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Cheney Strikes Back; Accused "Craigslist Killer" in Court; Representative Harman Denies Wiretap Report; Accused Pirate Gets Adult Trial; Bailout Cop on Criminal Probes

Aired April 21, 2009 - 17:00   ET

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


WOLF BLITZER, HOST: And to our viewers, you're in THE SITUATION ROOM.

Happening now, caught up in a wiretapping drama -- a key Congressional voice on national security is fighting for her political life right now. I'll speak with Democratic Representative Jane Harman. She's here in THE SITUATION ROOM.

A cyber attack on the nation's next generation war plane -- who's been stealing America's defense secrets?

And the White House announces a new effort on comprehensive Israeli-Palestinian peace.

Can the president pull it off?

I'll speak about that and a lot more with Jordan's Queen Rania.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

President Obama today left the door open to criminal prosecutions of Bush administration officials for what many called torture -- the harsh interrogations of terror suspects. The president says the attorney general, Eric Holder, he will have to decide whether or not to prosecute those former officials.

Mr. Obama spoke five days after his administration released secret Bush era memos detailing the use of interrogation techniques, including waterboarding. He says those techniques show America is losing its moral bearings.

Meantime, the number two man in the Bush administration is striking back.

Let's go to CNN's Brian Todd.

He's got a full report on what is going on -- Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, Dick Cheney again confronting this Obama White House. Dick Cheney, the man considered an architect of some of the most controversial tactics in the war on terror, is taking on the Obama White House over its release of those interrogation memos. (BEGIN VIDEOTAPE)

TODD (voice-over): Former Vice President Dick Cheney says the Obama administration's been selective in releasing documents on enhanced interrogation.

Cheney tells Fox News...

(BEGIN VIDEO CLIP, COURTESY FOX NEWS MONDAY)

DICK CHENEY, FORMER VICE PRESIDENT OF THE UNITED STATES: Because they put out the legal memos -- the memos that the CIA got from the office of the legal council. But they didn't put out the memos that show the success of the efforts. And there are reports that show specifically what we gained as a result of this activity.

(END VIDEO CLIP)

TODD: Cheney is referring to CIA memos and says he wants some of those declassified. The White House did not respond to our repeated attempts to answer Cheney's charge directly. The press secretary said only this.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: And we've had an at least two year policy disagreement with the vice president of the United States of America. That policy disagreement is whether or not you can uphold the values on which this country was founded at the same time that you protect the citizens that live in that country.

TODD: One memo from Bush lawyers released by the Obama team does mention intelligence gains saying interrogations of Al Qaeda operative Abu Zubaydah with enhanced techniques identified Khalid Sheikh Muhammad as the mastermind of 9/11.

Zubaydah's waterboarding was described to CNN by a retired CIA agent two years ago.

(BEGIN VIDEO CLIP FROM DECEMBER 11, 2007)

JOHN KIRIAKOU, RETIRED CIA AGENT: With Abu Zubaydah, they worked very well. And we -- we were able to corroborate the information that he provided after the waterboarding. And it turned out to be accurate.

TODD: President Obama is adamant that the techniques don't make America safer. A former Army lawyer who's now a human rights advocate agrees.

BRIG. GEN. JAMES P. CULLEN (RET.), HUMAN RIGHTS FIRST: And when a person goes without sleep for weeks and days on end, you're really looking at measures not designed to elicit actionable, reliable intelligence.

(END VIDEO TAPE)

TODD: Still, Cheney says he has formally asked the CIA to release its memos showing what was learned by enhanced interrogation. Intelligence sources tell us no formal request from the vice president has been received at the CIA. Those sources say any request from him would be given serious consideration, but they wouldn't speculate on whether the CIA would actually declassify any of those memos -- Wolf.

BLITZER: From Cheney's perspective, this is a turnaround from when he was actually vice president, seeking the release of these kinds of documents.

TODD: Absolutely. During that time. He was a big advocate, as you remember, of executive privilege -- the practice of keeping White House decisions and documents secret. He now says, reportedly, that the information he wants will not pose a threat to anyone, won't compromise sources and methods.

We'll see if the CIA ever accedes to his request.

BLITZER: We'll see what's going on.

Brian, thanks very much.

Brian Todd reporting.

There's been a major development in the so-called Craigslist killing.

We want to go to CNN's Mary Snow.

She's got more on this medical student -- a student that has now been arraigned.

What do we know -- Mary?

MARY SNOW, CNN CORRESPONDENT: Well, Wolf, this was the first court appearance for the suspect who was taken into custody yesterday. He has been ordered held without bail and faces several charges, including murder, kidnapping and robbery.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Philip Markoff, a 22-year-old Boston University medical student, appeared emotionless as a prosecutor accused him of brutal attacks against two women in Boston hotel rooms within four days of each other. Both women, say prosecutors, advertised masseuse services on Craigslist. One, 26-year-old Julissa Brisman, was killed. Her father Hector was in court to hear prosecutors describe his daughter's struggle. They accuse Markoff of striking her head and shooting her three times, including a fatal shot through her heart.

DAN CONELY, SUFFOLK DISTRICT ATTORNEY: This was a brutal, vicious crime -- savage. And it shows that Philip Markoff is a man who's willing to take advantage of women, to hurt them, to beat them, to rob them. He probably thought he was going to get away with it.

SNOW: But prosecutors say what led police to Markoff was an e- mail account set up one day before Brisman's murder. An Internet account was said to be tracked to Markoff's home. Police also had surveillance tape at the hotels where the attacks took place. Prosecutors say that among the evidence police retrieved at Markoff's home was a semiautomatic weapon.

But what would motivate a second year medical student planning to marry in August?

The D.A. says it appears robbery, but would not comment on reports Markoff had a gambling debt. The suspect's fiance told ABC News in a statement that the allegations are false, writing: "All I have to say to you is Philip is a beautiful person inside and out and could not hurt a fly."

Markoff's lawyer says there's no proof against his client.

JOHN SALSBERG, DEFENSE ATTORNEY: I'd just like to say this, which is that Philip Markoff is not guilty of the charges. He has his family's support.

(END VIDEO TAPE)

SNOW: And, Wolf, prosecutors say there may be other cases out there. Investigators are taking a look at whether or not Markoff is linked to another incident in Rhode Island. And prosecutors are also urging any other potential victims out there to come forward -- Wolf.

BLITZER: What a story. We're going to be learning a lot about this guy.

All right. Thanks, Mary.

Thanks very much.

Let's check back with Jack.

He has The Cafferty File -- Jack.

CAFFERTY: Something else, Wolf, to add to President Obama's ever expanding to-do list -- regulating the credit card industry. The president and his chief economic adviser, Larry Summers, are going to meet tomorrow with executives from some of the top credit card issuers. The administration has vowed to crack down on high interest rates and predatory lending practices if claims contributed to the economic crisis.

Many lenders have raised credit card interest rates significantly as the recession drags on. And that means defaults and delinquencies have shot up. Consumer groups are especially critical of companies who raised rates on existing cardholders while they were getting federal bailout money.

Meanwhile, the House Financial Services Committee is looking at a bill that would call for clearer labels on credit card offers -- almost like what's used to label food. In the Senate, Chris Dodd wants stricter federal oversight that would say when lenders can raise rates and would prevent rate hikes in certain instances from happening at all.

The Federal Reserve passed new rules that limit some credit card rate increases this winter. But they don't go into effect until July of next year.

No surprise, the banking industry is pushing back against all this. They want the White House and Congress to wait until the Fed's new rules go into effect next year before taking any other action. That's more than a year away. But the lobbyists for the credit card industry say if the measures prove to be too tough, well, they could end up restricting the flow of credit to consumers and blocking the economic recovery.

OK. Here's the question -- how would you regulate the credit card industry?

Go to CNN.com/caffertyfile and you can post a comment on my blog.

Want to get out from under the credit card companies?

Pay cash.

BLITZER: A smart idea for a lot of folks out there. Good work, Jack.

Thank you.

An influential U.S. Congresswoman reportedly wiretapped by the Feds.

(BEGIN VIDEO CLIP)

LARRY SABATO, UNIVERSITY OF VIRGINIA: Her entire career is absolutely at risk. This could be career ending.

(END VIDEO CLIP)

BLITZER: So what was recorded and what is Congresswoman Jane Harman saying about it all?

I'll ask her. She's standing by live here in THE SITUATION ROOM.

Also, America's newest, most advanced fighter plane compromised by computer hackers -- how they accessed thousands of top secret files.

Plus, President Obama responds to controversial remarks by the Iranian president that prompted a diplomatic walkout.

Is Mr. Obama putting Ahmadinejad in his place?

(COMMERCIAL BREAK)

BLITZER: Old allegations roar back to life as a wiretapping drama now threatens the political life of a California Democrat -- Representative Jane Harman, a leading Congressional voice on intelligence and national security.

Our homeland security correspondent, Jeanne Meserve, has the background on what's going on -- it's a little complicated, Jeanne, but explain what the story is here.

JEANNE MESERVE, HOMELAND SECURITY CORRESPONDENT: Well, Wolf, with her political reputation in peril, Congresswoman Jane Harman is punching back -- hard.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): In a letter to Attorney General Eric Holder, Congresswoman Jane Harman says she is outraged by reports that her conversations were secretly wiretapped: "This abuse of power is outrageous and I call on your department to release all transcripts and investigative material involving me in an unredacted form."

And she says she will make it public.

SABATO: This could be career ending. She must be aggressive. She must fight it at every turn. She has to fight it on every front -- legal and political, in the public forums and private forums.

MESERVE: Sources say Harman was overheard talking to an investigative target whose conversations were being legally intercepted. "Congressional Quarterly" and "The New York Times" report that Harman discussed using her influence to reduce espionage- related charges against two officials of the American-Israeli Public Affairs Committee.

In return, the person with whom she was speaking would lobby then House Minority Leader Nancy Pelosi to appoint Harman chair of the House Intelligence Committee.

Pelosi says there was no such lobbying.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: It isn't true. No. Mrs. Harman -- Congresswoman Harman has many friends who advocate for her. And to juxtapose that on any other activities that are going on is just not -- just not correct.

MESERVE: In her letter to Holder, Harman says that it's entirely appropriate to converse with advocacy organizations and denies contacting anyone who influence the AIPAC case.

"C.Q." also reports that after the intercept, the FBI tried to open an investigation of Harman. But Attorney General Alberto Gonzales pulled the plug because he wanted Harman's help defending the controversial domestic warrantless wiretapping program, which she supported.

(END VIDEO TAPE)

MESERVE: Today, the former attorney general had no comment. The Justice Department says only that it is reviewing Harman's letter. As for that deal that was allegedly discussed, Harman did not get the Intelligence Committee chairmanship and the trial of the AIPAC officials is slated for June -- Wolf, back to you.

BLITZER: All right, Jeanne.

Thanks very much.

Let's talk to Jane Harman, the Congresswoman from California.

She's here in THE SITUATION ROOM.

Thanks very much for coming in.

REP. JANE HARMAN, (D), CALIFORNIA: Thank you, Wolf.

BLITZER: Do you remember any such conversation with an Israeli or Israeli agent representing AIPAC, the American-Israel Public Affairs Committee?

HARMAN: I have known about this for a few days and I never had any idea that my government was wiretapping me at all. Three anonymous sources have told various media that this happened. And they're quoting snippets of allegedly taped conversations. So I don't know what the snippets mean. I don't know whether these intercepts were legal. And that's why I asked Eric Holder to put it all out there in public.

BLITZER: Because "The New York Times" and "Congressional Quarterly," they say there are actually transcripts of this recorded wiretap.

HARMAN: Well, let's see if there are -- or wiretaps. And let's see who else was wiretapped. I mean lots of members of Congress talk to advocacy organizations. My phone is ringing off the hook in my office from worried members who are asking whether I think it could have happened to them. I think this is an abuse of power, Wolf.

BLITZER: Because they say at the end of that alleged conversation, for which they have some sort of transcript, you were quoted as saying: "This conversation doesn't exist."

HARMAN: I have no idea what I might have said in conversations with somebody or somebodies. These are American citizens we're talking about -- conversations that took place in America.

I'm an American citizen...

BLITZER: Was this a conversation you had with an American citizen or an Israeli citizen?

HARMAN: I don't -- I cannot imagine I had any conversation like this with -- with anyone who was not an American citizen.

BLITZER: So is the NSA, the National Security Agency...

HARMAN: Well, let's find...

BLITZER: ...authorized to wiretap American citizens?

HARMAN: It's -- the -- the -- if -- if we're talking about the Foreign Intelligence Surveillance Act, the original target has to be a foreigner outside the -- the United States who's suspected of being a terrorist.

And if that person talks to an American in America, then you can get an individualized FISA warrant.

But this is complicated. It's not clear who did what. It's just -- the allegations are that it was about me. And I -- you know, I -- my comment is this is an abuse of power.

I'm not worried about me. I have a bully pulpit. I'm on your show talking about it.

BLITZER: But you did endorse -- you did support those warrantless wiretap -- those intercepts when you were, you know, just reviewing it, right?

HARMAN: I sup -- no. I support, if necessary, surveillance of people in order to prevent attacks against us. But they have to -- surveillance has to be done consistent with our laws and the Constitution. I didn't know -- I did not know that what the Bush administration was doing until it disclosed the program in 2005 did not follow the law, the Foreign Intelligence Surveillance Act.

BLITZER: And this notion that you were seeking to convince Nancy Pelosi to allow you to become the chair of the House Intelligence Committee, you went to a major political donor of Nancy Pelosi to threaten her that she would lose the support -- you saw that allegation in "The New York Times."

HARMAN: I -- I -- I think this is just -- just strange. I didn't need -- I don't need to persuade members of the American-Israel Political Action Committee that I'm a friend of theirs.

Why would I do some kind of deal?

And anyway, let's have the transcripts out. Let's see what I said and to whom. And I did not make any effort -- this I remember clearly -- at all ever to influence our government at any level to reduce the sentences of alleged...

BLITZER: Then you don't remember...

HARMAN: ...employees of AIPAC.

BLITZER: ...ever ending a conversation with anyone by saying those words that were quoted in "The New York Times" today: "This conversation doesn't exist."

HARMAN: Wolf, this is four years ago. I have many conversations every day with advocacy groups. There's nothing wrong with doing this. I talk to AIPAC. I talk to many other groups. I -- I frequently go to the Middle East, as you do.

And so I -- I want to see a full transcript of what I said, if someone wiretapped me. And I want to know, by the way, if the wiretaps were legal. And I want to make sure that members of Congress are not routinely wiretapped without their knowledge.

BLITZER: Because our Jeanne Meserve -- you just saw the report. She says based on the information she's getting it was a legal wiretap. But we're trying to figure out who the other person was that you allegedly had this conversation with...

HARMAN: Right.

BLITZER: ...whether it was a U.S. citizen, an Israeli citizen. And we don't know the answer to that.

HARMAN: And the sources for these stories, so far as I know, are three undisclosed people, former and present national security officials.

Who are these people and what agendas do they have?

And so...

BLITZER: Have you had conversations with officials at the Justice Department, the NSA, the CIA, the White House...

HARMAN: About this?

BLITZER: ...about this?

HARMAN: Never. Never. This story, this old, stale story has been leaked twice. In 2006, right before the election -- and it was discredited. And again, this weekend. And...

BLITZER: So what does Jane Harman do now to try to clear her name?

Because it was the banner of -- the lead story in "The New York Times" today.

HARMAN: Well, I, frankly, think my name is clear. My conscience is certainly clear. And I think the question is about, does our government -- or did our government abuse the rights of American citizens, including members of Congress, with legal or illegal wiretappings about things that were not appropriate and then selective leaking of the product of those leaks for political purposes?

BLITZER: And if there are these transcripts of this alleged conversation you had, you want the government to release those transcripts?

HARMAN: I want the government to release those transcripts without redaction, without crossing out names. And then I will make them available to the public. And you and I can read together what I may have said that was wiretapped four years ago and make sense of it or not.

I mean these were informal conversations with friends of mine. There is nothing wrong with talking to advocacy groups and constituency groups. And I do it every single day. And I'm proud to have a lot of friends, as you just heard Speaker Pelosi say, in Washington and I -- and around the world.

And this is a strange event. It's a -- it's a kind of out of body experience. But I am -- I am offended by it. I think it's an abuse of power. And I want to make sure it's not happening to other people.

BLITZER: If they hand over the transcripts to you and you want to release them, we'll be happy to read them together with you.

HARMAN: I'll welcome that.

I love being on this show again.

HARMAN: Thanks very much, Congresswoman.

HARMAN: Thank you, Wolf.

BLITZER: Congresswoman Jane Harman of California.

President Obama and the Middle East -- how is he perceived there and what hopes are being pinned on him?

(BEGIN VIDEO CLIP)

QUEEN RANIA: He has political capital. And I hope that he can expend that on the issues that -- that really matter to us.

(END VIDEO CLIP)

BLITZER: Jordan's Queen Rania gives us her perspective on the new president, the Israeli-Palestinian conflict. And a lot more. Queen Rania here in THE SITUATION ROOM today.

Plus, a real life drama for one of the child stars of the hit movie, "Slumdog Millionaire." Her father is accused of trying to sell her.

(COMMERCIAL BREAK)

BLITZER: All right. The alleged Somali pirate can -- can, in fact, be tried as an adult, even though he's a teenager.

Let's go to CNN's Deborah Feyerick.

She was in the court today when the judge made that ruling.

All right. Set the scene for us.

What happened -- Deb? DEBORAH FEYERICK, CNN CORRESPONDENT: Well, we can tell you that even though the judge did find he was a teenager, he said that he's 18 years old and not 16, as initially alleged. He said he -- the judge said he came to that determination based on numerous conversations with the defendant's brother.

The judge said that, in fact, he'd had a conversation with the alleged pirate's dad, but did not find the dad to be credible, because even though he knew the alleged pirate's birth date, he didn't know the birth dates of his other children. So the judge said that that was not particularly credible.

Now, I was just sitting, really, just a couple of feet behind him. And the man, Abdi Wali Muse sat very quietly. At the beginning of this whole hearing, you could see him wiping tears from his face and you could hear him sniffling. The courtroom was completely packed, Wolf.

But the complaint that I've just read through really makes it out that he was the ringleader -- that, in fact, he was the one who led the pirates on board, he is the one who shot at the captain, he's the one who robbed the ship, then he tried to get his pirates away safely by negotiating with those on the USS Navy ship -- Wolf.

BLITZER: All right, Deborah.

Thanks very much.

Deb Feyerick in New York.

Criminal investigations underway trying to keep your tax dollars from being wasted -- we're going to hear from the top cop of the federal bailout program.

Plus, President Obama slams Iran's president for his latest anti- Israel tirade. Donna Brazile and Ed Rollins -- they're standing by live.

And the White House launches a new push for a comprehensive Middle East peace.

Can the president pull it off?

I'll talk about it with Jordan's Queen Rania.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, a cyber attack on one of the country's most sophisticated fighter jets. Hackers gain access to top secret files.

How did they do it?

And what did they learn? Also, a child actor allegedly put up for sale by her own father. We have details of the real life drama now swirling around a young star from the hit movie, "Slumdog Millionaire."

And on Wall Street, increasing anxiety over the financial sector helped all three major indices rebound from yesterday's sharp losses. The Dow was up more than 1.5 percent. The Nasdaq and S&P each gained more than 2 percent.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

The man policing the government's $700 billion bailout program says 20 -- 20 criminal investigations are underway right now into possible waste and mismanagement of taxpayers' money.

CNNMoney.com's Poppy Harlow spoke with the top bailout cop today.

She's joining us from New York.

What did he say -- Poppy?

POPPY HARLOW, ANCHOR, CNNMONEY.COM: Wolf, a very interesting interview earlier today with Neal Barofsky, known by many as the TARP cop, charged, as you said, with tracking that $700 billion bailout program. He and his team this morning issuing a 250-page report regarding the use of TARP funds, also making recommendations to Treasury Secretary Geithner and other officials implementing the TARP program. According to that report, this really is the headline people have taken away, Wolf, 20 criminal investigations now open and ongoing. Also six audits, including one of AIG and the payment to its counterparties. All regarding the use of taxpayer money. We asked him for details on those criminal investigations. He said because they're ongoing, he can't divulge much information, but I also asked him about his current position and the role and the responsibility and really the action that he and his team can take. Take a listen.

NEIL BAROFSKY, SPECIAL INSPECTOR GENERAL: Ultimately our benchmark is transparency, being able to bring as much information to the American people and to the administration so they can understand and make the right policy decisions. Ultimately, what we do is make recommendations. It's up to treasury to adopt and implement those recommendations. And we're going to keep pushing for them to do so we can bring about that result.

HARLOW: All right, Wolf. He also warned about possible fraud and collusion with what has become known as PPIP, or the public- private investment program saying there are significant fraud rinks involved in this. Potentially saying we have to monitor that very closely.

BLITZER: Did he detail those risks, Poppy?

HARLOW: He certainly did. Take a listen and then I'll give you an example he gave me. BAROFSKY: There is so much money going out. Basically, a small number of players, private players have the potential of setting prices for these securities that it creates a host of dangers. Real significant fraud dangers. And our recommendations are these be addressed.

HARLOW: Wolf, you can see his entire interview on CNNmoney.com. He outlines some potential huge dangers there are with this program, Wolf.

BLITZER: All right. Thanks very much, Poppy Harlow. Good work.

Let's talk about this and more with our democratic strategist and CNN political contributor, Donna Brazile, and republican strategist and CNN contributor, Ed Rollins.

This is going to really make it harder for the government to go forward, if necessary, with more of the so-called T.A.R.P. money if there are 20 criminal investigations of mismanagement, misuse of these billions of dollars, Donna.

DONNA BRAZILE, DEMOCRATIC STRATEGIST: Absolutely, Wolf. We knew that it would be difficult anyway for congress to approve more money, but with these charges now and the fact that many of the funds that have been disbursed, the treasury officials have still not been able to account for. We don't know what the money was spent on. I think it's going to be very tough.

The good news, of course, is that the treasury secretary came out today and announced new methods that he will use to track additional funds that will be going out with the legacy asset program once that is set up. And he's also confirmed that about $25 billion of that money will be repaid within the next year.

But I'm disappointed. I'm sure many Americans, to hear that some of that money was abused.

BLITZER: I don't think any of us, Ed, should be surprised. Whenever the government hands out hundreds of millions of dollars within a few weeks, you know some of that money is not going to be used the way it's supposed to be used.

ED ROLLINS, REPUBLICAN STRATEGIST: But I can tell you though there will be an outrage over this, unlike anything else, because we're now very sensitive to people like Madoff and others who ripped off. And the fact that Americans who work hard to basically pay their tax dollars, they don't understand all the intricacies of T.A.R.P. and all the things that banks have done or shouldn't have done. But they do understand if their money is being stolen or misused. Historically, whether it's the Iraq war or whatever it is, when there's tremendous sums of money out there there's always some con man that comes along.

The good part, as Donna said, is they are catching this. They are on top of it early. They ought to basically prosecute these people to the fullest extent of the law. But the bottom line is this will be the story that people will believe that's how their money is being wasted.

BLITZER: Yesterday Ahmadinejad, the president of Iran, issued a statement, a very anti-Israeli tirade at the United Nations meeting in Geneva, Switzerland. And today, President Obama responded in part by saying this.

(BEGIN VIDEO CLIP)

OBAMA: We weren't at the conference, and what you saw was a whole host of other countries walking out. And that language being condemned by people who may be more sympathetic to the long-term aspirations of the Iranian people. So I think it actually hurts Iran's position in the world.

(END VIDEO CLIP)

BLITZER: Because he's been reaching out, as you know, Donna. The president trying to establish a dialogue with Iran and the Iranian leader Ahmadinejad responds with that kind of speech. Folks are saying what is President Obama doing.

BRAZILE: Well, there's rhetoric is not helpful, Wolf. The purpose of this conference in Geneva was to assess how far we've come as a world community in addressing racial discrimination, xenophobia, immigration and other issues and yet the president of Iran took this opportunity to once again throw insults at Israel. I don't know why anyone would listen to him because every time he opens his mouth he's talking loud and saying nothing. Unfortunately his comments have distracted from the important work of trying to tackle racial discrimination.

BLITZER: President Obama decided the U.S. wouldn't attend this conference, would boycott the conference, Ed.

ROLLINS: I think it was very important. You knew it was coming. It was an anti-Israeli conference from the start to the finish. And I think to a certain extent the decision not to go was important.

But equally as important, the president was sort of questioned over the last several weeks. Is he tough enough? Has he been too kind to people that haven't been very kind to the United States in the past? I think the remarks today were a start. I think he's got to basically make sure the Iranians understand what -- we're not going away. We're going to keep pressure on them. And they've got to behave in the world community or we're not going to let them be part of the world community.

BLITZER: Let's make a dramatic turn to the cover of the new issue of "Washingtonian" magazine. It's a very popular magazine here in Washington. There it is, the president of the United States at the beach. It's already generating a lot of commotion, Donna, out there as well. Is that appropriate for the president of the United States to be seen on the cover of "Washingtonian" walking around in his bathing suit like that?

BRAZILE: You know, Wolf, of all of the covers, I mean, this is not only a very smart and handsome president, but, of all of the pictures that I could have shown them from the inaugural, I am shocked that they would use something like that. But perhaps they are trying to sell, you know, magazines. I don't know why they would use that photo.

ROLLINS: The guy is buff, going to have more fans than ever. Ronald Reagan, when he was in his 70s had a body something like that. He worked out hard. It's a good thing that fat old men like me or Bill Clinton, when he was president, didn't have their pictures on the cover of "Washingtonian."

BLITZER: All right. Donna, thanks.

BRAZILE: I don't understand the drool over it because he's already taken.

ROLLINS: And beware.

BRAZILE: Absolutely.

She has -- she's buff as well.

BLITZER: Thanks, guys.

The peace process at a virtual standstill right now. Now hope turns towards President Obama.

(BEGIN VIDEO CLIP)

QUEEN RANIA, JORDAN: People in our world are sitting and waiting to see him articulate his plan for the Arab world.

(END VIDEO CLIP)

BLITZER: I'll talk about the president's new Middle East peace initiative and much more with Jordan's Queen Rania. She's here in THE SITUATION ROOM.

Plus, did the father of a child star try to sell her to a wealthy foreign couple? One of the kids from the "Slumdog Millionaire" movie at the center of an international uproar.

(COMMERCIAL BREAK)

BLITZER: America's defense secrets stolen in a cyberattack on the nation's next generation war plane. Let's go to our pentagon correspondent Chris Lawrence. He's got the details. Chris?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Wolf, some say this is just new evidence that the internet is becoming the military's new battleground.

(BEGIN VIDEOTAPE)

LAWRENCE: America's newest, most advanced fighter aircraft compromised by computer hackers. Senior defense officials say the hackers broke into thousands of confidential files over two years. They stole information on the F-35's performance, design and electronic system. How did they get in? Officials say through the computers of pentagon contractors who designed and build the jet. But the prime contractor says no classified data has been lost in a cyberattack.

BRUCE TANNER, CFO, LOCKHEED MARTIN: To our knowledge there's never been any classified information breach. Like the government, these attacks on our systems are continuous and we have stringent measures in place to stop these attacks.

LAWRENCE: It goes beyond one plane. The hackers also busted into the air traffic control system of the air force where they could see the locations of military aircraft in flight. Defense officials say the intruders were able to cover their tracks and make it look like the break-ins were coming from all over the world. And computer security experts say it's hard to determine if the hackers represent an actual government, a corporation or they are just private citizens.

MIKE LIACKO, V.P., INTEGRITY GLOBAL SECURITY: So often, the trail leads to China, to various parts within Russia, the Ukraine. And there's very little that can be done.

(END VIDEOTAPE)

LAWRENCE: Now the most sensitive information is the F-35 stealth system and its operating system. That information was not compromised. And the pentagon has a relatively new rule where new contractors now have to prove they've got the effective security system in place before they are ever even award a contract. Wolf?

BLITZER: Chris Lawrence at the pentagon, thank you.

The United States has a new ambassador in Baghdad. The U.S. senate has just confirmed veteran diplomat Chris Hill to become the next U.S. ambassador in Baghdad. The final roll call in the floor of the senate, 73 in favor of his confirmation, 23 opposed. Chris Hill will head off to Baghdad as the next United States ambassador.

President Obama launches a new push for a comprehensive Middle East peace.

RANIA: He inspires a lot of confidence and a lot of optimism and hope for our region.

BLITZER: Can the president succeed where so many others have fallen short? I'll speak about that and more with Jordan's Queen Rania. She's here in Washington.

And a shocking real-life drama for one of the child stars of "Slumdog Millionaire."

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK) BLITZER: President Obama met today with Jordan's King Abdullah as the white house announced the new U.S. president is launching an effort to achieve a comprehensive peace in the Middle East. His predecessors clearly fell well short of that goal. Can the new president succeed? I spoke earlier with Queen Rania of Jordan.

(BEGIN VIDEOTAPE)

BLITZER: Your late father-in-law, His Majesty King Hussein, I had the privilege of interviewing him on several occasions. He was a pioneer. He was -- he broke through, made peace with Israel, just like the late Anwar Sadat, the president of Egypt did. Is there hope right now?

Because a lot of us who have covered the Israeli-Palestinian peace process for so many years, we just see the same old-same old happening. Are you at all upbeat that this peace process, under the leadership of President Obama, can get off the ground?

RANIA: Look, I think that we all know what needs to be done in the Middle East. What has happened is that there has been frustration because of an endless process, an on-again/off-again negotiations that have not reached anywhere.

So this incremental process of process, we need to go -- we need to fast-track -- we need to fast-forward and go from process to the endgame, because without an end in sight, all that is done is fuel frustration...

BLITZER: Is there an end in sight?

RANIA: Of course there's an end in sight, if we have the political will to reach an endgame. So all that is done is to really fuel instability in our region, make people lose hope, and that just serves the extremist ideology in our region.

And we really need to understand that this festering conflict in the Middle East has changed the security dynamic in our region, has changed the ideology that's prevalent in our region, has changed people's -- a lot of people have gone from moderation to extremism as a result.

So it does always feed the extremist agenda. And, you know, at present, Obama's outreach to the Arab world has been very encouraging. He has stated that he wants relations that are based on mutual trust and respect.

He has stated his commitment to a two-state solution. We have yet to hear from the Israeli government the same kind of commitment to a two-state solution.

As you know, there is the Arab peace initiative that is on the table, that has been endorsed by 22 Arab countries which guarantees a two-state solution so it gives the -- it grants the Palestinians their right to statehood and the Israelis security and acceptance in the region.

And at the end of the day, security for Israel has to come from them being accepted regionally and not from conflict or barriers or war.

And for example, the conflict in Gaza that took place earlier this year, all that has done is harden hearts and minds in the region. And all that has done is given the extremists in our region the upper hand and more of a rallying call.

BLITZER: We're out of time, but a quick thought on the new president of the United States, and the new first lady of the United States. Certainly President Obama, as you point out, has reached out.

He has granted interviews to Arabic language television stations. He sent messages. He has got a special envoy, former Senator George Mitchell. How is he seen in Jordan and the Arab World?

RANIA: Well, I think he has been perceived very, very positively. I think he inspires a lot of confidence and a lot of optimism and hope for our region. And people in the Arab world are sitting and waiting to see him articulate his plan for the Arab world.

That said, he has already come up with some good, encouraging signs. But we are waiting to see how on the ground we are going to pursue, and how commitment -- how much commitment is going to be given to the (INAUDIBLE).

I think the core issue in our region is the Middle East conflict. And that's the key to unlocking a lot of the instability that is present in our region.

So people are optimistic. He certainly has a lot of credibility in the Arab world. And he has political capital, and I hope that he can expend that in the issues that really matter to us.

BLITZER: I know you and His Majesty King Abdullah are going to your best to try to help him get peace in the Middle East.

RANIA: Absolutely, because I think that's the one thing that we can give the rest of the world that will benefit us for many, many generations to come.

BLITZER: Good luck.

RANIA: Thank you.

BLITZER: Thank you.

(END VIDEOTAPE)

BLITZER: Tomorrow here on THE SITUATION ROOM we're going to have part two of my interview with Queen Rania. We speak extensively about education in the Arab and Muslim world, especially for little girls. Now, you'll be fascinated by what she has to say. Part two of the interview with Queen Rania tomorrow right here in THE SITUATION ROOM. One of the child stars from the hit movie "Slumdog Millionaire" is wrapped up in a real-life drama. Her father is accused of trying to sell her. CNN's Sara Sidner is in New Delhi with the details. Sara?

SARA SIDNER, CNN CORRESPONDENT: Wolf, the family is in emotional turmoil after a British tabloid newspaper alleged the father tried to sell his little star.

(BEGIN VIDEOTAPE)

SIDNER: After glory in Hollywood, trouble for the family of one of the youngest stars of the film "Slumdog Millionaire." This is a view of real life for little Rubina Ali who played Latika in the film. The fight is between her biological mother and step mother after allegations Rubina's father tried to sell his newly famous daughter. The accusations are not coming from police or any other Indian authority but from a British tabloid newspaper. Britain's "News of the World" says it sent a couple posing as a wealthy family from due by to offer to adopt Rubina. The article claims this video shows Rubina's father, Rafiq Qureshi on the right, agreeing to the illegal adoption and asking for about $290,000 to seal the deal. However, the video the newspaper handed to other news organizations has no sound. So, CNN cannot confirm what was said.

Qureshi has flatly denied the allegations been, but he said he did meet the fake sheikh and his wife who he says spoke in English. "I am not well read to understand what they speak, he says, so they started talking amongst themselves. They said that the sheikh's wife wanted to take Rubina, but I said no. I could never give my child away."

9-year-old Rubina, who still lives with her father and step mother in the slums backed her dad. My dad refused that Rubina should be taken, she says. My dad says if I have to make my daughter meet others, I can, but I will never give my daughter away however much money they might have. Police are now investigating because Rubina's biological mother complained to police after seeing the report. The couple separated years ago. The charity save the children says it's concerned about the allegations against the father, but it is also questioning the tactics of the tabloids.

THOMAS CHANDY, CEO, SAVE THE CHILDREN, INDIA: What news agency did is contemptible, is vulgar, and I think it's a cheap stunt, simply exploiting that child and the family's vulnerability. The child is under severe media glare and media scrutiny, so is the family at this point in time.

SIDNER: In a statement to CNN, "News of the World" said the biological mother of the girl backed the paper and its story. For his part, Chandy said tens of thousands of poverty-stricken families in India have to make unimaginable choices for the sake of survival. While it's not clear what the truth is in this case, the 9-year-old girl caught in the middle is having to deal with a testing time in front of the cameras.

(END VIDEOTAPE)

SIDNER: Police have questioned the father, but he has not been arrested or charged with any crime. Wolf?

BLITZER: All right, Sara, thanks very much, Sara Sidner's our correspondent in New Delhi.

Prosecuting former Bush administration officials, the senate intelligence committee chairwoman, Dianne Feinstein, was initially at odds with President Obama. Are they on the same page now? I'll ask her.

Plus, a 13-year-old girl, strip searched because an over-the- counter pain reliever. Now the U.S. Supreme Court is taking her case.

(COMMERCIAL BREAK)

BLITZER: Let's check in with Jack Cafferty. He's got "the Cafferty File." Jack?

JACK CAFFERTY, CNN CORRESPONDENT: Something nice and light this hour. How would you regulate the credit card industry?

Marin writes, "The credit card companies are hurting the consumer rather than helping. The interest rates skyrocketed for everyone, even long term customers like me who have always paid on time. The only option they have left me with is that I have stopped using my credit cards."

Rich in San Clemente, California, "There's way too much fine print in all the offers. Take the ability to arbitrarily raise rates away from the companies. The card balance is a loan and should be dealt with was such, a fixed rate loan with a definite term or the government should open a national citizens bank, issue national credit cards that have fixed low rates and no arbitrary adjustments."

Gareth writes, "Only in America would you have contracts where one party can alter the terms to suit themselves at any time for any reason. They all operate out of South Dakota which legalizes usury, a den of thieves. Get a rope!"

Richard in Colorado says, "Encourage people to go to the nearest pair of scissors and destroy all of their cards and pay cash for everything except their home and possibly a car. This is only common sense."

Diane in Monroe, Michigan says, "Make the banks that issue the credit cards pay the same rate of interest on customer's saving accounts that they collect on that customer's credit card." Yea, that'll happen.

And Mark in New Jersey says, "I would reinstitute the usury laws. What happened to them anyway? They seem to have disappeared during the Bush administration. I just borrowed ten grand from the mob because their rates were cheaper than my credit card company." If you didn't see your e-mail here, you can go to my blog CNN.com/Caffertyfile and look for yours there's among hundreds of others. Wolf?

BLITZER: Jack Cafferty with the Cafferty file. Thank you.

And to our viewers, you're in THE SITUATION ROOM.

Happening now, a shift by President Obama on investigating alleged torture. He now says he's open to prosecuting former Bush administration officials. This hour, reaction from the senate intelligence committee chairwoman, Dianne Feinstein. She's here in THE SITUATION ROOM.

Plus, watchdog demand answers from the treasury secretary. Did they hear anything to ease fears that their money is being misspent?

And a medical student stands accused of being the so-called Craigslist killer. His court appearance and fears about placing ads online.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

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