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Donald Trump's Accounting; Debt Debate

Aired April 21, 2011 - 20:00   ET


ELIOT SPITZER, CNN ANCHOR: Good evening. Welcome to the program. I'm Eliot Spitzer.

Our top story, a man who these days needs no introduction. Donald Trump. Tonight, we're looking into his finances and how he has presented the facts about his net worth. And we're doing it with Donald's help. We got our hands on sworn testimony he gave in a deposition at the end of 2007.

According to some polls, Trump is the Republican front runner for the presidential nomination.

Tonight, there's one thing you need to know about candidate Trump. His financial statements often appear quite different from an objective view of the facts. In 2007, Trump sued Tim O'Brien, author of the book, "Trump Nation: The Art of Being the Donald." That's where this deposition came from. And we've been going over the case pretty carefully.

CNN's legal expert Jeffrey Toobin joins me now. He's been studying it, too.

Jeff, it's tough to know where to start. But let's look at the condominium tower Trump built in Las Vegas. Back in 2006, Trump appeared on "LARRY KING LIVE" on CNN and he talked about how successful he was. Take a look at this.


DONALD TRUMP, ENTREPRENEUR: Its location, it's the city, if it's a great city, if it's a city with certain potential, Philadelphia is really on the upswing. I like the city a lot. So we decided to do that job. Miami, we're doing a lot of jobs in Miami. We're doing quite a few jobs in Miami.

Las Vegas, I'm doing a job with a wonderful partner that is going to be spectacular. It's totally sold out. It's 1283 units, totally sold out, a great location. It's a condominium. And it's been a really amazing success.


SPITZER: Trump made the same claim to the "Wall Street Journal" and to CNBC. Beautiful building, 100 percent sold. OK. Now for the reality. According to sales data submitted by Trump's own accountants, only 903 units were actually sold in Trump Hotel Las Vegas, leaving almost 1/4 of the units unspoken for. Donald Trump claimed he actually wanted to keep the rest as his own investment, but the lawyers' response, and I quote, "100 percent sold, that was a lie, Mr. Trump, wasn't it?"

So, Jeff, what do you make of this discrepancy? He said over and over again, 100 percent sold, and yet it wasn't.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, and his explanation is so bizarre. Because he says, well, those other 300 and change, almost 400 units, well, I wasn't actively trying to sell them. So it's like they were sold. You know, it's not a legal problem. But if he becomes a serious candidate for president, that kind of misstatement as they say, of politicians could be a big problem.

SPITZER: Here's what I would say, if this was one in isolation, OK. But if it is emblematic of a course of conduct, a pattern of -- in practice, then it becomes a problem and that's why -- let's take a look at another example.

Let's go back to the "LARRY KING" interview when Trump explained the golf development he was building he would have, he claimed, 75 mansions. Take a listen.


TRUMP: The fact is that I'm doing something that I'm very excited about. It's Trump International. It's a golf course along the ocean and palace where it's 2 1/2 miles along the ocean. And it's just opened and it's getting reviews that it's a better golf course than even the Great Pebble Beach, which of course I love.

But I have 2 1/2 miles on the ocean which is more than any other course. Every hole either is on the ocean or faces the ocean, and it's great. And in addition to that, I'm building 75 great mansions over the top of the golf course. So it's a very exciting project.


SPITZER: Earlier today, we called the sales office at the Trump National Golf Club Los Angeles. How many of those 75 mansions have been built? Five years later, six. And no more are under construction. And how many have been sold? Three.

But here's the thing, in 2003, Trump valued the property at $30 million. In 2005, he valued it at $360 million. Why? Because of the 75 mansions, but only six of them are there.

So that discrepancy in valuation, Jeff, that's a big number, and arguably a big problem.

TOOBIN: Well, this is the issue about that one. It's not false statements. It's that he's been accused of puffing up his net worth. And we know he's a very rich man. And frankly, I don't know what difference it makes whether he has $1 billion or $4 billion.

But the issue is, is he telling the truth about how much money he actually has and this certainly seems like a problematic valuation.

SPITZER: Precisely. Look, the whole predicate to his campaign. And these were his words the other day when he said, I'm bigger, richer -- I think the words were, many, many, many, many times richer than Mitt Romney, whatever the phrasing was.

If, in fact, that isn't the case or it is as you say puffing and there are real discrepancies between the numbers he's putting on projects and the actuality, then his own stated rationale for his candidacy begins to crumble. And that I think these 75 mansions is not six, only three are sold, and values it at $360 million, that's a lot of money for three houses.


TOOBIN: Even at higher -- in inflated real estate.

SPITZER: That's right. All right.

TOOBIN: Those are expensive houses.

SPITZER: One more. It tells a familiar story. Here's Trump talking about a speech that he claimed he was paid $1 million for.


LARRY KING, HOST, LARRY KING LIVE: I know you have some books out.

TRUMP: Right.

KING: On marketing and real estate, I saw those. You have tapes. You're everywhere. And what is this thing with the Learning Annex?

TRUMP: Well, the Learning Annex --

KING: This ad at "L.A. Times."

TRUMP: The Learning -- I didn't put that in, but the Learning Annex is a great institution. And they have seminars. And as an example this coming Sunday we have a seminar in San Francisco, 61,500 people.

KING: And you do it like a lecture?

TRUMP: I do it like a lecture. And frankly, they pay me a lot of money but I do it because I love doing it. I really enjoy doing it. It's usually on a Sunday night. So I'll leave either New York City or Palm Beach. I'll fly out to wherever the destination is and we'll have crowds that are unbelievable.

KING: True I read that in New York you got $1 million? TRUMP: A speech? Yes.

KING: For the Learning Annex.

TRUMP: Yes. That's true. It's actually more than that.


SPITZER: Well, no, actually, it wasn't $1 million, it was $400,000. Look, still not a bad paycheck, but not a million bucks the way he had just said it was.

Jeff, again, discrepancies between reality and what he's selling as the reality.

TOOBIN: Well, in fairness, we should point out what his explanation was. When he's confronted about that in his deposition --


TOOBIN: He says well, I only got $400,000, but they spent $600,000 promoting the lecture. So all those ads with my face on it, that's like I was getting paid that amount of money. But you know --

SPITZER: You're saying that without laughing.

TOOBIN: Well, I mean it seems like a ridiculous explanation.

SPITZER: It's like Derek Jeter saying, look, I'm paid $10 million to play shortstop, but the Yankees spend $30 million advertising the games, and so I'm being paid $40 million.

TOOBIN: It doesn't make any sense.

SPITZER: It's not reality.

TOOBIN: And you know --

SPITZER: He didn't pay taxes on it.

TOOBIN: We are trying to, you know, put forth these explanations. Think about how these could be used in political ads. Where they're not interested in fairness.


TOOBIN: I mean they could beat him over the head with this. Now will Mitt Romney do it? Will Tim Pawlenty do it? Will Barack Obama do it? They might because there is a lot of material here to be exploited.

SPITZER: Look, and as you just said, we want everybody out there to know what he said in response to this.

And as Jeff pointed out, he claimed the $600,000 that they spent advertising it was what he was referring to. I don't buy it. But you know he wanted the notion he's being paid a million bucks to give a speech. I understand why he wanted people to think that, it simply wasn't true.

Look, there were literally dozens of contradictions throughout his deposition. Discrepancies between what Donald Trump says and the facts as presented.

Listen to this exchange in the depositions. The lawyer asks him, have you ever lied in public statements about your properties? Trump says he tries to be truthful, but then he adds this, "I'm no different from a politician running for office. You don't want to say negative things."

Then the lawyer asks him, have you ever exaggerated in statements about your properties? His response, "I think everyone does."

You know what? That's not true.

Then there were his 2004 financial statements. He used it to try and get loans from North Fork Bank and Deutsche Bank. He said -- Trump said he was worth $3.5 billion. Norfolk did the math and said, no, only $1.2 billion. Still not bad, but it's not $3.5. Deutsche Bank said no, only $788 million.

The lawyers in this deposition accused him of lying about his worth. All we can tell you is this, nothing quite added up.

All right, Jeff, stay right there. We're going to talk about this for a moment or two. We'll be right back.


SPITZER: I'm back with CNN's senior legal analyst Jeffrey Toobin.

So, Jeff, you know, let me set the stage for this. This isn't just some effort to bash on somebody who has been, as I've said on this program, very successful. I have a lot of respect for much of what he has done. But he set up his entire presidential campaign and the argument for it as some sort of judgment on his qualities and skills as a businessman.

And when you do that, you kind of cry out for people to take a hard look at the authenticity of that record and the credibility of every number that you put in front of them.

TOOBIN: And it's not just numbers, it's your personality. It's your -- it's your reputation. It's your history of candor or lack thereof.

I mean look at it. When Bill Clinton ran for president, all of us in the news media spent a great deal of time looking at whether he dodged the draft in Vietnam and what he wrote to the draft board in Arkansas. Barack Obama and his minister in Chicago.

These are the relevant issues of background. This is sworn testimony that this man gave in a libel suit where he said he was libel, which by the way a case that was thrown out.



TOOBIN: Thrown out and the author was upheld. But you know this is -- this is perfectly fair game. And if you want to run for president, this is kind of a scrutiny you should -- you deserve.

SPITZER: Here's the bizarre thing. Donald Trump's career has been one of brilliant marketing. Marketing in his case that has a great deal of bravado built into it. His entire life story is one of I am bigger than everybody else. I am better than everybody else. And of course, half of that the public understands and I think appreciates is sort of -- if not smoke and mirrors, a story of exaggeration.

On the other hand, it's unfair of him to then turn around and say, look, everybody does this, which isn't simply the case, certainly when it comes to financials and it also is not the case despite the public perception when it comes to politics. The sort of aggrandizement -- self-aggrandizement he's participating here is not accepted and the media won't let him get away with it.

TOOBIN: Especially when you talk about how he's run his campaign so far, if it is even a campaign.


TOOBIN: He has expressed contempt for Mitt Romney, as you quoted earlier. I'm much richer than he is. Now, I have a question, do voters go into the voting booth and say I'm going to vote for the richest candidate? I mean I don't know if they do or not.

SPITZER: I can see -- I can see the John -- JP Getty was the president of the United States, or Nelson Rockefeller never got there, and Bill Gates isn't there yet. So --

TOOBIN: No, but once you say that, you raise the question of, well, how rich are you? How many buildings do you own? These turn out to be very complicated questions. At another point in that deposition, which we all went over today, he says, well, I own some buildings and I license my name to some buildings if it's all sort of the same thing.

Well, actually, you know, it's not sort of the same thing.

SPITZER: Right. Right.

TOOBIN: And, you know, these are the kind of things --

SPITZER: There is loosey-goosey language all over these depositions that I think will come back to haunt him if he is, in fact, a candidate. There's another quality or element to his campaign that deserves attention. He has made the birther issue the -- the center piece up to now of what is his appeal to the Republican Party. And if he's going around the country saying there isn't sufficient proof that the president was born in the United States, something that I think most of us have rejected out of hand as a credible argument, the one that Donald Trump is making, then I think he is almost begging for people to turn that same level of scrutiny back on him.

TOOBIN: Well, I would have a less kind evaluation of that. I mean, this is based on a lie. Barack Obama was born in Hawaii. Any rational person thinks that. The only people who don't think that are bigots and crazy people, and I don't think Donald Trump is either bigoted or crazy.

I think he's very cynical in using this to motivate a part of the Republican Party that hates Barack Obama beyond any level of rationality. And putting aside everything else, it's an absolute disgrace that he's raising this.

SPITZER: Can I turn completely turn the tables on you, though?

TOOBIN: Certainly.

SPITZER: One thing just occurred to me, there would be one absolutely wonderful thing if all of these skills that Donald Trump has, he brought them into the Oval Office in the White House, in the presidency. If -- with his accountant, with his way of valuing property and looking at books, there'd be no federal deficit.

He would just say the White House is worth $1 trillion, the Congress is worth -- how much ever we need, you know deficit is gone, lower taxes, everything would be good.

TOOBIN: Days of --

SPITZER: I like his accounting --

TOOBIN: Days of winding roads.

SPITZER: Days of winding roads. All right, Jeffrey Toobin, as always, thank you for spending the time going through these massive depositions today. We picked out only a couple, whole lot more that we could've chosen to zero in on.

All right. Just ahead, Republicans are playing games with our national debt. I'm going to take one of them to task when we return.


SPITZER: The biggest fight of the year in Washington is yet to come. It's the clash over the debt ceiling with a cap set by Congress on how much the federal government can borrow.

Republicans have drawn a line in the sand saying they won't vote to raise the debt ceiling without, and I quote, "serious reforms from the White House." With our national debt a whisker away from hitting that ceiling, is this really the time for games?

Joining me now from Salt Lake City is Republican Congressman Jason Chaffetz who sits on the House Budget Committee.

Congressman, welcome back to the show. Pleasure to be chatting with you.

REP. JASON CHAFFETZ (R), UTAH: Thanks, Eliot. Glad to be here.

SPITZER: He -- I just got to begin with this question. Isn't there something intellectually disingenuous? Eric Cantor who is the Republican who has been launching missiles at the White House pounding the pavement saying we're not going to vote for this, we're not going to vote for this.

He voted for the huge tax cuts in December, OK. He voted for the budget compromise just a couple of weeks ago. You put those two together, necessarily as a simple matter of arithmetic, you're going to have trillion-dollar deficits for the next year or two. So he knows we're going to have to borrow more.

How can you vote for both of those and then as the leading Republican stand up and say but we're not going to vote for the debt ceiling increase?

CHAFFETZ: Well, I voted against both of those. But I really like Eric Cantor. I like the direction he's going. And he's absolutely right. We got to cut up the government credit card. We can't keep spending we don't have.

We can't keep just adding more credit and more credit to our problems without it being coupled with some serious reforms. I think that's a very reasonable stance.

SPITZER: Jason, I think everybody now appreciates having gone through what -- the conversation we've had over the last couple of months, everybody knows we've got a deficit crisis.

The question is, is this the moment -- the national economy would go over a cliff, a cataclysm, everybody agrees, the Chamber of Commerce, usually a Republican ally, agrees this is not the moment to play games.

And what I'm saying is that Eric Cantor -- and I know you like him and you agree with him, that's fine. But what I'm saying is, you can't be intellectually honest and vote for all those tax cuts, for the budget agreement a few weeks ago, and then say, but I'm not going to vote to raise the debt ceiling because the debt ceiling is the necessary logical follow-up, it follows necessarily from his other votes.

How can you explain that? Vote to raise the debt ceiling and then we know we've got to deal with this debt crisis. Isn't that the better way to go? CHAFFETZ: Well, usually the criticism that comes upon Congress, which I think is accurate, is that Congress doesn't deal with these things. We continue to punt these things six or 12 months down the road.

Usually the excuse is hey, it's an election. But it's always an election year. And so there are those of us that want to deal with it right now. I mean I wish the deadline wasn't coming up, but we would still be with now, but don't let -- don't take this opportunity and use it as another excuse to say, well, we'll deal with that later.

SPITZER: Now look --

CHAFFETZ: Because that's why we got ourselves into this problem.

SPITZER: Congressman, I'm all for dealing with it and I'm all for making the hard choices. Look, you and I have had that conversation, you know you and I may disagree --


SPITZER: -- about the choices we should make but I'm all for making really tough choices and facing up to it. But I'm saying the one time you don't play with -- and light the fuse of economic cataclysm because if we don't raise the debt ceiling, we can't afford to default on our debt.

That would blow up the global economy. You and I agree on that, I presume, right?

CHAFFETZ: Yes, and I think as Senator Toomey has pointed out, you can actually structure this so that you can live up to the full faith and credit of the United States of America. Make those Social Security payments, do those other things, and prioritize those.

But look, the bottom line is we have to change the trajectory. Over the last 48 months, our debt went from $8.67 trillion to more than $14 trillion. We had a 60 percent increase in our national debt over the last 48 months. So what's going to change that if we don't have some sort of deadline to compel it to do something different?

SPITZER: Congressman, look, we're going to put up a graphic that shows folks just how close we are to hitting that ceiling. But you and I both appreciate the deficits over the last year were a consequence of at least two things.

One, the huge tax cuts that you and the Republicans voted for, and we disagree about that, but you acknowledge that was a Republican plan --

CHAFFETZ: I didn't vote for that. By the way, I did not vote for that.

SPITZER: You didn't think they were deep enough or long enough. So just that's clear. You didn't -- CHAFFETZ: Well, we also added -- we added -- and in fairness, not only did we extend those tax cuts, we added $300 billion in debt, but we didn't cut any spending. That's why I voted against it.

SPITZER: But wait a minute.

CHAFFETZ: That's why I thought it was wrong.

SPITZER: The deficit is a consequence of those tax cuts and the enormous recession that lowered revenue so much. But let me -- let's switch gears just a moment here.

The Paul Ryan budget plan, which you're basically in favor of. You said if we embrace that, Congress embraces that, you'd be happy to vote for the debt ceiling -- debt limit increase -- it's the only increase. Am I right about that?

CHAFFETZ: Well, if that creates the systemic change that puts us on a trajectory to actually balance the budget and eventually pay off the debt. If we're going to move in that trajectory, of course I would support that.


CHAFFETZ: But if we're going to go with what the president suggests which doubles and then triples the debt, no, I can't support that.

SPITZER: But Jason -- Congressman, let me deal with what I think is an agreed upon fact because it comes right out of Paul Ryan's budget proposal itself. You know, page S-1. Short as 1. He adds, adds over the next decade $5 to $6 trillion to our national debt.

Adds. He doesn't cut. He adds $5 to $6 trillion to our debt. Can we agree upon that as a fact? Those are his numbers.

CHAFFETZ: He had -- there is nobody -- there has nobody has put forward a plan that would balance the budget next year. I wish we could, but what the Republicans said is we're not going to put this on the backs of those 55 years old and older. So the trajectory is moving in the right direction.

SPITZER: But it's not.

CHAFFETZ: That's the point.

SPITZER: But it's not.

CHAFFETZ: You can't balance it next year, you can't. I understand. You can't do it.

SPITZER: Look, you're now --

CHAFFETZ: But you've got to be moving in the right trajectory.

SPITZER: You're agreeing with everything I've said. Of course you can't do it in one year.


SPITZER: And in fact Congressman Ryan's budget adds $5 trillion which is way more than it should because he perpetuates the tax cuts and in fact he balances his budget on the backs of the poor. But that's not the issue I want to go on right now.

CHAFFETZ: Come on. You cannot take that statement with a straight face. That is -- it doesn't balance it on the backs of the poor.

SPITZER: OK. Sure it does.

CHAFFETZ: Come on, that has no -- carries no water. Absolutely not.

SPITZER: Congressman, look.


SPITZER: Fact, fact, fact. Two-thirds of the cuts come out of Medicaid and public assistance for the least well-off members of our society. That is a fact. It may be as an ideology, but that's not -- again, we had that debate last time. I want to come up with another fact that you -- comes right out of his budget again.

You'd have to acknowledge even his numbers won't add up because he presumes the unemployment rate goes down to 3.5 percent in 2016 which can't happen and the Fed won't let it happen because inflation would go through the roof, and so there would never be the revenue which he presumes.

Can't we agree on that? It's simply not a real number.

CHAFFETZ: No, I would not agree with that. What I would agree with that the plan, based on the CBO numbers over the course of time balances the budget and pays off the debt. It takes a lot of years, takes decades to get from here to there. I wish it were faster, but it's a very reasonable plan.

And if the president or the Democrats have a different plan, show me the plan where they actually balance the budget and pay off the debt. Because the Democrats have yet to put forward a plan to do that.

And this is the dialogue that we should be having. I think this is a healthy part of the process. But the president, to suggest that he's going out on this deficit and debt tour having never suggested how he would ever balance the budget, I think is -- leaves a gaping hole for us to say we have a plan, where's yours?

SPITZER: Well, look, Congressman, I think with all due deference, the president's plan is very clear about where he will raise revenue. He was very clear about that. It is an ideological divide. CHAFFETZ: But it never balances, correct?

SPITZER: No, but wait a minute --

CHAFFETZ: It never balances.

SPITZER: Paul Ryan's budget balances when? 2040? Am I right about that?

CHAFFETZ: Just before that. In the 2030s. Yes.

SPITZER: Well, but the numbers as we see them 2040 because there were some errors. He made some simple math errors. I think he's acknowledged that. Arithmetic errors. And I'm not faulting him for that. Only small ones. Only $200 billion. That doesn't register these days.

CHAFFETZ: But the president doesn't have a plan.

SPITZER: But it's not until 2040.

CHAFFETZ: The president doesn't have a plan that ever balances, does he?

SPITZER: He does. Well, I promise you -- I want you back.

CHAFFETZ: No, he doesn't.

SPITZER: Have you figured out which tax loopholes you want to close?

CHAFFETZ: I want to go through that process where the Ways and Means Committee weighs all those options. Again, we want to broaden the base, lower the rates and make sure that we've got more people paying into the system.

SPITZER: OK, we --

CHAFFETZ: That's what we're trying to do.

SPITZER: Congressman, we agree on that, we just got to be -- I've got to pin you down on which ones because that's the painful part.

All right, Congressman, look, I envy you being out in Salt Lake City. Go enjoy the snow. I want to ski with you someday out and all but that's the area of the country.

CHAFFETZ: Come ski. Yes. Absolutely.

SPITZER: All right. Congressman, thanks so much for being with us tonight.

CHAFFETZ: Thank you.

SPITZER: All right. E.D. Hill is with me tonight. E.D., what have you got for us?

E.D. HILL, CNN CONTRIBUTOR: Well, as the federal government worries about the deficit, the billions spent to help homeowners avoid foreclosures has accomplished next to nothing.

An Illinois sheriff is trying to do what Washington can't and he's getting results. We'll speak to him -- Eliot.

SPITZER: Sounds like one tough sheriff. Can't wait to hear about him.

All right. That's coming up.

And next, the air war in Libya has just gotten even more intense. We'll go to Benghazi with the latest on that when we return.


SPITZER: Breaking news tonight, new air strikes have been heard over Tripoli. And just hours ago, President Obama approved use of drones in Libya to help the coalition forces. And not just for surveillance, these predators are armed with Hellfire missiles, which means they have the potential to engage in combat, and it's pretty clear the rebels need help.

One of those rebels is Professor Mansour El-Kikhia. He just got there about a month ago from Texas. He was born in Libya but has been living in exile for three decades. I spoke to him right here a few weeks ago when the thought of returning to Libya was just a dream. A short while ago, I spoke to him with his dream fulfilled.


SPITZER: Professor El-Kikhia, thanks so much for joining us once again.

MANSOUR EL-KIKHIA, LIBYAN OPPOSITION ADVISER: It's my pleasure. Thank you for having me.

SPITZER: So a number of weeks ago back in early March, you came on our show, you were here in New York City. You had been exiled from Libya for 30 years and you said you hoped to get back to Libya within a month. There you are. What does it feel like? What does it look like?

EL-KIKHIA: Well, it's a fantasy land. I mean, like Alice in Wonderland waiting for Godot. It's just unbelievable. I mean, for me it was just a new adventure, a new life. And this has taught me to look at life in a different way, to throw what I've learned over the last 30 years as an instructor of international relations and start looking at it differently, which is really phenomenal. But it's fantastic to be here to see how people are, to see life.

SPITZER: Now, you have been reconnected with family, you've been reconnected with friends whom you have not seen for decades. But you're in Benghazi, which is, of course, the capital or the seat of the opposition government. Do you have a sense that there is a government there that is in control of the opposition movement?

EL-KIKHIA: Not really, Eliot. I mean, I'll tell you, it really is a problem. They're trying very, very hard. But I don't think -- I don't think it has sunk in yet. I don't think it has sunk in that they're free and that being free requires you to do certain things. I think they're still -- they're still trying very hard to come to grips with that.

It's funny -- it's fascinating how the society itself is able to adjust. In this chaos, there are no police in the streets, but people stop at stop signs. They stop at red lights, and so you find that very clear. You find normalcy. Trying to achieve normalcy in life, but underneath that, there is an amount of fear. The fear of what is going to happen tomorrow? Will Gadhafi come back? Will the allies let us down? Will they help us? And so there's this constant questioning going on in their minds. And so it hasn't set in quite yet whether they're really free or not. But even during the circumstances, they're trying to do the best they can on a daily basis.

SPITZER: So it sounds to me as though one problem that you have diagnosed that certainly has been written about is a lack of certainty about who actually is in command of the military. Different generals vying for power. There is also a very fundamental question. How many troops are there? How many members of the army are actually going out to fight against Gadhafi's forces? We had one report that there are only a few hundred. What is your sense? Have you seen the troops? Do you have a sense of order of magnitude?

EL-KIKHIA: Well, really, we have -- as I said, we have two groups. We have the actual military itself. And this is under Abdul- Fatah Younis, whom I personally think is very, very capable, honest. He's a very capable man. He's head of the special forces and he has the loyalty of many, many of the soldiers. Very professional soldiers. And he's working very hard to train, to train young men to actually take over, to be able to defend the city.

And then you have the other group, the other group, actually the insurgents. And they have the arms. And they're fixated on removing Gadhafi. And so, in fact, they're more of a hindrance than help. But they keep on moving forward towards Tripoli and they're being pushed back. I'm sorry to say, but they are farther. And I hate to say this word but they won't listen, they won't listen to the military itself.

SPITZER: What is the impediment to getting more troops into the field? Is it a matter of having insufficient guns, insufficient body armor? The materiel? Are the bodies there, you just haven't trained them? What will it take to create a bigger, stronger, more structured military?

EL-KIKHIA: Well, a number of things. First of all, when the -- when the outbreak of the revolution took place, they opened up all the armories and took away all the arms. And then, of course, the saboteurs (ph), Gadhafi's saboteurs are still around the city. You still find today. Yesterday they captured a number of them. And they're there, they're here ultimately to create mischief. But the biggest mischief they created was blowing up this depot, a huge depot with arms that would allow the military to actually to combat Gadhafi's forces. So you have a number of factors.

First of all, the training. In their training now, the British and the Italians are coming in to help and the Americans to some degree. But I think the United States here must play an important role.

SPITZER: Explain in greater detail. What do you want the U.S. forces to do? Do you need more bombing raids? Do you need recognition? Do you need just materiel and guns, the hardware to win the war? What is that you need?

EL-KIKHIA: I think they need more than anything else is they need organization. I think they need more than anything else is they need organization, public administration. And I think this is where the United States can really, really help.

I mean U.S. military is notorious and famous for this, for helping organize, helping strategize, providing General Abdul-Fatah with aerial pictures of Gadhafi's forces and where they are. Target, making special targets. Leading them, helping the Libyans develop into a democracy.

This is -- this is like a child. This is a new child that just opened their eyes and they need as much help as they can in growing up and flourishing and developing. If America does not assume a bigger role in helping Libya develop into a institutional democracy, then you're going to have -- believe it, you're going to have lots of problems.

Believe it or not, Eliot, now you see it was despite all of this which you're seeing around us, you begin to see political parties forming and emerging. And this hotel we're staying in now, they're meeting every single day of parties emerging and coming out. And I think what America needs to do, it needs to guide and help guide the Libyans. It doesn't require total military force. It requires administration. It requires some help, advice and I think the best advice you can give to the council.

SPITZER: Mansour -- finally --


SPITZER: -- what role are you playing in the opposition governing structure? Do you have a formal role with the government? Are you going to be designated as a minister of some sort? You certainly bring great wisdom to this. What is your role in the opposition?

EL-KIKHIA: Eliot, I just talked to them. That's all. I just talk to them. I give them honest assessments, and that's it. I didn't start this revolution, but I'm helping, I'm supporting it the best way I can. If they ask me to serve, I will serve. But I will not ask to serve. I think they need to do that. But otherwise, I give them advice as much as I can.

SPITZER: All right. All right.

Professor Mansour El-Kikhia, thank you so much for joining us and I look forward to chatting with you down the road.

EL-KIKHIA: Thank you so much, Eliot. I'll see you very soon I hope.


SPITZER: Fascinating conversation with an individual who was full of genuine wisdom.

When we come back, E.D. Hill goes one-on-one with a sheriff who's taking on a new kind of bad guy.


E.D. HILL, CNN CONTRIBUTOR: More than two million people have lost their homes in the foreclosure crisis since 2009. The government's answer, give banks billions in taxpayer bailout money to help homeowners modify their loans. But the program failed. Why? Well, the banks could make more money foreclosing.

Sick of what was happening in his area, one man made his mission to help homeowners in his county. He's their sheriff. And joining us now is Sheriff Tom Dart from Cook County, Illinois.

Sheriff, thank you for being with us.

SHERIFF THOMAS DART, COOK COUNTY, ILLINOIS: E.D., thanks for having me on.

HILL: So what was upsetting you so much? How bad was the problem?

DART: Oh, E.D., you know, words can't describe what a mess it was. Let me put it this way.

About three or four years ago when this first started, one of the documents I got from a bank to go conduct an eviction was a house that no longer existed that the foundation had already overgrown with bushes because the house had been missing for so many years. And that where I was supposed to go evict somebody.

HILL: And you also had to send your deputies out to serve these eviction notices, but you believe that the system was flawed. Explain what you did.

DART: Oh, E.D., I would go out with my deputies on these evictions and we'd come into house after house where people were going about their normal day having dinner and playing with their kids and here I am standing in their living room dressed in black with battering rams and they had no idea why I'm there. Because in this reckless haste that got us into this mess to start with and it was all the banks, mind you, the recklessness that they did in the first place, they wanted me to be just as reckless and just toss everyone to the streets. And so after it became abundantly clear that person after person had no idea that there was even a foreclosure action going on, I just stopped doing foreclosures altogether and said until they get their act together, I'm not doing anymore.

HILL: So you're not denying that a lot of these cases, the owners, the actual owners of these homes were probably behind in their payments. But what it sounds like was happening was you're going there and perhaps it's renters or other people who didn't realize they were at this point. You know, we're sort of caught unaware. And you, I love this because I love it when people say something's wrong, no one's fixing it, I'm going to do something. So you were able to push something through so that people had to be notified. Explain what has to happen now.

DART: Now the banks are required to sign affidavits that they actually have gone out and that there is a house there, that there's the people there who are part of the lawsuit who have been notified. And now, they're forced to sign affidavits under penalty of perjury that all those things are going on. And it's assuring now that we have no more of these mistakes. And, E.D., it's been dramatic how much that has changed that aspect of it. But then the other part, about a year or so after that, then all of sudden we started getting whacked with all the robo signers coming in here, as well. And it became clear that our foreclosure files were filled with those, as well. It stopped the evictions a second time.

HILL: The robo signers, for anyone who's not familiar with this term, it's the banks or the lenders have people come in and sort of en masse they look at piles, stacks of these documents and they kind of, you know, rubber stamp it. There is the insinuation that they don't do their due diligence. But you then sort of partnered with the law students and they started looking at things. What did they find for you?

DART: What we found was two things -- one is actually sort of interesting because you can tell a lot of what has occurred since then. Since we put the brakes on that and started examining what's actually in these files, all of a sudden the number of filings have gone down in our county as well as one law firm pulled hundreds of cases out of the court system for reasons they wouldn't explain, but it's clear we know why. It became clear that everyone now had to go back and redo their files all over again because we were finding file after file with robo signing and also documents saying that we couldn't find the mortgage, we couldn't find the promissory note. So we were finding messes there, and so what we've now is we've opened up criminal investigations.

HILL: Fancy that. You shine a light on it and all of a sudden people want to take a little bit longer time to look at these things.

DART: Yes. Oh, yes.

HILL: My frustration and probably most of America's comes with, you know, the lawmakers in Washington because they set up these fiascoes and then they try to fix them and they just never seem to get anything done. In Illinois, you've been hoping that the legislature will take some action and they are looking at requiring the banks to actually sign affidavits, I believe, saying, you know, these foreclosures are legit. We've double checked it. So far, they haven't wanted to do that, right?

DART: No. You know, the unfortunate thing too, E.D., is I've seen how the political world works and not a day in the woods here. When you have people on the ropes, when this first started blowing up on them, that was the opportunity to get things done with the banks.

HILL: Yes.

DART: There is now the sense that it is our window of opportunity has passed us. And it's back to the old ways where in the silence of the back rooms, most of this legislation gets quietly killed, no one's fingerprints are on it, and all we know are that the homeowners don't really have that sense of security they deserve. We would expect more out of a fast food restaurant than we're getting out of these banks.

HILL: Well, you know, I think that the folks there in Cook County are pretty lucky to have you. If you're not necessarily able to change the situation entirely, you certainly have forced everyone to take greater care with what is such a devastating change to people's lives. And, you know, if you go behind in your mortgage or you've been irresponsible, we all understand that, but you have to make sure when you're doing these things, it's got to be done right. And it seems like you're really holding their feet to the fire and I appreciate that for one.

DART: Well, thanks. E.D., the banks make sure that the homeowners pay on time. There's no reason why the banks shouldn't be required to play by the very rules that they set, actually. We're not asking them to do anything crazy here. Follow the rules, please.

HILL: Sheriff Dart, thank you very much for talking to us.

DART: Thank you.

HILL: All right. Coming up next, Eliot returns to his favorite place, Wall Street, where there is enough glamour and greed for a soap opera. Only unlike those shows, this one's real. Stay with us.


SPITZER: It looks like those guys on Wall Street got away with it again. Just when you thought the tales of Wall Street greed couldn't get any crazier, you won't believe where hundreds of millions of your dollars have been going.

"The Real Housewives of Wall Street" is the latest expose from Matt Taibbi, the journalist who memorably called Goldman Sachs a great vampire squid. And that's only part of the quote.

Welcome, Matt. Great to have you back. So who are these housewives and explain this unbelievable tale to us.

MATT TAIBBI, CONTRIBUTING EDITOR, "ROLLING STONE": Just quickly the background on this is that during the debate over the Dodd/Frank bill last year, there was a bipartisan coalition. Ron Paul in the House, Bernie Sanders in the Senate who were trying to open the Fed's books. They wanted a complete audit, but what they got was a limited look from 2007 --

SPITZER: Let me stop you one second because the Fed had been giving away trillions of bucks and nobody knew where it was going.

TAIBBI: Yes, nobody knew where it was going. I mean, forever they've been doing this but especially during the bailout period, there's a massive amount of money, $1 trillion --

SPITZER: Let me guess, the Fed said sure, come in and look.

TAIBBI: No, of course, not.

SPITZER: They fought and said get away from here.

TAIBBI: Exactly. They fought it but they finally were forced by this amendment, the standards amendment to open up this one three-year period. And so in December of last year, they posted 21,000 transactions that were mostly emergency overnight loans and some limited bailout transactions, like for programs like the TALF. And so when these names came out, I got a call from somebody in Senator Sanders' office, like, dude, you have to see the names on this list. You won't believe it.

SPITZER: Even before we get to this, this is where we found out that Morgan Stanley had gotten like $2 trillion in loans.

TAIBBI: Right. Rolling finance.

SPITZER: Goldman Sachs $800 billion, even though they'd been denying it before that, numbers that are just gigantic (ph). Tell us about these.

TAIBBI: Right. So, you know, basically in order to sell this story to my editors and trying to make a great headline, we looked for the craziest name on the list. And the craziest name was Christy Mack who was the wife of John Mack, who at the time was the CEO of Morgan Stanley. And she was involved with a company called Waterfall TALF Opportunity, her and another woman named Susan Karches.

SPITZER: They created the company.

TAIBBI: Apparently yes. They were the principal investors in this company. And they got $220 million from the Fed to invest in student loans and commercial mortgages.

SPITZER: Just so this is clear, the wife of the CEO of Morgan Stanley got $200 plus million of our tax dollars to buy up paper.

TAIBBI: Right. SPITZER: Had she been in business before?

TAIBBI: Not that I can -- I was able to ascertain.

SPITZER: She isn't the Wall Street type. She's just the wife of the CEO?

TAIBBI: Exactly. Exactly.

SPITZER: $200 million?

TAIBBI: $200 million. And they did it -- the TALF was set up in a very unique way. Basically what they did is they were trying to spur consumer lending. So they gave people these millions of dollars and they said go out and buy student loans and commercial mortgages and credit cards and whatever else it is you want to buy, give them to us. If it goes up in value, you take them back and you cash them in. If they go down in value, you leave them with us and the taxpayer will eat the loss.

SPITZER: Let me translate that a little bit. It means the taxpayer is the sucker and the person getting the money wins all the time.

TAIBBI: Right.

SPITZER: Because if it goes up, they keep it and if it goes bad, they give the junk back to us.

TAIBBI: Exactly.

SPITZER: Which is the old heads you win, tails you lose, what we all learned was, you know, not fair in first grade.

TAIBBI: Exactly.

SPITZER: That's the deal they cut with her?

TAIBBI: They did have to pay a slight premium on the securities, less than 10 percent, so they did have a little bit of skin in the game.

SPITZER: That's it.

TAIBBI: That's it.

SPITZER: And these loans are non -- lawyers called nonrecourse loans, so they literally just walk away.

TAIBBI: Right. So you buy that, you go out and you buy the stuff. You dump it on the Fed's books. If it goes up, you take it back. If it goes down, you leave it on --

SPITZER: I want that deal. Where do we sign up?

TAIBBI: Yes, that's what Bernie Sanders said to Ben Bernanke. He's like, where's the 900 number so that I can call up --

SPITZER: And so, but the wife of the CEO of Morgan Stanley knew enough to go get 200 million -- that's not small change.

TAIBBI: Right, right.

SPITZER: But here's what I've also got to understand. This is how they're going to get people to lend more money?

TAIBBI: Right.

SPITZER: It didn't work.

TAIBBI: Well, yes, I mean, it's arguable. They're going to contend that, of course, the markets were frozen at the end of 2008, and they were unfrozen. But how surprising is that they threw, you know, $80 billion, $90 billion at the problem.

SPITZER: But they could also have done it a different way which is if you want to work off the mortgage situation, which is, you know, E.D. was just saying in our last segment, we clearly haven't done. Actually we get the banks to work on reforming the mortgages rather than cycling the money back and forth between bankers.

TAIBBI: Sure. Yes, they basically -- this was basically a giant government lending program that they allowed these millionaires and billionaires to act as middlemen and get gigantic risk-free commissions for doling out these government loans and they didn't attach any conditions. They didn't say, you know, credit cards from now on can't be higher than 15 percent, or these student loans have to be lower in cost.

SPITZER: Now, there was another element to what sort of tumbled out. And as you said, you had to pound down the walls of the Fed to get them to disclose who they'd been lending to. Give us some other examples. Like foreign banks, they're kind of crazy when you think about it.

TAIBBI: Yes. There were a number of foreign banks. There was the Bank of Bavaria. The Central bank of Mexico got almost $10 billion. Then there was a company called ABC, the Arab Banking Corporation of Bahrain, which is now 59 percent owned by the Central Lank of Libya which for some reason got $35 billion from the Fed that nobody --

SPITZER: Wait, wait, wait. That's the same folks we said we're sending drones over to bomb them, right?

TAIBBI: Exactly. Exactly.

SPITZER: I hope we got our money back before we dropped the drones.

TAIBBI: I don't know the answer to that question.

SPITZER: What are we doing giving money to this Bahrain bank that's owned by the Libyan government?

TAIBBI: There has not been an explanation yet that I've been able to figure out. But they've been giving money to everybody. They were giving money -- even as we're bailing out GM and Chrysler, we were giving billions of dollars -- the Fed was giving billions of dollars to Volkswagen, Toyota, Mitsubishi, all these foreign car companies.

SPITZER: Look, I have been very consistent all through this thing. We needed to do something to get solvency back into the financial system. The problem is, the one you put your finger one just a moment ago, you said there were no strings attached.

TAIBBI: Right.

SPITZER: There was nothing in terms of clawbacks, of crazy bonuses. There is nothing in terms of beginning to lend. Nothing in terms of reforming mortgages. It wasn't the fact that we bailed them out that was the crime, it's the fact they didn't negotiate with the banks to get anything back for the taxpayers.

TAIBBI: Right, right. And also, you have to remember that the banks were getting them all this money at very much below market rates, and yet the money that ended up in the system was all at market rates. So this is --

SPITZER: So some of the banks could take the federal money that was basically zero interest that the banks were paying, buy T-bills risk free at about three percent, make money on that spread and --

TAIBBI: It's free money.

SPITZER: Make money free. Now, look, there is an argument that this is how we got solvency back into the banking system.


SPITZER: We needed to do that.

TAIBBI: Sure. What an extraordinary coincidence that it always seems to work out that the solution to all of our economic problems involves giving risk-free millions of dollars to the same people who caused the financial crisis.

SPITZER: All right. We have only 20 seconds. Do you have that 900 number where we can call to get this loan?


SPITZER: You're useful for it.

All right. "The Real Housewives of Wall Street" is going to be a great TV show when it is finally made.

Matt, you keep coming up with these amazing exposes. We can't thank you enough. And this is really -- go out and read it. It is in "Vanity Fair," right? No, "Rolling Stones." "Rolling Stones," excuse me.

All right. Matt Taibbi, thanks so much for being here.

Good night from New York. Thanks for joining us.

"PIERS MORGAN TONIGHT" starts right now.