Return to Transcripts main page
CNN Newsroom
Detroit Mayor to be Arraigned on Charges; McCain Delivers Speech on Economy
Aired March 25, 2008 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DON LEMON, CO-HOST: A big city mayor goes to court over lies he allegedly told under oath, and it was about sex. We're watching the courtroom where Detroit Mayor Kwame Kilpatrick is due to appear for arraignment. That should happen at any minute.
BETTY NGUYEN, CO-HOST: Yes. And in the meantime, John McCain is about to tell the nation what he thinks went so terribly wrong with the housing market. We're going to hear his speech in Orange County, California, this hour.
LEMON: It is certainly a busy hour. We're also waiting for Hillary Clinton to speak at a town hall meeting. She'll do that near Pittsburgh.
Hang on tight. We'll catch you up on all the day's live events this afternoon, right here in the CNN NEWSROOM.
Hello, everyone. I'm Don Lemon, live at the CNN world headquarters in Atlanta.
NGUYEN: What a busy day it is.
LEMON: Yes.
NGUYEN: Hi, everybody. I'm Betty Nguyen, in for Kyra Phillips. She is still on assignment in Iraq.
LEMON: As we wait for John McCain we want to get to this story, until he shows up.
Steamy text messages. Lies under oath. A major cover-up. All of it allegedly part of a big-time scandal engulfing a big city mayor. Live pictures now from Detroit. You see this courtroom. This is where Mayor Kwame Kilpatrick and his former chief of staff face arraignment on multiple felony charges.
CNN's Susan Roesgen is at that courthouse.
And Susan, we want to know, as we're looking at these live pictures, what can we expect from this today?
SUSAN ROESGEN, CNN CORRESPONDENT: Well, the arraignment itself, Don, shouldn't take more than five minutes. The judge is going to line up the charges -- the criminal counts, the felony criminal counts -- against the mayor. He's going to let the mayor know how much of a prison term each of those counts carries, and then he's going to set the bond for the mayor.
But while it should only take about five minutes, it's going to be an unprecedented five minutes in the history of this city. No mayor here has ever faced felony criminal charges.
The case started with an affair between the mayor and his former chief of staff. And then there were allegations of a cover-up. And then the city had to pay more than $8 million to two police officers who blew the whistle.
(BEGIN VIDEO CLIP)
KYM WORTHY, PROSECUTOR, WAYNE COUNTY, MICHIGAN: It's not just about the sexual affair. It's about lying under oath. It's about misleading the public. It's about betraying the public trust. It's about using $8.4 million of the taxpayers' money to cover up that information from coming out.
And it's also about firing three police officers, that were doing their jobs, for investigating.
KWAME KILPATRICK, MAYOR OF DETROIT: I look forward to complete exoneration once all the facts surrounding this matter have been brought forth. In the meantime, I will remain focused.
(END VIDEO CLIP)
ROESGEN: So once -- once again here, this city has been shocked by everything that's happened here. Two police officers, later joined by a third, who sued the city. Taxpayer money, Don, had to go, more than $8 million, to pay because they had been wrongfully terminated.
And now we're waiting here to see what happens in court, this short arraignment. But I can tell you that this is a live signal that's being seen here in Detroit. People here around the lunch hour are watching this. They've been riveted by this case.
And the general public will not be allowed in the courtroom. It's only going to be media, the mayor and his lawyers, and his personal security team. And then after him, Christine Beatty, the now-former chief of staff who he had an affair with -- Don.
LEMON: Very interesting. And not only there people are watching it, Susan, but they're watching this all over the country, probably all over the world.
And this is not just about, you know, an affair, or text -- steamy text messages, even though that is the titillating part of it. But it was all about a scandal, about cover-up, about money having been paid to police officers, millions of dollars, when the city of Detroit is in financial straits already.
ROESGEN: That's right, Don. And there was so much hope here for this particular mayor, 37 years old, a Detroit native, one of the youngest mayors to lead such a big city. He had brought the Super Bowl here to this city, brought a lot of business here, and now this. LEMON: Yes.
ROESGEN: So we have the city council here calling for his resignation. Both local papers calling for his resignation. They say his credibility has been destroyed, no matter what happens. But as you heard him say, he plans to fight the charges.
LEMON: Yes, he certainly does. And we will be watching. Susan Roesgen in Detroit. Susan, thank you very much.
Scott, do we have that picture of the courtroom? Can we get back to that? Because we want to tell our viewers, as soon as that happens, that arraignment happens -- we're looking at live pictures in Detroit -- we're going to take you there live.
Also, we're going to talk about what the mayor faces, what his chief of staff faces as far as charges, as far as possibly going to prison. We're going to talk about that with civil rights attorney and law professor Avery Friedman -- is going to join us in a little bit.
And then this one: someone who knows the mayor, who's been covering him. The national spotlight, not just on Mayor Kilpatrick but also on the people he represents. Will his ordeal become their ordeal? One of Detroit's top radio hosts, as I said, Betty, Mildred Gaddis -- she's been covering him for years -- she takes us inside Detroit. Betty will interview her live at 2:30 Eastern. You don't want to miss that.
NGUYEN: Well, he spent last week globetrotting, showing off his foreign relations skills. And right now John McCain is in Southern California to talk about the No. 1 issue at home. That, of course, the economy.
He admits it isn't his best subject. And we are waiting for him to take to the microphone at a meeting of business leaders in Orange County. It is safe to speculate that he'll talk about the Bear Stearns debacle, the mortgage crisis, and the possibility of the "R" word, that being recession.
Well, Hillary Clinton is also speaking this hour. She is in a Pittsburgh suburb for a town hall meeting. She'll no doubt talk about the economy, as well. Now yesterday at the University of Pennsylvania, she criticized President Bush for what she says was his slow reaction to the mortgage crisis. Of course, the very important Pennsylvania primary is just four weeks away.
LEMON: And leading our political ticker today, Hillary Clinton's bad memories of Bosnia. Clinton says she misspoke when describing a dramatic arrival in the Bosnian city of Tuzla 12 years ago when she was first lady.
Video from that day shows Clinton and her entourage walking calmly from their plane toward a group on the tarmac. Well, these were her comments last week in Washington.
(BEGIN VIDEO CLIP) SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I remember landing under sniper fire. There was supposed to be some kind of a greeting ceremony at the airport, but instead we just ran with our heads down to get into the vehicles, to get to our base.
(END VIDEO CLIP)
LEMON: While speaking to the "Philadelphia Daily News," Clinton calls her earlier comments a misstatement. But she adds, before landing in Bosnia, quote, "I was told we had to land a certain way. We had to have our bulletproof stuff on because of the threat of sniper fire."
Well, Clinton supporter James Carville isn't backing down. He is standing by his controversial comments, comparing Bill Richardson's endorsement of Barack Obama to Judas' betrayal of Jesus.
(BEGIN VIDEO CLIP)
JAMES CARVILLE, DEMOCRATIC STRATEGIST: My view is, is that this was a particularly disloyal thing to do. And that's my view. I was speaking for myself, not speaking for anybody else. That's my judgment then; it's my judgment now. And I found in my life that, if you think something and you feel it, then you ought to say it. And I did.
(END VIDEO CLIP)
LEMON: Richardson calls Carville's comments "gutter politics." The New Mexico governor, who had to give up his own campaign for president, served in Bill Clinton's cabinet.
After months of almost nonstop campaigning, Barack Obama is taking a break. There you see him. Check out these exclusive pictures of the Democratic front-runner on a quick vacation in the Virgin Islands. He's there with his family, and he gets back to work tomorrow. Hope he enjoyed his respite.
All the latest campaign news available at your fingertips. Just go to CNNpolitics.com. We also have analysis from the best political team on television. That and more at CNNpolitics.com.
NGUYEN: Well, more true confessions from New York's new governor. Now, he's already acknowledged extramarital affairs, but now David Paterson is talking about his past drug use.
In an interview on a New York-based political show, Paterson said he tried cocaine and marijuana as a young man.
(BEGIN VIDEO CLIP)
DAVID PATERSON, GOVERNOR OF NEW YORK: Marijuana? Yes. Cocaine? Yes.
UNIDENTIFIED MALE: You have used cocaine, Governor?
PATERSON: I'd say I was about 22 or 23. I tried it a couple of times, yes.
UNIDENTIFIED MALE: When is the last time that -- is that the only time you tried cocaine, Governor?
PATERSON: Yes, around that time. Couple of times. And marijuana, probably when I was about 20. I don't think I touched marijuana since the late '70s.
(END VIDEO CLIP)
NGUYEN: Well, Paterson added that many Americans tried drugs during the '70s and went on to lead responsible lives.
LEMON: Federal air marshals are supposed to keep passengers safe from terrorists or criminals, but the number who are on the job, well, it might just shock you.
CNN has discovered air marshals are on less than 1 percent of daily airline flights. Less than 1 percent of daily airline flights. That means fewer than 280 flights out of 28,000.
CNN's special investigations unit correspondent Drew Friffin says the marshals' ranks -- ranks have been dwindling since hitting a peak in 2003. You can catch Drew's exclusive report tonight on "AC 360." The show begins at 10 p.m. Eastern. And we'll speak with Drew right here in the NEWSROOM at the bottom of the hour, 1:30.
NGUYEN: The Pentagon has launched an investigation into what you might call a major mail-room mistake.
Officials revealed today that four fuses for long-range ballistic missiles were sent to Taiwan in 2006 instead of the helicopter batteries Taiwan actually ordered. Those parts were recovered last week, a year and a half later.
Now China, which opposes U.S. military aid to the island, has been notified. And so far there is no reaction from Beijing. Of course, we'll get more from Pentagon correspondent Barbara Starr when she joins us live next hour.
LEMON: We've been telling you about that speech that John McCain is going to make on the economy. And there he is, stepping in front of the mikes. And we will listen in.
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: ... state of affair -- of affairs in Iraq, the Middle East and Europe. And I'll have more to say on those important issues in the days and weeks to come.
While I was traveling overseas, our financial markets experienced another -- unfortunately, another round of upheaval. This market turmoil leaves many Americans feeling both concerned and angry. People see the values of their homes fall at the same time that the price of gasoline and food is rising. Already tight household budgets are getting tighter. A lot of Americans read the headlines about credit crunches and liquidity crises and ask, "How did we get here?" In the end, the motivation and behaviors that caused the current crisis are not terribly complicated, even though the alphabet soup of financial instruments is complex.
The past decade witnessed the largest increase in homeownership in the past 50 years. Homeownership is part of the American dream, as we all know. And we want as many Americans as possible to be able to afford their own home. But in the process of a huge and largely positive upturn in home construction and ownership, a housing bubble was created.
A bubble occurs when prices are driven up too quickly, speculators move into markets, and these players begin to suspend the normal rules of risk and assume that prices can only move up but never down.
We've seen this kind of bubble before. In the late 1990s we had the technology bubble, when money poured into technology stocks, and people assumed that those stock values would rise indefinitely.
Between 2001 and 2006, housing prices rose by nearly 15 percent every single year. The normal market forces of people buying and selling their homes were overwhelmed by rampant speculation. Our system of market checks and balances didn't correct this until the bubble burst.
A sustained period of rising home prices made many home lenders complacent, giving them a false sense of security, and causing them to lower their lending standards. They stopped asking basic questions of their borrowers, like "Can you afford this home?"; "Can you put a reasonable amount of money down?" Lenders ended up violating the basic fundamental rule of banking: don't lend money to people who can't pay it back.
Some Americans bought homes they couldn't afford, betting that rising prices would make it easier to refinance later at more affordable rates. There are 80 million family homes in America, and those homeowners are now facing the reality that the bubble has burst, and prices go down as well as up.
Of those 80 million homeowners, only 55 million have a mortgage at all. And 51 million homeowners are doing what's necessary: working at second jobs, skipping a vacation, and managing their budgets to make their payments on time. That leaves us with a puzzling situation: how could four million mortgages cause this much trouble for us all?
The other part of what happened was an explosion of complex financial instruments that weren't understood by even the most sophisticated banks, leaders and hedge funds. To make matters worse, these instruments, which basically bundled together mortgages and sold them to others to spread risk throughout our markets, were mostly off balance sheets and hidden from scrutiny.
In other words, the housing bubble was made worse by a series of complex, interconnected financial bets that were not transparent or fully understood. That means they weren't always managed wisely, because people couldn't properly quantify the risk or the value of these bets. And because these instruments were bundled and sold and resold, it became harder and harder to find and connect up a real leader with a real borrower.
Capital markets work best when there's both accountability and transparency. In the case of our current crisis, both were lacking. Because managers did not fully understand the complex financial instruments, and because there was insufficient transparency when they did try to learn, the initial loss spawned a crisis of confidence in the markets.
Market players are increasingly unnerved by the uncertainty surrounding the level of risk, liability and loss currently in the financial system. Banks no longer trust each other and are increasingly unwilling to put their money to work. Credit is drying up, and liquidity is now severely limited. And small business -- small business and hard working families -- find themselves unable to get their usual loans, as we will hear from our panel today.
The net result is the crisis we face. What started as a problem in subprime loans has now convulsed the entire financial system.
My friends, let's start with some straight talk. I will not play election year politics with the housing crisis. I will evaluate everything in terms of whether it might be harmful or helpful to our effort to deal with the crisis we face now.
I've always been committed to the principle that it's not the duty of government to bail out and reward those who act irresponsibly, whether they're big banks or small borrowers. Government assistance to the banking system should be based on solely preventing systemic risk that would endanger the entire financial system and the economy.
In our effort to help deserving homeowners, no assistance should be given to speculators. Any assistance for borrowers should be focused solely on homeowners, not people who bought houses for speculative purposes, to rent or as second homes. Any assistance must be temporary and must not reward people who were irresponsible at the expense of those who weren't.
I will consider any and all proposals based on their cost and benefits. In this crisis, as in all I may face in the future, I will not allow dogma to override common sense.
My fellow Americans, when we commit taxpayer dollars as assistance, it should be accompanied by reforms that ensure that we never face this problem again. Central to those reforms should be transparency and accountability. Homeowners should be able to understand easily the terms and obligations of a mortgage. That's pretty simple. In return, they have an obligation to provide truthful financial information, and should be subject to penalty if they do not.
Leaders -- lenders, lenders who initiate loans should be held accountable for the quality and performance of those loans, and strict standards should be required in the lending process. We must have greater transparency in the lending process so that every borrower knows exactly what he is agreeing to and where every lender is required to meet the highest standards of ethical behavior.
Policy should move towards ensuring that homeowners provide a responsible down payment of equity at the initial purpose of a home. I therefore oppose reducing the down-payment requirement for FHA mortgages and believe that, as conditions allow, down-payment requirements should be raised.
So many homeowners have found themselves owing more than their home is worth, because many never had much equity in the house to begin with. When conditions return to normal, government-sponsored enterprises, or GSEs, should never insure loans when the homeowner clearly does not have enough equity in that loan.
In financial institutions, there is no substitute for adequate capital to serve as a buffer against losses. Our financial market approach should include encouraging increased capital and financial institutions by removing regulatory, accounting and tax impediments to raising capital.
I'm prepared to examine any new proposals and evaluate them based on these principles. But I think we need to do two things right away.
First, it's time to convene meeting of the nation's accounting professionals to discuss the current mark to market accounting systems. We're witnessing an unprecedented situation as banks and investors try to determine the appropriate value of the assets they're holding. And there's widespread concern that this approach is exacerbating the credit crunch.
We should also convene a meeting of the nation's top mortgage lenders, top mortgage lenders in this country working together. They should pledge to provide maximum support and help to their cash- strapped, but credit-worthy customers. They should pledge to do everything possible to keep families in their homes and businesses growing.
You may recall that immediately after September 11, 2001, General Motors stepped in to provide zero-percent financing as part of keeping the economy growing. We need a similar response by the mortgage lenders. They've been asking the government to help them out. I'm now calling upon them to help their customers and their nation. It's time to help American families.
More important than the events of the past is the promise of the future. The American economy is resilient and diverse. Even as financial troubles weigh upon it, other parts of the economy hold up, or even continue to grow.
I've spoken at length in other settings about the need to keep taxes low on our families, entrepreneurs and small businesses; to make the tax code simpler and fairer by eliminating the alternate minimum tax that the middle class was never intended to pay; to improve the ability to our companies to compete by reducing our corporate tax rate, which today are the second highest rates in the world; to provide investment incentives; to control rising health care costs that threaten the budgets of our businesses and families; to improve education and training programs; and to ensure our ability to sell to the 95 percent of the world's customers that lie outside the United States borders.
These are important steps to strengthen the foundations of the millions of businesses, small and large, that provide jobs for American workers. There is no government program or policy that is a substitute for a good job. These steps would also strengthen the U.S. dollar and help to control the rising cost of living that hurts our families.
These are important issues in this campaign, and the debate with my Democrat rivals, but I will get my chance to talk further another day. Now I look forward to hearing from our small business owners, the very lifeblood of our economy.
Thank you very much.
LEMON: John McCain in Santa Ana, California. You see the time there, 10:23 a.m.; 1:23 here in the East. You're listening to his speech.
Certainly, talking about altering the faltering economy. Just moments ago in California, the presumptive Republican presidential nominee spoke about the mortgage mess.
And our senior business correspondent, Mr. Ali Velshi, joins us now from New York to break down that speech.
Ali, I guess you're doing some -- some fact-checking for us...
VELSHI: Yes.
LEMON: ... so to speak. Very interesting stuff that he had to say. Is it all -- can he do it all, though? Is it all correct?
VELSHI: It's a bit nonspecific, Don. It was an interesting speech in that he said earlier, "I'm not going to allow dogma to override common sense." Now, part of the issue, of course, here is that John McCain has been very clear in saying that he doesn't believe in rescuing people who got themselves into this problem in the first place.
He also said a couple of specific things. He said, "I oppose reducing the down-payment requirement for FHA -- that's Federal Housing Authority -- mortgages." In fact he thinks the down-payment requirement should actually be raised.
He also said that he wants to convene a meeting of the nation's top accountants and the nation's top mortgage lenders, which is, again, an interesting, nonspecific discussion, especially on the heels of Hillary Clinton's speech yesterday, in which she gave four specific things that she'd like President Bush to do right now. Now John McCain may have gotten himself into a bit of a corner because he has spoken so often about how the economy is not his strong suit. Now, of course, as we know, it's issue No. 1.
He did mention something at the end of his speech which caught my attention. I want to do a little thinking about this. But he says, "I recall that immediately after September 11, General Motors stepped in to provide zero-percent financing as part of keeping the economy growing. We need a similar response by the mortgage lenders."
I think it's an entirely different situation. The car industry was collapsing back in 2001, very specifically from sort of the entire economy.
LEMON: Yes.
VELSHI: But you can tell, Don, that it's an effort to have a broad appeal in terms of getting people to say, "Hey, that's a great idea. John McCain is saying that the mortgage industry should do something."
Again, Don, we're seven months from the election. He's going to need to get a little bit more specific as he goes in. This is not what we were expecting on the heels of such a detailed speech yesterday by Hillary Clinton. It seems almost designed so that John McCain can express to the audience that he's following the economic situation. But not too many specifics.
LEMON: Yes. And anything that -- anything that -- September 11th, right, that catches our attention. So when he said that...
VELSHI: Yes.
LEMON: ... I kind of looked at it and said, "Yes, I remember General Motors doing that after. But that's -- is it kind of apples and oranges?" Here's what...
VELSHI: That's right. It's apples and oranges.
LEMON: Here's what I sort of got from this. He said, No. 1, consumers stopped asking questions, he said, in the beginning, when it was all so good and rosy in the '90s, Ali.
VELSHI: Yes.
LEMON: And he said 15 to 16 percent of homes started improving every year, at least the -- what your home was worth.
Mortgages, et cetera, No. 2, he said were not managed wisely. That's when he talked about the bundling.
And then he talked about the ripple effect. He says banks don't trust each other anymore, and now they aren't trusting the borrowers.
And those were the three big things that I sort of got out.
VELSHI: Yes.
LEMON: He talked about how we got into this but not necessarily how we're going to get out, at least specifics on that.
VELSHI: Yes. You're right. And that's exactly what he said. This has been a big theme of John McCain's, that people are responsible for what they got themselves into.
LEMON: Right.
VELSHI: And he does not want -- he keeps on talking about not wanting to reward anybody, whether it's lenders or borrowers...
LEMON: Right.
VELSHI: ... for getting themselves into that. It's been a bit of a Republican refrain. And there are many people who support that. They say, "Why are you bailing somebody else out when I made the right decisions? I booked into my mortgage at the right rate. I did all of those things."
The problem, of course, is that this problem has overtaken policymakers. It's overtaken the Fed. It's overtaken the administration, and now it's overtaken the candidates.
LEMON: Right.
VELSHI: So he needs to sort of edge his position over to say, "I'm not going to allow those kind of philosophies to dictate what I'm doing."
LEMON: OK.
VELSHI: "But I don't want to bail out people who were overly speculative."
LEMON: All right, Ali. We've got to run, because we have other breaking news.
VELSHI: Sure.
LEMON: Hey, thank you for analyzing that speech for us, sir.
VELSHI: Sure.
NGUYEN: And speaking of the economy, take a look. Hillary Clinton is speaking right now live in Greensburg, Pennsylvania. And she obviously is going to be talking about the economy, as well. We got some details from her yesterday. And we will be hearing more a little bit later in the NEWSROOM today.
But we are also waiting for this. Detroit Mayor Kwame Kilpatrick and his former chief of staff face arraignment on multiple felony charges. We're following this story very closely today, and we'll bring you the latest live when it happens.
You are in the CNN NEWSROOM.
(COMMERCIAL BREAK)
(NEWSBREAK)
(BUSINESS HEADLINES)
NGUYEN: Speaking of the economy, we are going to be listening very closely to Senator Hillary Clinton. She's speaking right now in Greensburg, Pennsylvania. Here's a live picture of that speech. We're going to be bringing that to you as well when she starts taking some questions today, as yesterday we heard some details about her economic plan.
And look at the right of your screen. We are waiting for this to happen, Detroit Mayor Kwame Kilpatrick and his former chief of staff, they face multiple felony charges, and they will be arraigned today. As soon as that takes place, we will bring it to you live. You are in the CNN NEWSROOM.
(COMMERCIAL BREAK)
LEMON: As we keep our eyes on the arraignment of the Detroit mayor, we're also now going to take you now live to Greensburg, Pennsylvania, where Hillary Clinton is talking about the economy.
(JOINED IN PROGRESS)
SEN. HILLARY CLINTON (D), PRES. CANDIDATE: ... and the account will be yours. You can take it from job to job, and you can roll over any existing retirement savings into your account.
In short, my plan will help tens of millions of middle-class families go from just getting by to getting ahead, putting them on a path to a secure retirement.
These American retirement accounts will build on the bedrock of our retirement system -- Social Security, which must always remain rock-solid.
(APPLAUSE)
You know, later today, the trustees of the Social Security trust fund will issue their report on the solvency of Social Security and it will be another reminder of how important it is to make sure Social Security is there for the next generation.
And we've got to do everything in our power to make sure no one ever privatizes Social Security, undermining that rock-solid guarantee. You know, as a Senator, I fought President Bush's attempts to privatize Social Security tooth and nail, and I stood with many of you and with groups like AARP and the AFL-CIO and others in that effort.
We withstood President Bush's attempt to divide us. We debunked the cynical claims that Social Security was in crisis and we won. Now, when I am President, privatizing Social Security will be completely out of the question. You won't have to worry about that anymore.
And that's another big difference between Senator McCain and me. Senator McCain said something stunning the other day. He pledged to continue President Bush's attempts to privatize Social Security. He said, and I quote, "As part of Social Security reform, I believe that private savings accounts are a part of it, along the lines that President Bush proposed."
Now, Senator Mccain has already promised to continue George Bush's failed Iraq policy, and to make permanent his tax breaks for the wealthy few. Now he's taking up President Bush's assault on Social Security. So in a nutshell, that's John McCain's plan for America -- four more years of the same. Well, we cannot afford one more year of the same.
Now for the life of me, I cannot understand how Senator McCain can find the money for 100 more years in Iraq and tax cuts for the wealthiest, but not for Social Security. And I would never understand why he turned Social Security's guarantee into a stock market gamble for millions of Americans.
You don't need to look any further than Bear Stearns and Wall Street lately to know that our workers and seniors simply can't afford the Bush-McCain privatization scheme. So my message to senator McCain is this -- Social Security privatization is a bad idea whose time has come and gone. And the American people rejected the Bush privatization plan in 2005 and the American people will reject the Bush-McCain privatization plan in 2008.
DON LEMON, CNN ANCHOR: All right, Hillary Clinton in Greensburg, Pennsylvania, obviously talking about the economy. She gave her economic plan a couple days ago, and in some instances -- really in a lot of instances in this speech talking about reacting to McCain's speech and what McCain says about the economy.
One specifically saying, you know, how can McCain afford 100 more years in Iraq when he can't afford to take care of the people here at home. Social Security and what have you. So Hillary Clinton on the campaign trail talking the economy, as well John McCain, you heard from him just a short time ago. We'll continue to follow it.
BETTY NGUYEN, CNN ANCHOR: In the meantime, we are following this as well, an arraignment taking place right now in Detroit, Michigan, where Mayor Kwame Kilpatrick will be there shortly. Right now, we're looking at a live picture of his chief of staff, Christine Beatty, who has entered, we understand, a not guilty plea. Both of them face multiple felony charges. Of course, we will bring you more from this arraignment live right here on CNN.
(COMMERCIAL BREAK)
LEMON: Live pictures now from Detroit, a courtroom, this is an arraignment. You see that woman right there in the center of your screen, the chief of staff for Mayor Kwame Kilpatrick. Her name is Christine Beatty. They're facing several charges, several very serious charges.
Just how grueling will this battle be when it comes to this mayor and his chief of staff? What are the chances Kilpatrick can keep his job and his freedom. We're awaiting the mayor now. She was just arraigned, she pleaded not guilty. Put in a not guilty plea.
Avery Friedman, who is a civil rights attorney, Avery, it is always good to see you here on CNN, especially here in the NEWSROOM in the afternoon. Okay, first of all, we have been talking about these text messages. That's really what has been the highlight in all this.
And let me just show you some of them that came to light so people will know what we're talking about. This is one from Kilpatrick to Beatty, it says, "I'm madly in love with you." And then Beatty says, "Did you miss me sexually?" Kilpatrick said, "Hell yeah." And then Kilpatrick said, "You couldn't tell? I want some more."
Okay, that's putting it light. And probably a lot of ooh'ing going on in that. So listen, we're talking about serious charges, but it is not just about these text messages. That's really what got them into trouble, by saying, "You know what? We didn't have a relationship."
But it all started before that when police officers were actually investigating the mayor and the mayor -- and then found out about all of this. So it is not just about these text messages, it is about millions of dollars.
AVERY FRIEDMAN, CIVIL RIGHTS ATTORNEY: That's exactly right, Don. In fact, when Kym Worthy, who is the Wayne County prosecutor, had her press conference yesterday, she made a point of saying this case is not about lying about sex, but rather the destruction of the careers of three police officers in Detroit because of the untruthfulness and also the inability to get evidence, get information, which frankly, City Hall was blocking to go public.
LEMON: Yes. And just reading through this, I was looking through a timeline this morning. Apparently after all of this, after the original trial where the money was awarded, there was some sort of secret agreement that apparently the mayor -- or I should say allegedly, the mayor, and then his staff, lied about.
They kept one secret agreement and they've had one agreement for the public. And then all of this all came about and that's really where all of these charges are stemming from. So if you've got all of this, if you've got SkyTel, and you've got all this information, what are the chances that these people will get off from this?
FRIEDMAN: Well, you know, your adjective was 'grueling', and I think it is. The fact is that there are eight felony charges against Mayor Kilpatrick, and of course, there are seven against his former chief of staff, Christine Beatty.
The difficulty in the defense of this case, Don, will be that there are roughly 15,000 text messages and according to prosecutor Worthy, there were 40,000 pieces of evidence -- LEMON: Oh my gosh.
FRIEDMAN: -- which the prosecutor's office reviewed. That's a lot of evidence, Don.
LEMON: Yes, and we've been seeing -- yesterday, you know when I talked to some of the panel about -- and you probably know him better -- when you get Dan Webb to defend you --
FRIEDMAN: Yes.
LEMON: -- you're in trouble.
FRIEDMAN: Well, listen. Understand that both of these defendants are presumed not guilty under our American constitution.
LEMON: I'm not saying they're guilty. But you're facing some serious trouble when you go that high-profile.
FRIEDMAN: Well, and I like the idea that both -- or at least as far as the mayor is concerned, he has got quality defense lawyers. Because unless you have that, Don, there's an imbalance. The prosecutors have overwhelming evidence. It's the job of the prosecutor to assert at least the theories at this point and how he's going to defend this case.
Okay, let's talk about the court of public opinion here. Public opinion. Because after all this, the mayor apologized to his wife, he apologized to the people in Detroit. But then during a state of the city address, he used the 'N' word and said -- and likened what was happening with the scandal and with the press, he called it a witchhunt.
They asked him to step down. He fought and said he wasn't going to do it. Now, the major papers are asking him to step down in Detroit.
FRIEDMAN: Right.
LEMON: In the court of public opinion, this doesn't fare well for him.
FRIEDMAN: Well, I mean, you got to give him credit, Don. I mean, he came up with the idea of making a public apology, but that apology only addressed the tip of the iceberg. There was so much overwhelming evidence in this case that the apology in terms of the effect on public opinion, that might sell much better than in the court of law. But he's got a world of trouble with major people in Michigan saying, you know, mayor, it's time for you to step down.
LEMON: OK, Avery, hang on. We're going back to the courtroom. We're going to go back -- live shot, Scottie (ph), if can take that full. And then, I want to talk about this. "I am madly in love with you. Did you miss me sexually? Hell yes. You couldn't tell? I want some more."
FRIEDMAN: Wow.
LEMON: Mayor Kilpatrick coming to be arraigned, moments away.
(COMMERCIAL BREAK)
LEMON: OK, you saw inside the courtroom in Detroit. This is outside and you see people there, Betty, what does it say? Fairness?
NGUYEN: Fairness, justice.
LEMON: Justice? Justice, fairness, yes, that's what they're asking for. Not sure if they're asking for the mayor or for the city of Detroit. We're not exactly sure which side they're on. But standing by as we look at these live pictures and as we await the mayor of Detroit Kwame Kilpatrick to come into the courtroom, we're going to bring it to you live. Avery and I will shut up if that does happen.
But Avery, I want to get to real quick, two points. One, if -- when "The Detroit Free Press" did their foyer (ph) -- their freedom of information act to get all this information about Kwame Kilpatrick and his chief of staff and they found that there was actually a secret agreement to keep some of the records concealed -- do we have it?
OK, we've got the audio, the mayor's coming in. Hey, hang on. Let's go to it.
(JOINED IN PROGRESS)
UNIDENTIFIED FEMALE: ...law offensive, misconduct in office, penalty five years and/or $10,000. Count five, perjury, court proceeding, penalty 15 years. Count 6, perjury, court proceeding, penalty 15 years. Count 9, perjury, other than court proceeding, penalty 15 years. Count 10, perjury, other than court proceeding, penalty 15 years. Defendant is present.
JAMES THOMAS, ATTORNEY FOR MAYOR KWAME KILPATRICK: Good morning, your honor. My name is James Thomas. I'm appearing on behalf of the defendant with Mr. Mitchell as well as Mr. Webb. I filed a motion for Mr. Webb to appear pro hac vice. I know Mr. Webb, I've done cases with Mr. Webb, he's been practicing for over 35 years, more years than we want to remember. He's certainly well qualified and he is a member in good standing of the Illinois ...
LEMON: OK, that was live pictures happening of the arraignment there in Detroit, Michigan. That's our affiliate. Obviously, we don't have any control of that picture. We're going to get it back to you just as soon as possible. Gus (ph), I'm watching it on Router 33. I don't know if you can get it back up.
OK, so let's listen back in to this.
(JOINED IN PROGRESS)
UNIDENTIFIED MALE: ...as it relates to a potential conflict of interest. I know that this placed on the record for the arraignment of Ms. Beatty, but it occurs to me that Mr. Morganroth represents Ms. Beatty in this criminal matter, represents this defendant in a civil matter, the same civil matter. So, I'm just notifying the court that there is a potential conflict of interest on both defendants because of that civil representation.
The second notification requires the notification that my boss, the Wayne County prosecutor made notification to the chief judge of this court of another potential conflict, and that is this entire court because there is one, possibly two current sitting judges on this court who are potential witnesses for the preliminary examination.
UNIDENTIFIED MALE: Thank you, Mr. Webb (ph). Both of those matters are noted for this record. We are going to proceed with the arraignment at this point.
UNIDENTIFIED MALE: Your honor, at least as far as the second notification, I'm just going to mention as part of the notification, that we just found this out today that there had been this ex-party communication with the chief judge, which -- that did lead to somehow a disqualification of this entire bench, that may raise certain issues which I believe should not be appropriately raised here today, but I don't want to waive any of those issues.
So, I accept the notification and we'll raise the appropriate response in the appropriate form.
UNIDENTIFIED MALE: So noted.
UNIDENTIFIED MALE: Thank you.
And judge, we received a copy of the complaint and information in this case. We waive a formal reading. He's going to stand mute (ph) to the charges and we'd ask the court to set a reasonable bond.
UNIDENTIFIED MALE: Thank you. Not guilty plea has entered. As to exam date, there had been discussion of June 9th for exam. That is exceeding the 14-day rule and I'd ask you to voir dire your client on that.
UNIDENTIFIED MALE: Mr. Mayor, you understand that you have a right to a preliminary examination within 14 days. We have matters that we have to attend to and there is discovery materials that we have to review. You can waive that, and then we can have it scheduled for what we've agreed to is June the 9th. We'd ask you to waive the 14-day rule. Will you do so?
MAYOR KWAME KILPATRICK, DETROIT: Sure.
UNIDENTIFIED MALE: All right.
UNIDENTIFIED MALE: Court's satisfied there's been a knowing and voluntary waiver. Exam June 9, 8:30 a.m., 36th district courthouse. As to bond, I'm going to release the defendant on personal bond, $75,000 personal, understanding there is no objection from any party in that regard. As to conditions of bond, as with any defendant in any felony case, defendant would be restricted to the state of Michigan while this case goes forward. However, given the position, defendant shall have the right to travel anywhere within the United States, not just continental, while this case goes forward without permission, but with advance notice to the offices of pre-trial services as to specific times and whereabouts.
That is the condition on personal bond while this case goes forward. Have I expressed the condition accurately as to our prior conversations?
UNIDENTIFIED MALE: You have, your honor.
UNIDENTIFIED MALE: People agree with that, your honor, yes.
UNIDENTIFIED MALE: Very good.
UNIDENTIFIED MALE: The only other -- I think was also, as far as non-reporting, by phone? Is that ...
UNIDENTIFIED MALE: That is correct. There will be no reporting.
UNIDENTIFIED MALE: OK, people have no objection to that as well, your honor.
UNIDENTIFIED MALE: Unless there's anything further, that would conclude this arraignment. Anything further?
UNIDENTIFIED MALE: No, your honor.
UNIDENTIFIED MALE: This matter is concluded.
LEMON: OK, they said matter is concluded. Myor Kwame Kilpatrick walking out of a courtroom for the arraignment in Detroit, Michigan.
Avery, we had a bit of a technical problem, glitch when we got there, but I head him talk about ex-party, communication with the chief judge ...
FRIEDMAN: Right.
LEMON: ...and that does -- that's doesn't sound good to me. I'm not an attorney, but that sounds pretty serious.
FRIEDMAN: Well, ex-party means one lawyer spoke to the judge in the absence of the other lawyer. But to be honest with you, Don, there's a blockbuster development that we just saw, and it may not be apparent. And that is that -- there was a request on the part of the defense team, at least a suggestion that there are going to be judges testifying in this case. And that may very well lead to the next step, the blockbuster, and that is this case may not be heard in Wayne County, but elsewhere.
LEMON: Right.
FRIEDMAN: That's huge.
LEMON: Because if there's a judge, then I guess how it can be fair ...
FRIEDMAN: Yes.
LEMON: ...in that venue if the judge is, indeed, testifying in this case.
FRIEDMAN: It's going to create an appearance of impropriety ...
LEMON: OK.
FRIEDMAN: ...and there may be a move here.
LEMON: OK, would it be moved outside of the county but not necessarily moved out of Michigan?
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxantshop.com
