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Spitzer Steps Down; David Paterson Readies to Take Spitzer's Place; Airspace Breached at Capitol Building; Southwest Grounds 41 Planes

Aired March 12, 2008 - 12:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

(BEGIN VIDEO CLIP)
FMR. GOV. ELIOT SPITZER (D), NEW YORK: ... every time we fall. As I leave public life, I will first do what I need to do to help heal myself and my family. Then I will try once again, outside of politics, to serve the common good and to move toward the ideals and solutions which I believe can build a future of hope and opportunity for us and for our children.

I hope all of New York would join my prayers for my friend, David Paterson, as he embarks on his new mission. And I thank the public once against for the privilege of service. Thank you very much.

(END VIDEO CLIP)

TONY HARRIS, CNN ANCHOR: There you have it, the resignation statement from Governor Eliot Spitzer just about 15 minutes or so ago.

Let's get you to Washington, D.C. now. We're talking about fast- breaking developments. There she, is our justice correspondent, Kelli Arena.

Kelli, great to see you. You have information about the federal investigation of Governor Spitzer.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, first of all Tony, I'm going to caution everyone out there, there is so much bad information going around and people pontificating in all sorts of ways. We're going to try to clear a lot of this up.

There has been, by the way, a total clamp-down at Justice Department and U.S. attorney's office in the southern district of New York, great deal of concern about accusations of politicizing this investigation, various leaks to the media.

We do know that Spitzer's lawyers have been in contact with prosecutors, lawyers are not commenting at this time either. My guidance is that the government is less interested in pursuing charges related to the prostitution side of this equation, but rather focusing on what he may have done, as we've been saying all along, to conceal the money trail.

I'm told that the charge of structuring, which we heard about, which is transferring money into smaller amounts to try to hide it, is high on the list of possible charges. But again, this is all being held very close to the vest.

Some are suggesting that just because the governor has resigned that that's somehow going to factor into the equation. I'm told that really is not going to matter much as a bargaining chip.

The government has Spitzer, according to our sources, cold on a federal wiretap. Investigators have identified at least eight instances in which Spitzer used the Emperors Club. They're still examining records, but that's new information we have from our sources. We're told that he actually began meeting with this particular organization about eight months ago, and this criminal investigation began, as you know, Tony, when a bank notified treasury.

We now know it was the North Fork Bank that notified officials about suspicious activity, more speculation that it was because it was a politician that this is why he was targeted. Not so I'm told by various sources. It was because the money was going to a shell corporation that the prostitution ring had set up.

And so when you follow the money trail and it ends up in what appears to be a shell corporation, that's going to ring some alarm bells. And that's what happened. So lots of reporting, lots of speculation. Let's take a deep breath. We're only going to give you the accurate stuff here -- Tony.

HARRIS: Well hang on a second because so much of that is framed in a much better way, frankly, than I had heard it to this point.

ARENA: Tony, you haven't been listening to me, buddy!

HARRIS: Send me an e-mail from time to time, will you, please? So let's do this again because again, Kelli, so much of this information is really framed in a way that for many folks watching the program at this moment, this idea of structuring. Let's start there again. We've got some time. Then let's work through it.

ARENA: OK. Structuring is when you are trying to bundle your money in smaller amounts, when you're trying to shuffle them between accounts, as to not raise alarm bells at a banking institution. As you know, once you hit a certain level of money being transferred, that triggers an automatic review.

HARRIS: We used to think that figure was $10,000.

ARENA: Actually, no, it's gone lower. Since September 11th, there have been many changing in the banking laws because they were trying to go after terror financing. OK.

Obviously this deals with public corruption, it deals with many other things. Any time a criminal organization tries to launder money they're having a tougher time. The levels have been lowered. The examination is many more vigorous. You have a lot of software constantly running.

The money, according to our sources, that Spitzer was transferring eventually made its way -- some of it at least -- made its way to a shell corporation. Now he didn't set up the shell corporation. It was the prostitution ring that set up the shell corporation so that all of their clients could send their money to the shell corporation and try to make it look like a legitimate business expense.

HARRIS: Yes.

ARENA: If he were trying to -- if the intent was to circumvent banking laws, then he could be charged with that, and that is something that I'm told the prosecutors are looking very hard at.

HARRIS: All right. Let's leave it there for now. That is terrific. OK. Our justice correspondent, Kelli Arena for us. Kelli, appreciate it. Thank you.

HEIDI COLLINS, CNN ANCHOR: This just in now to the CNN NEWSROOM. Want to make sure we get it out to you immediately.

This is a statement now from the lieutenant governor of New York, David Paterson. As you know, as the current Governor Eliot Spitzer mentioned in his live press conference moments ago, this is the man who will take over the state of New York as governor effective on Monday.

Here is what his statement says: "Like all New Yorkers, I am saddened by what we have learned over the past several days. On a personal level, Governor Spitzer and Silda have been close and steadfast friends. As an elected official, the governor has worked hard for the people of New York. My heart goes out to him and to his family at this difficult and painful time. I ask all New Yorkers to join Michelle and me in prayer for them. It is now time for Albany to get back to work as the people of this state expect from us."

Again, that statement coming out from lieutenant governor's office, David Paterson who will assume the role as New York's governor on Monday.

Wolf Blitzer is standing by now to talk more about this situation.

Wolf, as we read that statement from the lieutenant governor, going to be the governor on Monday. Got a very, very big job in front of him.

WOLF BLITZER, CNN ANCHOR: And he's going to be governor until the next election, the next scheduled election here in New York State, Heidi. That's in November 2010. He's got an important job ahead of him.

He's going to have to recreate and improve relations with the Republicans in Albany, not an easy chore for a Democrat at any time but especially now given some of the tensions that have developed, not necessarily as a result of the sex scandal, the involvement with the prostitution ring by Eliot Spitzer, but all sorts of other problems Spitzer had generated in terms of his combative style with the Republicans in Albany over the past two years or so and even going back when he was the attorney general of New York state.

So he's got his hands full, David Paterson. But by all accounts, he's highly respected, well liked. He's someone who the Republicans have suggested they can work well with. He's the son of a long-time Democratic political leader here in New York, Basil Paterson of Harlem. So his lineage, his family is well known and he's going to be the next governor of this state.

COLLINS: I had the opportunity to meet him just a few months ago in New York. Seemed to be a very nice guy, did not talk politics with him.

Tell us a little bit more about what the difference will be between Governor Eliot Spitzer and the new governor coming in on Monday, Governor Paterson. Are we going to see -- is he more liberal, less liberal? What are we likely to see?

BLITZER: Well, he's obviously a liberal in the sense that he is a New York Democrat and by almost by definition he's going to be a liberal. But at the same time, he doesn't bring the combative style that Eliot Spitzer brought as the attorney general.

We've been pointing out, he is legally blind, and that is not only is he going to be a legally blind governor of the state but he's going to be the first African-American who is going to be governor of New York State as well. So this is a real historic moment here in the empire state with David Paterson about to become on Monday the governor of New York. So there is a lot of history unfolding right now, even as we watch it.

But as I said, I don't think he's going to be as combative and he's certainly going to learn some of the lessons of Spitzer's mistakes in terms of generating some of the battles he's had with Joe Bruno and others, the Republican leader in the legislature.

So he's going to -- I think he's going to try to work together and I think there is going to be an effort on the part of the Republicans to try to work together as well. There is enormous budget problems and other problems facing this state right now, and they've got their hands full in dealing with that.

COLLINS: Are there any issues to your knowledge though that will be treated with different priority when we look to Governor Paterson over Governor Spitzer?

BLITZER: The economy is going to be the most important issue in this state, as it is in every state right now, given the economic situation. So many people already think the country's in a recession, and if it isn't in a recession, it certainly seems to be on the brink of a recession.

So the economic problems in New York, as in every other state in the country, are first and foremost on the minds of these political leaders. And they're going to try to deal with that. I'm not sure that he's got a specific economic strategy or blueprint in mind, but they're going to have to deal with the budget first and foremost. COLLINS: Yes, absolutely. All right, CNN's Wolf Blitzer, so appreciate it.

We'll take a quick break. We'll be back right here in the CNN NEWSROOM in just a moment.

(COMMERCIAL BREAK)

HARRIS: Who is David Paterson? Well, aside from the obvious, the lieutenant governor who is about to inherit the office of governor, he is in many ways a stark contrast to Eliot Spitzer.

A closer look now from CNN's Brian Todd.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT: Not as well known as Eliot Spitzer, and not as controversial. David Paterson was sworn in as lieutenant governor of New York in January 2007.

ED KOCH (D), FORMER NEW YORK MAYOR: He is an understated guy, and that I think at this particular moment in time will be very helpful.

TODD: At 31, he was the youngest state senator ever in New York, then worked his way up to senate minority leader making more friends than enemies.

Paterson, who is now 53, lives in Harlem and would be New York's first African-American governor. In 2004, he was given a speaker's slot at Democratic national convention.

LT. GOV. DAVID PATERSON, NEW YORK: I have a vision for New York State. I can't see it with my eyes, but I feel it in my heart.

TODD: Paterson is legally blind. But that didn't keep him from running in the New York City marathon.

PATERSON: I'm as proud of that as any elective office or any other achievement I've had in my life.

DAVID DINKINS (D), FORMER NEW YORK MAYOR: Legally blind. He was able to finish law school, get elected to the senate, become the leader of the Democrats in the senate, all with this, what for some would be a handicap.

TODD: If Spitzer were to resign, Paterson will come into office as a relatively fresh face.

STEVE KORNACKI, NEW YORK OBSERVER: The public is hoping for that replacement to redeem the office and their faith in elected officials in general. David Paterson in a sense walks into a great opportunity.

TODD: Republican leaders say they're willing to give Paterson the benefit of the doubt.

JAMES TEDISCO, NEW YORK STATE ASSEMBLY: I told him we'd give him our full support because this is not about politics anymore.

TODD: Paterson will need all the friends he has. New York State has to close a budget gap of up to $5 billion this year.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

HARRIS: Boy, '08, what a year! The soon-to-be governor of New York lives in Harlem.

Let's get to Allan Chernoff just outside the governor's lower Manhattan office where Eliot Spitzer made his announcement a short time ago.

And Allan if you would, we wonder what it is like to be in the room at momentous occasions, and you were there for this one. We often describe it as sort of the crackle of anticipation in the air. What did it feel like?

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Everybody in the room knew that they were witnessing history. Of course, that is the reason that so many of us do go into journalism, to see these big moments everybody knew this certainly was one of those, without question.

Many of us in fact had covered Eliot Spitzer press conferences in the past when he was attorney general, even as governor. And almost always those press conferences were all about ethics, except Mr. Spitzer was the good guy.

He was the one taking down the criminals. He was the one saying, that's not what you're supposed to do. And here he was apologizing. The irony is just incredible, absolutely incredible.

Let me talk a little bit, please, about the tone that we saw from Eliot Spitzer. Because Eliot Spitzer really seemed to have almost the same eyes forward, I got to do what I got to do type of attitude during this press conference. It wasn't a man who was crying. It wasn't a man who was really showing a lot of emotion, even though he did say I'm deeply sorry I did not live up to what was expected of me.

It almost, from outward appearances, appeared to be the same type of Eliot Spitzer saying, "I'm determined, I'm going to do this," boom, boom, boom, goes straight ahead. That's the type of guy he is, at least publicly on the outside.

We pretty much still did see that. His wife stood once again to his side and again, with that almost blank stare, deer in the headlights type of situation. Of course, your heart has to go out to her.

HARRIS: Absolutely. All right, Allan Chernoff for us; Allan, appreciate it, thank you.

COLLINS: Want to get to Cait McVey now with our affiliate WXXA. She is actually standing outside David Paterson's home, the current lieutenant governor to assume the role of governor of New York on Monday.

You'll hear his name a whole lot more. Again this is outside of Albany -- Cait.

CAIT MCVEY, WXXA REPORTER: Hi, Heidi. That's right.

We've been outside Lieutenant Governor David Paterson's house all morning. We are told that he has been inside. We have yet to see him come out. Basically we've been talking to security. He says he's well aware that all of us are out here. No word yet if he's going to come out and comment.

Again, there's a bunch of us out here. Lots of cameras, everyone's waiting at the end of the driveway to just get a feel, we want to talk to him. As you said, he's going to be very prominent now that he's taking over. We just want to hear what he has to say.

COLLINS: Absolutely. All right. Cait, thank you.

And once again, in case you didn't hear, we've already received a statement from the lieutenant governor, David Paterson, regarding the situation with Governor Eliot Spitzer saying a number of things, in the last line here: "It is now time for Albany to get back to work as the people of this state expect from us." Again those words coming from the current lieutenant governor. You see him there assuming his office, David Paterson.

HARRIS: Let's squeeze in a quick break here. Want to let you know what's on the menu for the other side of the break. We are anticipating a news conference from New York Senator Chuck Schumer scheduled for 12:30 p.m. Eastern Time. We'll bring that to you.

When we come back we will also get reaction to all of these developments today from a former New York City prosecutor Paul Callan and also the reaction in Albany, New York. First a break.

(COMMERCIAL BREAK)

HARRIS: We of course are following the latest developments in the Eliot Spitzer story.

Let's get you back now to Allan Chernoff who has some breaking news for us -- Allan.

CHERNOFF: That's right. Tony, there had been speculation that Eliot Spitzer perhaps was delaying his resignation so that his attorneys might work out a deal with the U.S. attorney, the federal prosecutor, here in Manhattan.

We just have a message, a public message, from the U.S. attorney Michael Garcia saying, "There is no agreement between this office and Governor Eliot Spitzer relating to his resignation or any other matter."

Indeed I had called his office earlier today. His press secretary's would not comment on my question, wouldn't respond to it. I called a source within the office and learned that negotiations were still ongoing and here we have the U.S. attorney himself actually putting out a public statement which is pretty rare, especially in this type of a situation.

Pretty rare. But he is saying that there is absolutely no agreement between the prosecutors - the federal prosecutor here and the governor who is about to step down, who has just announced that he is going to be stepping down.

Now let's talk a little bit about potential possible charges that he might face. Now he apparently was a client of a prostitution ring. How often are Johns prosecuted? That really doesn't happen. But in this case we do have evidence that he helped arrange, the governor did, for a prostitute to come from New York City down to Washington, D.C. That's crossing over state lines, that is a violation of federal law.

In addition, the investigation that led to all of this in the very first place, a financial investigation by IRS agents looking into actual transfer of funds out of the governor's account to other accounts and ultimately to an account controlled by this prostitution ring.

The talk among law enforcement authorities is that this potentially could lead to a charge of structuring; that is trying to move money around so that the federal authorities don't actually notice it. It usually involves sums of $10,000 or more. If you break them down into some less than $10,000, that's when a charge can come in.

Mr. Spitzer's attorneys would be arguing that, hey, the governor clearly was not trying to hide anything in terms of the money from the federal government. Perhaps just trying to hide something from his wife.

HARRIS: Again keeping track of the fast moving developments. Allan Chernoff for us in New York; Allan, appreciate it. Thank you.

COLLINS: Quickly want to get you back to Albany.

Mary Snow is standing by with more information and more reaction to the fallout of the announcement from the governor of New York that he indeed will be resigning -- Mary.

MARY SNOW, CNN CORRESPONDENT: Well, Heidi, I talked to one lawmaker who said that everything came to a stand-still as everyone watched what Eliot Spitzer had to say. It's still a shock here.

Now the next road comes for David Paterson to take over as governor. As we heard, that is expected to happen on Monday. He released a statement saying that he is saddened by what has happened but now is the time for the work of New York to continue.

He is at his home outside Albany in Schenectady. We have called his office several times in terms of the logistics but he has not said anything beyond that written statement that was released just a short time ago and is not here at the capital right now.

Just judging from the reaction, this is really such a big shakeup. We've been talking all morning about political adversaries of Eliot Spitzer. One of the biggest ones is Republican Joe Bruno. He is the senate majority leader and he is saying that New Yorkers have gone through a crisis like none other, his heart goes out to the Spitzer family, but now is time for the work of New York to get done.

I was talking with a Democratic assembly man from New York who said that the tone of contempt and confrontation is over. And many lawmakers are looking forward to David Paterson taking over. He is very well respected among his colleagues.

We've been talking about the fact that he will make history; he'll become the first African-American governor in New York State. He has been untested though. He's been in the state senate since 1985, is now 53 years old, has a lot of supporters here in Albany but such a big shakeup when you think about the turmoil Eliot Spitzer's had in the time that he's been in office.

COLLINS: All right, well, yes, Mary, as we move forward with this we still expect at least in the days to come there could be even more obviously that we learn, certainly regarding any charges or more fallout from the government there.

Sounds to me like what you're saying is lawmakers are saying this actually might be a good thing for the state of New York.

CNN's Mary Snow reporting from Albany, thanks.

HARRIS: OK. Just getting last bits of information here. We're just getting information that the U.S. Capitol building in Washington, D.C., as you can probably figure out from the pictures we're showing you now, is in the process of being evacuated right now because of what we understand is a breach of the airspace in that particular area.

The building is being evacuated because of a plane that we understand has breached the airspace. So these are pictures just in. Give me the details of the story as --

All right. We have an unknown emergency. That's all that we can report apparently at this time. But as you can see, the capitol building in Washington, D.C. is being evacuated right now. That's all we have. I suppose we should just leave it there, because that is all the information that I understand that we can go with. So that is the information that we have, that the U.S. capitol building is being evacuated right now.

More details to come in just minutes right here in the CNN NEWSROOM.

COLLINS: Certainly very hard to ascertain what might be going on there just by the way people are moving. We'll of course cover that more for you. As soon as we get more out of Washington, D.C. as well as the coverage of Governor Eliot Spitzer's resignation happening just moments ago. Had it for you live on CNN.

Continue now with Don Lemon and Brianna Keilar. Hope have you a good day, everybody.

(COMMERCIAL BREAK)

DON LEMON, CNN ANCHOR: Parts of the U.S. Capitol evacuated as a precaution.

I'm Don Lemon here at the CNN World Headquarters in Atlanta.

BRIANNA KEILAR, CNN ANCHOR: And I'm Brianna Keilar in for Kyra Phillips.

You're looking here at a live picture of the Capitol. You can see people there on the right-hand side of your screen milling about outside of the Capitol. Some people kind of strolling. Not necessarily taking it very seriously because this kind of thing does happen from time to time.

LEMON: It does happen all the time. And it's (ph), Brianna Keilar -- that is your post there in Washington. And as Brianna has been covering Washington, she will tell you this happens all the time. And usually -- not saying it's the case in this instance -- it is a small plane who doesn't know the boundaries and goes into airspace that the plane should not be going into.

Again, not sure if that has happened here but the Capitol, parts of it, evacuated as a precaution. We understand there's still some work going on inside of the Capitol, specifically with the Senate, and, I believe, our Ted Barrett is on the phone, right? Correct?

KEILAR: That's right. Well actually -- and I just want to say that we've gotten some information in that it was a private aircraft that violated restricted airspace. And the way it works around Washington is you have a circle of restricted airspace that planes are not supposed to go into unless, obviously, they are cleared and there's a procedure that you would go through to get cleared.

So we do now know that this was a private aircraft that violated that restricted airspace around Washington, D.C. and Jeanne Meserve is going to be joining us here shortly with some more information on that. But you can see people milling around outside of the Capitol. And do we have Ted Barrett on the phone?

LEMON: No, we don't have Ted Barrett on the phone yet but we have Kate Bolduan. She's going to join us in just a little bit. But again, the information that you're getting is that it's a small aircraft that entered this restricted space just a short time ago and on a day when there couldn't be anything more going on with the goings on happening in New York and also now this happening in Washington, D.C.

But the reason we're showing you this picture of the Capitol and you're seeing these people milling about on the mall here is because parts of the Capitol, we're hearing parts of the Capitol, evacuated as a precaution because a small plane has entered restricted airspace.

KEILAR: That's right. A private aircraft has violated that restricted airspace. And you can think of it basically around Washington as a bubble of restricted airspace and this private aircraft has gone inside of that.

LEMON: And, Brianna, you work with Kate Baldwin on The Hill when you're there and I believe Kate is on the phone now.

Kate, can you explain this to us?

KATE BOLDUAN, CNN CORRESPONDENT: Yes, I haven't heard what you guys have been talking about so far, so I know you probably have the basics. But basically what we've seen or heard here is over kind of the internal P.A. system, they announced a code orange. And that would mean that something has gone into restricted airspace.

Now, everyone remembers this did happen last week and it was -- it seemed like an errant plane in air and it was diverted to Richmond but today --

LEMON: Hey, Kate, real quickly, we're going to get right back to you in just a second. Hold the line, OK?

BOLDUAN: OK.

KEILAR: All right. We want to get you now to Jeanne Meserve. She's standing by for us in our Washington bureau with more on this.

Jeanne, what do you know?

JEANNE MESERVE, CNN CORRESPONDENT: Brianna, I just spoke to an official at the Department of Homeland Security who says at this time there is no indication of an imminent threat to the Capitol. Once again, no indication of an imminent threat.

Indeed a private plane did enter the restricted airspace around the Capitol. I'm told by this official that it was traveling east, then it turned south. Now I'm told it is heading west. They are working to establish communication with this aircraft, which is apparently heading away from the Capitol and at last report was 15 to 20 miles west of dead center of the national Capitol region. That, of course, would be the National Mall.

They are working to establish communications with the aircraft. In addition, the Coast Guard, which has responsibility for policing this airspace, has scrambled a helicopter up. We have seen those helicopters in action.

They signal to the pilot. They also have flashing signs on the side of the helicopter telling them what frequency to tune in to so they can establish that communication. In addition, this Department of Homeland Security official was of the impression that there may also have been some military aircraft scrambled from Andrews Air Force Base. I should tell you that it is not infrequent for there to be intrusions into the national Capitol airspace. They have become far fewer in number because the word has spread within the aviation community that indeed there are very strict restrictions on this space, but it does happen from time to time.

And in this case, at last report, according to a Homeland Security official, no imminent threat to the Capitol. But, of course, out of an abundance of caution, you are seeing these evacuations here in Washington -- Brianna.

KEILAR: And, Jeanne, talk to us about when there are these incursions into restricted airspace. I know that sometimes it has turned out to be perhaps a private pilot who kind of lose their way, doesn't realize how close they are to this restricted airspace. Is that generally what you see, do you know?

MESERVE: Absolutely true.

LEMON: Just real quickly, guys, I want to point out that there's Chuck Schumer, who is walking by there. Chuck Schumer. Pardon me for the interruption there, Jeanne, but Chuck Schumer is supposed to hold a press conference right now and he is walking by now, so we're not sure -- to talk about veterans affairs, if that's going to go on. It appears that it is.

But I'm sorry to interrupt. I just wanted to point that out. Jeanne and Brianna, continue. Sorry.

KEILAR: But, Jeanne, just give us some context as to what these incursions normally turn out to be? Not necessarily in this case.

MESERVE: They normally turn out to be private pilots who simply weren't aware of the rules here or weren't paying attention to what they were doing. It's interesting you see a spike up in the number of these incidents usually when the weather turns nice because there are more private pilots up in the air.

The national Capitol region installed a system around the Capitol to flash radar and lasers at these planes to let them know when they were in violation of space. Actually we've been trying to get some word for actually probably about a year an how effective that's been and we haven't gotten much response.

But we do know the Coast Guard is up there on a regular basis and their helicopters signaling these planes, communicating with them. The usual policy, once they're out of the airspace, is to make them land somewhere. Then they talk to these people and make sure that they don't pose and never pose any kind of threat.

KEILAR: All right, Homeland Security correspondent Jeanne Meserve there with the very latest on that. Thanks, Jeanne.

LEMON: All right. We're going to continue on to talk about this. At least try to figure out exactly what's going on with this. Jeanne Meserve explained it really clearly there. And as you could see from the right side of your screen, we showed that Chuck Schumer standing there, about to start a press conference. It is believed that he's going to talk about veterans affairs and then, at the end of that, possibly talk about the scandal that has plagued New York state over the past couple of days, the resignation of Eliot Spitzer.

Now we want to get to our other breaking news. The scandal was shocking. The upshot seemed only a matter of time.

(BEGIN VIDEO CLIP)

SPITZER: I am resigning from the office of governor. At Lieutenant Governor Paterson's request, the resignation will be effective Monday, March 17, a date that he believes will permit an orderly transition. I go forward with the belief, as others have said, that as human beings, our greatest glory consists not in never falling, but in rising every time we fall.

(END VIDEO CLIP)

LEMON: Barely 14 months after taking the oath of office, 48 hours after being exposed in a prostitution scandal, Eliot Spitzer calls it quits as New York governor. If you've been watching CNN, you've seen the culmination of a stunning political collapse. The law and order crusader whom New Yorkers elected governor by a landslide, buried by a scandal of his own making.

KEILAR: Here is what we know. Eliot Spitzer is resigning. This is effective Monday. That date supposedly set by his success, New York Lieutenant Governor David Paterson. Paterson saying it's time for Albany to get back to work. That is a quote.

Now what we don't know is whether Spitzer made any deals with the feds to avoid prosecution. As you may know, the whole mess came to light with the FBI discovered Spitzer's back-channel payments to a high-priced call girl ring.

LEMON: And before we go on, let's let Spitzer speak for himself. Here's his statement with his wife at his side, again. This was a little less than an hour ago.

(BEGIN VIDEO CLIP)

SPITZER: In the past few days, I've begun to atone for my private failings with my wife, Silda, my children, and my entire family. The remorse I feel will always be with me. Words cannot describe how grateful I am for the love and compassion they have shown me.

From those to whom much is given, much is expected. I have been given much. The love of my family, the faith and trust of the people of New York, and the chance to lead the state. I am deeply sorry that I did not live up to what was expected of me.

To every New Yorker and to all those who believed in what I tried to stand for, I sincerely apologize. I look at my time as governor with a sense of what might have been. But I also know that as a public servant, I, and the remarkable people with whom I worked, have accomplished a great deal. There is much more to be done and I cannot allow my private failings to disrupt the people's work.

Over the course of my public life, I have insisted, I believe correctly, that people, regardless of their position or power, take responsibility for their conduct. I can, and will, ask no less of myself. For this reason, I am resigning from the office of governor. At Lieutenant Governor Paterson's request, the resignation will be effective Monday, March 17, a date that he believes will permit an orderly transition. I go forward with the belief, as others have said, that as human beings, our greatest glory consists not in never falling, but in rising every time we fall.

As I leave public life, I will first do what I need to do to help and heal myself and my family. Then I will try once again, outside of politics, to serve the common good and to move toward the ideals and solutions which I believe can build a future of hope and opportunity for us and for our children.

I hope all of New York will join my prayers for my friend, David Paterson, as he embarks on his new mission. And I thank the public once again for the privilege of service. Thank you very much.

(END VIDEO CLIP)

KEILAR: And just to get back to another story we've been following at the Capitol, an all-clear has been issued. We told you just a few moments ago that there was an incursion into airspace over Washington, D.C. That the Capitol had been evacuated.

Well now, at this point, there is an all-clear, which means that those staffers and those members of Congress are going to be able to get back into their offices. Obviously the danger here not turning out to be a danger. This was just a precaution. So an all-clear there at the Capitol in Washington, D.C.

Let's get back to the Eliot Spitzer scandal, though. Going now to CNN's senior correspondent Allan Chernoff. He's in New York for more on the Spitzer resignation.

You were actually in that room when he publicly announced his resignation, right?

CHERNOFF: That's right, Brianna.

And we just heard the governor's comments once again. And if you listen closely, if you look at the governor, you really get a sense of the pride of the man. Even in resigning, amidst this incredible scandal, he does say that "I believe we accomplished a great deal." He's proud of his accomplishments as governor.

Then also that comment that he made right near the end, "I go forward with the belief as others have said, that as human beings, our greatest glory consists not in never failing, but in rising -- not in never falling, but in rising every time we fall."

And to actually talk about that and talk about going forward, trying to serve also the public good down the road, I mean here is a man who just has astounding pride in himself. Obviously he's apologized for what he has done here, but this is a very proud man and, frankly, you know, just a very sad moment, not only for him, his family, everybody here, all his constituents, all of New York state really.

But it's just striking. This is not a high-level politician who is throwing himself on the mercy of public opinion and shedding tears. He is just a very, very head-strong -- and everybody who knows him says that about him. And you even detect a sense of that even here in his resignation speech -- Brianna.

KEILAR: When you talk to people there where he was giving this announcement, was that really what they noticed? Did anyone say perhaps that she should have been more apologetic? Because there definitely was a sense of pride there.

CHERNOFF: Right. More contrite. I mean, you -- just the sense in the room, frankly, was that this is history. This is one of those big moments that, as journalists, we all live for. And so everybody was just eating it up very into the moment, of course.

But when you step away from it, a few moments later, that's really the sense that you get. I said earlier that this was an Eliot Spitzer giving his presentation in a way that was not terribly dissimilar from the way that he would announce a successful prosecution, when he would announce that he had taken down perhaps a Wall Street firm, a mutual fund, a health care company, or even a prostitution ring -- Brianna.

KEILAR: That's right, apologizing but still holding his head up high.

Allan Chernoff there for us in New York. Thanks.

LEMON: All right. We have been -- we'll get back to this breaking news story in just a moment, but now we want to go to special investigations correspondent Drew Griffin. Drew Griffin broke this story.

Drew, I believe it was last week regarding some faulty mechanics with Southwest Airlines? And as I understand from our producers here, you've got some new information for us.

DREW GRIFFIN, CNN CORRESPONDENT: Don, more trouble for the airline that carries more passengers in the U.S. than anybody else. Southwest Airlines confirming now it's grounded 41 of its Boeing 737s. That happened today. What Southwest is not saying is the reason for that. Other to say that it is not related to structural damage. I'm waiting for confirmation on exactly why 41 of these planes were grounded.

This comes just one day after Southwest Airlines placed three of its employees on administrative leave, hired an outside consultant to overview its maintenance program and announced it's going to fully engage with the FAA on the audit of Southwest Airlines. Of course, following our report last week that 117 Boeing 737s flown by Southwest were flying at one point in 2006 or 2007 past mandatory inspection limits.

The FAA, as you know, Don, saddled Southwest Airlines with the largest fine ever against an airline, $10.2 million, because of those violations. But the news this morning, Southwest Airlines has grounded 41 of its 737s -- Don.

LEMON: Drew, I remember speaking to you here last week when you broke this story. We were talking about one of the people in your story, one of the officials there said that they broke the law. And so if they're doing this, can we expect -- and I don't want to get ahead of ourselves -- maybe some sort of criminal action against Southwest Airlines?

GRIFFIN: It's really hard to determine if, indeed, a law was broken here. That was certainly the opinion of James Oberstar (ph) in Congress, you know, really the champion of aviation oversight. But as to whether or not there's a criminal investigation open up.

The investigation actually came from FAA inspectors themselves who were "blowing the whistle" on managers at the FAA. And it's been long charged by critics of the FAA that those managers that are assigned to airlines are too cozy with the airlines.

And if you remember from what our piece was, that a manager at the FAA, who has since been demoted, was allowing Southwest to fly past those mandatory inspection dates simply to help the airline keep up with its flight schedule. And that is what has members of Congress so upset over this entire situation. And there's going to be some congressional hearings next month about this.

LEMON: OK. Real quickly, because we have to go, I'm up against a break here. Drew, are you doing anything for prime time on this?

GRIFFIN: This just broke now. You always put me on the spot. We've been trying to find out more and find out from Southwest exactly why they did this.

LEMON: Well, we would hope that you are. All right. Well, we know you can handle it, Drew Griffin, that's why I put you on the spot. Hey, thank you very much for coming on and giving us this new information. Special investigations correspondent Drew Griffin breaking some news there in regards to Southwest Airlines.

Now back -- we're going to continue to follow that story. We want to get back to the Eliot Spitzer story. What does this mean for New Yorkers? What's next for him? And what does it mean for the candidates out on the campaign trail?

Eliot Spitzer, a supporter of Hillary Clinton, and so is David Paterson, the new -- or the governor who will be coming in, or sworn in on Monday. What does this mean for the candidates? We're going to check in with "THE SITUATION ROOM"'s Wolf Blitzer on the other side of the break. Don't go anywhere.

(COMMERCIAL BREAK)

LEMON: All right. Barely 14 months after taking the oath of office, 48 hours after being exposed in a prostitution scandal, Eliot Spitzer calls it quits as New York governor. And for more context now, we turn to CNN's Wolf Blitzer in New York.

And, Wolf, watching that press conference, he didn't appear to be as contrite as some thought that he should be and he didn't -- he ruled out public political life, but didn't say that he would come back at some other public figure and try to work on the issues that he thought were important.

WOLF BLITZER, CNN CORRESPONDENT: I suspect right now, Don, he's got other problems, he's got other issues on his mind, especially dealing with his family and his friends and the legal fallout from all of this, because we don't know, as we've been reporting, whether any criminal charges are going to be filed, whether there was any deal with prosecutors to try to -- if he steps down, he wouldn't face any serious criminal charges. Maybe some sort of minor misdemeanor.

We do know that there have been all sorts of reports threatening some serious criminal charges, including what they call structuring, trying to conceal the transfer of funds which potentially carries a five-year penalty. So right now I don't think he's thinking long-term as much as he's thinking very, very short-term, getting out of the legal mess and trying to recreate his life an re-establish his relationship with his wife and his family.

LEMON: Obviously, and he did, again, as I said, he did mention that in his press conference. So that's probably, you know, on his long list, as you say, Wolf, and not his short list.

BLITZER: Right.

LEMON: Let's talk about -- can we talk about the presidential campaign for a bit? Can you talk about that? Eliot Spitzer, a supporter of Hillary Clinton, and so is the lieutenant governor. As a matter of fact, I think in Ohio -- let's see, this was back -- this was in Ohio. David Paterson and Hillary Clinton appearing together at an economic solutions summit in Ohio. Talk to us about that. How might this affect the campaign, the people (ph) out campaigning?

BLITZER: Well, an immediate, you know, relatively minor impact will be that Hillary Clinton is going to lose one of her super delegates. He's automatically a super delegate, a Democratic super delegate as the sitting governor of New York, a Democrat. He's no longer going to be the sitting governor of New York. So he's not going to be a super delegate.

David Paterson is a super delegate. He does support Hillary Clinton. So she'll still have him. But he was a super delegate to begin with. So that's a relatively minor part of this. I think the -- in terms of the major political fallout on the campaign, I suspect there won't be a whole lot. This thing probably will be over with in a few days. I'm just getting right now. And I'm not sure it's going to have very dramatic ramifications on either Hillary Clinton or Barack Obama or John McCain in terms of this being an issue in the campaign.

Both political parties have had their embarrassments with politicians who have had sexual scandals emerge and they move on. I think it sort of comes with the territory.

If there's any fallout, it would be -- just my sense that there would be greater cynicism among the American public about elected politicians and don't always believe what you see because you take a look and see how this guy has fallen from grace very, very rapidly and to the surprise of almost everyone. I should say, everyone who knew him, including friends of his going back to law school or undergraduate, this was the last guy a lot of people thought would be caught up in this.

LEMON: OK, hey, Wolf, we have some breaking news. We'll be watching you in "The Situation Room." Thank you, sir, so much for joining us.

BLITZER: All right.

KEILAR: Want to get you now to Washington where New York Senator Chuck Schumer is talking about Eliot Spitzer.

Let's listen in.

(JOINED IN PROGRESS)

SEN. CHARLES SCHUMER, (D) NEW YORK: Paterson and I spoke this morning. I pledged my full support and cooperation. David Paterson will be a first-rate governor and he has my full confidence. He's smart, he brings people together, and he's always grown in every job that he served.

I told him this morning that this is stepping into to being governor in this way is very challenging and he shouldn't expect that he can just on day one know everything and do everything. But he's very good at learning a job and excelling at it.

I've watched him do that over the years as we've been friends and I know that he will be an excellent governor for New York. And my hope and believe is that the people of New York will stand right behind David Paterson, Democrat, Republican, whether you live in Montauk or Buffalo, the north country or Binghamton, everyone will stand behind the governor and will try to unite and move the state forward.

Ready for your questions.

QUESTION: Did you talk to Governor Spitzer at all? SCHUMER: I have not talked to -- the last time I spoke to Governor Spitzer was his office last Friday when nobody knew this was happening. So I've not talked to Governor Spitzer.

QUESTION: Senator, what do you say to members in the public who are just so disappointed and wonder how much faith they can have in their public officials?

SCHUMER: Well, look, I guess public officials, like everyone else, are human. But we have real needs. We have real needs in New York state. We have real needs in America. And what we have to do is try to move forward.

You know, Ernest Hemingway once said, the world breaks us in places but we grow back stronger over the breaks. And I think that's hopefully what will happen here, that we will unite behind Governor Paterson in New York, that Democrats and Republicans will come together and will try to move the state forward.

There's been a great deal of enthusiasm and interest in the elections this year, particularly the presidential election. And that is not simply because of individuals. That is because the world has changed and people, and particularly young people, are clamoring that our country change with it and not let people get left out in these quick and broad changes.

And that's going to continue. And so I think it's our obligation as public servants to try and show the country, people of this country, that government can be a force on their side and a force that's good. And we have to move forward. We have no choice.

QUESTION: Senator, do you believe that elected officials should be kind of held to a different standard (INAUDIBLE)?

SCHUMER: Well, you know, in general, I think that elected officials, when you represent the public, you have to be held to the highest standard.

QUESTION: (INAUDIBLE) position, unique (ph) enforcement, you know, going after prostitution rings puts him in a position to be punished for sure and should be . . .

SCHUMER: Well, I'm not going to get into any punishment. I mean the governor's undergoing plenty of punishment right now with the resignation, the revelations, and, of course, greatest of all, the wounds in the family fabric. And so talking about further punishment today is not something I'd want to do.

QUESTION: Senator, how shocked were you, on a personal basis? And did you see (ph) any signal or any . . .

SCHUMER: I think the whole state and the whole country was shocked. No question about it.

Thank you, everybody. KEILAR: All right, that is the senior senator from New York, Chuck Schumer. Obviously from the same state where Eliot Spitzer is from, talking about the Eliot Spitzer sex scandal. And the significance here is, this is really the first time, aside from a written statement, that Senator Schumer has spoken about this.

I know I was on The Hill yesterday. The reporters there, we were bombarding him with questions and he basically was not having a whole lot to do with those questions.

LEMON: Yes. It was very interesting, he said, he saw them on Friday, before this broke. But it would have been interested if the reporter had followed up and said, what was he like on Friday because apparently he found out about it on Thursday or Friday of last week.

The next hour of the CNN NEWSROOM starts right now.

Well, the scandal was shocking. The upshot seemed only a matter of time.

KEILAR: Barely 14 months after taking the oath of office, 48 hours after being exposed in a prostitution scandal, Eliot Spitzer is out as New York governor.

Hi there, I'm Brianna Keilar, in today for Kyra Phillips at CNN world headquarters in Atlanta.

LEMON: And I'm Don Lemon. You're in the CNN NEWSROOM.

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