. And there you have it, we have Admiral Fallon being announced today that he is resigning. Thank you, Kyra.
LEMON: We want to get back now to that briefing at the Pentagon. Secretary Gates still talking. Let's listen in for a little bit.
(JOINED IN PROGRESS)
QUESTION: There was a line in that "Esquire" story that said that basically if Fallon gets fired, it means we're going to war with Iran. Can you just address that?
GATES: Well, that's just ridiculous. It's ridiculous.
UNIDENTIFIED MALE: Next question.
QUESTION: I mean, you've said in your opening statement that this was an embarrassing situation, Admiral Fallon said it was an embarrassing situation. Doesn't that "Esquire" article and that one line open you up for even more criticism, the notion that this does signal the -- an opening for warfare?
GATES: Well, I am presented with dealing with Admiral Fallon's decision, and as I say, I think it's the right decision. As I say, the notion that this decision portends anything in terms of a change in Iran policy is, to quote myself, ridiculous. Thank you.
QUESTION: Thank you.
LEMON: All right. Defense Secretary Robert Gates finishing up that press conference there, taking questions at the end of it about the resignation of Admiral William Fallon.
And at the Pentagon now, our senior Pentagon correspondent, Jamie McIntyre, joins us.
Jamie, we heard the response. We heard Admiral Fallon's side from Kyra Phillips in Baghdad. What is the sec def's response there? What are you hearing?
JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, a couple of very interesting things here. First of all, Defense Secretary Robert Gates went to great pains to say that this was Admiral Fallon's decision, that he came to it entirely on his own, that it was based on what Admiral Fallon felt was a misperception created by this "Esquire" magazine article, that he was at odds with the administration.
Secretary Gates said he disagreed with that conclusion. He does not believe Admiral Fallon in is in any way out of step with the administration, that he supports the administration goal of dealing with Iran both economically, diplomatically and also through the military options, if necessary.
But Admiral Fallon strongly believed that this article created an impression that was a severe distraction, and he came to the conclusion that it was the right thing to do to step aside.
Secretary Gates said he accepted that resignation with regret. He said that there will be a big hole to fill, because Admiral Fallon, he said, was extraordinarily talented and was a strategic thinker. And while he believes that -- that the perception is wrong about him, he also agreed that it was creating a distraction. And, therefore, he said he thought Admiral Fallon had made the correct decision.
He also said that he did not run this decision to accept Fallon's resignation by President Bush, who was traveling today. He said President Bush has made it clear that these kind of matters are to be handled within the Pentagon.
In the meanwhile, he's appointed his deputy to be -- to take over as the U.S. Central Commander. And, of course, a key question now is that Admiral Fallon was supposed to be preparing advice on what to do next in Iraq that would compete or be -- stand beside the advice of General Petraeus. Admiral -- Admiral Mullen, the chairman of the joint chiefs, and Secretary Gates himself.
But, again, Gates strongly disputed that this stepping down of Admiral Fallon portends anything for Iran. And that's really the problem that this creates. Admiral Fallon's decision to step aside is going to reinforce the belief among many that he was pushed aside because he does not agree with those in administration who favor military action against Iran. That's the danger here. That's the perception that's going to be reinforced by this decision.
But Admiral Fallon obviously weighed that and decided that this "Esquire" magazine article which created this impression that he was, in fact, one of the few people standing between the administration and war with Iran was just a perception that he could not deal with. And therefore he made the decision to step down.
Again, he says he called -- Secretary Gates said he was called this morning. Admiral Fallon told him of the decision, and he accepted the resignation. Going to be a big fallout from this decision. I can tell you that.
LEMON: Real quick, Jamie, because I have to get to a break. He said a perception that he was pushed aside. Explain that just a little bit more.
MCINTYRE: Well, some people are just not going to believe -- whenever somebody says that "it was my own decision; nobody pushed me out of the way," it is always the suspicion that somebody said -- suggested to him that he should step aside. And Gates said it was entirely his own decision.
LEMON: Got it. All right. Jamie McIntyre, senior Pentagon correspondent, thank you.
What is with -- what's going to be the fallout of Admiral Fallon resigning? We're going to continue to talk about this subject right after a quick break, right here in the CNN NEWSROOM.
(COMMERCIAL BREAK)
LEMON: All right, we have some developing news right here in the CNN NEWSROOM. WE first were talking about Eliot Spitzer. Now we're talking about General -- Admiral, I should say, William Fallon, resigning and retiring, he says. Fallon, the top U.S. military commander for the Middle East, says he's resigning. That announced just moments ago from Defense Secretary Robert Gates.
And here's what he said. This is really, because, really kind of the fallout of an "Esquire" article that was recently published last week, where the magazine portrayed him as opposed to President Bush's Iran policy. Fallon said he was the lone voice against taking military action to stop the Iranian nuclear program. And then, so as not to be a distraction in all of this, Admiral Fallon decided to step down and retire.
General David Grange joining us now on the phone, a frequent contributor here on CNN.
What is your reaction to this, sir?
BRIG. GEN. DAVID GRANGE (RET.), U.S. ARMY: Well, I think if that's the case, it was an honorable thing for the admiral to do. You know, there's a -- there's a means for military commanders in the civilian leadership to -- to discuss, to agree, disagree, on policy. And if he disagrees but still says -- is ordered to follow out that policy and he doesn't feel good about, then the right thing to do is to resign.
LEMON: This is, I mean, very interesting. In Admiral Fallon's statement, he cited the disrespect -- and these are strong words, General -- of the president in a recent magazine article resulting in the embarrassment and perceptions between his views of administration policies and the resulting distractions from Centcom's mission.
"Recent press reports suggesting a disconnect between my views and the president's policy objectives have become a distraction at a critical time and hamper efforts in the Centcom region." So, he's directly talking about the president of the United States and saying publicly that they disagree on policy.
GRANGE: It's OK to disagree. I mean, you know, not everybody agrees on all the policies or course of action or how to attack, how to draw down an operation or whatever the case may be.
And what he's doing here, he realizes that it requires unity of effort, at the national level, to conduct a policy in a region of the world like this. And he's saying that, because they disagree, the right thing to do is to stand down.
I don't think it's just because of this magazine article. I think it was other discussions, obviously, behind closed doors. But I think this is the right thing to do.
LEMON: I think...
GRANGE: And there's nothing wrong with admitting that.
LEMON: I think -- I think what they're saying is that this magazine article was not the precipitating factor but really the final straw here, the one that...
GRANGE: Could be, yes. Yes.
LEMON: So, how do you respond? Secretary Gates says that it is -- he does not believe -- he says it's ridiculous, any notion that Fallon's departure signals the United States is planning to go to a war with Iran.
GRANGE: Agreed. I don't -- I don't think there -- no, I don't think that the disagreement means is they're actually going to go to war or not. It was the procedures to handle the situation in Iran. And there's always a war option. But to say that this was an imminent war with Iran, I don't believe that either. I think what Secretary Gates said is correct.
LEMON: So...
GRANGE: Just to lead up actions that the admiral probably did not agree with.
LEMON: So, General, if the secretary of defense is saying, "You know what, this was not a distraction at all. I did not see that Admiral Fallon possibly disagreeing with the administration at times -- I didn't see it as a distraction. I didn't see this magazine article as a distraction." So, then, why resign if the other side is saying they didn't see it as a distraction?
GRANGE: Well, because I think that maybe that Admiral Fallon says, as it goes down the road, as different actions happen and as my -- the procedures for containment or for disruption or whatever the case may be, that he didn't agree with the campaign, the long-term strategy of how to deal with Iran, that he just decided, "I don't want to be a part of it. I don't feel like I can follow those orders properly. I don't feel good about it. The best thing for me is on get out of the way with -- with this particular current administration."
LEMON: Yes.
GRANGE: So, you know, actually, I think it's the right thing to do, instead of doing something that you're totally against. Especially a senior officer. I mean, you know, you're involved in these kinds of decisions.
LEMON: Yes. And probably asked you the best question at the end and we, you know, it's TV -- you do this a lot -- we have to move on. You know Admiral Fallon, and you're -- what do you make of him?
GRANGE: I think he's a very capable, seasoned commander with a lot of experience. And, you know, this is -- this is an example of how a military serves the free, democratic society. And we should be very thankful that this is -- this is the kind of system that we have, with America's armed forces. I think it's a healthy thing.
LEMON: Brigadier General David Grange, thank you, sir.
GRANGE: My pleasure.
LEMON: Let's move on now. Talking about brewing outrage in Katrina-ravaged Biloxi, Mississippi. Why is such a large chunk of hurricane relief money, meant to rebuild houses, being used for something else? CNN's special investigations unit brings you an exclusive report. Abbie Boudreau joins us.
(COMMERCIAL BREAK)
NGUYEN: Well, as Mississippi voters cast ballots in that state's primary today, economic worries abound in areas that were hard hit by Katrina. Many are outraged about millions of dollars in hurricane aid being redirected from housing to other projects.
Abbie Boudreau with CNN's "SPECIAL INVESTIGATIONS UNIT" has this exclusive report.
(BEGIN VIDEOTAPE)
A.J. HOLLOWAY, MAYOR OF BILOXI, MISSISSIPPI: I'm proud to say that we're making progress each and every day here in Biloxi.
ABBIE BOUDREAU, CNN CORRESPONDENT (voice-over): The site for Mayor A.J. Holloway's rosy pronouncements, the lavish Beau Rivage Hotel and Casino.
HOLLOWAY: Well, I think the state of Biloxi is in great shape.
BOUDREAU: It was a feel-good celebration for Biloxi's elite. But "Keeping Them Honest," a five-minute drive away, we find a part of Biloxi that is definitely not in great shape.
CONSUELA SWAW, BILOXI RESIDENT: This is wrong, you know. This is very wrong.
BOUDREAU: Consuela Swaw still lives in one of the more than the 10,000 FEMA trailers and mobile homes in Mississippi.
SWAW: I think that's what I feel a lot, it's just anger.
BOUDREAU: For Swaw, life in the trailers is an ordeal.
SWAW: It got ruined because the trailer sweats so bad.
BOUDREAU: There's mold.
SWAW: The mold starting to build up more now.
BOUDREAU: Roaches. And rats.
SWAW: They just chewed through the walls of the trailer and...
BOUDREAU (on camera): They play in your daughter's bed?
SWAW: They're always in her bed, yes.
BOUDREAU (voice-over): She's one of thousands of Gulf Coast residents who rented before Katrina struck. Community groups complained renters are being excluded from the nearly 5.5 billion dollars in federal grants. Here's why.
Of all that federal money, $3.1 billion has been set aside to assist homeowners. But only $426 million is for rental housing. And there's a catch. The money doesn't just flow in. Local governments must first ask for it, so residents like Consuelo Swaw can get out of her trailers and into rental housing. REP. GENE TAYLOR (D), MISSISSIPPI: None of the local governing authorities have set foot in my office saying, "We want some money for housing. We want to put it right there."
BOUDREAU: Congressman Gene Taylor says local governments in Biloxi and other towns don't seem to want low-cost housing or the people who live in it.
TAYLOR: In fact, what we're seeing some of is "not in my backyard."
BOUDREAU: With all that federal relief money just sitting there, Governor Haley Barbour got approval to use a lot of it for something else: improving the harbor at Gulfport; $600 million that was supposed to be spent on housing will now go to reviving the port. And some suspect it will help build new casinos.
(on camera) This is the port that everyone is talking about, the one that would benefit from the $600 million. We asked Governor Haley Barbour to sit down and talk to us about this, but his office says he's unavailable.
(voice-over) In a statement, Barbour said the money for the port would have a huge and beneficial impact in creating jobs. And in January he said he'd set aside $100 million for low-income housing.
But critics argue that renters and low-income residents could have used that $600 million.
Kimberly Miller is with Oxfam, an international aid group working on the Gulf Coast.
KIMBERLY MILLER, OXFAM AMERICA: And that forecloses forever the opportunity to use those funds in the way that is still needed.
BOUDREAU: The mayor of Biloxi says he feels the governor is spending the money wisely.
(on camera) Why spend the money on economic development when you still have people in FEMA trailers?
HOLLOWAY: Well, as I said, people living in FEMA trailers right now, a lot of them are not wanting to get out of the FEMA trailers.
BOUDREAU: Why wouldn't they want to get out of the FEMA trailers?
HOLLOWAY: Well, I don't know. But, I just know a lot of them don't.
BOUDREAU: Do -- you don't know why, though? Is it because it's free?
HOLLOWAY: Because it's free.
(END VIDEOTAPE) BOUDREAU: HUD insists it had no other choice but to allow Governor Haley Barbour to redirect the funds to the port of Gulfport. Again, a decision even the mayor of Biloxi supports.
NGUYEN: All right, so let's go back to what the mayor said. He says the people don't want to leave the FEMA trailers; they don't want to get out of them.
BOUDREAU: Well, he says that they don't want to leave the FEMA trailers because they're free. The people that we talked to, of course, say...
NGUYEN: Yes. What do they say?
BOUDREAU: ... a much different story. We're desperate to get out. We'd love to get out, but there's just nowhere to go. Rent has more than doubled in these areas and there are very few places available for people to move into. So it's not that they don't want to move out. It's just that they're stuck.
NGUYEN: Right.
BOUDREAU: It's a really difficult situation.
NGUYEN: Which is completely different than saying they don't want to leave because it's free.
BOUDREAU: Exactly.
NGUYEN: All right, Abbie Boudreau, thank you very much for that -- Don.
LEMON: A band (ph) that's making a run from the border, sneaking from Mexico into the U.S. to get some major firepower. The reason? Well, it's actually easier to buy guns in this country. And they're using the high-powered weapons in an all-out war against Mexican police.
(BEGIN VIDEO CLIP)
DREW GRIFFIN, CNN CORRESPONDENT: This is not a police car, but this is how many of the police officers are killed, in their cars, and look at what they face. This kind of criminal firepower. Anybody sitting here in the driver's seat literally has no chance of escaping this kind of an attack.
(END VIDEO CLIP)
LEMON: U.S. law enforcement agents are joining the battle to stop the flow of guns south. See Drew Griffin's exclusive special investigations unit report on Operation Gunrunner. That's tomorrow right here in the CNN NEWSROOM.
NGUYEN: Well, the closing bell and a wrap of the action on Wall Street, all of that is straight ahead.
(COMMERCIAL BREAK)
LEMON: All right, we have this just in to the CNN NEWSROOM. We've been reporting about the resignation and the retiring of Admiral William Fallon. The White House, the president specifically, releasing a statement just moments ago, and I'll read part of it.
It says, "Admiral William Fallon has served our nation with great distinction for 40 years. He is an outstanding sailor, and he made history as the first naval officer to serve as commander of Central Command." And then he goes on to talk about his service. But he said, "With service in Vietnam as vice chief of naval operations commander, Pacific Command and many other positions, Admiral Fallon has served this country with honor, determination, and commitment."
Those words -- that in part, plus more from President George Bush just released that statement from the White House just moments ago.
Time now to check in with CNN's Wolf Blitzer.
NGUYEN: He is standing by, and he joins us live.
What do you have, Wolf?
WOLF BLITZER, CNN ANCHOR: Thanks, guys, very much.
What will happen next here in New York state? Coming up, the latest on the investigation and how it all started.
I'm also talking to the former New York mayor, Ed Koch, and Governor Spitzer's friend, the Harvard law professor, Alan Dershowitz.
It's primary day in Mississippi, and the exit poll results are coming in. We're going to bring you the very latest on who's casting ballots and what's most important to the voters.
And we'll also have complete coverage of the breaking news on Admiral William Fallon resigning after that magazine article.
All that, guys, and a lot more coming up right here in "THE SITUATION ROOM."
NGUYEN: All right. Thank you, Wolf.
LEMON: Time to check what videos are clicking with all of you CNN.comers.
A young Iranian man in fear for his life, desperately fighting deportation from Britain. He is gay, and homosexual sex is a capital crime in Iran.
A heck of a scare for drivers on this Wisconsin road. Two huge tires come -- come flying off a tractor-trailer. One of them hits a minivan on the other side of the highway. Goodness. The driver was injured by shards of window glass. But he will be OK. There you go. You see that tire going across the interstate right there. And reaction to the Eliot Spitzer scandal. Lots of you are wanting to hear from someone who's been there, like Dina Matos McGreevey, estranged life of a former New Jersey governor. Her "LARRY KING LIVE" interview very popular today.
You can link to all our top stories just from the front page of CNN.com.
NGUYEN: Well, listen to this story. A thank you note from the president to a group of school kids. No, not President Bush, but President Lincoln, which is why it could fetch as much as $5 million at auction.
LEMON: Wow.
NGUYEN: Abe sent the letter to a teacher in Massachusetts who'd sent an anti-slavery petition, bearing the names of almost 200 pupils. In his reply, Lincoln expressed thanks for, quote, "young hearts so full of sympathy."
It will go on sale April 3 at Sotheby's in New York.
And here is another gem from Sotheby's. Look at this. It's beautiful. A pear-shaped diamond weighing 72 karats.
LEMON: I could see that on your finger.
NGUYEN: Oh, yes, I could, too.
The rock is on the block in Hong Kong. The sale is next month. The price, though, could top 10 million bucks, and I don't think that will be on my finger. Can't afford it.
LEMON: You can find someone who can, though.
NGUYEN: Maybe.
LEMON: Maybe.
NGUYEN: The closing bell is about to ring on Wall Street.
LEMON: Susan Lisovicz standing by with a final look at the trading day. The markets reacting to Eliot Spitzer and also the Fed, the feds as well?
LISOVICZ: What a remarkable day. First of all, if you can check out the big board, this is not something we have seen in years. The percentage gains that we're seeing on the Dow right now, 3.3 percent. We haven't seen gains like this since 2001. A remarkable day, especially for the fact that we have seen nothing but bad news and terrible sell-offs as a result.
Why? A major move from the Fed, not an interest rate cut, although we expect that to come next week. The Fed trying to ease the credit crunch that has paralyzed lending, offering certain financial institutions, cash-strapped financial institutions, up to $200 billion in loans and allowing them to use mortgage-backed debt as collateral. And that has been nothing short of toxic.
So what we're seeing right now is a move -- a 400-point rally by the Dow Industrials across the board, in spite of the fact that oil hit yet another all-time high today, closing at just under $109 a barrel.
While I'll mention that other story, of course, which is all the talk of every trading floor in the nation, and that is the downfall of Eliot Spitzer, a man who was called by many the Sheriff of Wall Street. And he had a lot of things to brag about, as he -- as he prosecuted some very serious issue in corporate America, including irregular accounting, conflicts of interest, excessive executive pay
It was the manner in which he operated that offended so many people on Wall Street. The "Wall Street Journal," in a blistering editorial today, said he routinely used the extraordinary threat of indicting entire firms, a financial death sentence, to force the dismissal of executives. So a few individuals, and the whole firm was tarnished.
So a very good day on Wall Street. A tough day for Eliot Spitzer. But some satisfaction here because of it.
Back to you, Don and Betty.
NGUYEN: Thank you, Susan.
LEMON: Time now to turn it over to "THE SITUATION ROOM" and...
NGUYEN: Wolf Blitzer in New York.
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