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LOU DOBBS TONIGHT

President Obama's Housing Plan; Predatory Lending; State of Emergency; Nation of Cowards

Aired February 18, 2009 - 19:00   ET

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


LOU DOBBS, CNN ANCHOR: Wolf, thank you. Tonight, President Obama taking action to tackle our worsening housing crisis, trying to help nine million distressed home owners. We'll have complete coverage.

Also tonight, building outrage after Attorney General Eric Holder declares we are a, quote, "nation of cowards on the issue of race". We'll examine the impact of Holder's failure to acknowledge a nation that is actually achieved quite a lot, a nation perhaps of heroes on racial issues.

Also tonight stunning video of the out of control drug war raging just south of our border, we'll have all of that, a thorough examination of why some people are intent on putting down Americans and America, all of that straight ahead, here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Wednesday, February 18th. Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody. President Obama today announcing an aggressive plan to help struggling homeowners, the president's $75 billion program is designed to help as many as nine million distressed homeowners, President Obama saying that his plan will stop the housing crisis from causing what he called even greater havoc. The plan representing a complete break from existing government programs that have utterly failed to prevent the worsening spiral in home prices and skyrocketing foreclosures -- Candy Crowley with our report.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT (voice-over): It is a plan as complex as it is costly, $75 billion in taxpayer money.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We will save ourselves the costs of foreclosure tomorrow, costs that are borne not just by families with troubled loans, but by their neighbors and communities and by our economy as a whole. Given the magnitude of these crises it is a price well worth paying.

CROWLEY: It is a controversial plan nonetheless and that's one of the plans the president took pains to talk to the vast majority of homeowners still paying on time.

OBAMA: But I want to be very clear about what this plan will not do. It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans.

CROWLEY: The president said that includes speculators, dishonest lenders and people who bought homes they knew they couldn't afford. As for those it does help, the president says that's between seven to nine million homeowners. That includes at risk borrowers in sub prime loans. The plan has incentives for lenders to reduce mortgage payments for five years, down to 31 percent of income.

OBAMA: Sub prime loans, loans with high rates and complex terms that often conceal their costs, make up only 12 percent of all mortgages but account for roughly half of all foreclosures.

CROWLEY: If homeowners who qualify for the plan pay on time for five years, the loan is reduced by $5,000. And there is relief for qualified homeowners who have kept up with their payments but can't refinance to lower rates because their mortgage is bigger than the value of their house.

OBAMA: These families are unable to sell their homes, but they're also unable to refinance them. So in the event of a job loss or another emergency, their options are limited.

CROWLEY: Only those with loans held or guaranteed by Fannie Mae or Freddie Mac are eligible. And the amount of the loan is tied to the current value of the home.

(END VIDEOTAPE)

CROWLEY: The plan has already begun to draw some Republican opposition. Mostly, they say, they have a lot of questions on how exactly this would all work. But for the most part, Lou, this is a plan that the president can put in action without any kind of approval from Congress. So he is on his way. We are told that that money may be in the system as early as March 4th.

DOBBS: It couldn't get there too soon, certainly. And we should give credit to Sheila Bair (ph), the chair of the FDIC, who has been calling for exactly this -- well, not precisely this type of intervention, but very close to it. Bill Isaac (ph), former head of the FDIC, calling for action into the housing market for about a year and a half.

It is good after the fact that the Bush administration had ignored the housing market to see quick action on it. And as you say, this is still a controversial plan. But at least it is the beginning of some action. Candy, thank you very much. Candy Crowley.

The president today said there are now almost six million homeowners at risk of foreclosure. The latest housing data shows the magnitude of our housing crisis. There were nearly 275,000 foreclosure filings in just last month alone. That's an increase of almost 20 percent over the past year.

That means one in every 466 homeowners received a foreclosure notice in January. It was the 37th consecutive month of year-on-year increases in foreclosure filings. President Obama's housing plan today did not propose any rules to stop predatory lending by mortgage companies. This despite repeated hearings in Congress on the critically important issue. Kitty Pilgrim has our report on why not.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Remember all the congressional hearings about predatory lending? Remember how legislators promised to crack down on abusive lending practices? After all that talk last summer, the legislation never got through Congress. There is still no federal law to protect borrowers. Today President Obama talked about predatory lending as a root cause of the country's financial mess.

OBAMA: Banks and lenders must be held accountable for ending the practices that got us into this crisis in the first place.

PILGRIM: Consumer advocates say more needs to be done and soon.

JOHN TAYLOR, NAT'L COMM. REINVESTMENT COAL.: Congress needs to outlaw the don (ph) practices that got us here in the first place. They still haven't done that. It's appalling. But they need to pass legislation that outlaws these practices.

PILGRIM: Anti-predatory lending legislation did get through the House 291-127, but a similar bill never made it through the Senate. Some states have moved on their own, 35 states and D.C. have some kind of predatory lending laws, but they are not all equally protective of consumers.

REP. BARNEY FRANK (D), FINANCIAL SERVICES CHMN.: We are not doing to preempt any state law here in general. If states -- we're going to pass a national law. If the states want to be even tougher, we won't stop them, but we have to get a basic set of protections in there against these bad loans.

PILGRIM: House Financial Services Chairman Barney Frank says he plans to reintroduce legislation in Congress in coming months to ban predatory lending.

(END VIDEOTAPE)

PILGRIM: Now the Federal Reserve issued guidelines against predatory lending back in 2007, but those rules won't fully take effect until October of this year. According to the First American Corps Logic (ph) which tracks mortgage data, there will be more than half a million sub prime resets this year, so Lou, this problem is not over.

DOBBS: It's not and this Democratic Congress has got to act along with this president. They've had -- the Democratic Congress has failed to -- over the course of the past two years to do anything about the credit card companies, despite hearings and hearings, predatory lending by mortgage lenders. I mean this is a blight on the nation's honor to allow the treatment of credit cardholders, mortgage holders that we have permitted on the part of unscrupulous business interests, it's ridiculous. These are certainly marginal interests, but they are -- and certainly most businesses lending are honorable and honest. But the number -- the hundreds of thousands of Americans who have been just devastated by predatory lending, it's unconscionable.

PILGRIM: The fact that they didn't close this up and finish it last year is amazing.

DOBBS: Yes and it will be critically important that it occur this year certainly. Kitty, thank you very much -- Kitty Pilgrim.

Well turning oversea, the commander of our troops in Afghanistan, General David McKiernan today declared it will be a tough year in the war against radical Islamist terrorists and insurgents. General McKiernan's remarks coming one day after the president announced he will send another 17,000 of our troops to Afghanistan in effect making this war his war. General McKiernan saying the reinforcements will be deployed in southern Afghanistan.

(BEGIN VIDEO CLIP)

GEN. DAVID MCKIERNAN, U.S. CMDR. AFGHANISTAN: Those forces of course are aimed at being operational by the highest part of the insurgent fighting season this summer and to be in place and operational before the projected elections in August of 2009.

(END VIDEO CLIP)

DOBBS: General McKiernan said this is not a temporary increase on our forces in Afghanistan. Those reinforcements he said could be in Afghanistan for as long as three to five years.

Coming up next California is on the verge of collapse. The latest on California government's struggle to deal with its out of control deficit, that's next.

(BEGIN 911 CALL)

UNIDENTIFIED FEMALE: She's dead. She'd dead.

UNIDENTIFIED MALE: Why are you saying that she's dead?

UNIDENTIFIED FEMALE: She's dead. He ripped her apart.

(END 911 CALL)

DOBBS: We'll have the chilling 911 call after a chimpanzee viciously attacked a woman, that story coming up.

(COMMERCIAL BREAK)

DOBBS: Police have released the recording of the frantic 911 call made after a chimpanzee brutally attacked a woman in Stanford, Connecticut, Monday. The chimp's owner trying to save her friend from the attack but she could not. That's when she called 911.

(BEGIN 911 CALL)

SANDRA HEROLD, CHIMP'S OWNER: He's trying to attack me. Please, please hurry!

911 OPERATOR: OK, I need you to calm down a little bit. They're on the way.

HEROLD: They got to shoot him. Please, please, hurry, hurry!

911 OPERATOR: If the monkey moves away from your friend, let me know, OK so we can try to help your friend.

HEROLD: No, no, I can't. She's dead. She's dead.

911 OPERATOR: Why are you saying that she's dead?

HEROLD: She's dead. He ripped her apart. I can't hold on much longer. I can't hold on. I can't. Please have them shoot him.

(END 911 CALL)

DOBBS: Police shot and killed the chimp when it attacked them. An animal autopsy is being performed to determine whether the chimp had rabies. The victim tonight still in critical condition.

The founder of a Muslim television network who is accused of beheading his wife is in jail tonight after appearing in court today in New York. Police arrested Muzzammil Hassan (ph) Thursday after he led them to his wife's body. His wife filed for divorce a week earlier. That case is slated to go before a grand jury. Hassan (ph) is likely to be charged with second-degree murder.

Astronomers saying a blazing fireball that flashed across the Texas sky this weekend was likely a meteor. The fireball was seen from Austin to Dallas. Calls flooded in to 911.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Well, I don't have an exact address and I'm not sure if anyone else is reporting it, but there's just something flaming in the sky.

(END VIDEO CLIP)

DOBBS: According to a leading astronomer, this is not as uncommon as one might think.

(BEGIN VIDEO CLIP)

DERRICK PITTS, CHF. ASTRONOMER, FRANKLIN INST.: This kind of object that we see in the video from Texas actually is not unusual. The question is how often does it get video recorded like this? So it immediately would present itself as being a natural piece of space -- space junk, if you will, like a meteor falling into the earth's atmosphere.

(END VIDEO CLIP)

DOBBS: Well scientists are estimating that as many as 150,000 tons of natural debris, mostly from asteroids and comets, enter the atmosphere each year. Much of it results as cosmic dust or meteors burning up before hitting the earth.

In New Jersey tonight, officials there are try to identify another chunk of burning metal that crashed into a building. The metal, about the size of a brick, crashed through the roof of a moving company in Jersey City this morning. Reports initially saying the metal came from an aircraft, but as you see there, the FAA determining the debris was too large to have come from an aircraft.

Well, in New Jersey, there's also trouble on the ground. The state is taking drastic steps to close its widening budget gap. Governor Jon Corzine has proposed a two-day furlough for state workers. The governor wants to cut 473 million from this year's budget. The governor said the furloughs would save the state 35 million.

California is already furloughing its workers trying to save money, the state facing a $42 billion budget deficit. Now, partisan politics stopping law makers from reaching a deal to fix that deficit. The result, taxpayers won't be receiving their tax refund. Public services will be cut, 20,000 state workers will be fired. Casey Wian has our report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): California Governor Arnold Schwarzenegger is so desperate to find a solution to the state's budget crisis that he appealed to a famous state resident, Captain Chesley Sullenberger (ph), the pilot who safely landed a U.S. Airways jet in the Hudson River last month.

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: They're negotiating and working on a budget, need a great hero in the state Capitol. They need a great hero in the state Capitol that should inspire all the legislators for them to be heroic today and to pass this budget.

WIAN: Darrell Steinberg, the leader of the State Senate, joined in, wondering if Sully could head upstairs and vote aye just once. One Republican vote is all that's preventing California lawmakers from reaching a budget deal. A tentative agreement to solve California's $42 billion shortfall through next year collapsed around midnight Tuesday when State Senate Republicans voted to remove their leader because they feared he was ready to agree to more than $14 billion in tax increases.

DARRELL STEINBERG (D), CALIF. SENATE LEADER: It's important to listen to your constituents, but it's also important to demonstrate real leadership because we're elected to make hard choices. And of course nobody wants their taxes raised. Nobody wants the deep cuts either, but when you face a crisis of this magnitude due to what's happening in the economy nationally and internationally, you have to make difficult choices. WIAN: Already 20,000 layoff warnings have been sent to state workers, 276 major public works projects are being stopped, taxpayers are not receiving state refunds, and state employees are required to take two days off each month without pay, possibly coming soon higher sales, income, automobile and gasoline taxes and education spending cuts of more than $8.5 billion. The proposal also relies on $5 billion in borrowing from future lottery revenue and $11 billion in federal stimulus money.

(END VIDEOTAPE)

WIAN: Today, U.S. Senator Barbara Boxer warned her state counterparts that failure to pass a budget could make California ineligible for that federal bailout money -- Lou.

DOBBS: Well, does Senator Darrell Steinberg sense any irony when he said the people that sent them to Sacramento to make hard choices? Where in the world has he and his colleagues in the State Legislature, where have they been for the past decade?

WIAN: They've been trying to make these hard choices, they say. But it's clearly a lack of effective political leadership. This has been going on for months. This is the longest delay of a budget in the history of the state of California. It's the largest budget deficit ever. It's already -- if this plan that was voted down last night passes and it's still the sort of blueprint that they're working on, the average California family is going to pay about $1,000 a year more in state taxes alone, so -- and it's only getting worse, Lou.

DOBBS: It's only getting worse -- again, net immigration out of the state of California for non immigrants, they're leaving the state and leaving it in droves. The state is -- what is it, 49th in education? It's a disaster. The state is an absolute shambles and frankly an embarrassment to the nation.

And yet they've doubled the size of the state debt over the course of the past -- what is it, eight years? And they're talking about hard choices? This is -- this is absolutely unconscionable. This is worthy of federal legislators not a State Legislature.

WIAN: Yes, and that's why people are talking about blowing up the entire State Legislature, Lou, figuratively, basically starting all over and coming up with a new structure for state government modeled after some other states that have their legislatures meet every couple of years and have a little more regularity to their budget processes because that's what's happening in California. It's clearly not working now.

DOBBS: And Governor Schwarzenegger calling for that approval on doubling, what, the gas tax and tax on automobiles, wasn't that what he defeated Gray Davis on when he came into office, that very same issue?

WIAN: That sure was. That was the straw that broke the camel's back. That's what basically prompted the recall of Gray Davis. DOBBS: (INAUDIBLE) Darrell Steinberg that sent us there to Sacramento to make tough choices. I don't think that's probably selling too well. Casey thanks very much -- Casey Wian.

The mayor of New York City has come up with a plan. You're not going to believe this. A $45 million plan and what is the 45 million going to be used for? Well, to train some of the city's unemployed workers. That is investment bankers. Mayor Michael Bloomberg says that plan, which includes $30 million of federal money, could create 25,000 new jobs. I mean this is where we're going, folks. Mayor Bloomberg saying the program would contribute $750 million to the local economy. Apparently they're going to play roulette on the side.

Well up next the attorney general says we're a nation of cowards. What is the deal about insulting Americans and America? And what is the deal with the first black attorney general of the United States calling Americans cowards on the issue of race? That was a pretty interesting historic election back in November. We'll hear from three top political analysts about that.

And border drug wars raging out of control. We'll show you incredible video of a journalist caught in a cross fire.

(COMMERCIAL BREAK)

DOBBS: At least 15 people are dead after violent clashes last night in several Mexican border towns. Protests erupted in El Paso, Texas, and Juarez and Reynosa, Mexico, federal police clashing with protesters for hours on the bridge between El Paso and Juarez. Those protests were sparked by the presence of Mexican military in border towns.

There are claims that the protests were inspired by the drug cartels. In the city of Reynosa deadly shootout erupted between drug traffickers, federal police officers and members of the Mexican army. At least 12 people were killed in the firefight. One reporter was diving for cover as the town was -- just in moments turned into a war zone in broad daylight.

(BEGIN VIDEO CLIP)

UNIDENTIFIED REPORTER: (SPEAKING FOREIGN LANGUAGE)

(END VIDEO CLIP)

DOBBS: That is Miguel Teresa (ph). He is a reporter for Mexican television Mexaphinal (ph). Incredibly, he and his crew were not injured.

Violence has exploded in Mexico since President Felipe Calderon declared war on the drug cartels in his country at the beginning of 2007. Since then, at least 9,000 people have been killed in drug war violence. More than 1,000 of those killed police and military personnel. Estimates are that thousands of Mexicans are kidnapped every year. And less than one in three of the kidnappings are reported because of the corruption in Mexico's law enforcement. A sobering new report confirms what we've been reporting here for years, our broken immigration policies penalizing black and Hispanic- American citizens the most. The report by the Center for Immigration Studies using Labor Department statistics shows the unemployment rate among minorities without a high school diploma is up to three times the national rate, nearly 25 percent of African-Americans, 16 percent of Hispanic-Americans.

The study shows less skilled Americans are being put in direct competition with illegal immigrants for jobs. And despite that, our reporting here clearly shows many of our elected officials are still pushing for amnesty and open borders including the Congressional Black Caucus and the Congressional Hispanic Caucus.

Well, time now for some your thoughts. P.J. in Kentucky said: "If states are going to give taxpayers an IOU on tax refunds, shouldn't they have to pay interest like they charge the taxpayers"?

And Michael in Ohio said: "Keep up the good work, Lou. The stimulus package is a joke. Unfortunately, I think we've only seen the beginning of waste from this government".

Dan in Oregon said: "Give money to the taxpayers, not local governments or any other organizations. We the people will stimulate our own economy."

Send us your thoughts to loudobbs.com. We'd love to hear from you.

Up next, rising anger after Attorney General Eric Holder calls us a nation of cowards on the issue of race. Also ahead...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You couldn't find your backside with two hands if the lights were on.

(END VIDEO CLIP)

DOBBS: Democratic Congressman Gary Ackerman (ph) joins us here next.

(COMMERCIAL BREAK)

DOBBS: Well, we're back. We begin with astonishing remarks today by Attorney General Eric Holder on the issue of race. Holder, the nation's first African-American attorney general today saying, quote, "We are a nation of cowards when it comes to the issue of race". Holder made those comments to Department of Justice employees at an event celebrating Black History Month. Jessica Yellin has our report from Washington.

(BEGIN VIDEOTAPE)

JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Stinging words from the nation's first African-American attorney general.

ERIC HOLDER, U.S. ATTORNEY GENERAL: Though this nation has proudly thought of itself as an ethnic melting pot, in things racial, we have always been and we, I believe, continue to be in too many ways essentially a nation of cowards.

YELLIN: He says Americans are afraid to talk about race.

HOLDER: Certain subjects are off limits and that to explore them risks and at best embarrassment and at worst the questioning of one's character.

YELLIN: And he argues while the workplace is integrated our private lives are segregated. Conservative bloggers are now slamming the comments as reprehensible and smug. The facts suggest America is socially segregated. While the majority of African-Americans live in central cities, the majority of whites live in the suburbs.

A new University of Illinois study shows that white Americans are less likely to find a neighborhood desirable if they see African- Americans living there. And African-Americans have been hit harder by the sub prime mortgage crisis and have a five percent higher unemployment rate than the nation as a whole.

UNIDENTIFIED MALE: What is provocative, but it's accurate, very well, we don't talk about race in our country, and he's right when he talks about even in the workplace, we've kind of learned to get along, but we've learned to get along by omitting things.

YELLIN: The attorney general says he wants to start a new conversation.

HOLDER: I think if we're going to ever make progress, we have to have the guts. We have to have the determination to be honest with each other.

(END VIDEOTAPE)

YELLIN: And Lou the attorney general called on his employees and the nation as a whole to become more comfortable talking about race. In the past, he's also committed to making enforcement of the nation's civil rights laws a priority -- Lou.

DOBBS: Yes, and, you know, well, let's turn to a couple things. You reported on the perception apparently and the reaction of white Americans when they perceive a black American in a neighborhood. What is the inverse reaction on the part of black Americans and white Americans?

YELLIN: well, actually, the same group did a study ten years ago and then currently and they found that black Americans have become more comfortable over time living in communities that are also where white people live but whites have not made the comparable development.

DOBBS: Ok. And the second part of that is, why is the -- what is the reason for more blacks in urban areas and more whites in suburbs?

YELLIN: Well, there's -- one is overarchingly the socioeconomics of it; that it's more affordable to live in the cities than in the suburbs. And so that breaks down along class lines. Then there's also this emotional component, the unspoken sort of discomforts that come with it, where even African-Americans are being shut out of neighborhoods inadvertently. That's what some of these studies have found.

DOBBS: Ok Jessica, thank you very much. Jessica Yellin.

We'd like to know what you think about all this. Here's our poll tonight. Are you insulted by the attorney general's assertion that we are what he called a nation of cowards on the issue of race? Yes or no. Please cast your vote at loudobbs.com. I think everybody would like to know how you feel about this. We'll have the results here later.

Joining me now, three of the best political analysts: Ron Christy, former domestic policy adviser to President George Bush; Republican strategist, former White House political director, Ed Rollins, CNN contributor; Democratic strategist, Robert Zimmerman, also CNN contributor.

Let's start out, first of all, with the stimulus package. I called for, a year and a half ago, the Bush administration, Ron Christy, to get involved in the housing industry, to do a trickle up approach, commit $75 billion to $100 billion. It took -- and the Bush Administration ignored that and other calls, including that of Bill Isaac, former head of the FDIC.

It took Barack Obama four weeks and one day to move on it. What's the deal?

Ron Christy, former domestic policy adviser to George W. BUSH: Well, Lou, I think the new president came in and he said that he had a number of priorities that he wanted to focus on. Obviously, housing was one of them. But in the broader context, I'm very concerned about the size that the government has been spending and what we're doing to the deficit.

If you look at the stimulus package, if you look at the letter that was sent by the head of the Congressional budget office over to Senator Judd Gregg who's the ranking member of the Senate Budget Committee, the macro-economic effects of the stimulus package are unknown.

Right after you get this passed into law, then you have the president coming out with a $75 billion housing plan, Lou? My concern is, it's a lot of government in a very short amount of term and we don't know what this is going to do to our country.

ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: My concern, Ron, is the way you avoid the issue. We're facing a crisis to our economy that focuses on, that begins with and addresses the foreclosure crisis. The housing crisis is the core of this economy. The fact that George Bush did not make this a priority during his tenure and the fact that Barack Obama did move forward and in just four weeks and one day in office, I think speaks to the kind of new leadership we need. Is it a big package? Yes, it's bold, it's very bold.

(CROSSTALK)

DOBBS: I want to bring in Ed Rollins here. California is going belly up. I'm going to say this straight up, in my opinion, Governor Schwarzenegger has been absolutely derelict. They're blowing kisses and bouquets at one another there in Sacramento. The state legislature is run by morons. And they're acting absolutely irresponsible as they have for the past eight years. What is the future there?

ED ROLLINS, REPUBLICAN STRATEGIST: There is no future. I started my life as an assembly staffer in California fortysome-odd years ago. The budget has always been a debatable issue.

At the end of the day, this governor four or five years ago went out and borrowed money to create his operating budget. He spent an awful lot of money. This is a $10 billion or $12 billion increase in spending over the last five years.

There's a $45 billion shortfall and they have to do some structural overhaul. It's not just raising taxes or cutting spending. I mean, obviously, there's something wrong with this system that is not going to get better. And they've now just taken the $15 billion that the stimulus package is going to get them, that's going to become a part of the ongoing budget.

DOBBS: I love the fact they want to take $5 billion from future lotteries, for crying out loud.

Let's turn to the attorney general remarks today. Here's what Eric Holder, the attorney general, the first African-American attorney general, of the country, had to say today.

(BEGIN VIDEO CLIP)

HOLDER: Though this nation has proudly thought of itself as an ethnic melting pot, in things racial, we have always been and we, I believe, continue to be in too many ways essentially a nation of cowards.

(END VIDEO CLIP)

DOBBS: Ron, your reaction?

CHRISTY: I think these are pretty cowardly remarks coming from the attorney general of the United States, Lou. We have an African- American President of the United States. We have an African-American attorney general, who is in a building, by the way, where we're supposed to have justice which is blind to color. And he's going to say that we are a nation of cowards?

I think that's an absurd comment for him to make. I think it's a reprehensible comment for him to make. Obviously this country still has, everyday, we can improve in the way we deal with race relations. But for the attorney general of the United States to say that I think is just disgraceful.

ROLLINS: It's an absurd discussion. We have African-Americans and white American, men and women, fighting side by side in Afghanistan and Iraq. And you don't call those men cowards or those women cowards.

I'm happy to have a great debate on race. But you can't basically then anytime you raise an issue, you're called a racist. The word racist is not used by us. It's used oftentimes on the other side. And there's some serious problems that need to be addressed in this country. It's not his job to do it. His job is to do the justice, but --

DOBBS: I've got to be honest with you, Robert, I'm a guy who's real tired of people in this country, whatever their ideological or partisan position or their agenda. You know, it's become acceptable to just insult this entire nation, to insult the American people.

And where we've come over the course -- are we perfect? Far from it. Are we desperately in need of improvement as a people, as individuals? Absolutely. As a nation? Surely. But to call the American people -- you know, I have no idea in the world what Eric Holder's talking about.

If there's any issue he wants to talk about on race of any description, nature, whatever, Mr. Attorney General, please join me, right here. We'll talk about it. We'll talk about it. Be delighted to. I thought that was a ring and run piece of political rhetoric and theater.

ZIMMERMAN: To your credit, your program has done a great deal, more than most, to foster a dialogue about race and addressing the issues of sexism in our society. I think what Attorney General Holder was doing in his comments, clearly they were provocative, was talking about fostering a dialogue and discussion among the American people. He wasn't referring to our soldiers as cowards, he was saying that we have been hesitant as a society --

DOBBS: He was talking about the American people --

CHRISTY: No, no --

ZIMMERMAN: Excuse me, Ron. He was talking about the idea we have to further our dialogue around race relation and that applies to the gay and lesbian community and to women -- to women's rights as well.

CHRISTY: Further our dialogue? I would dare say that we have had a lot of dialogue about race over the last several decades and particularly over the last couple of years with an African-American who's now the President of the United States. It's very insulting --

ZIMMERMAN: And that doesn't finish the job. CHRISTY: It's very insulting to the American people. Obviously that's right. It didn't finish the job. But don't insult the American people. Interpret the law, Mr. Attorney General.

DOBBS: I think that's a very good point. It's one thing as a journalist or a politician to be talking about, you know this -- you can throw this kind of inflammatory nonsense around, insulting nonsense.

But when you're the attorney general, you've got a, I think, higher standard to meet. I think he failed that standard, certainly in my opinion.

Robert, thank you as always. Thank you. Ed, thank you. Ron, appreciate you being here. Good to see you all three.

Up next, a massive brawl brings a high school basketball game to an unexpected end.

And one of your most basic rights enshrined in the constitution is under assault tonight.

(COMMERCIAL BREAK)

DOBBS: Well, the right to bear arms under our Second Amendment is under assault. Many firearms experts say gun sales are rising because of concerns that the Obama administration will crack down on private gun ownership and owners rights.

Bill Tucker has our report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT: The FBI ran 1.2 million firearm background checks in January, the most for any January since the FBI began running checks through its National Instant Checks Systems since 1998. That follows spikes of 42 percent in November and 22 percent in December, which drove the number to nearly 13 million last year -- a record.

Firearm advocacy groups say there is a simple reason for the increase.

WAYNE LAPIERRE, NATIONAL RIFLE ASSOCIATION: In spite of the fact President Obama campaigned all over the country saying he will always defend the Second Amendment, if you look at what he did prior to being elected president, said he was for a 500 percent increase in the excise tax on firearms and ammunition. Said he was for a handgun ban, a semi-auto ban.

TUCKER: Which is why, right or wrong there's a strong belief within the gun rights community that President Obama may push for limits on gun control; a belief that has led to a boom in this part of an otherwise dreary economy.

RICH WYATT, OWNER, GUNSMOKE GUN SHOP: It's unbelievable how great our sales are ever since Obama got elected. People in fear of what he might do have been rushing in to purchase all different types of guns.

TUCKER: Of particular concern to the NRA and others is that while in the senate, then Senator Obama voted against the protection of Lawful Commerce in Arms Act, which protects gun manufacturers from being sued for crimes committed with guns. It was signed into law in the fall of 2005.

Ironically, a challenge to that law is at the core of a lawsuit in Indiana where the City of Gary is suing gun makers on claims of public nuisance and negligence in the distribution of firearms. The suit originally file a decade ago was just given the go-ahead by the Indiana State Supreme Court. The case followed an undercover police investigation where officers bought handguns they shouldn't have been able to buy.

The suit seeks to hold gun makers partially responsible for the distribution of those guns. An advocate for gun ownership finds the lawsuit downright scary.

DAVID KOPEL, INDEPENDENCE INSTITUTE: If you drive all the firearms manufacturers out of business, it's sort of hard to exercise your Second Amendment rights. And this is a case which could bankrupt the entire firearms industry.

TUCKER: Gun owners are quick to say it's not just President Obama who worries them.

(END VIDEOTAPE)

TUCKER: No, in fact, Attorney General Holder has made it clear that he does not believe the Constitution guarantees individual gone ownership rights. He has argued that, quote, "The Second Amendment does not protect firearms possession or use that is unrelated to a participation in a well-regulated militia."

Though he made that argument in support of the District of Columbia's ban on handguns in filing a brief with the court; that decision was narrowly overturned 5-4. He was on the losing side.

DOBBS: May he always be. Thank you very much, appreciate it. Bill Tucker.

One example of outrageous prosecution under our nation's gun laws is a case of David Olofson. Olofson was convicted in federal court of transferring a machine gun.

His semiautomatic weapon misfired on a shooting range that he had loaned to another individual. It fired three rounds and jammed. The ATF said the misfirings made the rifle, by definition a machine gun, if you can believe that.

Joining me now is Lynn Savage, he's the president of Historic Arms who testified for David Olofson at trial, and Herb Titus who is Olofson's attorney. Great to have you both with us. Let me turn Lynn to you and ask, how in the world could any jury be persuaded that a three-round burst from an AR-15 semiautomatic rifle constitutes a machine gun?

LYNN SAVAGE, HISTORIC ARMS: Well, it was never tested by the defense. They only got to see the evidence that the government put forth.

DOBBS: They only saw the evidence -- well, where the heck was his defense attorney?

SAVAGE: You'd have to ask them, Lou. They were the -- federal defender services out of Wisconsin.

DOBBS: Herb Titus, what's going on here? Why are we dancing this? This is outrageous on its face. Give us some insight into this.

HERB TITUS, DAVID OLOFSON'S ATTORNEY: Well, it is outrageous. The definition of a machine gun that was used in the process of Olofson is directly contrary to the ATF's own definition of a machine gun and contrary to the United States Supreme Court definition.

I believe what happened in that case is the prosecutor kept saying that a machine gun was a gun that fired more than two shots with a single pull of the trigger and he kept repeating it and repeating. And that's as far as it went.

DOBBS: That's -- you know this is just calamity as far as the rights of David Olofson are concerned. Why and I want to go to you, Lynn, in just a minute but I have to ask you this.

Why in the world is no one standing up in that community in Wisconsin, in that state government? Why in the world is no one standing up for this man's rights? I mean, he has been trampled on. His rights have been trampled on. What in the world is going on?

TITUS: I think people in America are really afraid when it comes to firearms. We've forgotten the historic reason why the Second Amendment is in the Constitution of the United States. People are afraid to affirm that firearms are absolutely essentially for the cause of liberty.

DOBBS: We, that's one -- that's a highfalutin expression that I happen to agree with. That doesn't explain to me why the folks in Wisconsin are letting their citizens be just absolutely devastated this way and his rights trampled.

TITUS: Well, I tell you, Lou, what you see in America today are people who don't understand the significance of the Constitutional guarantee of right to keep and bear arms.

DOBBS: So what you're really saying is Americans -- I mean this is almost an Eric Holder statement. What you're really saying is as Americans we're too stupid to preserve the Republic? TITUS: Well, look at who's the attorney general of the United States. He doesn't believe the Second Amendment give us a right to keep and bear arms. If the attorney general doesn't think that, what do you think the ordinary people think?

DOBBS: Yes, Lynn, let me turn to you. In your testimony, you were critical of the ATF here. And we have been reporting on this, as you know, from the outset. You say they're retaliating against you now because you testified against the ATF. Have you heard anything that would suggest they're changing their attitude toward you? What happens next?

SAVAGE: Well, all's I know is my firearm was arrested a couple weeks ago and is now facing trial --

DOBBS: Whoa, your firearm was arrested? You got to be kidding. They didn't arrest you; they arrested your firearm that you designed?

SAVAGE: They arrested the firearm. They issued an arrest warrant and took it into federal custody.

DOBBS: Well, just when you think the Alcohol, Tobacco and Firearms folks don't have a sense of humor, obviously they do. What's the point of having done that?

SAVAGE: They're seeking its condemnation.

DOBBS: Are you about ready to -- I don't know. Don't know how you preserve -- either your sense of humor or your sense of perspective on this one. Do you have attorneys representing you here? Lynn?

SAVAGE: Yes, I do.

DOBBS: And what's --

SAVAGE: They're look out after the firearm.

DOBBS: Well, we appreciate you being with us. It gets better and better, doesn't it? Lynn Savage, thank you for being with us. Herb Titus, thank you.

Up next, why these students are now heading -- there they are, to a different kind of court.

And the man who took federal regulators to task for failing to protect you.

We'll be right back.

(COMMERCIAL BREAK)

DOBBS: Congressman Gary Ackerman of New York has been extremely critical of the banking industry's role in our housing crisis. And the federal government's oversight of the financial industry, he's been an critic of that as well. I'm delighted he joins us here tonight. Congressman, great to have you with us.

REP. GARY ACKERMAN, (D) NEW YORK: Thank you Lou.

DOBBS: Let's turn first to the announcement today, the $75 billion foreclosure relief announced by the president. Your reaction to it?

ACKERMAN: I'm enthusiastic. I think it's very, very important to try to keep people in their homes and work it out with the financial institutions to not make them pay the entire burden and to be able to compensate.

You know -- when you take a lack at what they tried to do and announce it first, sell the toxic assets, the banks really didn't want to sell them. There was -- they said it's going to be worth something, why should we sell it for pennies on the dollar? We're going to hold to the toxic assets.

Now what do you do when people are going to be thrown out of their homes? I think the administration made a very good move with this announcement to keep both classes of people in their homes.

DOBBS: It's very frustrating that for over a year the Bush administration refused to deal with the housing issue. And in four weeks and one day, I'm as critical as anyone else of the Obama administration and some of its ideas, but certainly they have to be given great credit for moving in four weeks and one day, that the president was sworn in.

You recently denounced the SEC at a Capitol Hill hearing for fail to investigate a private investigator's tip on a fellow by the name of Bernard Madoff, Bernie Madoff. Here is the Congressman. Listen in, if you will.

(BEGIN VIDEO CLIP)

ACKERMAN: One guy with a few friends and helpers discovered this thing nearly a decade ago, led you to this pile of dung that is Bernie Madoff and stuck your nose in it and you couldn't figure it out. You couldn't find your backside with two hands if the lights were on. Could you explain yourselves?

(END VIDEO CLIP)

DOBBS: Well, no, the answer to that was they couldn't. And you understand why I happen to enjoy talking with Congressman Ackerman. She -- Linda Thompson, the top enforcement official at the SEC, resigned less than a week later. It really isn't a solution though, yet, is it?

ACKERMAN: No, it's not a solution. Two things have to be done. One, to figure out what to do with the situation on the ground as we have it and the other thing is try to figure out how not to have this happen again. And those are the two tracks that we have to be on.

DOBBS: The idea here that we're going to see this -- we've heard both the president, the previous president, the Congressional leaders, talking about catastrophe, disaster, depression. Is it time for everybody to say, wait a minute, you're leaders of this great nation and it's time to quit talking down the economy, quit talking down our markets, and start doing something about it, rather than exercising free rhetoric that is so negative?

ACKERMAN: I think you put your finger on something very important. I think what they're trying to do is lower the expectations to let people know how serious it is. I think people really get it. They know how serious it is because they're feeling the pain.

DOBBS: Based on the Dow Jones industrial average that we see here, I'd say the people get it.

ACKERMAN: People are getting it. People are very, very concerned. You know, 70 percent of the problem is real and 70 percent of the problem is psychological. You know? And we got though two dynamics going.

We need an administration now that switches into cheerleader mode to try to make sure the American people are encouraged to do the right thing to get us back on our feet.

DOBBS: Or perhaps at least recalls the politics of hopes rather than the rhetoric of fear.

Congressman, it is great to have you with us. We appreciate it.

ACKERMAN: Pleasure being with you, Lou. Thank you.

DOBBS: Congressman Gary Ackerman.

Coming up at the top of the hour, Campbell Brown, "NO BIAS, NO BULL." Campbell, what are you working on?

CAMPBELL BROWN, CNN ANCHOR: Hey there, Lou.

Tonight, millions of Americans wondering how they're going to make their next mortgage payment; President Obama offering up an extreme makeover for the nation's housing meltdown. But can it really help turn things around? Ali Velshi's going to break things down for us.

We've also got Suze Orman, personal finance expert. She's joining me live with her assessment of the plan. She'll also take viewer questions about how to make the money last in these tough times -- Lou.

DOBBS: Thank you very much, Campbell.

Up next here, we'll tell you what caused a massive brawl at a high school basketball game.

(COMMERCIAL BREAK) DOBBS: A brawl erupted at an Alabama High School basketball game last night. G.W. Carver High School was beating Valet High School 52- 37 in the fourth quarter of the Central Regional Tournament Semifinal. A foul was called. A player shoved another. And this is the result.

Several players fighting, fans joining in the melee and about a dozen kids were detained. They were sent to Montgomery Juvenile Detention facility. Carver High School declared the winner pending further investigation.

Can you believe this nonsense? Well, from atrociously bad behavior to an outstanding example of true sportsmanship. Milwaukee Medicine high school senior John Tell Franklin's mother died of cancer the night of a game against Illinois's Dekalb High School. Despite his devastating loss, at the last minute Franklin decided he wanted to join his team and to play.

The opposing team, under rules, had to be given a technical foul that is, given -- granted two free throws because of his late addition to the roster. But the team intentionally missed both shots. The Dekalb player who missed those shots, Darius McNeill, said it was the right thing to do. And you are exactly right.

Well, tonight's poll results, 63 percent of you are insulted by Attorney General Eric Holder's assertion that we are what he called a nation of cowards on the issue of race.

Thanks for being with us.

Campbell Brown "NO BIAS, NO BULL" starts right now.