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Eliot Spitzer Resigns as New York Governor; Private Plane Violates D.C. Airspace

Aired March 12, 2008 - 13:00   ET

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

DON LEMON, CNN ANCHOR: Well, the scandal was shocking. The upshot seemed only a matter of time.
BRIANNA KEILAR, CNN ANCHOR: 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.

KEILAR: And CNN's Mary Snow joining us now from the New York state capital of Albany.

What's going on there, Mary?

MARY SNOW, CNN CORRESPONDENT: Brianna, we're joined now by Senate Minority Leader Malcolm Smith, who has been on the phone with David Paterson, the next governor of New York.

First of all, thank you for joining us. Tell us, how well positioned right now is the New York state government to go on in this transition of power? What will it take?

MALCOLM SMITH (D), MINORITY LEADER, NEW YORK SENATE: We're well positioned. We're prepared. We know that there are certain issues that affect New York citizens, as property taxes, job creation, healthcare, education.

Governor Paterson is going to move us forward. I'm very confident about his ability to handle the state of New York, and we're going to be there to support him.

SNOW: How did he sound this morning on the brink of taking over?

SMITH: He sounded very good. You know, we talked about what going forward would look like. He talked about Monday addressing the joint conference of the legislature to talk about the direction of the state and how we're going to be cooperating with each other. He sounded, you know, concerned -- obviously, we're all concerned about the governor and his family, but he's prepared.

SNOW: You said you were with David Paterson when you got word on Monday about what was to come concerning Eliot Spitzer. We'll talk about the shock in a second. But there have been transition talks as early as Tuesday?

SMITH: Right. Everyone had been speculating on the possibility of this occurring. And so, of course, we understand the importance of continuing the state's business and moving it forward. You know, there was discussions going on those days as to what would occur, how, what would be necessary and to make sure that we're prepared.

SNOW: Somebody was explaining to me that when Eliot Spitzer was giving his statement, there was -- everything came to a stand-still, and we talked about the shock value. You said you're still shocked. But you said there's a range of emotions. Are Democrats feeling betrayed or angry, as well?

SMITH: Indeed, there is a range of emotions. A lot of it is solemn. There's no question about that. There was some anger, some disappointment. Rightfully so.

But for the most part it was just sorrow; really, concern about his family, his children, and how they're going to deal with this going forward. And in the same breath, we took stock of what's going on right now, and that is what's going on with the state of New York and how we have to show the people of the state that they can be confident about how we're going to take care of their business.

SNOW: But you said also some people did feel some anger among Democrats?

SMITH: Yes, there were some people that felt a little disappointment, and they expressed it. But at the same time, they knew this is a somber moment for the entire state of New York and we have to move forward.

SNOW: Talking about business, you have a massive budget that everyone has to put together. Everybody has been talking about moving forward. But this also is going to be an historic time for David Paterson, the first African-American governor.

SMITH: Yes.

SNOW: Right?

SMITH: Yes, very historical for him, very historical for the state. But David Paterson is a personal friend, and I have the utmost confidence in him. I know he will do a great job. He's been if the legislature for over 20 years. He knows the leaders of the legislature.

We do have a massive budget, close to $176 billion. We have a $5.3 billion deficit we are facing. We're going to have to be very mindful of the pain that's going to be inflicted on some of the state in terms of what we have to do. But job creation and making sure we cut taxes is critical for us.

SNOW: Malcolm Smith, thank you very much for joining us.

SMITH: Thank you. SNOW: Malcolm Smith, he is the senate minority leader here in Albany -- Brianna.

KEILAR: All right. Mary Snow there in Albany, New York, for us, thanks.

LEMON: All right. This story breaking today, as well as another story. Our Drew Griffin, our special investigations correspondent, told us just moments ago about news regarding Southwest Airlines.

The company is saying it has grounded 41 planes. That happened last night. This all happens in the wake of a recent admission that the company missed required inspections of some planes for structural cracks.

And as you might remember, last week Southwest Airlines put three employees on leave after being notified of a penalty. The penalty: $10.2 million by the Federal Aviation Administration.

Our special investigations correspondent is working on this now. I understand Drew Griffin will be joining us -- all right. I'm being told that Drew Griffin called to tell us that the planes are being ground for inspections. That's information just coming to me just now as I'm reading this story.

So just so you know, we're going to continue to follow this story to bring you all of the developing news as it comes. A lot of people fly Southwest Airlines. I believe more people in the country fly Southwest Airlines than any other airlines in -- airline in the U.S.

Back now to our breaking news from New York and the resignation of Eliot Spitzer. What's next for New York's soon-to-be ex-governor? Very soon to be. Monday, as a matter of fact. What can New Yorkers expect from their next governor? What does all of this mean outside of New York?

Our panel can shed some light on all of this. Joe Conason is the national correspondent for the "New York Observer." Paul Callan is a lawyer and former New York prosecutor. And John Roland is a political consultant and former New York City news anchor.

I've got to start with you. Thank you all for joining us today, but I'm going to start with you, Paul, because I spoke with you yesterday. You said that he was probably making some sort of deal and that he'd probably walk away from all of this. So in the last hour, since that first speech that we heard from him with his wife standing by his side, what has he been doing?

PAUL CALLAN, FORMER NEW YORK PROSECUTOR: Well, he obviously tried desperately over the last couple of days to make a deal. But prosecutors in New York have already announced that no such deal arrangement has been reached.

So Eliot Spitzer, I think, is now hoping that his stepping down as governor of New York can still be used by his attorneys to say, "Hey, he's been punished enough. His personal life has been destroyed. His professional life has been destroyed." And hopefully, he will convince the prosecutors to back off on a wide range of criminal charges that are available to them.

But as I said, southern district prosecutors are playing this very close to the vest. They've said no deal has been made with Eliot Spitzer and that their investigations are continuing.

LEMON: Paul, I need to -- I need to jump in here right quick. Hold tight, guys, because a lot of breaking news going on.

We want to go now, since we're talking about this story, to the New York state assembly. They are speaking now, and we want to listen in just for a bit.

(JOINED IN PROGRESS)

SHELDON SILVER (D), SPEAKER, NEW YORK STATE ASSEMBLY: ... governor our full cooperation in moving ahead with the tasks that will be upon him as he assumes that office.

I'll entertain any questions that you have.

QUESTION: Speaker, between now and Monday, talk about what you see happening, because Eliot Spitzer is still technically the governor until Monday. Do you think the New York State -- how can New York state function in this situation where you've got governor who's resigned but you don't have a new governor in place?

SILVER: I think clearly the legislature is functioning. We are passing a budget resolution today, a budget bill today. We in the assembly are passing a balanced budget. We will talk about that with you on Monday. We'll comment on the highlights of our budget, and likewise, we'll comment on what the Senate is doing today.

QUESTION: Speaker, Paterson's priorities are not necessarily going to be the same as Governor Spitzer's in terms of budget. Do you think there's going to be significant changes in the executive budget priorities between now and April?

SILVER: I think what's important in this transition over the next four days is to lay out, to meet with David Paterson, to lay out the priorities that he has and to see if we can jump-start the process as he assumes the role of governor.

It's breaking news...

LEMON: Before you were saying -- you were saying that you hoped to jump-start the process of (INAUDIBLE).

SILVER: Well, we come in on Monday and, you know, having met with the governor and get his priorities and hope to be able to move toward a collegial budget. We'll have two weeks to do it. I think both the senate, the assembly and the governor will have to be of a mind-frame that we want to be on time.

(CROSSTALK) QUESTION: (INAUDIBLE) How does David Paterson compare to Eliot Spitzer?

SILVER: I think, you know, they ran together. I think there's clearly different personalities involved between Eliot Spitzer and David Paterson. As I said, I think David Paterson comes from the legislature, understands the workings of the legislature.

I don't think he needs an orientation as to that. He can hit the ground running on Monday in dealing with the legislature. And to that extent, you know, I think he is best suited to pick up those pieces and move forward.

QUESTION: Mr. Speaker --

SILVER: Yes, sir.

QUESTION: Picking up on that previous question about who is leading the state between now and Monday. We have five days. Who calls the shots? How does it work?

SILVER: I think that clearly that everybody, every one of you and every one of us look to David Paterson as the de facto governor until Monday, and even Eliot Spitzer said he delayed his resignation at the request of David Paterson. But he is the de facto governor going forward.

And obviously, people, you know, the -- beyond today, there will be no legislative determinations made, and people will look to partner with the governor, who will be the governor on Monday. So...

(CROSSTALK)

QUESTION: Paterson seemed reluctant to even run for lieutenant governor. Do you think that he is emotionally prepared to move -- move into this position? Because he was initially reluctant.

SILVER: I don't know whether he was initially reluctant or not. I can tell you, I know David Paterson. He has the intellectual capacity. He has the ability, the humor, the charisma and the personality to be one of the finest governors New York has ever had.

Yes, sir.

QUESTION: Clearly, going back pretty much from the first day of the Spitzer administration, there was distraction after distraction, Cooper-gate (ph) and the driver's license thing, and now this. What had you hoped would have been accomplished in the last 14 months that hasn't been?

SILVER: I think there are a lot of things that should have -- you know, could have been accomplished. But the point is, there were a number of accomplishments that I think you should take a look at and see that, in the short time period that Eliot Spitzer was governor, there were a lot of things that happened in New York state that he can be proud of and we should be proud of, as well. And I'm talking about workers' comp reform where billions of dollars in premiums have been saved by New York businesses this year in a job that Eliot Spitzer undertook on day one as governor, that no prior administrations tried to accomplish and never could.

We had a very good ethics reform bill, a good budget reform bill, all of the things that we did very early on in the administration of Eliot Spitzer. But you know -- and I'm confident that, as we move forward into the Paterson administration, we will, likewise, have successes, as well.

I think David is qualified. I think David is intellectually gifted, and I think his personality reaches out to others in a different way. But I think it can do -- it will accomplish very much on behalf of the people of the state of New York, as well.

QUESTION: Mr. Speaker, do you think that -- did you think that Mr. Spitzer should have resigned immediately?

SILVER: It's irrelevant. I mean, this is history now. It's irrelevant what I thought it and what I didn't think.

QUESTION: Did Mr. Paterson share with you his reasons for not wanting to take the oath until Monday? Do you know why?

SILVER: No, we did not talk about it at all. But I would assume he wanted a period of transition to meet with people who are in place, to make determinations as to what he needs and what talent is available to him that he's ready to move forward with. I would assume that that's the reason.

QUESTION: Have you spoken with Governor Spitzer before, though?

SILVER: I have spoken with Governor Spitzer on several occasions. I -- you know -- you know, Eliot Spitzer and I have become friends, and these were friendly conversations that -- that I don't think is appropriate to discuss here.

LEMON: All right. Sheldon Silver, who is the speaker there in the New York assembly. He's saying that he's spoken to the governor over several occasions but didn't think it was fair to share those conversations with the public and with the media there.

All right. So Joe Conason, Paul Callan, John Roland, part of our panel there, listening to Sheldon Silver. And as we were -- I so rudely interrupted you guys so that we could get to that.

Paul, you were saying that over the last couple of days the governor has been weighing his options. Obviously, his people have been saying to prosecutors he has suffered enough. He has suffered enough, and that is -- that's really all he needs.

You said to me yesterday that he's probably going to walk away from this and not see any jail time from it.

CALLAN: Well, I suspect that he probably will not see any jail time. I'm not so clear that he'll actually walk away without any criminal exposure.

I thought it was interesting in his speech, which you know, was sort of an elegant and noble attempt at resignation, one of the things he said was that he had a personal belief in people accepting personal responsibility for their actions. And now we'll see how he handles that philosophy...

LEMON: Yes.

CALLAN: ... when prosecutors say, "We want you to take a plea" to something involving allegations of prostitution or money laundering or wire fraud or whatever else federal prosecutors may be putting on the table.

LEMON: And Paul, you guys are going to join us a little bit later on. So I want to get the other folks in here real quickly, because we're going to bring you back.

John Roland, I want to talk to you. Listen to Sheldon Silver there, and Sheldon Silver first elected in 1976. You've been in New York 35 years. The question is -- and I thought it was a very interesting question. I'm not sure if Sheldon Silver answered it. Who is really in charge right now?

JOHN ROLAND, POLITICAL CONSULTANT: Well, really in charge, Sheldon Silver is one of the ones in charge, largely, along with Joe Bruno. The two of them, along with the governor, really are the ones who run New York state. The rest of the legislature just kind of -- kind of goes along...

LEMON: It's three people who are really in charge. Right?

ROLAND: ... with whatever they're told to do. I've known every Governor of New York since Rockefeller, and they've all had one thing that Eliot Spitzer does not have, and that's street smarts. I'm sure his SAT's are off the chart, Don, but the man doesn't have street smarts.

To do what he did and the way he did it and get caught the way he did is something that you can go up to the Bronx and you can find three guys that can take you out and buy machine guns, and nobody will ever know about it. But to use a credit account to get hookers, Eliot Spitzer did not have the street smarts that New York governor -- that a New York governor should have.

So rather than a tragedy, I see this as kind of a big sigh of relief for New Yorkers. At least we found out now what the character flaws are in this man. And better now than down the road. Goodness knows.

He wanted to become the first Jewish president. Imagine if that had happened. We'd have no idea of what might have happened down the road with extortion and blackmailing and that sort of thing. Thank goodness we found out about this now.

LEMON: John Roland, Joe Conason, Paul Callan -- and Joe, I'm going to get you, because I understand -- I've been reading your "New York Observer" article today, "The Shame of Eliot Spitzer." I'm going to talk to you about that just a little bit later on. We're going to hold you guys, because we're going to be covering this story throughout the day.

Thank you, guys. Hang tight.

KEILAR: Let's check in now with justice correspondent Kelli Arena. She is in Washington. She's got some new details on the Spitzer investigation.

What's going on, Kelli?

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Brianna, you know, we don't often get statements like this, but we did get one from the U.S. attorney of the southern district of New York, Michael Garcia, whose office is actually in charge of the Spitzer investigation.

And he says, "In response to press speculation, there is no agreement between this office and Governor Eliot Spitzer relating to his resignation or any other matter."

And as you know, Brianna, there has been speculation up the wazoo on what was going on in that office. Of course, based out there. Would not go further. In fact there's been a total clamp-down here at the Justice Department, over at the U.S. attorney's office, a great deal of concern about possible accusations of politicizing this investigation. Various leaks to the media.

We do know that Spitzer's lawyers have been in contact with prosecutors. His lawyers are not commenting at this time either, though, Brianna.

My guidance is that the government is less interested in pursuing charges for prostitution. We've heard -- we've heard there are several statutes that apply there. But rather, they are focusing on what he may have done to conceal the money trail.

I'm told that the charge of structuring -- we've talked about that. That is how you bundle a large amount of money into smaller portions to try to hide its source and where it's going, is high on the list of possibilities as possible charges being discussed.

But again this is all being held very close to the vest. And some are also suggesting that, as you heard, that because he resigned, his lawyers will make that argument, say, "Look, he's suffered enough," that somehow that's going to have to factor into the equation.

But, you know, some legal experts are saying that is really not going to matter as a bargaining chip. The government does have Spitzer pretty cold on a federal wiretap, according to sources.

And as for this ongoing investigation, some little nuggets here, Brianna. Investigators have identified at least eight separate instances in which Spitzer used that prostitution organization, the Emperors Club, but they're still obviously going through the records.

Spitzer had actually begun meeting with prostitutes from the Emperor Club, according to sources, eight months ago. And it turns out that the bank that flagged the suspicious activity is a bank that was known as North Fork Bank.

Our sources say that -- that that flagging, despite several reports, had nothing to do with the fact that he's a public official but instead because the money that he was tinkering with between his accounts ended up in a shell corporation; that, of course, set up by the prostitution ring. Of course, that raised all sorts of red flags, and that's why this was brought to the attention of investigators, Bree.

KEILAR: It's almost like the dominoes fell there. Very interesting. Kelli Arena for us in Washington.

Also want to update you on another story coming out of Washington. As we told you last hour, there was an incursion into airspace, restricted airspace, over Washington, D.C. That has resolved itself, basically.

There was an all-clear at the Capitol, U.S. Capitol police saying that this aircraft, the private aircraft that came into restricted airspace, has actually landed. They said this was an unauthorized aircraft. It had been redirected. It landed, actually, in Leesburg, Virginia. This is a suburb of Washington, D.C., about 40 miles -- roughly 40 miles outside of Washington.

And so that plane on the ground and an all-clear at the Capitol, things resolving themselves after a private airplane went into restricted airspace over Washington, D.C.

LEMON: Luckily nothing happened there.

KEILAR: Yes.

LEMON: Now the Eliot Spitzer sex scandal, splashed across cyberspace. We want to know what's being said online.

What is being said, Fred?

FREDRICKA WHITFIELD, CNN ANCHOR: Well, Don, very strong opinions about Governor Spitzer, the investigation and his resignation. We're monitoring folks who are sounding off on the Web.

(COMMERCIAL BREAK)

LEMON: OK. We started the newscast with this story, breaking news from Washington about reports of a plane entering restricted airspace in Washington. Well, here's what we are being told from our affiliate there in Leesburg, Virginia, WJLA.

We believe -- and you can see there, there's some sort of police officer, some sort of officer near that plane. This is believed to be the plane that encroached on that airspace that shouldn't have been there. Again, this is Leesburg, which is about 40 miles outside of Washington, D.C., a suburb.

Our Jeanne Meserve reported that the Department of Homeland Security officials said that the plane has landed here in Leesburg, Virginia. And you're looking at it on the ground.

Here's what it said. We're told officially an unauthorized aircraft entered restricted airspace. The aircraft was redirected and then landed outside the restricted area. That was according to a law enforcement official. They are continuing to investigate this.

The Capitol, although some folks were out, some folks as a precaution, were asked to leave. It was not officially evacuated. And everything now, of course, is back to normal.

But the question, obviously, for the pilot and the people on this plane, why were you in restricted airspace? And why were you not listening, heeding our calls when we tried to call you on the radio?

And we heard from Jeanne Meserve that there were helicopters up in the air, flashing the frequency in which they could communicate with them, to tell them to get out of that airspace -- Brianna.

KEILAR: This is -- and you see this is -- if this is the plane that we're looking at here with the blue and white, this is a small plane. This is a plane that's maybe a -- maybe a four-seater. This is the kind of plane that a private pilot would go on, maybe just for fun.

And this happens quite a bit in Washington, that there are incursions into airspace, maybe private pilots, who obviously don't have as many hours in the cockpit as commercial airline pilots. They get confused. They don't realize they're in this restricted airspace.

LEMON: Just thinking about private pilots...

KEILAR: Yes.

LEMON: Just as you said "private pilots," a private pilot is on the phone, but he also happens to work here, Miles O'Brien.

Miles, pick up the story from here for us, will you?

MILES O'BRIEN, CNN CHIEF TECHNOLOGY & ENVIRONMENT CORRESPONDENT: Well, Don, let me just tell you about the Air Defense Identification Zone. Think of Washington, D.C. Think of Reagan National Airport right in the heart of Washington, D.C.

And imagine a big disk that extends about 30 miles outward from there, with incidentally, a little bit of a notch taken out, almost a bite taken out at Leesburg. In other words, that aircraft right now is outside this Air Defense Identification Zone.

This area that -- the central part of it, the 15-mile central core of it, has existed since time immemorial, because some of the most important places in Washington, D.C. -- the Washington Monument, the White House, the Capitol -- of course, are in there. This disk got expanded and the security was cracked down on significantly post- 9/11. Of course, we all know that.

And there are specific rules that pilots have to comply with if they want to fly inside that disk. They have to be talking to controllers. They have to have a specific code in their transponder, which is designed to enhance their signals with radar so that the controllers know who they are. They have to know where they're going. They have to know their altitude. There's a lot of information that goes back and forth.

There are airports that are -- that need this Air Defense Identification Zone, that pilots can safely fly to and from, but you don't do that without getting on the radio and talking to Potomac Approach, the air traffic controllers.

LEMON: And Miles, people may be wondering why -- you know, if it's all clear why are we covering this so much? But you remember back in 2004, someone -- I think it was a governor from Kentucky -- going to Ronald Reagan's funeral, I mean, caused -- really caused a stir there at the Capitol. They, you know, were possibly going to -- there were calls to shoot the plane down, but then everything was OK. Do you remember that?

O'BRIEN: Of course, yes. What happened in that case -- and that was a very interesting one, because there was a miscommunication. They had a faulty transponder, which is that device which enhances your radar signal.

They had a faulty transponder. That information was passed along from controller to controller. The FAA had no problem with the fact that this transponder wasn't operating properly. However, that information did not get to the Defense Department. There wasn't good communication there, and so they got into a very concerned state, even though the FAA knew about it.

LEMON: Yes.

O'BRIEN: Remember, though, before that, the year before, that little Cessna 152. Do you remember that one?

LEMON: Yes.

O'BRIEN: Which took off from Pennsylvania. They were trying to make their way down to North Carolina. And if you draw a straight line between their airport and North Carolina, it took them right over the Washington Mall.

LEMON: Right.

O'BRIEN: And they flew right into that zone, caused the evacuation of the Capitol, other important buildings in Washington. It was a huge mistake for any pilot.

LEMON: Miles -- yes. We've got to move on, because we have some other -- some other news to get to. But we appreciate you calling in. And Miles, I'm sure you'll agree to this: better safe than sorry when it comes to the safety of the Capitol and the folks there. O'BRIEN: Yes, it's -- it's quite a veil of security. And some would say the net is too big, but that's another story.

LEMON: All right. Miles O'Brien, thank you, sir.

KEILAR: And that investigation will continue. Obviously, not over for this pilot, certainly.

Meanwhile, Eliot Spitzer's shocking fall from grace, it is burning up the blogs, as you can imagine. Tons of e mails, comments and coverage of the story in cyberspace today. Let's find out more about this from our Fredricka Whitfield.

What are you seeing there, Fred?

WHITFIELD: Brianna, we're going to begin with CNN.com, because there you can read about the investigation; you can look at the criminal complaint; you can learn more about Governor Spitzer's meteoric rise, his career; and of course, you can read about what a lot of the viewers and readers are submitting.

Not so sympathetic. At least in this file right here from Mel Grove of Deer Creek, Minnesota. He says, "I don't understand how he could get so arrogant or reckless."

And then Cory Skinner (ph) of Rochester, New York, also writes in to say that "Governor Spitzer's actions show a blatant disregard for not only his poor family but for all of the Democrats who counted on him to repair our fractured state."

And not everyone who ever believed that perhaps his transgressions deserve resignation. So this from Don Persons of Elyria, Ohio. He says, "This is not a scandal involving misuse of position or public funds. Take this immediately off the politics section and put it where it belongs: a footnote in the lifestyle section."

And Johnny Lawless -- of course his screen name -- from Brownsville, Texas, saying, "When it has become suspicious to transfer your own money from one account to another, the terrorists have won. What is suspicious is that a corrupt Bush Justice Department would be wiretapping the most hated man on Wall Street? All because he wanted to spend his own money. It doesn't make sense."

Governor Spitzer, as you know, had a reputation for weeding out corruption in Wall Street, other places of New York, earning the name "dragon slayer."

Meantime, if you are on our CNN.com Web site, you just scroll to the bottom, where you will see a section called "Sound-off." And there kind of more instantaneous reaction from people following the resignation announcement from Governor Spitzer.

Fred -- not me -- one writer saying, "Here we go again. Another attorney general, now governor, who was known for integrity and ethics, is involved in a sex scandal. Recently the AG of Kansas had to resign under a similar situation."

And then Zach also saying, "Is anyone really surprised? This isn't some kind of brilliant political whiz kid. It's just another greasy, slimeball politician."

Well, of course, we're getting a great reaction from folks here at CNN.com. And will continue to monitor some of the other news -- news of blogs, as well as newspapers.

And then a bit earlier before the resignation, on the "Quick Vote" section of the CNN.com, the question was asked: "Do you agree with calls for New York Governor Eliot Spitzer's impeachment?" Seventy percent saying yes. Right there. Thirty percent saying no.

And as I mentioned, as we continue to monitor a number of the other blogs and newspapers, mainstream newspapers, and we're inviting responses from folks, we're seeing quite a candid response from a lot of folks, particularly from the New York area newspapers.

But of course, there's reaction from across the country. Would you believe, Brianna, even the "L.A. Times" has a story about how already a T-shirt manufacturing company is starting to capitalize off this scandal? Much more later on in the hour.

KEILAR: Of course they are. Of course they are, Fred. All right. Fredricka Whitfield for us there, thanks.

LEMON: OK. Take a look at the big board. Stock market up 64 right now. And it's back above 12,000, finally. Finally. We were concerned about that yesterday. But what about the price of a barrel of oil? The price of a barrel of oil. Hope you're sitting down when we tell you how much it is.

KEILAR: And changes at the top. The commander of all troops in the Middle East bows out. He says it's not about what he thinks; it's about what other people think. We'll explain.

(COMMERCIAL BREAK)

LEMON: All right. Is it doom and gloom over on Wall Street? Or was yesterday's big rally just a blip on the radar? Susan Lisovicz joining us. She's down on the floor. She's at her perch at the New York Stock Exchange. She joins us with all the details.

I mean, can we tell from one day? The market is up, but do we know if the doom and gloom is over?

SUSAN LISOVICZ, CNN CORRESPONDENT: No, I think that would be quite a reach. I mean, you know, just to even follow through is pretty optimistic. And we are seeing some positive momentum. Remember, this was a 416-point gain for the Dow, the best in five years. Would not be a surprise to see a bit of a pullback.

One trader who I saw quoted said, you know, Ben Bernanke and the Federal Reserve just put a bigger Band-Aid on the mortgage crisis. There are still a lot of concerns out there. And that's why you see the stock market reacting to. I mean, these wild gyrations.

Stocks did open on the plus side. We've even seen triple-digit gains at the high point of the session. But still of concern, oil prices. Today, crude hit yet another intraday record: nearly $110 a barrel, despite the fact that today we got the weekly inventory report, showing a surplus of crude and gasoline stocks.

Normally, that would drive prices lower, but there's just so much speculation there, especially because stocks have been going lower and so has the U.S. dollar. Today that is not the case with supply and demand or with stocks, for that matter.

Checking the numbers, the blue chips, well, it's not triple-digit gains but up 48 points, or about half a percent. The NASDAQ is up three-quarters of a percent.

If the market can pull out gains today and for the rest of this week, it would go against recent history as Fed moves have been greeted with gains that often don't last for even one session, much less for any sustained period of time.

The "Wall Street Journal" says the U.S. government has now provided nearly $1 trillion in direct and indirect support to financial institutions since August. And it's been to help unfreeze credit markets, Don. So it's still a concern.

LEMON: So we're not out of the woods yet?

LISOVICZ: No. And you know, there's a stock I wanted to mention as well, Don. You've been talking about Southwest Airlines. Southwest shares, ticker symbol L-U-V, LUV, for Love Field, which is its base of operations, they're down about four percent.

Now airline stocks in general are under pressure today because of a downgrade by JPMorgan over fears of recession, which would certainly hit that industry hard, as well as industry-specific concerns. But I just wanted to mention that, in case it slipped my mind.

You know, there are other concerns, you know, in the marketplace. I mean, not only high oil prices, inflation in general but the housing market. We still have a lot of -- we still have a lot of unsold homes.

We have a lot of consumers who are in trouble with their debt, and those kind of things take a while to play out. But for today, the glass is half full. And we like that.

LEMON: OK. Hey, listen. I want to talk to you in a little bit -- we don't have time now -- about the reaction to the resignation today. I'm sure it was very interesting there on Wall Street.

LISOVICZ: Oh, yes, it's been an interesting week, no question about it, Don.

LEMON: OK. We'll talk to you. Thank you, Susan.

LISOVICZ: You're welcome.

KEILAR: A four-star admiral calls it a career, and today we're talking about why. Admiral William Fallum -- Fallon, pardon me -- stepping down as the head of all U.S. forces in the Middle East. That includes Afghanistan and Iraq. The main analysis involves the media and charges of White House pressure.

But let's get to Baghdad for reaction to Fallon's abrupt decision to leave his post. NEWSROOM's Kyra Phillips is there with more on that.

Hi, Kyra.

KYRA PHILLIPS, CNN ANCHOR: Hi, Brianna.

Had a chance to spend, actually, a couple hours with the admiral today. He was calm; he was quiet. I can tell you, it was very somber among his team, though. This was really hard for all of them when the news came through last night. Just sitting there in the office adding a lot of support to the admiral, of course, everybody around him there over at the embassy today.

I can tell you, he had about four hours of sleep. His mind was spinning, and that's how it happened last night. He called the secretary of defense, and he said that he thought that he should resign. The secretary of defense agreed to do so.

And it happened so quickly, you saw what happened yesterday when we were able to read the statement coming from Admiral Fallon, once the secretary of defense stood up in front of the mikes and told reporters about the decision that had been made. But he wanted to meet with a handful of people today.

I was lucky enough to be one of them. He met with the prime minister. He met with key generals that he had developed good relationships with. He just wanted to make sure that he had that one- on-one time with each individual that he felt he had developed a lot of strategies and success stories with while he was here in Iraq. This cut his trip short, and he headed back to the states today.

KEILAR: And -- and Kyra, there was obviously this "Esquire" magazine article that's really at the center of this, really portraying Admiral Fallon as the man who would basically push the Bush administration back from a war with Iran, if things came to that. Now what role did this interview with "Esquire" play in all of this?

PHILLIPS: Let's go back and look at what he said to me last night and what we told our viewers, this quote specifically, Brianna. He said, "Recent press reports suggesting a disconnect between my views and the president's policy objectives have become a distraction at a critical time."

And then he goes on and says, "And although I don't believe there's ever been any differences about the objectives of our policy in the Central Command area of responsibility, the simple perception of that -- that there is makes it difficult for me to effectively serve America's interests there."

Now I've always known Fallon to be a straight shooter. If you're honest with him he lets you inside, lets you see what his mission is about, and he's very -- he's very straight-forward and very up-front and honest with you. And that's what he allowed within this "Esquire" article. I mean, two weeks on the inside of what he was working on.

And in that quote, you notice he said that the report "suggests a disconnect." Well, I can tell you with regard to Iran, this is something that he's told a very -- or he's held a very strong stance on. Last year he made it very clear about how he felt about Iran. A big beef that was made a part of this article. This is what he told me last year.

(BEGIN VIDEO CLIP)

PHILLIPS: Would you consider war with Iran?

ADMIRAL WILLIAM FALLON, OUTGOING HEAD OF CENTRAL COMMAND: Well, we're not interested in a war. We've got a conflict going here that we've got lots of folks tied up trying to fix. We have another conflict in Iraq -- Afghanistan.

(END VIDEO CLIP)

PHILLIPS: And he stands strong on that, Brianna. He's always stuck to that philosophy. He says, you know, "There's a perception of capability that we have to portray. They need to know who's boss. And if indeed it did come down to war, we're ready and we're going to win."

But at the same time he's saying, "That's not my first choice. I'm a negotiator." I mean, he's known for breaking bread with people across this country. That's what he wants to do. He wants to talk, develop relationships, because he feels that's the key to bringing not only Iraq but these countries in the other Middle East region together.

KEILAR: That's right, he stands strong, basically, on not going to war with Iran, but of course, the question is going to be will the person who follows him as commander of CentCom also feel that way? Kyra Phillips for us there in Baghdad, thanks.

LEMON: The rise and fall of Eliot Spitzer. The rise took decades; the fall, well, it took less than two days. We'll look at the fallout.

(COMMERCIAL BREAK)

LEMON: If you have been watching CNN, you've seen the culmination of a stunning political collapse. A law and order crusader whom New Yorkers elected governor by a landslide buried by a scandal of his own making.

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

Now, what we don't know and what Spitzer likely doesn't know either is whether he still might face prosecution. The U.S. attorney said no deal -- no deal exists to close the case in exchange for Spitzer's resignation.

As you may know, the whole mess came to light when the FBI discovered Spitzer's back-channel payments to a call-girl ring.

LEMON: And we are covering the Eliot Spitzer resignation from all angles. CNN's Allan Chernoff was at Spitzer's announcement in New York.

Allan, talk to us about that.

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: The tone inside was just filled with a sense of history. Every journalist, every photographer in that room right behind me at the governor's office knew that history was being made and that we were lucky enough to be personally witness to it.

The governor stepped in with his wife and, frankly, I was very struck by the fact that he had that same sense of determination that you almost always see from Eliot Spitzer, whether as attorney general, as governor, prosecuting someone, whatever. He had that sense of determination, "I've got something to do and I'm going to do it," a big contrast to just the almost expressionless look on his wife, who pretty much was like a deer in the headlights, once again, apparently in disbelief that this was all happening.

And frankly, we are all just amazed that this has all happened, because, as we've said time and again over the past couple of days, Eliot Spitzer had been Mr. Clean, his entire political career built upon that very image, and now found out to have been a client of an international prostitution ring, bringing him down in just a matter of days, resigning as governor of the state of New York.

LEMON: CNN's Allan Chernoff. Allan, thank you.

KEILAR: Teenage girls and sexually transmitted diseases. Mom and Dad, you're going to want to hear this. New findings may leave you stunned.

(COMMERCIAL BREAK)

LEMON: All right. Joining us now on the phone to talk about this Eliot Spitzer sex scandal, former mayor of New York City, Mr. David Dinkins.

Mayor Dinkins, thank you so much for joining us today.

DAVID DINKINS, FORMER MAYOR OF NEW YORK CITY: You're welcome.

LEMON: You can obviously speak to Eliot Spitzer but also you can talk about the new mayor, David Paterson. Because as a matter of fact, he worked in your campaign when you ran for mayor back in, what, 1994-1995?

DINKINS: He did. He worked -- he worked in my campaign when I ran, finally, successfully for borough president. I ran three times. And when David helped me in '85 I won.

LEMON: In '85 as borough president. That's correct.

DINKINS: Right.

LEMON: Tell -- tell us about him.

DINKINS: Well, he -- I used to say to him, "David, nobody's supposed to look better or sound better than the candidate." And we'd go to an event, and when he got through introducing me in his articulate fashion, I had little to say. So I said, "Man, you got to stop violating all the rules of the campaign!"

He's very bright, very witty, hard working. I am very fond of him. I've known him his entire life.

LEMON: People are talking about him, and some are saying, you know, he has a little legislative experience. But then there are others saying he's not confrontational and his personality can work well with -- on both sides of the aisle, and it may actually work for the assembly there in Albany. Can you talk about that?

DINKINS: Well, I think that's true. He has the capacity to bring people together. And I expect that he will get along well with Bruno in the senate, a Republican, and with Shelly Silver, a Democrat, who heads the assembly.

And I suspect that there will not be as much tension as there sometimes is between the mayor of the city of New York and the governor of the state of New York, irrespective of parties.

LEMON: Talk to us real quickly about Eliot Spitzer. And you know, everyone -- and we hear this over and over, everyone saying I was shocked; I'm shocked; I'm shocked.

DINKINS: I know. I -- I'm sad by the entire circumstance. I know Eliot. I like him a lot. I think he's exceedingly bright. I was stunned by this news. And I am so sorry for his family, for his teenage daughters and for his parents, particularly. Of course his wife, but I worry more about his father and mother, who are advanced in age. They are my generation. And of course, his teenage daughters.

It's tough. I hope that they make a judgment to the girls go to school in Switzerland or someplace.

LEMON: Yes.

DINKINS: They shouldn't have to grow up in the face of this.

DINKINS: I'm going to -- going to speak to something very candidly that some folks have mentioned, others -- people are not mentioning, as well. But I've been listing to it on the radio, reading about it on the blogs. You were talking about Eliot Spitzer's family.

You were an African-American mayor of New York City, and that was history. There were talks of Eliot Spitzer being the first Jewish president, ever. And there are people in the Jewish community who are saddened by this, because they looked up to him as a hero, not only a hero in his political capacity but as a hero for the Jewish people.

DINKINS: I think that's very true. I have never discussed it with Eliot, but I would not be at all surprised had not one of his ambitions been to achieve the presidency of the United States. He certainly -- you pardon me -- better equipped than the president we now have.

LEMON: What does this -- you're talking about his family. What sort of -- you know his family, I would imagine.

DINKINS: Yes. Not real well, but I know them. His father was very successful and generous to me over time, and he's not well. He's sort of bent over a little.

And -- but I know he and his wife, they swell with pride. I saw them recently in the last several weeks. Eliot spoke to the Association for a Better New York, gave a great speech, and his father and mother were there and his wife, of course, also.

And I know the pride that my father felt when I achieved the office of mayor of New York, and so I know how his father and mother must feel. And so it's really sad. And while I am delighted that David Paterson will have this opportunity, I am so sorry for the Spitzer family.

LEMON: Mayor Dinkins, do you know his wife, Silda?

DINKINS: I do. I do.

LEMON: I was listening to former Mayor Koch on "THE SITUATION ROOM" yesterday with Wolf Blitzer. And he says just over the past day or so you can see how she's aged, a very beautiful, graceful woman.

DINKINS: I saw that. I was watching CNN, and I heard Ed Koch make that observation. She's an attractive woman, and if you look at her standing next to Eliot with a very grave expression, she's aged a lot, I suppose, in a few days.

LEMON: And certainly, you can understand why, with this much pressure and the shock of all of this.

DINKINS: Absolutely.

LEMON: Any final words before I let you go? Indeed, as I said, it's an honor that you're joining us.

DINKINS: No. I would just like to make the observation that Basil Paterson ran for lieutenant governor a few years back and won 61 out of 62 counties in New York. And then he joined with Arthur Goldberg, who was running for governor.

And he was a former United States secretary of labor, former United States ambassador to the United Nations, and former United States Supreme Court justice. Now that's pretty heavy. And he was not a very good candidate. Otherwise, Basil would have been the first black lieutenant governor and, in all probability, the first black governor of the state of New York.

LEMON: You are talking about David's father.

DINKINS: His father, Basil. So as we see this thing come full circle, and here's David.

LEMON: Yes. OK. Former mayor of New York City, David Dinkins, offering a very interesting perspective, not only about the new governor, David Paterson, but also being a friend of the family, offering his perspective about Eliot Spitzer's family, as well, and his parents.

Former Mayor Dinkins, thank you.

DINKINS: Thank you. Take care.

KEILAR: Ever since New York Governor Eliot Spitzer was implicated in this sex scandal two days ago, bloggers have been demanding his resignation. And today they got their wish. So what are people saying now?

Joining us now, Ben Smith, a senior political reporter for Politico.com. He's with us from New York City. And Elizabeth Benjamin of the "New York Daily News." She is in Albany, New York.

And I'm just wondering, guys, what happens now at this point?

BEN SMITH, SENIOR POLITICAL REPORTER, POLITICO.COM: Well, I think basically things go back to normal in Albany. Spitzer has been this incredibly disruptive force, had really confronted this really in-grown legislature. And Paterson is from that world, and I think it sort of reverts to the norm now.

KEILAR: And what are -- what are -- I'm wondering what your readers, Elizabeth -- or where's the intrigue here? Is it because of the hypocrisy, that it's the prostitution, the salacious details, all of the above?

ELIZABETH BENJAMIN, "NEW YORK DAILY NEWS": Yes, probably all of the above. I don't -- it's funny, though. I don't know what constitutes normal in Albany, generally. I mean, if that means that it's going back to dysfunction, that's a little bit dangerous. I don't know what's going to happen. I think, actually, I have to disagree, respectfully. It's going to be a long time before things get back to normal around here.

But people are very -- they're shocked. They're -- they're a little bit nervous, I think, because David Paterson is certainly, while well-liked, a little bit of an unknown entity, and he's really never had to do this kind of task. Admittedly, no one who hasn't been governor before has to do this kind of task. So, you know, it's going to be very interesting to watch.

KEILAR: And so many questions up in the air. For instance, Eliot Spitzer, although he did have a lot of enemies, he did have an ally in Hillary Clinton. He was a supporter of her.

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