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Campbell Brown

Illinois Governor Scandal Intensifies; Auto Bailout Still Alive?

Aired December 12, 2008 - 20:00   ET

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

CAMPBELL BROWN, CNN ANCHOR: Hi, everybody.
We start with breaking news tonight: exclusive new details on the scandal swirling around the Illinois governor and the allegations he put a for sale sign on Barack Obama's Senate seat.

Late tonight, CNN spoke with Governor Rod Blagojevich. You won't hear him talking anywhere else.

(BEGIN VIDEO CLIP)

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: Are you going to resign, sir?

GOV. ROD BLAGOJEVICH (D), ILLINOIS: I will have a lot to say at the appropriate time.

(END VIDEO CLIP)

BROWN: We're going to have much more on the stunning corruption case tonight.

Bullet point number one: As Blagojevich fights for his political life, congressman Jesse Jackson Jr. also answers some tough questions today. The man known as candidate five in the corruption probe says no one, certainly not his own brother, went looking to buy him a U.S. Senate seat.

(BEGIN VIDEO CLIP)

REP. JESSE JACKSON JR. (D), ILLINOIS: He would never do anything untowards, make any kind of offers on my behalf, and certainly not without my permission.

(END VIDEO CLIP)

BROWN: Don Lemon will join us from Chicago with more of his probing conversation with the congressman.

Bullet point number two tonight: As Jackson talks, the governor's right-hand man walks. Chief of staff John Harris resigned today, three days after he was arrested, along with Blagojevich. Well, now the Illinois attorney general wants the state Supreme Court to strip the governor of all power, at least for the moment. We're following all the fast-breaking developments at this hour. Bullet point number three: the car bailout that just won't die. The White House is now picking up the ball, after the Senate could not agree on spending $14 billion to keep GM and Chrysler rolling. The battle lines over the bailout seemed to resemble the Mason-Dixon line. And David Mattingly is going to show us why in just a few minutes.

And bullet point number four tonight: a $15 billion Wall Street rip-off. That's right, $50 billion. We're going to have a closer look at the man called a pioneer of Wall Street now accused of running a giant Ponzi scheme on his own wealthy investors.

First, though, as always, "Cutting Through The Bull" tonight, at this hour, Congress is still fighting over whether or not to give the automakers $14 billion to try to prevent General Motors and Chrysler from going bankrupt. This is after dragging the CEOs of these companies to Capitol Hill, raking them over the coals, publicly humiliating them, and demanding a detailed plan from them on just how this money will be spent.

And, by the way, I think they should have been raked over the coals. They should account for how taxpayers' money will be spent.

But, boy, wouldn't it be nice to see a little bit of equivalency for the big banks? Do you think anybody has asked the bank managers if they fly in private jets? Why aren't they being held to the same standard, in particular, Citigroup, once the country's largest bank?

Citi was on the verge of going under largely because the managers of Citi made some dumb decisions. And yet with little or no debate, Citi got a check for $45 billion, more than three times what the automakers were offered.

Now, you remember Robert Rubin, the former treasury secretary. He is one of the head honchos of Citi. Was he called to Capitol Hill? Was he raked over the coals, publicly humiliated, and made to account for those -- or for how those dollars would be spent? Has he been asked whether he flies by private jet? Nope, no calls for his resignation that I'm aware of.

Well, now, I'm not arguing that Citi shouldn't have gotten the money. Frankly, Citi's survival may be more important to the economy as a whole, as some have argued. But we damn sure ought to be holding all of these companies and all the managers who have screwed up these companies to the very same standards. They are all asking for a government handout.

They're all asking for your tax dollars. And they all need to be held accountable.

Right now, we're going to go straight to our breaking news tonight on the Blagojevich scandal. And it is a CNN exclusive. Drew Griffin from our Special Investigative Unit was the only reporter to track down the embattled Illinois Democrat this afternoon. He caught up with Blagojevich just as he was leaving his attorney's office. Take a look.

(BEGIN VIDEO CLIP)

GRIFFIN: Drew Griffin with CNN.

Can you say anything to the people of the state of Illinois, sir? Do you have anything to say?

GOV. ROD BLAGOJEVICH (D), ILLINOIS: I will at the appropriate time, absolutely.

GRIFFIN: Are you going to resign, sir?

BLAGOJEVICH: I will have a lot to say at the appropriate time.

GRIFFIN: Governor, are the authorities right in their petition, the criminal complaint? Did you do what they say you did? Governor? Just 30 seconds for anybody? For the state of Illinois?

(END VIDEOTAPE)

BROWN: Drew, it was a valiant effort, I have to say. You know, the governor, we heard there, really giving no indication when or if he will resign. Yet, it seems every politician in the state of Illinois now saying he's got to go. What's going on?

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: Yes, he's not a guy that usually passes up a microphone either, Campbell. And so it was really odd to see him pass by.

Two avenues going on. The Illinois attorney general wants the Supreme Court to kick him out of office, the state legislature moving on impeaching him, perhaps starting that as early as Monday, all this while that governor becomes more isolated by the day.

(BEGIN VIDEOTAPE)

GRIFFIN (voice-over): In perhaps a sign he has nowhere else to turn for help, pastors of local churches showed up at the governor's door this morning, emerging to say they came to offer support.

UNIDENTIFIED MALE: I had a prayer with -- we had a prayer with my governor. He called me.

QUESTION: What was your prayer? What did you say?

UNIDENTIFIED MALE: That he continues to be a great governor. Stay the course.

GRIFFIN: The governor waved to the press and waved off any questions on what he is going to do. At the downtown office building where the governor works, Illinois' attorney general announced she had filed a motion with the state Supreme Court to have the governor stripped of his power.

LISA MADIGAN, ILLINOIS ATTORNEY GENERAL: We think it is very clear that he is incapable of serving, and we are certainly hopeful that the Illinois Supreme Court will hear this matter and appoint Lieutenant Governor Quinn as the acting governor.

GRIFFIN: Behind the scenes, the legislature is gearing up to start their own removal procedures.

Meeting on Monday, the House and Senate are expected to take up motions to strip the governor of his ability to name a U.S. senator to the vacant seat prosecutors say he was trying to sell.

And Democratic House members are circulating this letter, asking colleagues to join them in impeaching the governor. But that will take time. Politicians agree the best thing for the state is for the governor to resign.

And while his accused chief of staff, John Harris, did submit his letter of resignation, the governor apparently is still on the job, working, and not telling his press secretary much else.

LUCIO GUERRERO, BLAGOJEVICH PRESS SECRETARY: People are trying to deal with today's issues, as opposed to what's been going on this whole week.

(END VIDEOTAPE)

GRIFFIN: Campbell, I think the pressure will build even stronger on Monday when the governor and everybody else sees just how swiftly the House and the Senate expected to move on these impeachment proceedings.

BROWN: And, Drew, I guess at this point, you know, he seems fairly defiant in choosing to not step down. I mean, any indication from his staff that he is showing signs of getting ready to leave in any way?

GRIFFIN: Campbell, I talked to his press secretary today, and I was kind of blown away.

The governor has been at work, acting like the governor. Even today, he was at work signing a bill into law which would extend insurance coverage to kids with autism. It is almost like he's going to work oblivious to the fact that his whole world is crushing around him.

So, it will be interesting to see if he has any plans of resigning in the very near future, which is what everybody in this state seems to want.

BROWN: All right, Drew Griffin for us tonight -- Drew, thanks very much.

Governor Blagojevich now has yet another problem. The Illinois state attorney general has taken the extraordinary step of asking the state Supreme Court to temporarily strip the governor of his power.

In a moment, Jeff Toobin will handicap the legal showdown for us.

Also ahead, after lots of speculation president-elect Obama's chief of staff, Rahm Emanuel, we learned today more about the investigation into his role, if any. We will talk about that as well.

Stay with us.

(COMMERCIAL BREAK)

BROWN: We are learning more details tonight about the charges that Rod Blagojevich tried to sell Barack Obama's old Senate seat.

A source tells our Jessica Yellin that Rahm Emanuel, president- elect Obama's chief of staff, has been notified that he is not a target of the investigation. Now, that means there are still a lot of unanswered questions here, though.

And Jessica Yellin is in Chicago for us tonight with more on all of this story.

And, Jessica, I know you have been talking to a lot of people about this. Give us the very latest.

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Well, Campbell, what is significant about this is the fact that Mr. Emanuel was notified that he's not a target, as you said, significant because it both puts a point on what Barack Obama himself said when he told the public that the people around him did nothing wrong, so it gives that some official heft, that certainly his chief of staff seems to be cleared.

But also it begs the question presumably officials would not bother to tell him he's not a target unless he had some sort of contact with individuals who are involved in the inquiry. So, it raises all these new questions about did he have conversations with whom, and all of this is what we're still waiting for the Obama team to let us know.

As we have said for several days now, there would be nothing unusual about Rahm Emanuel, the chief of staff of the incoming president, having a conversation with the governor or his aides. So, everybody is pressing still for more details on that. We're just not getting them yet. As we all know, we are waiting -- Campbell.

BROWN: Well, and Obama was pretty clear about saying that his transition team was going to release whatever contact they could discover between his staff and the governor and the governor's staff.

When do you have -- do you have any sense? Are they giving you any idea of the timeline on this, when we may see this information?

YELLIN: They almost roll their eyes. When I e-mail them, when I call, they said a few days. Obama said a few days. It will be a few days.

Basically, this is how Barack Obama operates. It is his style. He takes his time. He is thorough. He is fiercely protective and private about this stuff. We are going to have to get used to this. It is how he does business. He releases it on his own timetable, and we're probably not going to get leaks until then -- Campbell. BROWN: All right, Jessica, continue to be annoying. All right.

(LAUGHTER)

YELLIN: I will.

BROWN: We will we will talk to you on Monday.

Jessica Yellin for us tonight -- Jessica, thanks.

So, what does the news about Rahm Emanuel mean for the president- elect's transition team and what about the showdown brewing between the governor and the Illinois attorney general? Attorney General Lisa Madigan took the extraordinary step today of asking the state Supreme Court to temporarily strip Blagojevich of his powers.

Well, can she even do that?

Our senior legal analyst, Jeffrey Toobin, is here to talk through all of this with us.

Jeff, good to see you, although I wish you were in the studio, but hey.

Let me start with a Rahm Emanuel. What exactly does it mean when Patrick Fitzgerald, as we heard just Jessica Yellin report, says that Obama's chief of staff, Rahm Emanuel, is not a target of this investigation?

JEFFREY TOOBIN, CNN SENIOR ANALYST: Well, federal prosecutors have three categories for people. They have targets, who are almost certain to be indicted. There are subjects, whose behavior is under investigation, and they may or may not be charged. And then there are simply witnesses, people who have information that is useful to investigation.

We know Rahm Emanuel is not a target. So, the question is, is he a subject or is he a witness? Certainly, the available evidence suggests that he is simply a witness, that he has information that might be useful to the grand jury, and he's providing it.

But it is also possible that he's a subject and he is being looked at. That's really all we can say at this point.

BROWN: And, Jeff, you know, we heard Obama say over the next few days he is gathering all the information about any contacts his staff may have had with the governor's office and that he's going to put that all out there publicly.

Both legally and, frankly, politically, do you think he's making the right move?

TOOBIN: Oh, I certainly think politically it is the right move. Legally, he certainly has no obligation to put out information like this. But this is, needless to say, a bizarre situation. It involves his Senate seat. His staff is full of people involved in Illinois politics, who have relationships with the governor. There is a natural curiosity about what his staff might have discussed with the governor or with the governor's staff.

Getting all that out there as soon as possible, but accurately, makes political sense. And, as long as the information is both accurate and not incriminating, Obama and his staff should be fine.

BROWN: OK. Let's talk about the governor's future and the legal ramifications here. If he doesn't resign, and it doesn't look like he will, he can either be impeached or what we saw today, the attorney general filing papers with the Supreme Court to strip him of his powers.

I mean, this is unchartered territory, isn't it? I guess, what happens now?

TOOBIN: At many levels, because Illinois is one of the few states that actually has a law like this.

I frankly had never heard of such a law, but Illinois has a law that says the Supreme Court can strip the governor of his powers temporarily if he's unable to fulfill his duties. What those words mean is unclear. Certainly, the Illinois Supreme Court will invite the governor to respond to the attorney general's request, and say, "How should we rule on this?" and allow both sides to argue their case.

That will take some time, but the Illinois Supreme Court will simply be making this up as it goes along, that is, the procedural side of it, because this has never happened before in Illinois.

BROWN: And, quickly, Jeff, there may be some politics at play here as well. I understand that the attorney general, Madigan, may have a vested interest here also.

TOOBIN: She's a very prominent politician. She clearly wants to be governor. She might want this Senate seat, too.

So, her role is both political and legal. There is nothing wrong with that. An elected attorney general is always part law enforcement and part politician, but her role is going to be very carefully studied.

And she is positioning herself as the anti-Blagojevich. She is saying, I am so outraged by his behavior that I am the one trying to get him out of office.

She thinks that's good politics. It may also be good policy.

BROWN: All right, Jeff Toobin for us tonight -- Jeff, as always, thanks.

TOOBIN: OK. BROWN: In a moment, our interview with Jesse Jackson Jr. The congressman reacts to allegations linking him to the Blagojevich case and Obama's old Senate seat.

Plus, the battle between the North-and-South divide over the auto bailout. Southern senators don't want to help the Big Three, but they love those foreign carmakers with factories in their states.

(COMMERCIAL BREAK)

BROWN: We're pretty sure that at least some of you may have asked yourselves a simple question about Governor Blagojevich. If, in fact, these allegations are indeed true, then is this guy dealing with a full deck? Well, you're not the only ones wondering about that.

Even more remarkably, people begin asking that blunt question long before the recent revelations that have created a tornado around him.

And Gary Tuchman has that story.

(BEGIN VIDEOTAPE)

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT (voice-over): The mind of Rod Blagojevich is being discussed in polite company.

The president-elect.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: I can't presume to know what was in the mind of the governor.

TUCHMAN: The Illinois attorney general.

LISA MADIGAN, ILLINOIS ATTORNEY GENERAL: And I'm not qualified, you know, to make any psychological diagnosis, but, you know, clearly something's wrong.

TUCHMAN: What do you say about a governor who knows he's been under investigation for years, yet says something like this just this week?

BLAGOJEVICH: I don't care whether you tape me privately or publicly. I can tell you that whatever I say is always lawful.

TUCHMAN: But then prosecutors say they caught the Democratic governor on tape saying this about his chance to appoint someone to fill Barack Obama's Senate seat -- quote -- "I have got this thing, and it is bleeping golden. And I am just not giving it up for bleeping nothing."

Well, here's what another fellow Democratic, a state senator, says.

MIKE JACOBS, ILLINOIS STATE SENATOR: I think, at the very least, he's having some kind of mental breakdown. TUCHMAN: And he exclaimed that before this all went down, when he was summoned into the governor's office and said he wouldn't support a bill that Blagojevich wanted.

JACOBS: The governor blew up at me and he began to make threats to me, including, you know: I will destroy you, I will destroy you personally, I will destroy your family, I will (EXPLETIVE DELETED) do whatever I have to do to make sure that you end up in a bad position in Illinois.

TUCHMAN: The governor, who has not commented to CNN, has had agreements with reporters in the past.

BLAGOJEVICH: And you're not just interested in sensationalizing something so you can do your big news story, you wouldn't even bother asking a question.

QUESTION: But, Governor...

TUCHMAN: Here is what other state politicians have said.

Representative Joe Lyons and other fellow Democrats said the governor was -- quote -- "insane." And Democratic Representative Jack Franks says Blagojevich has -- quote -- "delusions of grandeur."

But they're not psychologists.

Dr. Gail Saltz of New York Presbyterian Hospital is.

DR. GAIL SALTZ, ASSOCIATE PROFESSOR OF PSYCHIATRY, THE NEW YORK PRESBYTERIAN HOSPITAL AT WEILL-CORNELL SCHOOL OF MEDICINE: I would say it is highly likely there is some mental or emotional issue that this man is dealing with.

TUCHMAN: A true diagnosis needs a face-to-face assessment. But Dr. Saltz and Chicago psychologist Dr. Scott Ambers share the feeling the governor is no insane and does know right from wrong, but:

DR. SCOTT AMBERS, CLINICAL PSYCHOLOGIST: He probably does suffer from some form of psychopathology, some form of psychiatric disturbance, which I think is best captured by a diagnosis called narcissistic personality disorder.

TUCHMAN: Which, in plain English, they say, is exaggerated or grandiose fantasies of one's self, which isn't that uncommon of a condition. This "Chicago Tribune" reporter thinks it is much simpler, though.

JOHN KASS, "THE CHICAGO TRIBUNE": He's merely a Chicago politician who was caught on tape.

TUCHMAN: But recent comments like this...

BLAGOJEVICH: I'm not interested in the U.S. Senate. I like my job as governor.

TUCHMAN: ... and his own experiences make Senator Jacobs feel much differently.

JACOBS: Well, he got over the top of me and he doubled his fist this way. And, you know, I'm not a shrinking violet myself. I'm a good-sized man. I'm 6'3''. I played football at the University of Iowa. I know when someone is about to strike.

TUCHMAN: The governor did not strike, which indeed sounds like a most sane decision.

Gary Tuchman, CNN, Chicago.

(END VIDEOTAPE)

BROWN: Still ahead tonight: the very latest on the auto bailout. The carmakers may still get their loan, even after the Senate voted to kill the deal last night. We will talk with our panel about that coming up.

Then, imagine getting inside information from the McCain/Palin campaign on a discarded bargain BlackBerry. We are going to have that and more in our "Political Daily Briefing."

(COMMERCIAL BREAK)

BROWN: We learned more today about another big-name politician caught up in the Blagojevich scandal. Congressman Jesse Jackson Jr. says he has not yet talked with federal agents investigating the case.

Earlier this week, he was identified as the so-called candidate five, under consideration for Barack Obama's old Senate seat. Now, Blagojevich allegedly described a deal being cooked up by an associate of candidate number five.

So, serious questions still remain here.

Just a little while ago, Jackson sat down with Don Lemon in Chicago.

And, Don, "The Chicago Tribune" reports today that representative Jackson's brother, Jonathan, may have attended a fund-raiser with some businessmen who may have been involved in the alleged Blagojevich pay- to-play scam. I mean, the suggestion seemed to be that his brother may have indirectly been a kind of emissary on his behalf.

You talked to him about it. What did he have to say?

DON LEMON, CNN ANCHOR: I certainly did.

And I told him, and he -- even he admits that it does look bad on the surface. Now, according to "The Chicago Tribune"'s reporting, Campbell, they say -- they said that it was a fund-raising event. But, according to Congressman Jackson, he says it was an Indian day event, and that the governor showed up, and, therefore, just sort of he overshadowed the event.

Now, he does admit that he does know those two men, the two businessmen here who are campaign contributors, but says they not only contributed to his campaign; they contributed to others as well. So, he says it looks bad on the surface, but there is no backdoor dealing here. I talked to him about it. Take a listen.

(BEGIN VIDEO CLIP)

REP. JESSE JACKSON JR. (D), ILLINOIS: No, they were not. I made that perfectly clear.

I love my brother Jonathan. Jonathan is a deeply spiritual and religious person. He would never do anything untowards, make any kind of offers on my behalf, and certainly not without my permission. He did not represent himself as an emissary on my behalf. Jonathan is an active person in Chicago public life. He goes places. He goes to things.

(END VIDEO CLIP)

LEMON: So, it is very interesting.

Unlike any other city, probably more than any other city, Campbell, you know that saying that politics is local? Well, politics is local here, and it's a very small circle. And, in many instances, as you found out with Blagojevich and his father-in-law, Dick Mell, one of the aldermen here, it is a family event as well.

And, so, yes, he said, while it did look like it was there was something going on -- this is according to Congressman Jackson -- he says it is nothing inappropriate at all and that it is merely a coincidence -- Campbell.

BROWN: And, Don, in your interview today, he still seems to be selling himself very much for this Senate seat. Does he really believe that he can still get it?

LEMON: Well, you know, he's hopeful that he can still get it.

Obviously, he's been touting his credentials and he has been going around, even as his press conference the other day, saying that he has the highest seniority, except for one person here, who is in Congress. He has the highest seniority, 13 years. So, clearly, he thinks that he has the credentials, but he's very aware of how this looks to the public.

So, I did ask him about that, about whether he thought he was still qualified, whether he thought he could win. And he responded. Take a listen.

(BEGIN VIDEO CLIP)

JACKSON: let me be perfectly clear.

While I would be honored to serve the people of this state, it is clear to me that I am in no capacity to serve them if there is a cloud over my head that seems to suggest I am involved in some unscrupulous scheme to be a United States senator or to be anything else. (END VIDEO CLIP)

LEMON: And, Campbell, at one point during the interview, he actually teared up. I thought he was going to break down, until his wife sort of jumped in and saved him, when he said: You know, I want my name back. I have been discredited in blogs and in the newspaper. And I just really want my name and my credibility back.

BROWN: Don Lemon for us tonight from Chicago -- Don, thanks very much. Appreciate it.

Still ahead tonight: an incredible confession. Authorities say a wizard of Wall Street, a man with an unblemished reputation, admits running a $50 billion scam. How he did pull it off?

Plus, a story that may open your eyes about why certain senators may have voted against the auto bailouts, why they may prefer foreign cars built in their states.

(COMMERCIAL BREAK)

CAMPBELL BROWN, CNN ANCHOR: There is new life for the auto bailout loan, supposedly. The White House says it will do whatever it takes to keep the big three automakers alive, but to pull that off, the president has to either play hard ball with the Senate Republicans who defeated the bailout bill last night or do an end run around them all together.

Senior White House correspondent Ed Henry has been tracking all this for us. He's got the very latest from the White House.

Ed, what is going on?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, good evening, Campbell. What's fascinating about this is, as you know, the president may be a lame duck, but he still has vast powers in some cases like this. And with one stroke of the pen, he could actually engineer this auto bailout after all.

And two senior officials tell me the president could act as quickly as this weekend to tap into emergency funds to get this bailout done. And you know what is amazing is that several weeks ago, Democratic leaders were saying the president should do that very thing. Do it on his own, do it through the so-called TARP fund, that big pot of money, that $700 billion bailout from September. But the White House kept saying, no, that's for financial firms, not auto firms. They were drawing the line in the sand.

But last night, there was that spectacular failure, fellow Republicans in the Senate abandoning the president. So he really has no other option at this point and so he's now contemplating tapping those TARP funds, those emergency funds. But even now, Republicans like Bob Corker in the Senate are still raising questions and some red flags. Take a listen.

(BEGIN VIDEO CLIP) SEN. BOB CORKER (R), TENNESSEE: If the White House puts TARP money in on top of GM's $62 billion in debt, OK, and doesn't require all of these things that I'm talking about to happen, OK, all they're doing is throwing good money after bad.

(END VIDEO CLIP)

HENRY: So there is an expectation that the president will at least listen to some of that, and put some checks and balances here. But he's very likely to tap the funds. And what's fascinating is, you know, what was the point of that Senate debate where the big three were dragged out there to testify? They got raked over the coals, as you said before, about their jet planes. And after weeks of all that back and forth, it's going to come down to the president anyway, and it seems like the debate on the Hill really didn't amount to very much, Campbell.

BROWN: It sure does. Ed Henry for us tonight. Ed, thanks very much.

HENRY: Thank you.

BROWN: We want to drill down a bit more into this calamity, I guess you could call it at this stage of the game. The thing is not all of America's carmakers and not all of its autoworkers are in terrible trouble. Those that are in trouble are unionized and in the north part of the country, those that are doing OK are the non-union shops or factories and they're in the south.

And now, here's an odd coincidence. Which senators helped kill the bailout? Northern or southern senators? David Mattingly has been looking into the politics of this for us. And, oh, yes, there are politics -- David.

DAVID MATTINGLY, CNN NATIONAL CORRESPONDENT: Well, Campbell, all they needed was eight more votes. But let's just say when the bailout died, the big three weren't feeling a lot of warmth coming from the Sun Belt.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: On this vote, the yeas are 52, the nays are 35.

MATTINGLY (voice-over): It's kind of like a war between the north and the south. Senators in the south are saying no to bailout loans to carmakers up north in Detroit. Eight Senate votes from just these four southern states could have saved the bailout. Instead, all their senators voted no.

RON GETTELFINGER, PRESIDENT, UNITED AUTO WORKERS: There's no question who was the minority in the Senate representing, regardless of their motivation. They thought perhaps they could have a two-fer here, maybe. You know, pierce the heart of organized labor while representing the foreign brands. MATTINGLY: Foreign brands in Kentucky, Tennessee, Alabama and Georgia have spent billions on plants creating thousands of jobs. They're adding thousands more next year. Almost all southern states have right to work laws, no union membership required. By one industry estimate, non-union workers make about $3 per hour less than their union counterparts.

MIKE RANDLE, SOUTHERN BUSINESS AND DEVELOPMENT: Labor is for an automaker their number one cost factor. But other factors, taxes, utility costs, real estate costs, they all factor in, in terms of the south being extremely competitive.

MATTINGLY: Talks to save the bailout deadlocked over Republican demands for United Auto Worker cuts in pay and benefits in 2009. But some say southern Republicans also practice backyard protectionism. This Hyundai plant was built in Alabama, taking advantage of more than a quarter of a billion in state and local incentives.

MICHAEL ROBINET, AUTO INDUSTRY FORECASTER, CSM WORLDWIDE: By 2014, over 80 percent of total production in the south will be of companies other than the Detroit three. So that really tells you that they have a vested interest in protecting those companies.

(END VIDEOTAPE)

MATTINGLY: Now a good way to illustrate how the battle lines are drawn is to follow the money. One nonpartisan calculation by maplight.org shows the UAW contributed an average of $7,400 to each yes vote they got in the Senate. Compare that to $147 they spent for each no vote. That's over a period of seven years, Campbell. This fight started a long time before the big three bailout hit the Senate floor.

BROWN: All right. David Mattingly for us tonight. David, thanks very much.

Coming up next, our panel will talk us through the bailout. If the White House can't rescue GM and Chrysler what will happen and when will it happen?

Then later, tonight's "Bull's-Eye," John McCain finding his inner Blagojevich no bleeping way. "NO BIAS, NO BULL" returns right after this.

(COMMERCIAL BREAK)

BROWN: High octane politics complicating the auto bailout bill. So much riding on this now, jobs and millions of Americans at stake. So let's cut to the chase. Where do we stand tonight?

And our panel is here to talk about that. "New York Daily News" columnist Errol Louis, also morning host for WWRL radio in New York, CNN chief business correspondent Ali Velshi, and Republican strategist Kevin Madden.

Ali, let me start right with you. You know, GM and Chrysler may not have the money -- may not have enough money to make it through the end of the year.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Right.

BROWN: If there is not some sort of deal, if the White House doesn't step in, what happens?

VELSHI: Well, there's some time to continue to work out some way to finance them but General Motors is running out of time. General Motors has admitted that it may run out of money by the end of this year.

Now, the ability to get some money from the government means that these companies can then try and raise money elsewhere. But if there's no money on the horizon for General Motors within the next few weeks, that company could be forced into bankruptcy.

BROWN: Kevin, we just heard right before the break, David Mattingly reporting that lawmakers -- the lawmakers most opposed to the bailout have foreign carmakers in their states. These non-union companies, competitors to the big three. Do you think politics are at play here?

KEVIN MADDEN, REPUBLICAN STRATEGIST: Well, I think that Republicans are going to make the argument that fiscal sanity is what's most important. You know, you can make the argument for foreign carmakers and their industry having a presence in lots of states, not just the south. What's most important for Republicans here is that there's a reorganization that's not going -- that's going to help the long-term viability of the industry that's going to help these workers maintain their jobs in a long term basis instead of just a short-term tourniquet and that we're going to save the taxpayers money. But that's what's most important.

BROWN: But, Kevin, how does that reorganization happen if GM goes out of -- goes into bankruptcy like Ali is predicting?

MADDEN: Well, the bankruptcy is reorganization. Ultimately these -- the industry is going to find -- have to find a way to reduce their legacy costs, to reduce a lot of the burdens that they have on their industry if they're going to flourish in the future. And right now they haven't done that. They haven't provided a more detailed plan for how they're going to reorganize and compete in this global market.

VELSHI: Neither did Citigroup when they got $50 billion. But the bottom line is, it's not my case but GM and Chrysler make a very strong case that bankruptcy for them and particularly in GM's case may mean liquidation, not reorganization.

BROWN: You agree with that?

ERROL LOUIS, "NEW YORK DAILY NEWS": Yes, that's right. Buyers are not going to buy cars if they don't know the parts and the service are going to be there four and five years out. So we don't know what kind of a collapse we're going to see. We're already seeing dealerships experiencing credit problems, and they're the ones who really sort of make the connection between the consumer and the auto companies. So we're already in trouble. We don't know.

Even if they are able to get some kind of a bailout in place in the next few weeks, it may already be too late. We just don't know. This is unchartered territory.

BROWN: And, Kevin, let me go back to a political question here. I mean, if they go under and if they don't reorganize, aren't able to under the argument that we've heard Ali and a lot of other people make that they can't if they go into bankruptcy, it's over. I mean, we're talking millions of people out of work. Aren't Republicans going to pay a serious political price for that?

MADDEN: Look, first, Campbell, I think the alternative is that these companies go under anyway is that we keep throwing good money after bad. There is no reorganization. We're only offering a tourniquet. There's no long-term restructuring.

And I think that Republicans, you know, if you look at the way voters are looking at this, they don't want to see money -- good money thrown after bad. They want to see somebody stand up for the taxpayers and somebody put forth some sort of plan that's going to bring these -- bring the industry back to long-term viability. And Republicans can make a very cogent argument that they're standing up against essentially the nationalization of this industry and they're standing on the side of taxpayers.

BROWN: Ali, too big to fail. I mean, it was the argument we heard made on behalf of the banks. Does it work in this case?

VELSHI: It was true. I mean, because we haven't seen Armageddon, it doesn't mean something worse would have happened if we didn't bail out the banks.

Now, the issue here is that there are many failures in Detroit. The UAW is responsible for some of them. The leadership of the car companies is responsible for some of them. But really, you have to take a look from a little bit higher up and say that there have been major strides made in the last few years. They were really gaining on some of their problems. This may not be the month to drive a stake into the heart of organized labor to prove your point. Right now, we may want to save the auto industry and finish that discussion.

LOUIS: And, of course, in so many of these states, the states have been subsidizing these foreign companies.

VELSHI: Right. It's not a freebie.

(CROSSTALK)

Or you allow them lots of tax breaks to come in and manufacture your cars in different states. One way or the other, taxpayers are encouraging carmakers in this country. MADDEN: Ali, let me disagree with you on the idea that this is driving (ph) a mistake.

BROWN: Quickly, Kevin.

MADDEN: ... through the United Auto Workers union. This is instead bringing them into the table. Everybody has to have -- everybody has an incentive here to help the industry maintain long- term viability. And they're going have to make some concessions to help their companies become more competitive.

BROWN: All right, guys, we got to end it there. We're out of time. But to Errol, Ali and Kevin, many thanks. Appreciate it.

When we come back, the Obama family has gotten a ton of attention for their search for a dog. But another puppy moving to Washington getting all the attention tonight. We will explain.

(COMMERCIAL BREAK)

BROWN: That is really a full moon -- the actual moon. Scientists tell us the moon is closer to the earth right now than it has been in 15 years, which is why it looks so big and beautiful tonight.

Coming up, John McCain in our "Bull's-Eye" and his campaign's old BlackBerry in the "PDB." Details ahead. First, though, Joe Johns here with tonight's "Briefing" -- Joe.

JOE JOHNS, CNN SENIOR CORRESPONDENT: Campbell, word just in from Atlanta. A jury says it is still deadlocked on whether Brian Nichols should be executed. So he won't be. He was convicted of killing four people including a judge at the Fulton County courthouse in 2005. The judge could impose a life sentence tomorrow.

A rough weather day on both ends of the country. In the northeast, an ice storm snapped tree branches, leaving hundreds of thousands without power. And people in the Pacific Northwest are suffering through snow, wind, rain and power outages.

President Bush says he's got something in common with college students. He joked with graduates of Texas A&M today. If they're not exactly sure what comes next, he knows how they feel.

And in Mumbai, tens of thousands took a stand against terror, joining hands and lining up as a massive human chain throughout the city. Some stood outside the hotels, train station and other targets of last month's massacre. Organizers say the goal was to show peace will win -- Campbell.

BROWN: All right. Joe, thanks very much.

"LARRY KING LIVE" is going to be along at the top of the hour. He -- Larry has the very latest on the Caylee Anthony case down in Florida.

Larry, what's going on tonight?

LARRY KING, HOST, "LARRY KING LIVE": Yes, Campbell. Is the mystery finally solved, or is the discovery of remains that believe to be hers just the beginning? Or are they hers?

We'll talk about the bailout bill too that went bust. It's going to happen now. Plus the latest, of course, on the Illinois governor scandal and why won't he resign? It's all ahead on "LARRY KING LIVE" -- Campbell.

BROWN: All right, Larry. We'll see you in a few.

For sheer audacity, mind boggling brazenness, our next story is pretty hard to beat and Chicago has got nothing to do with it.

Up next, the man under arrest in New York, charged with running a $50 billion Ponzi scheme.

(COMMERCIAL BREAK)

BROWN: Tonight, we have a pretty astounding story and an infuriating one if you had money invested with a particular Wall Street master of the universe. This man, with a stellar reputation, seems to have taken a whole lot of very smart people to the cleaners for a breathtaking sum of money. Joe Johns back now with us with the story -- Joe.

JOHNS: Campbell, Ponzi schemes, securities fraud, call it what you will, it's got all the makings of one of the biggest rip-offs ever to hit Wall Street and it also happens to be one of the oldest tricks in the book.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): In hindsight, it's one of those things that just seemed too good to be true. Invest with a Wall Street pioneer, a former Nasdaq chairman of the board, Bernard Madoff, a guy who is supposed to know the ropes, and get huge double-digit returns on investments year after year when other people are losing money.

Anyway, you know how this goes, right? Of course, it was too good to be true. And now Madoff is just another Wall Street high roller who went down hard, leaving some very rich people with nothing to show for it but a question, how could I be so stupid?

BOB LENZNER, NATIONAL EDITOR, "FORBES": How come some of the people who were feeding him these billions of dollars didn't -- weren't suspicious, which they should have been about the steady double-digit returns year after year. I mean, Bernie Madoff was considered to be a magician. Everybody wanted to be in Madoff's fund. I wanted to be in Madoff's fund.

JOHNS: "Forbes" magazine national editor Bob Lenzner never got in, and it's good for him he didn't. According to a federal criminal complaint against him, Madoff made it all up. He apparently got turned in by his own family. The complaint says he told senior executives of Madoff Investment Securities, identified as his own two sons by "The Wall Street Journal," that it was a $50 billion fraud. It's all just one big lie, the complaint says, basically a giant Ponzi scheme. A fast-money rip- off that rewards people who get in early with investments that come later.

LENZNER: I believe that what he was doing was he was paying off his older investors and a lot of the charitable accounts with the newer investors. And what happened is that the volatility of this market here, he wasn't able to do his -- whatever strategy he was doing.

JOHNS: When the FBI came to arrest Madoff here at his New York penthouse, the complaint says, Madoff told the agents there is no innocent explanation and that he "expected to go to jail". The former Nasdaq chief is free on bond. His attorney has not responded to our request for comment.

(END VIDEOTAPE)

JOHNS: Madoff faces a single count of securities fraud that could lead to a 20-year prison term and an investigation by the Securities and Exchange Commission. And as a bunch of big time investors wondering how a guy named Madoff made off with their money -- Campbell.

BROWN: All right. Joe Johns for us. Joe, thanks.

Tonight's "Bull's-Eye" goes to the one politician who seems to be having a good laugh this week. Senator John McCain went on the late show with a little message for David Letterman or anybody else who wanted to relive the presidential race.

(BEGIN VIDEO CLIP, "THE LATE SHOW WITH DAVID LETTERMAN")

DAVID LETTERMAN, HOST, "THE LATE SHOW WITH DAVID LETTERMAN": After a campaign like this, and it consumed two years and probably more, really, what do you do? What has your life been like since? I mean, you go from going a thousand miles an hour to a much slower pace.

SEN. JOHN MCCAIN (R), ARIZONA: I don't want to talk about the bleeping campaign. Understand?

(LAUGHTER)

If you think I'm going to go back to that bleeping situation, then bleep you.

LETTERMAN: OK, thanks. Whoa.

(LAUGHTER)

(END VIDEO CLIP) BROWN: So tonight, John McCain gets the "Bull's-Eye" for his Rod Blagojevich impression and giving new meaning to the word straight talk.

The "Political Daily Briefing" is still ahead. We're going to show you the secondhand smart phone that came the way crackerjacks used to, with a surprise inside. Secrets from the McCain campaign. We'll reveal the details ahead.

(COMMERCIAL BREAK)

BROWN: Time for the "Political Daily Briefing," our roundup of other political news of the day. We like to call it the "PDB" and it is a PDA they were talking about tonight. Dana Milbank is with us as always.

Dana, topping tonight's PDB, unbelievable follow-up story to the McCain campaign tag sale that you told us about yesterday. It turns out there was a whole lot more for sale than old office supplies.

DANA MILBANK, CNN CONTRIBUTOR:: Yes, indeed, Campbell. As we discussed yesterday, the "PDB" is trying to help the McCain headquarters with its going out of business sale on items such as BlackBerries.

(BEGIN VIDEO CLIP)

MILBANK: Now everybody likes straight talk. But now you can hear it more clearly on this BlackBerry 8700C for a no holds price of just $30.

(END VIDEO CLIP)

MILBANK: Now it turns out it's an even better deal than that, Campbell. The local FOX affiliate bought one of those BlackBerries, and it came with 50 private phone numbers and hundreds of e-mails from the campaign. Now the lapse is all the more surprising because as the campaign once claimed, McCain himself helped to invent the BlackBerry.

BROWN: I mean, there's going to be a great story written or reported by this FOX affiliate, I hope, based on what they learned from this. Dana, very interesting.

We're also now learning that just because Barack Obama is about to become the most powerful man in the world doesn't mean that he can get special treatment when it comes to his move to Washington.

MILBANK: True enough, Campbell. It's so crowded in Washington around the inauguration that even the president-elect is having trouble getting a room here. The Obamas asked Bush officials if they could move into the Blair House across the street from the White House in early January so the girls could start school. The answer was no, the place is booked solid. That's all the way through January 15th.

Now, once the Obamas do move into Blair House, they should probably use the bathroom before they leave for the swearing in. The Washington subway system expects a million riders for the inauguration but will shut down its restrooms for security reasons, replacing them with just 146 port-a-potties. I calculate that to be one for every 6,849 people.

BROWN: Oh, it's going to be fun, isn't it, Dana?

MILBANK: Looking forward.

BROWN: Finally tonight, we still don't know what kind of dog the Obamas are going to bring to the White House with them. But we now know the puppy that will be moving in with Vice President-elect Joe Biden.

MILBANK: We do. And the search does go on for the presidential canine. But Vice President-elect Joe Biden is proving to be, shall we say, the alpha dog in this hunt for the pet.

BROWN: Oh.

MILBANK: He's adopted a German Shepherd.

BROWN: He's cute.

MILBANK: A little puppy. Yes, it looks very cute now but when he grows up, he's going to be really mean and fierce and growly. They don't have a name for him yet, but "PDB" recommends they call him Dick Cheney.

BROWN: And he'll have lots of running room at the vice president's mansion for sure.

MILBANK: It sure will.

BROWN: And no word yet on the Obama dog, huh?

MILBANK: No word yet. And obviously, a German Shepherd not being hypoallergenic just won't work. We're still pulling for the Schnoodle -- Campbell.

BROWN: I am. I am definitely in the Schnoodle camp.

Dana Milbank for us tonight. As always, Dana, appreciate it.

MILBANK: Thanks a lot.

BROWN: That does it for us. We will be back here on Monday. Have a great weekend, everybody.

"LARRY KING LIVE" starts right now.