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THE SITUATION ROOM

Catastrophic Oil Spill Threat; Some Critics Dismiss Fallout for Wall Street; Arizona Governor Signs Tough Immigration Bill

Aired April 23, 2010 - 17:00   ET

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


SUZANNE MALVEAUX, GUEST HOST: Thanks, Rick.

Happening now, breaking news, Arizona governor's signs into law the toughest crackdown on illegal immigration in America. This hour, we are getting new reaction and taking a hard look at what this means for the nation.

And pollution crews on alert for a possible oil spill disaster off Louisiana.

Will the rig explosion unleash toxic crude and sink plans to expand offshore drilling?

And it sounds like a 1960s flashback, but some scientists say that mind-altering drugs like LSD can be used to treat real medical problems.

Wolf Blitzer is off today.

I'm Suzanne Malveaux.

And you're in THE SITUATION ROOM.

In Arizona just moments ago, Republican Governor Jan Brewer signed into law an immigration bill that President Obama calls "misguided." It would require immigrants to carry alien registration documents at all times. And it would require police to question people if there's reason to suspect that they are in the United States illegally.

(BEGIN VIDEO CLIP)

GOV. JAN BREWER (R), ARIZONA: There's no higher priority than protecting the citizens of Arizona. We cannot sacrifice our safety to the murderous greed of drug cartels. We cannot stand idly by as drop houses, kidnappings and violence compromise our quality of life. We cannot delay while the destruction happening south of our border -- our international border -- creeps its way north. We in Arizona have been more than patient waiting for Washington to act.

(END VIDEO CLIP)

MALVEAUX: Protesters in Arizona and critics across the country are afraid that this law is going to give police license to conduct racial profiling and possibly lead to harsh crackdowns on illegal immigrants in other states.

Our CNN's Casey Wian is in Arizona following this breaking news story -- and, Casey, I want to start off with you.

We heard the governor explaining what the reasoning was behind this law and already she was being pummeled with very tough questions -- critical questions.

The bottom line here is how would a law enforcement officer identify somebody who they suspect is an illegal immigrant?

CASEY WIAN, CNN CORRESPONDENT: Well, I had a conversation with a sheriff here in Arizona about that very issue yesterday. And I'll tell you what he told me -- it's not going to be the color of someone's skin, it's not going to be the way they dress, it's not going to be their perceived national origin.

He described a situation where somebody is pulled over in a traffic stop. They're not able to provide an Arizona driver's license. They're not able to produce an insurance form for their car. They give conflicting statements about where -- what they're doing or how long they've been in the country, where they entered, things like that.

It's those things that, officers say, will add up to reasonable suspicion, not the color of someone's skin or their perceived ethnicity.

And that is despite the fact that protesters have been saying they're afraid of these law enforcement officers and that they will use this to racially profile all Latino people in Arizona.

Now, the governor addressed that head-on. She said she has no tolerance, under this law, for illegal immigration in Arizona and the drug smuggling and the alien smuggling that goes along with that.

But she also said she's not going to have any tolerance for racial profiling by law enforcement officers. She promised to go after that just as diligently as she goes after illegal immigrants -- Suzanne.

MALVEAUX: Now, Casey, you -- you've spent the last couple of days, obviously, with people who are there on the ground in Arizona, both people who are supporting this new law and those who are vehemently against it.

What is your sense of how the people of Arizona feel about this?

It -- it seems very emotional and very controversial.

WIAN: Well, obviously, the supporters of this law are going to be very pleased. Many of them were worried that the governor was not going to take any action on this bill and was going to just let it go -- become law without her signature and sort of turn the issue over to -- over to the courts.

Opponents, I think, will probably still be upset because the bottom line is they don't trust the language of this bill, even though there is language in there that specifically prohibits using race as the sole basis for an immigration status check, the opponents of this bill do not trust that. They believe they're going to be racially profiled. And I think they're still going to be upset that this governor signed this bill into law.

MALVEAUX: OK, Casey, thank you very much.

We're very likely to get back to you.

I want to also bring in somebody in part of this discussion here, Isabel Garcia.

She is the legal defender of Pima County, Arizona.

She is also co-chair of a Tucson-based human rights group.

And I know that this is very worrisome to you. You've been speaking out against this.

The bottom line here, the governor, she said that this is not going to -- she's not going to tolerate racial profiling, this is not going to be discrimination, she's not going to let police officers pull somebody over because of the color of their skin or how they look.

Do you believe the governor?

ISABEL GARCIA, PIMA COUNTY, ARIZONA, LEGAL DEFENDER: Absolutely not. We already have many, many examples of racial profiling even without the law -- police officers that stop people and ask them questions in violation, really, of their Fifth Amendment rights. And they call the Border Patrol. Of course, Sheriff Arpaio has been acting on it.

So it gives us absolutely no reassurance. The only reassurance we could have received is a resounding veto of this very illegal, unconstitutional law. We're going to live in a police state. And, really, this law represents by -- the final nail of the coffin of their creation of our modern-day black codes -- I guess we could call them our brown codes.

And today is truly a sad day for the State of Arizona and for the rest of this country. To pretend to deal with immigration by inflicting these kind of laws is just preposterous and irresponsible.

MALVEAUX: Do you not believe that she says she's going to work on at least getting these police officers trained so there's some sort of education, some sort of background -- accountability that they have when they pull someone over for suspecting that they're illegal?

GARCIA: Absolutely not.

Where in the law do you see anywhere else that race can be a factor?

Can you imagine if we put -- if you believe you're Jewish or African-American, it's one of the considerations that you can take into account?

We already have a slew of cases where police officers say, well, yes, I took his race into account, but there were these other strange things. I mean, the commentator earlier said that if they begin asking them questions, how did you get here and that sort of thing, obviously, imagine that -- without being told that they have a right to remain silent because, in fact, now their liberty will be infringed as a result of this new law.

MALVEAUX: And this...

GARCIA: It's criminalizing anybody without papers.

MALVEAUX: And Miss. Garcia, what did you think -- what did you make of the governor's statement, when she was asked immediately after signing this bill into law, whether or not she knew what an illegal immigrant looked like. And she said, I do not know what an illegal immigrant looks like.

Was that surprising to you.

Was that disturbing to you?

GARCIA: It's disturbing. I mean it's not surprising, because they can't tell where I was born at all just by my appearance. And, of course, we also know that there's some very anti-immigrant elements within many of these police forces that have been dying to implement this law.

Clearly, this is going to set us back a good 50 years in the State of Arizona in terms of basic civil rights, human rights. And the resistance begins.

MALVEAUX: All right, thank you very much, Ms. Garcia.

We appreciate your -- your point of view here.

I want to also bring in, on the phone, CNN's senior legal analyst, Jeffrey Toobin, to explain some of the legal aspects of this.

And we have been talking about this, following this very closely -- Jeffrey, what -- what is the next step here?

I mean this is an -- kind of an extraordinary step forward for Arizona, separate from what the other states are doing and certainly separate from -- from federal law.

Could this be challenged?

Could this go to the Supreme Court?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, it will certainly be challenged almost immediately. And there are several grounds.

The first, which is not as sexy, not as sort of controversial, but quite important, is the issue of whether federal law even allows Arizona to get involved in the subject of illegal immigration. Illegal immigration is traditionally an area where the federal government preempts -- that's the legal word -- preempts states from getting involved. So certainly there will be a claim that Arizona has no right to pass this kind of law.

The more sensational issue is, is it legal to have a law that says you can stop anyone on the street if you have reasonable suspicion that they are illegally in the country?

And what does it mean to have reasonable suspicion that someone is illegally in the country?

That's really the heart of the controversy here. And courts will certainly be involved in that almost immediately.

MALVEAUX: And, Jeff, assuming that if the law goes through, it would take effect in 90 days, we know the Obama administration's Justice Department is looking to see whether or not this violates people's civil rights.

But if you were somebody who was there and you were pulled over in Arizona and you felt like your rights were violated, what could you do?

What kind of action could you take?

TOOBIN: Well, it depends what happens to you. If you're stopped and questioned and simply let go, there's probably not much that the legal system can offer you. But if you are arrested -- and certainly people will be arrested under the provisions of -- of this law -- you will challenge the law. Your lawyer will say, you can't use this law because it's unconstitutional, either because the federal government simply preempts the area or because this is an intrusion on an individual's rights, allowing questioning under these circumstances.

MALVEAUX: Jeffrey Toobin, thank you so much.

I appreciate it.

Well, more on our breaking news.

President Obama spoke out about Arizona's pending legislation this morning.

Plus, what's going to happen on the national stage when it comes to immigration reform?

Plus, it's an environmental time bomb in the Gulf of Mexico right now -- will the sunken drilling rig unleash a catastrophic oil spill?

We're going to have the latest on the rig disaster and what may happen next. (COMMERCIAL BREAK)

MALVEAUX: Jack Cafferty is here with The Cafferty File -- hey, Jack, what are you working on?

CAFFERTY: Hello, Suzanne.

As Wall Street brought the nation to the brink of financial collapse a couple of years ago, some of our so-called top government regulators were spending hours a day of agency time watching pornography on government computers instead of watching the investment bankers on Wall Street who were going south with the economy.

The inspector general for the Securities and Exchange Commission says at least 33 employees were involved watching Internet filth. Almost all of these cases occurred in the last two-and-a-half years, which, coincidentally, is when the financial system in the country was bordering on collapse.

More than half of these employees were senior level folks, making up to $220,000 a year.

If you're not disgusted yet, allow me to continue.

One senior attorney at the SEC in Washington spent as much as eight hours a day looking at and downlording -- loading pornography. And after he ran out of space on his hard drive, he burned the files onto CDs or DVDs and then stored them in boxes in his office.

An SEC accountant was blocked more than 16,000 times in a single month from trying to access porn sites. And another SEC accountant tried to access pornography online 2,000 times in a two week period. She had 600 pornographic images stored on her computer.

Now, the SEC won't release the names of these cretins, even though they work for you and for me. They are public employees. The agency claims that those involved had been disciplined, suspended or fired. And, of course, we're supposed to believe them.

They should all be fired outright. And we should know who they are and that should be the end of the discussion.

Meanwhile, President Obama wants to create another new government bureaucracy to oversee Wall Street.

What if the SEC just did its job instead?

Here's the question -- should President Obama be more concerned about the SEC watching pornography when they should have been watching Wall Street?

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

MALVEAUX: Jack, I bet you'll get a lot of responses on that one.

CAFFERTY: I already have, actually. MALVEAUX: All right.

I can't wait to see them.

Just hours before the Arizona governor's announcement, President Obama spoke out against the state's immigration bill. He acknowledged that Arizonans are trying to fill a gap at the federal level. But he says that they're doing it in an irresponsible way.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Indeed, our failure to act responsibly at the federal level will only open the door to irresponsibility by others. And that includes, for example, the recent efforts in Arizona, which threaten to undermine basic notions of fairness that we cherish as Americans, as well as the trust between police and their communities that is so crucial to keeping us safe.

In fact, I've instructed members of my administration to closely monitor the situation and examine the civil rights and other implications of this legislation. But if we continue to fail to act at a federal level, we will continue to see misguided efforts opening up around the country.

(END VIDEO CLIP)

MALVEAUX: The White House says the president won't have any further comment on the new Arizona law now that the governor has signed it.

And now, I want to get the big picture on immigration reform on the national level.

I want to talk about that with our senior Congressional correspondent, Dana Bash, who is here -- and, Dana, obviously, following this, I mean this is really quite in -- incredible here. I've spoken with people who have urged President Obama to get involved in the immigration reform debate -- begged him to get more involved, whether it's legislation, make a statement, something, call a summit, whatever.

What are you hearing? What is the likelihood that something like that would even happen?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, Suzanne, Democratic sources I've been speaking to all week says that there is a new push to get immigration on the front burner again, especially in Congress. In fact, I was told today that climate change, which is supposed to be next, is probably not even going to happen this year on the Senate floor.

But one reason for this push is senator Majority Leader Harry Reid has got a brutal re-election battle coming -- coming up in the State of Nevada, obviously, where he's from. A quarter of the population there is Hispanic. But more broadly it's what you just pointed out, Latinos came out in large numbers, as you know, for the president. And they're furious. They're furious that they -- the Democrats have not kept their promise to go for immigration reform so far.

Now, to give you a reality check here, Democratic sources I talk to say they simply don't think that ultimately something is going to pass this year. But they are trying right now. And the immediate goal is to try to get Republicans on board, to try to make this bipartisan. Right now, they have Republican Lindsey Graham of South Carolina. He says you have to get another Republican on board or I'm walking.

MALVEAUX: And we know that Senator John McCain, certainly in the Bush administration, was -- was one of the allies who pushed for comprehe...

BASH: He was one of those Republicans.

MALVEAUX: Right. Exactly.

BASH: Yes.

MALVEAUX: -- comprehensive immigration reform.

Where does he stand now?

How is he playing into this debate?

BASH: He used to be, but not any more. In fact, if you look over the years, he has had various positions dealing with this. And it really depended on what election battle he was in at the time.

I want to start back in 2007. He was actually the lead Republican sponsor on bipartisan comprehensive immigration reform.

Look at what he said back then.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: This is the first step, but an important step, in moving forward with comprehensive overall cam -- immigration reform.

(END VIDEO CLIP)

BASH: And you remember what happened back then. That was incredibly unpopular with the Republican base. He was running for president inside -- for the Republican nomination. And he tanked for -- because of that, primarily.

MALVEAUX: Right.

BASH: He started to climb back. And as he came back, he changed his tone on the issue of immigration.

Listen to that.

(BEGIN VIDEO CLIP)

MCCAIN: No, I would not, because we know what the situation is today. The people want the border secured first.

(END VIDEO CLIP)

BASH: By the way, no, I would not, he was saying he would not actually vote for his own immigration bill. That was as far as he got in the Republican primary battle.

But let's fast forward a little bit more, when he was running against Barack Obama in the general election. He came back to the middle and back toward the whole idea of comprehensive immigration reform.

(BEGIN VIDEO CLIP)

MCCAIN: We get in this kind of a circular firing squad on immigration reform in the Congress of the United States. And the lesson I learned from it is we've got to have comprehensive immigration reform.

(END VIDEO CLIP)

BASH: Now let's fast forward to present day. Right now, again, John McCain is in a primary battle in his home state of Arizona. The same politics that the governor is facing right now with regard to what you're talking about, with the state law.

He, this week, introduced a specific bill on border security only. And I asked him, what about what you had pushed for a couple of times in the past...

MALVEAUX: Right. Exactly.

BASH: -- comprehensive immigration reform.

Here's what he said.

(BEGIN VIDEO CLIP)

MCCAIN: The lesson is clear. First, we have to security the border. If you want to enact some other forms -- some other reforms, what -- how could that be effective if you have a porous border?

So we have to secure the border first.

(END VIDEO CLIP)

BASH: Secure the border first, not talking about comprehensive immigration reform. Democrats I talked to said early on, they tried to see if he was once again, going to be a player. No way. And it's really primarily because of the politics back in Arizona and also because of the -- of the situation. The border is...

MALVEAUX: So you...

BASH: Border security is a big, big issue and a big problem now. And if you ask John McCain, he'll say it's a growing problem -- a bigger problem than it was back in 2007.

MALVEAUX: And it certainly depends on when you ask him, what kind of response you get from Senator McCain.

BASH: And what -- and what kind of voters he's facing -- Republican voters or general election voters.

MALVEAUX: All right, Dana, very interesting. Fascinating.

Thank you.

Well, now I want to talk about that with our -- the political risks that are involved with immigration reform. Clearly, there are many.

I want to bring in our senior political analyst, Gloria Borger -- and, Gloria, what I found interesting here was the president -- a preemptive strike -- said this is misguided, this -- this law here.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Absolutely.

MALVEAUX: The governor came right back and said that the federal approach to immigration -- illegal immigrants -- was also misguided.

Where do the Republicans stand?

BORGER: Well, it...

MALVEAUX: Where do they go from here?

BORGER: -- it's kind of interesting. Republicans understand that the Democrats have a calculation here that works for them, which is, as Dana was pointing out, Hispanic voters are very important to them. In the past, this issue of immigration has really divided the Republican Party.

But they're not particularly worried about immigration reform coming up in the United States Senate because we've got 10 percent unemployment. And they believe that they can make a very good argument that we need to be concerned about the jobs that people don't have right now, rather than immigration reform. Historically, people are a little less generous when it comes to immigration when they are not doing so well.

And one Republican strategist I talked to said, look, there's also a lot of anger out there. People don't want people big government solutions to problems right now. And this will be perceived as a one size fits all government solution that people just won't buy.

MALVEAUX: Well, I know that the governor of Arizona, Brewer, she's in a tight re-election fight...

BORGER: She is.

MALVEAUX: -- for herself.

BORGER: In the primary.

MALVEAUX: Obviously, the primary in August. And some of her opponents -- Republican opponents -- were saying, hey, we would sign this. We want you to sign this. So there's political pressure on her.

Why -- how are the Democrats coming out on this?

Do they see this as a big opportunity to take some Latino voters?

BORGER: You know, they do. Obviously, it's important for them, they believe, to raise the issue, because they want to motivate those Hispanic -- Latin -- and Latino voters to get out there and vote.

But there is a down side for them. And lots of Democrats I talk to say, look, we have to be careful here. We have to talk -- we have to talk about jobs. We have to talk about the economy. We're going to have a Supreme Court nomination. We don't want to get too far off track about our message that resonates with the voters.

And they're worried, some of them, that if this measure should get anywhere, that those moderate Democrats who had to walk the plank on health care and stimulus and all the rest are going to say, you know what, I'm not going to walk the plank on this.

However, they believe that it is unlikely that it would get out of the Senate this time. The Democrats will have a vote on it. They'll get to show where they stand and where Republicans stand. And then the parade will move on.

MALVEAUX: All right.

Thank you very much, Gloria.

BORGER: Sure.

MALVEAUX: I appreciate it.

Well, a wave of deadly bombings kills dozens in Iraq. Details, including who authorities think is behind this violence, it's just up ahead.

And Sarah Palin on the witness stand in a case that dates back to the 2008 campaign. We'll tell you what that's all about.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: Lisa Sylvester is monitoring some of the other top stories that are coming into THE SITUATION ROOM right now -- hey, Lisa, what are you following?

SYLVESTER: Hey there, Suzanne.

Well, 11 men suspected of piracy are on U.S. soil. Authorities flew them from East Africa to Norfolk, Virginia to face federal prosecution for their alleged attacks on U.S. Navy ships off Somalia. The indictment says five of them were caught after a pirate ship attacked the USS Nicholas March 31st. The other six were captured after the pirates fired on the USS Ashland April 10th. The cases will be prosecuted in Norfolk.

And Friday in Baghdad has been a throwback to an era of daily violence in the Iraqi capital. Dozens of people were killed today in a wave of bombings in Baghdad and in Anbar Province. No one claimed responsibility, but experts say the attacks are characteristically Al Qaeda. They come days after Iraq and the U.S. announced they had killed the two most wanted Al Qaeda leaders in the country.

And the Catholic Church is throwing its support behind research into adult stem cells as an alternative to the use of embryonic stem cells. Today the Vatican announced it will provide funding for the study of adult intestinal stem cells by a group of researchers at the University of Maryland School of Medicine. The church opposes embryonic stem cell research because it calls for the destruction of embryos -- Suzanne.

MALVEAUX: All right.

Thank you, Lisa.

An oil spill in the Gulf of Mexico could be disastrous for the environment. We are keeping an eye on that sunken rig and whether it's leaking toxic crude.

(COMMERCIAL BREAK)

MALVEAUX: In the Gulf of Mexico right now, crews are scrambling to contain any oil that spilled from that rig that exploded and is now under water. Coast guard officials say that no fresh oil appears to be leaking, but you know that could change. What if a major spill becomes a reality? Our CNN's Ed Lavandera is following the rig disaster. Obviously there are a lot of questions about what happens now that this thing is under water and how much damage could it potentially do?

ED LAVANDERA, CNN CORRESPONDENT: And that's the question. Officials here aren't quite ready to say that the gulf coast has averted a major disaster. But everything's held steady throughout most of the day where they're not seeing thousands of gallons spewing into the Gulf of Mexico. That's helping gulf coast residents feel better. But that cause for concern still hasn't completely gone away, Suzanne. (BEGIN VIDEOTAPE)

LAVANDERA: Have you ever saw the day when these come in covered in oil --

MIKE VOLSIN, MOTIVATI SEAFOODS, INC.: It would be a mess. What would happen, because the oysters are filter feeders, what would happen if oil got there, they would at first take it in, but then they'd shut up. So they'd have that oil in them. And they would taste like oil.

LAVANDERA: Oysters and oil, the mother of all nightmares for Mike Volsin. When you shuck them and open it up --

VOLSIN: You can see a sheen on the water.

LAVANDERA: He owns an oyster house in Louisiana. 180,000 oysters a day are processed here. His company farms 2500 acres of oyster bottoms in southern Louisiana, just 100 miles from where the oil rig exploded. It's not that far away.

VOLSIN: The potential is catastrophic. If they don't get a handle on it and it continues to spew tens of thousands of gallon of product a day and the winds push it inland, we could have some real challenges in the fishing community.

LAVANDERA: Disaster crews are removing the crude oil mix, which left this sheen in the gulf water, but 5,000 feet below the surface, the coast guard is worried about the oil well head. Mary Landry of the coast guard says it is not secured and could spew hundreds of thousands of gallons.

ADMIRAL MARY LANDRY, U.S. COAST GUARD: We have a remote vehicle and sonar. We're monitoring 24/7 for any release of crude.

LAVANDERA: Right now the coastal water where these oysters are harvested remains clean, but mike is closely monitoring the efforts. He isn't sure the worst is over.

VOLSIN: That's what we're really concerned about, if that pushes in, kills marsh, gets into the bottom structure, the creatures get impacted. It could impact the shrimp, the fish. And if it gets nearer to shore and in shore, it could impact oysters, crabs, all the living creatures that are out there.

(END VIDEOTAPE)

LAVANDERA: People still worried about the what if at this point even though everything's kind of held steady today, they won't feel more comfortable until officials say they have a handle on that situation 5,000 feet below the surface of the water. This would affect the tuna fishing as well as the shrimping industry.

MALVAEUX: Could be a very big problem. Thank you, Ed.

As the Senate moves closer to a possible showdown to financial reform, there are some who are asking if Wall Street suffers because of the bill, so what? Let's bring in our senior political analyst David Gergen to talk a little about that. Obviously, you get the sense here that financial reform going to go to the Senate. A lot of people talking about this. This is "The New York Times" op-ed says -- it's entitled "Don't Cry For Wall Street." It says the fact that Mr. Obama should be trying to do what's right for the country, full stop. If doing so hurts the bankers, that's okay. Should there be some concern here for private enterprise, free enterprise, that the banks are going to suffer, or does it really matter?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, Suzanne, it's one thing to say we ought to get more regulators on the field and have stronger regulations. That's a good thing. But as a major Harvard economist told me this afternoon to set out to punish the banks is misguided. If you think about it, you see that it not only hurts the banks, it winds up hurting the country.

MALVAEUX: Do you thing the president struck the right tone when he was on Wall Street there? Because he obviously was changing his tone. Didn't call them fat cats. It wasn't very aggressive. But we certainly heard from the Democrats who were pushing very hard on the fact that these Wall Street banks were not doing the right thing.

GERGEN: I think he did strike a more constructive tone. I would remind you that during the depression Franklin Roosevelt didn't set up to hurt the factor of great wealth. He was always proud of that. He saved capitalism. It was in that spirit that president Obama spoke yesterday. Come back to the bench. They have done some bad things and they do need to be regulated. But it's also true that the investment banks of the country have made New York the financial the of the world and that has provided credit to an awful lot of companies to grow here in the United States and to export more overseas. If you wind up punishing them, New York will shrivel as a center and Singapore and Hong Kong will take over the financial operations of the world and Americans will wind up with fewer jobs and less money in their pockets.

MALVAEUX: We heard a lot of back and forth between the Democrats and the Republicans. I know talking to white house aides that they were encouraged by Chuck Grassley's position on this, when it comes to trading derivative, making that more transparent here. It does seem like this thing will pass. Who comes out on top? The Democrats or the Republicans? Who looks like they've done the right thing?

GERGEN: On this one, I think that the Democrats are going to pick up most of the credit because opinion is running stronger in favor of tighter and tougher regulation. The president played it reasonably well. But I also think that enough Republicans will come on board before it is all over to make it look more bipartisan. George Will has predicted there will be 70 votes. I think that might be close to the mark.

MALVAEUX: All right. David, thank you so much.

We're following breaking news this hour. The governor of Arizona signs a controversial immigration bill that could provoke a national debate. We'll talk about this and the implications for the rest of the country.

(COMMERCIAL BREAK)

MALVAEUX: Lisa Sylvester is monitoring some of the other top stories coming into THE SITUATION ROOM right now. Hey Lisa. What are you working on?

LISA SYLVESTER, CNN CORRESPONDENT: Hi Suzanne. Well, Sarah Palin took the witness stand in Knoxville, Tennessee in a courtroom to testify against a man accused of hacking into her e-mail account during the 2008 presidential campaign. Palin told jurors that she didn't know her account had been accessed and that personal information had been posted on a public website until it was reported in the media. She says her life and the campaign were disrupted by that incident.

Government incentives and milder weather being credited for a surge in new home sales. The 27% gain in March off record lows in February surpassed expectations. It is the largest monthly increase in 47 years. The median sales price was $214,000.

A court ruling in Utah clears the way for the first firing squad execution in the United States in more than 14 years. In Utah, death row inmates convicted before 2004 can choose to die by firing squad or lethal injection. A judge this morning signed the death warrant for convicted killer Ronnie Lee Gardner after ruling that he had exhausted all avenues of appeal. Gardner said, quote, I would like the firing squad, please. At least the guy knows what he wants, how he wants to go out.

MALVAEUX: OK. Thank you Lisa. More on our breaking news. Arizona governor's signs the nation's toughest immigration bill on record. President Obama calls the measure misguided. Well, is it or a step in the right direction?

(COMMERCIAL BREAK)

MALVAEUX: Breaking news this past hour, Arizona Governor Jan Brewer signs a controversial immigration bill into law. This makes it a state crime to be in the country illegally and requires police officers to question people about their immigration status if they suspect it. Now, joining me for today's strategist session or Democratic strategist and CNN political contributor Donna Brazile and David Frum, a CNN.com columnist and former special assistant to President George W. Bush. I mean, this is -- everybody is talking about this, kind of unbelievable how much interest this has really garnered around the country. Was this a smart move on the governor's part?

DAVID FRUM, CNN COLUMNIST: First, I'm a naturalized U.S. citizen. I have a special interest here. I'm someone who believes the United States needs a lot less immigration and with a lot more emphasis on skills. But you want to put your immigration restriction in a way that won't plunge your state into years of litigation in which you are going to be joined from doing the things that could really make a difference. The place to stop -- there are two places to deal with illegal immigrants. At the workplace where you make it more difficult for illegals to get a job, and where people are stopped anyway in the course of a lawful police stop. That's how they got the guns out of New York. To get police power to stop people on suspicion, that's lawsuit bait.

MALVAEUX: Donna, do you believe this could lead to racial profiling?

DONNA BRAZILE, DEMOCRATIC STRATEGIST: Absolutely. It gives the police the right to challenge anyone for their immigration status. I think it's regressive, wrong headed. I support comprehensive common sense immigration reform. It is time that Congress and the president both sit down and come up with a workable plan that will allow the millions of undocumented workers a pathway to either citizenship or to figure out how we crack down on businesses that hire undocumented workers.

MALVAEUX: But I cover the Bush administration for some eight years. And he tried. He tried and tried and tried. He couldn't get it through. It just was not happening. And there are a lot of people who have been lobbying President Obama behind the scenes for months now to get more involved in this, to hold a summit, to push forward legislation, and they've not seen enough on the federal level here.

FRUM: Don't do the amnesty part. That was the thing that was the bone in the throat in the bush years. That's the deadly part. Here's what you can do. Empower police to say somebody makes an illegal left turn, in addition to showing their driver's license, police can then ask them for their papers. We should a mechanism for removing people that don't have proper proof that they're entitled to be in the country. The workplace, it should be a really serious offense. The violation of the clean water act carries $25,000 per day for offense. Immigration offenses charge nothing like that. If the employers knew it didn't pay, they wouldn't hire the illegals. Then those who are here would go home. You don't authorization the police.

MALVAEUX: Does this motivate President Obama to do something here? We've heard from the governor before. She says, I asked the Obama administration to support 250 National Guard, put them on the border. She says they dropped the ball. She's taking it into her own hands.

BRAZILE: I think she's in a tough primary challenge and doing what she can to shore up her base.

MALVAEUX: You think it's political?

BRAZILE: Absolutely. In this politically charged environment, absolutely. The president should authorize the justice department to authorize that this bill is legal. That we're not unnecessarily rounding up people because they look a certain way. But this allows residents to sue the municipalities if they don't believe that the police are doing enough to so-called round up undocumented workers. This is going to cost many people in Arizona, one-third of the population right now, Latinos. This will cause many of them to be fearful of being stopped for just nothing. Just to see their papers. FRUM: Let's remember what the lawful residents of Arizona are going through. When illegals cross from Mexico into Arizona and Arizona is now the major crossing point. Along the way, they leave garbage, human feces on people's laws. They bring organized crime with them. Phoenix is now the capital of kidnapping in the United States and maybe one of the capitals of it in the western hemisphere and Mexicans gangs reach in and wreak violence on their rivals there. It is a huge problem.

MALVAEUX: And bottom line is this governor supported what many people -- the legislature already supported this. This was mainstream society in Arizona supported what a lot of people look at as extreme. What does this say about the tone here, the tenor, the people of Arizona, what they're feeling, real quick?

BRAZILE: As I understand -- and I have to agree with David that it is an issue of law enforcement. People are worried about crime. But people also are worried about fairness. This is a society that based many of our values on fairness and opportunity for all. So again, it's broken. We need a national solution.

MALVAEUX: We're going to have to leave it there. Donna Brazile, David Frum. Appreciate it.

Jack Cafferty is asking should President Obama be more concerned about the S.E.C. watching pornography when it should have been watching Wall Street? He is standing by with your e-mail.

And an oil rig safety expert helps us understand the threat of a massive leak off of Louisiana, after that fiery explosion this week.

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MALVAEUX: Jack joins us again with "the Cafferty file." Hey, Jack.

JACK CAFFERTY, CNN CORRESPONDENT: Suzanne, the question this hour is -- should President Obama be more concerned about the S.E.C. watching pornography when they should have been watching Wall Street? Here's some of the e-mails that I can read you.

David in New Hampshire, "Why in the hell aren't their names being released? That along with getting a pink slip. After all, like you said, they work for us. I used the "work" for lack of a better term. I used to work for a major airline. It was cut and dry, if you were caught accessing porn on company computers, either on the clock or not, you could kiss your job good-bye."

Mary writes, "Our entire government is a sham. We're going broke paying taxes, and for what? Things like this. We as a society have declined in morals and integrity. I can't wait until November, 2010, to vote these incumbents out of office and for November 2012 to remove Obama."

David in West Virginia says, "Come on, Jack, these guys were under a lot of stress."

Mika writes, "This is a perfect example of big government gone wrong. Who regulates the regulators? And let's not forget the government's hand in the financial collapse by putting programs in place to allow people to buy homes who had no business buying them in the first place. They love to blame Wall Street without accepting their own role in all of this."

Chris writes, "Well, the S.E.C. clearly has its priorities. Maybe just fire them all and create a new agency. But just adding layers of bureaucracy to the bloated government of a broken country is not the answer. If something doesn't work, replace it. Don't create a couple of new agencies to do the same redundant, ineffective work."

Dennis in North Carolina says, "Yes, a typical government employee mindset. We owe them a living."

Nick in Detroit says, "You've got to admit, though, when the world is crumbling all around you, nothing spells relief quite like p- o-r-n."

And Kyle in Washington, "Jack, they were probably on those sites legitimately. Obviously they were doing research on how to perform the same acts on the average citizen."

You want to read more on this, and there's some yucks in there, some I couldn't put on the TV here, go to the blog, the website, CNN.com/Caffertyfile.

MALVAEUX: Wow. Okay. Thank you, Jack. Thanks very much.

Well, we're going to have more on the Goldman Sachs just ahead. A group of house Republicans is asking for a federal investigation. Was there something fishy about the timing of the fraud charges against Goldman Sachs? Those details right up ahead.

And we'll get a little flavor from the first stop on the Obama's North Carolina vacation.

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MALVAEUX: A major airline manufacturer is navigating through tough times with a simple, but unofficial motto, innovate or die. Here's CNN's Tom Foreman with the story.

(BEGIN VIDEO CLIP)

TOM FOREMAN, CNN CORRESPONDENT: A few years back, Cessna, one of the most renowned names in aviation, was selling hundreds of multimillion dollar airplanes annually, then the recession, scandals over the misuse of corporate jets, and the company lost half of its orders and half of its jobs, 6,000 in Wichita alone. For CEO, Jack Peloton, a wake-up call.

(END VIDEO CLIP)

MALVAEUX: Apologize for that sound problem there, but you're in THE SITUATION ROOM.