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LOU DOBBS TONIGHT

CIA Controversy; What did They Know?; Bailout Pressure; Obama's Tough Words; Obama and the CIA

Aired April 23, 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. Good evening everyone.

The White House trying to demonstrate leadership in the escalating controversy over those CIA harsh interrogations, a controversy overshadowing the president's agenda right now, and dividing much of the Democratic Party -- the White House today sent out Attorney General Eric Holder to clarify the Obama administration's position on prosecutions of President Bush's officials after the president reversed course on the issue this week.

Also extraordinary developments involving the federal government in one of this nation's largest banks -- Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Hank Paulson stand accused of coercing Bank of America CEO Kenneth Lewis to hide massive losses from BofA shareholders.

And new questions about the competence and judgment of Homeland Security Secretary Janet Napolitano, the official charged with securing our borders and ports after Secretary Napolitano declared she wants to repeal a critically important law first proposed by the 9/11 Commission.

We begin tonight with the latest White House efforts to end the political controversy over CIA interrogation methods. Attorney General Eric Holder today declared he will not permit the criminalization of policy differences. This after the president opened the way for prosecutions of former Bush administration officials who had justified the interrogations. Republicans say the Obama administration is damaging the CIA and American national security. Ed Henry reports from the White House.

(BEGIN VIDEOTAPE)

ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): The man with the power to prosecute Bush officials said he will not lead a political witch-hunt. But Attorney General Eric Holder vowed to pursue wrongdoing over alleged torture of terror suspects as far as it goes.

ERIC HOLDER, U.S. ATTORNEY GENERAL: I will not permit the criminalization of policy differences. However, it is my responsibility as the attorney general to enforce the law. It is my duty to enforce the law. If I see evidence of wrongdoing, I will pursue it to the full extent of the law.

HENRY: Holder's declaration came as White House aides suggested the president has decided against the Democratic push for an independent commission to investigation the enhanced interrogations.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: The president determined that the concept didn't seem altogether that workable.

HENRY: Aides say the president privately considered a 9/11-style commission but ruled it out earlier this month, even though Mr. Obama talked about the hypothetical outline of an outside panel earlier this week.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: To the extent that there are independent participants who are above reproach and have credibility that would probably be a more sensible approach to take.

HENRY: The White House is also dealing with the mixed signal from the cabinet. With Defense Secretary Robert Gates saying he's worried last week's release of interrogation memos could help al Qaeda.

ROBERT GATES, U.S. DEFENSE SECRETARY: I also was quite concerned, as you might expect, with the potential backlash in the Middle East and in the theaters where we're involved in conflict, and that it might have a negative impact on our troops.

HENRY: But Gates added he felt it was inevitable the memos would come out. White House aides insist everyone is on the same page.

GIBBS: The full national security team of this administration determined that the totality of this and the use of these techniques has made this country less safe.

(END VIDEOTAPE)

HENRY: Now at a private White House meeting today, House Republican Leader John Boehner says he pressed Vice President Cheney's request, the former vice president, for the release of other memos that could show that some of these harsh interrogations actually prevented terror attacks. The president reportedly said he'll consider it, though White House aides have stressed that it's unclear whether there are other documents that would actually prove such a cause and effect, Lou.

DOBBS: I think it's a little confusing; it raises the question as to whether or not we would be talking about being against torture as a nation or being against torture when it's not effective and for it when it is. That becomes a little problematic, does it not?

HENRY: Certainly. I mean I think people have been -- in this town have been arguing whether or not alleged torture actually helped or not prevent terror attacks. The president has been trying to make the point that regardless of what happened in the past, he's now banned this practice, so that moving forward it doesn't happen again, Lou.

DOBBS: Ed Henry, thank you very much, from the White House.

House Speaker Nancy Pelosi and other top Democrats tonight insist they did not know about the CIA's harsh interrogation methods. Republicans, however, say senior Republicans and Democrats on the Intelligence Committees were briefed by the CIA on this very issue. Speaker Pelosi tonight is focusing instead on her demands for what she calls a truth commission, to investigate those interrogations, a position opposed by Senate majority leader, Senator Harry Reid. Dana Bash has our report from Capitol Hill.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): House Speaker Nancy Pelosi admits she was briefed that CIA officials might use harsh interrogation techniques, but adamantly denies being told they actually did.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: We were not -- I repeat not told that waterboarding or any of these other enhanced interrogation methods were used.

BASH: Pelosi was the lead Democrat on the House Intelligence Committee in 2002, when Bush officials authorized controversial interrogation methods like waterboarding against terror suspect Abu Zubaydah and others. A newly declassified timeline of events released by the Senate Intelligence Committee says after those interrogation techniques were used on Abu Zubaydah, "CIA records indicate that the CIA briefed the chairman and vice chairman of the committee on the interrogation."

PELOSI: Flat-out, they never briefed us that this was happening. In fact, they said they would if and when they did.

BASH: When pressed, Pelosi would not say whether she raised objections when told controversial interrogation methods were even a possibility. She insisted that's not the point.

PELOSI: They come in to inform you of what they are doing. What my point was, are they doing this? No, they're not doing it.

BASH: But the House Intelligence Committee's top Republican suggests Pelosi tacitly approved the techniques by not raising questions.

REP. PETE HOEKSTRA (R-MI), INTELLIGENCE COMMITTEE: She could have said, you know, I want to see the legal documentation. I want to know before you apply this technique why you're going to apply it.

BASH: Jane Harman who took Pelosi's place on the Intelligence Committee said last year she did raise concerns in 2003 about the legal basis for controversial interrogations. But adding to the confusion about who knew what, when, Bob Graham (ph), the Senate intelligence chairman in 2002, insisted to CNN in a phone interview he was never briefed at all about harsh interrogation methods.

FMR. SEN. BOB GRAHAM (D), INTELLIGENCE COMMITTEE CHAIR (via phone): It came as much of a surprise to me when I read about them as it did anyone else.

(END VIDEOTAPE)

BASH: But an intelligence official insists to CNN that Graham and other Intelligence Committee chairmen and ranking members did have detailed information about the interrogation tactics, and, Lou, not just that, the source says that there were more than 30 briefings over the life of the program specifically devoted to its methods and tactics. Lou?

DOBBS: Extraordinary developments, thank you. Let's turn to the obvious divide between Senator Reid and Speaker Pelosi. What is going on there, and where will that likely lead us?

BASH: It was an interesting day, Lou. First we were at a briefing with the Senate majority leader, Harry Reid, who said everybody needs to relax. He said that the Senate Intelligence Committee is doing its -- its business, on a bipartisan basis and they're going to finish their investigation by the end of the year. It's fine to stay there. And then Nancy Pelosi, about an hour later, on the House side, said that she still thinks it's the right thing to do to go forward with a truth commission.

So, they're absolutely divided on the way to go on this, it's very clear. But I think you heard Ed's reporting earlier, maybe the president actually decided himself today because it sounded like he pretty much but the kibosh on a truth commission or an independent commission because it would be something that Congress would have to pass and he would have to sign it.

DOBBS: All right, Dana, thank you very much -- Dana Bash from Capitol Hill.

Later here in this broadcast, influential Congressman Dan Burton (ph), a member of the Foreign Affairs Committee joins us to give his view. Congressman Burton saying it would be crazy, as he put it, for the Obama administration to proceed with prosecution of former members of the Bush administration.

Well, as the president approaches his first 100 days in office, new indications today that his approval ratings are high, but not as high as some other presidents, as some political analysts have been suggesting. A Pew Research Center survey showing President Obama has an approval rating of 63 percent.

That is, as it turns out, the same percentage as President Carter at this stage of his presidency. But President Reagan was even more popular than either of them -- 67 percent. Meanwhile Pew Research showing Vice President Joe Biden is less popular than Vice President Cheney was in July of 2001 -- Vice President Biden with an approval rating of just 51 percent to Vice President Cheney's 58 percent.

Another new poll showing many Americans are feeling more hopeful about the direction of this nation for the first time in years. The poll, by The Associated Press, shows 48 percent of Americans now believe the country is headed in the right direction. But, still, more than 40 percent disagree. The same poll also reflects deep anxiety about the economic future of this country. Seventy-nine percent of Americans say they are worried that increasing debt will harm the financial futures of their children.

Up next, President Obama demanding action to help credit cardholders and immediately facing a backlash from the credit card industry and special interests.

Stunning charges tonight that the U.S. Treasury and the Federal Reserve threatened one of this country's biggest banks, its CEO, and forced him to hide massive losses. We'll tell you all about that next.

(COMMERCIAL BREAK)

DOBBS: Stunning charges today that the federal government tried to hide massive losses at one of this nation's biggest financial institutions, at the height of the financial crisis. Bank of America's CEO, Kenneth Lewis, testified that he was told to keep quiet about billions of dollars in losses at Merrill Lynch before the company's merger. This, as Lewis faced intense pressure from the U.S. Treasury and the Federal Reserve to complete the deal for Merrill Lynch. Kitty Pilgrim has our report.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): A bombshell letter from New York Attorney General Andrew Cuomo's office to the SEC and Congress. It said last December then Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke threatened to fire Bank of America CEO Ken Lewis and the bank's board, if it pulled out of its merger with Merrill Lynch.

They said abandoning the merger would mean systemic risk to the financial system. At the time, Bank of America was concerned by what it called the staggering deterioration at Merrill Lynch. CEO Ken Lewis testified he first told Paulson he wanted BOA to pull out of a proposed merger last December 17th. He was summoned to Washington that very night for a closed-door meeting.

Four days later Paulson made the threat to remove the board and management. Lewis responded, "Let's deescalate this". The letter states that Secretary Paulson largely corroborated Lewis' account, but also said he made the threat at the request of Chairman Bernanke. The Federal Reserve denies it, saying "no one at the Federal Reserve advised Ken Lewis or Bank of America on any questions of disclosure."

Lewis also testified before Cuomo in February that Paulson and Bernanke put pressure on him to stay silent about Merrill's losses. I was instructed that, quote, "We do not want a public disclosure." Andrew Cuomo charges that throughout the process, it appears the SEC was kept in the dark and demands greater transparency in decision making.

The merger resulted in devastating losses for Bank of America. Those losses eventually triggered a federal bailout of $20 billion for Bank of America and huge losses for Bank of America stockholders. Today, the White House declined comment.

GIBBS: In many ways, the account is -- the account is something that our guys weren't involved in, as it took place, last fall.

PILGRIM: Congress today met with the head of the Troubled Asset Relief Program without commenting on the letter. Neil Barofsky, the special inspector general for TARP, later released this statement. "As our investigation is ongoing, we cannot comment on the details of the disclosures made by the attorney general earlier today."

(END VIDEOTAPE)

PILGRIM: Now Attorney General Cuomo's letter says the SEC, the watchdog agency for investors, was kept in the dark. Treasury Secretary Paulson admitted he did not keep the SEC chairman in the loop. Now the SEC has indicated that it will have a statement soon, Lou.

DOBBS: A remarkable development and transparency, Ken Lewis, one of the nation's most respected bankers, with many questions about his performance and the understanding, whether it be the -- the bonuses that were approved for John Thain and the CEO of Merrill Lynch going ahead with the deal that ultimately was revealed to be deleterious to the interest of the shareholders, all of that unexplained and carried squarely on the shoulders of Ken Lewis, a remarkably unfair approach taken by the Treasury and the Fed.

PILGRIM: Yes, it certainly is. This is, of course, a developing story. A lot more has to come out about what actually happened, but it seems that he really had to -- he was pressured by government officials.

DOBBS: All right, Kitty, thank you very much -- Kitty Pilgrim.

President Obama today had some tough words for the credit card industry, amid rising concern about high interest rates and excessive fees. In a meeting, at the White House, President Obama demanded a law to provide what he called strong and reliable protections for credit cardholders. Missing from that meeting, Vice President Joe Biden, who is a close ally of the credit card industry and as a senator helped write the bankruptcy law of 2005, making it more difficult for consumers to erase their debts. Dan Lothian has our report.

(BEGIN VIDEOTAPE)

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT (voice-over): President Obama wasn't cutting up credit cards, but he was going after companies that are maxing out their profits on the backs of consumers.

OBAMA: We want to preserve the credit card market. But we also want to do -- do so in a way that eliminates some of the abuses and some of the problems that a lot of people are familiar with.

LOTHIAN: Like starting off with a low rate and watching it double or unexpected fees. To help consumers, the president wants all credit card forms to use plain language. No more fine print. Give cardholders the information they need to comparison shop. And he wants more accountability, oversight and enforcement. Mr. Obama's push for reforms comes a day after a congressional committee voted to clamp down on credit card rates and fees, something the industry strongly opposes. The American Bankers Association saying it will have a negative effect on lenders' ability to offer reasonably priced credit to consumers and may make matters worse for the broader economy. And some of the executives sitting around the president's table have pushed back, too, saying that any further action from the White House and Congress is unnecessary.

GIBBS: They believe what the Fed is doing is probably enough.

LOTHIAN: The president admits there has to be a balance.

OBAMA: We think that it's been out of balance, and so we think we need to create a new equilibrium where credit is flowing.

LOTHIAN (on camera): The balance, according to the president, credit card companies are able to make what he called a reasonable profit and consumers don't end up in a bad situation.

Dan Lothian, CNN, the White House.

(END VIDEOTAPE)

DOBBS: A recent survey confirmed what many of us already know. Credit card companies are charging outrageous fees on many of their customers. The Pew Charitable Trust (ph) found that more than 400 credit cards offered by the top 12 credit card companies disadvantage, as they put it, their customers. The survey discovered that banks could change the interest rates on 93 percent of those cards simply by altering the terms of agreement, the so-called fine print.

Top White House economic adviser Lawrence Summers apparently having a few problems staying awake during official meetings, once again -- it occurred again today during the president's meeting with the credit card company executives while the president was talking with reporters and Summers nodded off, even as photographers were taking pictures of the group and, of course, Summers. It is not the first time Summers has been caught napping at a public event at the White House. He dozed off during a fiscal responsibility summit meeting some two months ago.

Up next, a series of controversies raising new questions about Secretary Janet Napolitano's fitness to serve as Homeland Security Secretary and a Detroit woman tonight can claim she owns a true miracle bra. That story is next.

(COMMERCIAL BREAK)

DOBBS: Chrysler may file for bankruptcy as early as next week. "The New York Times" reporting the Treasury Department, Chrysler, and the United Autoworkers union have reached an agreement on workers' benefits -- Chrysler receiving $4 billion in government loans, given until April 30th to come up with a restructuring plan. This would be the first bankruptcy filing among Detroit's carmakers. General Motors saying it will shut down 13 of its plants for up to nine weeks over the summer. The shutdowns will cut production by 190,000 vehicles. General Motors has received more than $13 billion in government loans. The carmaker has a government deadline of June 1st to come up with its restructuring plan.

An update now on the deaths of those 21 polo ponies in Florida -- an incorrectly prepared supplement may be to blame. An official at a veterinary pharmacy, Franck's Pharmacy, in Ocala, Florida, says the strength of one ingredient in that supplement was incorrect. They are not saying what the ingredient is. The Venezuelan team ponies died Sunday, just before the U.S. Open Polo Championship.

Other stories we're following around the country tonight -- in South Carolina, a raging wildfire has destroyed as many as 70 homes in the Myrtle Beach area -- Governor Mark Sanford (ph) declaring a state of emergency for the county. Fortunately, no injuries reported.

Police in Detroit tonight searching for three suspects after a home burglary -- the suspects shot at a neighbor who witnessed the burglary. Incredibly, the under-wire in the woman's bra deflected the bullet. Detroit police told LOU DOBBS TONIGHT they didn't know the manufacturer of the bra and they didn't know the size either, as they put it. We're told the woman is doing just fine.

In a delay of game for one NBA mascot, during the Atlanta Hawks pre-game show, Spirit usually flies from the rafters to get the crowd all worked up. But last night, the hawk refused to leave. Instead, he perched on the scoreboard and even on the top of the basket. The game finally began after Spirit returned to his handler. The hawk received a standing ovation from the crowd and several players. The Atlanta Hawks, however, lost the game.

Up next, Republicans accusing Democrats of planning show trials of former Bush administration officials. Top Republican Congressman Dan Burton (ph) joins us.

And Homeland Security Secretary Janet Napolitano facing calls for her resignation for seeking to repeal a law proposed originally by the 9/11 Commission. We'll be right back.

(COMMERCIAL BREAK)

DOBBS: The big issue tonight the Obama administration struggling to focus on its political agenda after the administration's reversal on the issue of whether to prosecute former Bush administration officials who justified the CIA's so-called harsh interrogations. Even congressional Democrats tonight appear divided on how to handle the issue.

Also, what could be a serious abuse of government power at the height of the financial crisis -- Federal Reserve Chairman Ben Bernanke and then Treasury Secretary Hank Paulson are accused of trying to coerce Bank of America CEO Kenneth Lewis to stay silent on billions of dollars of losses. And Homeland Security Secretary Janet Napolitano faces rising pressure to resign after what critics say is her latest in a series of blunders. This time Secretary Napolitano declared she wants to repeal the Real ID law, a critically important measure that was proposed by the 9/11 Commission.

We reported earlier here on the controversy surrounding the president's handling of the CIA interrogation memos. Joining me now is Congressman Dan Burton, who is the senior member of the House Foreign Affairs Committee -- Congressman, good to have you with us here tonight.

REP. DAN BURTON (R), INDIANA: Good being with you. I'm a big admirer of yours.

DOBBS: Well, I appreciate that, Congressman. You've said that the prosecutions that could come out of the release of these memos and subsequent prosecution by the Justice Department, if it were to occur, would be simply crazy. Why do you say that?

BURTON: I say that simply because we're talking about national security here and the memos that were released by the White House jeopardizes our ability -- our ability to get CIA-type information, intelligence information, from people that we arrest as terrorists. Khalid Sheikh Mohammed (ph) -- I have trouble with that name -- he was -- he was put under arrest. He was held.

He was interrogated. He said when asked about more terrorist attacks after 9/11, he said, soon you will know. And our intelligence officer said they were convinced that he knew when the next wave was going to happen. And so they decided that they were going to use very difficult techniques, very tough techniques to elicit this information to stop another attack and they did.

They used what was called waterboarding. And the waterboarding did force him to give the information. Now, the big issue is whether or not that was inhumane. I believe that they took necessary steps, because they stopped an attack on the Library Building, one of the tallest buildings in Los Angeles, which was the next target of attack by the al Qaeda people.

DOBBS: Congressman, Defense Secretary Gates says he reluctantly agreed to the release of those memoranda but felt they would inevitably be released no matter what, because of -- many have been pushing for those interrogation investigations. Could their release in your judgment have been avoided and where is all of this likely to lead us?

BURTON: Well, I think that it could have been avoided and for them to prejudge what the court would do as far as releasing those documents is something that they should not have done. We're talking about national security. This was top secret memos. And that means that when it says top secret that that involves the security of the United States and is classified. It shouldn't be put into the public domain. Now, al Qaeda knows that the limitations on our -- our interrogation techniques, and they'll be able to tell their operatives, their terrorists around the world, how far that we're going to go before we stop pressing them for information. And I think that jeopardizes the security of every American.

DOBBS: House speaker, Nancy Pelosi, Congressman, said this about some of those controversial interrogation techniques --

(BEGIN VIDEO CLIP)

PELOSI: We were not -- I repeat were not -- told that waterboarding, or any of these other enhanced interrogation methods, were used. What they did tell us is that they had some legislative council, the office of legislative council, opinions that they could be used.

(END VIDEO CLIP)

DOBBS: You say that Congress was aware of what was --

BURTON: Yes.

DOBBS: -- being conducted by -- how the CIA was conducting itself? You heard the speaker right there. Is she mistaken?

BURTON: Yes, she's definitely mistaken. Porter Goss who was on the intelligence committee said that she was in meetings when they went into detail about the techniques that were going to be used to get information from these terrorists, to stop another attack. And in addition to that, other members of Congress, on both sides of the aisle, democrats and republicans, were aware and gave their consent. As a matter of fact, they authorized more money to be used for these intelligence techniques, which saved lives, in my opinion. I truly believe they stopped an attack in Los Angeles that would have killed many people, similar to what happened in New York. And for them to say that these techniques should not be used, they -- the president can use this -- can say that if he wants to, but he should not be giving this kind of information to the terrorists around the world, who now will know the limitations of our -- of our -- of our concerns and our investigations.

DOBBS: Congressman Dan Burton, thank you for being with us here.

BURTON: Thank you, buddy.

DOBBS: Turning now to the latest controversy over homeland security secretary, Janet Napolitano. After only three months on the job, the secretary has made a series of missteps, including her refusal to criticize a department memo about right-wing extremist groups and returning veterans from the wars in Iraq and Afghanistan. Secretary Napolitano now faces sharp criticism for saying she wants to repeal the real I.D. law. Some lawmakers are calling for her resignation. Casey Wian with our report.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT: New homeland security secretary, Janet Napolitano, was quickly confronted by a familiar threat, escalating drug cartel violence along and across the U.S./Mexico border.

JANET NAPOLITANO, U.S. HOMELAND SECURITY SECRETARY: I believe that Mexico right now has issues of violence that are of a different degree and level than we've ever seen before.

WIAN: As governor of Arizona, Napolitano demanded more National Guard troops to reinforce the border. But as DHS secretary, she's still reviewing similar requests from current border governors.

REP. MICHAEL MCCAUL (R), TEXAS: I think she very much understands this issue. I think perhaps in her heart of hearts, she would welcome the increased funding for this side of the border. I'm afraid that it may be tied up in politics within the administration.

WIAN: At a Congressional hearing in late February, she questioned the action of her own immigration and customs enforcement agents, after a raid at a factory in Bellingham, Washington.

NAPOLITANO: I want to get to the bottom of this as well, so I've already issued those directives to I.C.E. to get some answers.

WIAN: Napolitano later directed I.C.E. to concentration enforcement on employers, not illegal alien workers. All but one of the suspected illegal aliens detained during the Bellingham raid were given work permits while the case is being investigated.

Napolitano also is pushing to undo the real I.D. act which requires stays to issue more secure driver's licenses by the end of this year in favor of a different approach. Real I.D. was recommended by the 9/11 commission.

And speaking of 9/11, Napolitano apparently misspoke this week suggesting the hijackers entered the United States through Canada, angering the nation's largest trading partner. The final straw for some was the release of a homeland security report on right-wing extremism, that mentioned returning veterans and opponents of illegal immigration.

REP. JOHN BOEHNER (R), OHIO: I think Secretary Napolitano has an awful lot of explaining to do. When you look at this report, on right-wing extremists, it includes, you know, includes about two- thirds of Americans, who, you know, who might go to church, who may have served in the military. Who may be involved in community activities. This is -- it's bizarre.

WIAN: Homeland security chief later said the report should not have been read as an accusation against military veterans.

NAPOLITANO: I apologize for that offense. It was certainly not intended.

WIAN: Thursday republican Congressional leaders met with President Obama carrying requests from some in the rank and file that Napolitano resign.

Casey Wian, CNN, Los Angeles.

(END VIDEOTAPE)

DOBBS: The Obama administration today said now is the time to, quote, revive global trade. U.S. trade Representative Ron Kirk vowed to complete free-trade deals with Panama, South Korea, and Colombia. All three negotiated by the Bush administration. During the election campaign, candidate Obama said he would reopen negotiations on the North American Free Trade Agreement. Now, he has softened that position, as they say in Washington. He wants to strengthen some provisions, we are told by his trade representative, without renegotiating the agreement.

Up next, rising outrage over the use of imported steel in an American steel town. What happened to buy America?

And the latest assault on second amendment rights. A crackdown on sales at gun shows? But we'll report to you some facts that most people don't know and the number of people are trying to hide.

(COMMERCIAL BREAK)

DOBBS: Curtail our second amendment rights to keep and bear arms. Senator Frank Lautenberg is proposing legislation that would restrict gun sales at organized gun shows. Critics say those restrictions in the senator's bill would actually go far beyond gun shows and do almost nothing to prevent crime of any kind. Bill Tucker has our report.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): There are thousands of gun shows every year all across America. Most of the sellers at those shows are federally licensed gun dealers who by law are required to record each sale and run FBI background checks on every buyer. Private citizens also sell guns, with no federal licenses and they perform no background checks and sales are legal. That is what advocates for gun control call the gun show loophole.

SEN. FRANK LAUTENBERG (D), NEW JERSEY: The gun show loophole should be closed. This is a gun vendor who is able to sell guns no matter who you are, how many guns you want, without asking a single question.

TUCKER: Senator Lautenberg is sponsoring a bill that would increase regulation on gun shows and require private collectors to perform those checks. His bill says that gun shows are a key place where, quote, criminals and other prohibited persons obtain guns without background checks and frequently use guns that cannot be traced to later commit crimes.

But that's not what the facts say. According to a report from the department of justice in 2001, less than 1 percent of criminals obtained their guns at gun shows. One noted FBI researcher and behavioral science investigator who now serves as a consultant to law enforcement says his professional research supports that finding. EDWARD DAVIS, FMR. FBI INVESTIGATOR: The people that I actually interviewed, the killers and the assaulters, specifically stated that they would never go to a gun show to purchase a gun. When I asked a killer about a weapon that he used, he said he didn't worry about any of the federal laws.

TUCKER: America's largest gun rights group says that is just the point.

WAYNE LAPIERRE, NATL. RIFLE ASSN.: You're not making it harder for criminals to get guns. Senator Lautenberg's not. He's simply putting more restrictions on the law-abiding people and that's not where we should be going.

TUCKER: The NRA says it favors tougher enforcement for criminals that use guns to commit crimes.

(END VIDEOTAPE)

TUCKER: This is not the first time around for the bill, Lou, Senator Lautenberg introduced it in 1989. It did pass the Senate but it went no further then.

DOBBS: And we appreciate it as always, Bill. Bill Tucker reporting.

Well, there is compelling evidence that rising gun ownership in this country has led to a decline in violent crime. The national rifle association says at least 2.5 million crimes a year are prevented by gun owners, about one every 13 seconds and that doesn't include action by law enforcement officers. The NRA bases its estimate on the national self-defense study conducted by Florida State University.

There is rising outrage tonight in Granite City, Illinois, over imported steel coming from India. Tons upon tons of Indian-made steel pipe are being imported to build an oil pipeline and it's all happening as hundreds of American steelworkers are being laid off. Lisa Sylvester has our report.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Retired steelworker, Jeff Rains, often walks the mile from his house to the union hall in Granite City, Illinois. On one trip he noticed steel pipes coming in on a freight train, not made in the USA, made in India. That caught him off-guard because just yards away from where the Indian steel pipe was delivered sits a U.S. steel plant. A steel factory that in December laid off more than 1,600 workers. And now sits idle for the first time in its 130-year history.

JEFF RAINS, RETIRED STEELWORKER: It's a slap in the face to the working people in America. I mean, you grow up thinking if you work hard that you're going to prosper, and then this stuff happens.

UNIDENTIFIED MALE: What do we want? UNIDENTIFIED MALE: Jobs!

SYLVESTER: Workers rallied recently at the pipeline construction strike, incensed foreign steel is being used to build the oil pipeline that will stretch from Alberta, Canada, to the heart of the Midwest. While their closed plant couldn't have made the pipe, they say it could have been made the steel for the pipe. Trans-Canada, which is building the keystone pipeline, says it is purchasing 30 percent of the steel pipe from U.S. suppliers, 20 percent from Canadian sources and 50 percent from India. Spokesman Robert Jones said the Indian company was, quote, the most price competitive and could produce the highest quality and meet delivery schedule. That company is Caldwell's fund, based in Mumbai. It shipped the steel from a port in India, discharged at the port of Houston, and then brought to Granite City, Illinois, via railroad. A 9,844-mile trip. Delivered India steel is up to $166 a ton cheaper than U.S. steel, which might not sound like much, but over the life of this project, that's a difference of $46 million.

How is the Indian steel able to come in cheaper even with the transportation costs? Government subsidies, according to the Alliance for American Manufacturing.

SCOTT PAUL, ALLIANCE FOR AMERICAN MANUFACTURING: India has been cited by the department of commerce at least 20 times for different sorts of subsidies that they provide to their steel industry.

SYLVESTER: Wells Fund, the company that made these pipes, has not been cited for improper subsidies. Back in Granite City, Doug May is among those out of work after 36 years on the job.

DOUG MAY, LAID OFF WORKER: We can compete with anybody, as long as these laws are enforced, as long as the competition is done fairly.

SYLVESTER: These steel pipes, May says, a sign of a broken trade system.

(END VIDEOTAPE)

SYLVESTER: Trans-Canada, the company making the pipeline, says at the time they were seeking business in 2006, U.S. steel plants were running almost at full capacity. Now, there is a parallel pipeline that is also being built. The united steelworker union is actively pushing to get some of that work. But I spoke to a company spokesperson, and he would not commit -- Lou?

DOBBS: Lisa, thank you very much. That is incredible. 9,844 miles from India, to that steel plant. I mean, it's just -- it's amazing.

SYLVESTER: These workers are so outraged, because they know that they can do the work. And if it were a level playing field, if there weren't subsidies involved, there's no doubt that this steel would be cheaper if it were bought in the United States. Coming all that great distance. But because this is subsidized steel, it comes into this market a lot cheaper and that's why those workers are out of work. And that's what they say is the basic problem with the trade system in this country, Lou.

DOBBS: All right, Lisa, thank you very much. Terrific report. Lisa Sylvester from Washington.

Coming up at the top of the hour, "NO BIAS, NO BULL" with Roland Martin in for Campbell Brown. Roland?

ROLAND MARTIN, CNN ANCHOR: Lou, tonight, putting credit card executives on notice. The president has been talking tough, telling them to change the way they do business, so what will this mean for your interest rate? We'll get to that in a moment.

Plus, the doctor who says he's cloned humans, who is he, and what is he up to? You'll find out.

Also, Lou, a story we've all been talking about, the mom who ordered her bratty skid out of the car and drove off. Should the mom face charges? We're taking calls on that. Trust me, it's going to fee a hot topic. All that at the top of the hour.

DOBBS: All right, Roland, thank you.

Up next, secretary of state, Hillary Clinton, warning us what she called a mortal threat from radical Islamic terrorists in Pakistan. Her warning coming less than a month after the assessment of the U.S. military. We are here, I'll be joined next by General David Grange.

(COMMERCIAL BREAK)

DOBBS: Islamists, the Taliban in Pakistan tonight are consolidating control from the district that lies only 60 miles from the capital of Islamabad. Secretary of State Hillary Clinton called the prospect of a Taliban takeover in Pakistan a mortal threat. Last year the U.S. joint forces command recognized the vulnerability of Pakistan and another country Mexico. The command identified successfully threats that no other U.S. intelligence agency acknowledged, in public, at least.

Joining me now, military analyst General David Grange. Let's begin by doing something I have not seen anyone do. I'm in a loss as to why not. The joint command deserves great credit for its analysis and for what appears to be a prescient conclusion about the state in Pakistan.

BRIG. GEN. DAVID GRANGE, U.S. ARMY (RET.), CNN MILITARY ANALYST: The military is going to bear the load, convince if this nation falls apart. That will bring the entire region into turmoil and conflict. They have to be prepared. The military, as always, prepares for the worst.

DOBBS: Preparing for the worst and being capable of delivers a response that is both successful and timely is another issue. The military continues under severe strain in north Iraq and Afghanistan. And in the global war on radical Islamist terror. To what degree do you anticipate there might be an American involvement required in Pakistan if this conflict is to worsen and to what degree do you estimate the United States military can successfully respond should it be decided by President Obama that it must?

GRANGE: Well, prior to any falling apart of the nation of Pakistan is a lot of economic support that needs to be put in at the same time we do the economic work in Afghanistan. Both the infrastructure water, electricity, other needs for the people of Pakistan. They do not believe that we want to help them to the level they need it. And so if you lose the will of the people, then that nation's at risk. The only thing that holds Pakistan together is their military, which is a very good military, but it's the only thing that holds them together. We have limited options up front if it does fall apart, except for containing the situation. The problem with India's relationship with Pakistan, of course, the threat on oil for everybody in the world. This is probably bin laden or if he's not around, al Qaeda for sure, long-range strategy to do this.

DOBBS: A long-range strategy and the Taliban being allowed to return to extraordinary strength both in Afghanistan and Pakistan. Looks also to be a miscalculation by U.S. intelligence services and the U.S. military. To what degree are those reasonable, possible conclusions?

GRANGE: I think that's accurate. I think there's been neglect for many years. I think we are trying to do it on the cheap. Look, if you were an al Qaeda member and you were working on your strategy, what better way to accomplish the missions you tried to start years ago, almost a decade ago against Saudi Arabia, against the united states, western nations dependent on oil, cause a fight between India and Pakistan? What Iran is going to do in this situation. You would cause more disruption. It's a great strategy. If I was them, that's what I would be focused on. We better pour in the resources and collaborate the best we can to hold that nation together the same time we fight the Taliban and al Qaeda and keep Afghanistan on its feet in the direction we are trying to get it to go to.

DOBBS: We should point out tonight that Pakistan army forces are moving into that district who apparently engaged the Taliban and we are waiting reports on. Latest developments there, as well. General Grange, as always, good to have you with us. We appreciate it.

GRANGE: Thank you, Lou.

DOBBS: General David Grange.

Coming next, an important update on my new movie, Ben Affleck and Russell Crowe are also in it. We'll tell you a little bit about that next. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Last night we reported to you on the New Haven firefighters' racial discrimination case heard yesterday before the Supreme Court. Since our report there's been an outpouring of e-mails and support for those firefighters. So far today, thousands have gone to the website newhaven20.com. We'll continue to update you on this important case that has national implications.

Finally tonight, I mentioned a few days ago my new movie "State Of Play." Opened over the weekend to critical acclaim. Russell Crowe and Ben Affleck star in the murder mystery thriller also, but clearly it's my performance carrying this movie. In fact the movie earned some $20 million worldwide so far. Just a little more of my stellar acting, if you don't mind -

(BEGIN VIDEOTAPE)

DOBBS: The growing tide of hostility toward him this afternoon when he appeared together with his --

UNIDENTIFIED FEMALE: In a long life of politician wives we triumphed.

DOBBS: He apologized for his affair and offered his apology.

UNIDENTIFIED MALE: Can you believe this? We are on six channels simultaneously.

UNIDENTIFIED MALE: You might want a sudden death.

UNIDENTIFIED MALE: What?

(END VIDEOTAPE)

DOBBS: Six channels, I should point out, only one that counts. I bring this up because I like to say "My Movie." It's something new to me. Ben Affleck and Russell Crowe are a little more accustomed to it. If I may implore you to watch it carefully in theaters all across the country. A terrific mystery thriller. And join me please on the radio Monday through Fridays for the Lou Dobbs show. Thank you for being with us tonight.

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