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THE SITUATION ROOM
Fitch Downgrades JPMorgan; Edwards' Trial Judge Won't Dismiss Charges; Powerful Explosion Rocks Syria's Largest City; Hudson Family Murder Trial: Guilty on All Counts
Aired May 11, 2012 - 17:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: And you're in the SITUATION ROOM. Happening now, new calls to bust up mega banks now that JPMorgan chase has revealed a $2 billion training blunder. Four years after America's financial crisis, are your investments at risk?
Plus, complaints of air traffic controllers taking naps, watching movies, playing games while they were on the job. A whistleblower raising a big red flag about safety along one of the busiest flight paths in the nation.
And we're standing by for the verdict to be read this hour in the trial of the man charged with murdering three family members of the entertainer, Jennifer Hudson.
We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in the SITUATION ROOM.
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BLITZER: It's blatant proof that Wall Street mega banks haven't stopped taking big risks that could threaten the U.S. economy. JPMorgan Chase's $2 billion fiasco is giving a lot of people flashbacks to the 2008 financial meltdown. Many Americans are wondering how this could happen and what it could mean for their own finances.
Mary Snow is joining us now. She's got the beginning of our coverage. A shocker, I must say, Mary. What's going on?
MARY SNOW, CNN CORRESPONDENT: Yes, this certainly was a shock, Wolf. And another riffle effect has passed. Rating agency, Fitch, cut its rating on JPMorgan Chase. Now, not only is this the nation's largest bank. The news came from a highly respected CEO who managed to steer his company through the financial crisis better than most.
SNOW (voice-over): JPMorgan Chase's CEO, Jamie Dimon, waited until after the markets closed Thursday to make the stunning announcement that the bank lost $2 billion this quarter, a loss he blames on sloppiness and bad judgment. VOICE OF JAMIE DIMON, JPMORGAN CHASE'S CEO: These were egregious mistakes. They were self-inflicted. We were accountable, and what happened violates our own standards and principles by how we want to operate the company. This is not how we want to run a business.
UNIDENTIFIED MALE: I cannot believe that a CEO respected as much as Jamie Dimon, who a month earlier said everything was fine, said, oops, we've got it wrong.
SNOW: Bank analyst, Mike May, the author of "Exile On Wall Street" says while the loss as the JPMorgan Chase aren't life- threatening to the bank, it raises much larger concerns.
UNIDENTIFIED MALE: The question is, are these big banks including JPMorgan too big to manage? They were taking actions to protect the company, and they lose money. It's as if I went out and took insurance out on my house, and a month later, I said, whoops, I lost $100,000 on the insurance policy. If you're doing something to protect yourself, how do you lose money? People are still scratching their heads.
SNOW: The head scratching focuses on the bank's chief investment office in London. That's where one trader in particular was taking such large insurance-like bets that he gained the nickname the White Whale, and it involved complex training instruments that are similar to the ones that triggered economic chaos in 2008.
University of Maryland professor, Cliff Rossi, who managed risk, and major bank says because of the complexity of this business, it can't be fully regulated.
CLIFFORD ROSSI, UNIVERSITY OF MARYLAND: There will always be areas, dark areas of the market and shadowy areas, if you want to call it that, that will remain very murky and very difficult to exactly know until a time like this arises when the other shoe falls, and now, you've got a problem.
SNOW: Now, JPMorgan Chase's problem is amplifying the debate over stiffer regulations in the so-called vocal rule, named for former Federal Reserve chairman, Paul Volcker, that would restrict proprietary trading by banks. Just last month, CEO Dimon was asked about big risk taking, which he said was, quote, "a tempest in a tea pot."
SNOW (on-camera): And Wolf, "The New York Times" reports that in recent days, the Securities and Exchange Commission opened a preliminary investigation in potential civil violations linked to the $2 billion loss. Now, the SEC told CNN it would not comment when asked if they were looking into the matter -- Wolf.
BLITZER: Thanks very much, Mary Snow.
Wall Street investors appeared to shrug off the JPMorgan bombshell. Bank stocks took a hit, but the major indices closed little changed from the day before. That doesn't mean there won't be consequences, though. Our chief business correspondent, Ali Velshi, is joining us right now. Ali, explain to us how this trading by JPMorgan went so horribly wrong.
ALI VELSHI, CHIEF BUSINESS CORRESPONDENT: Well, first of all, when you think of investment banks like JPMorgan, what they typically do is they take people with a lot of money and they pair them up with companies that require some kind of finance in order to expand. There's a new thing that's happened. It's called proprietary trading. So, it's not the customer's money.
This is the bank's money, and they use it to take directional bets on an industry, on companies and stocks or on bonds, or in this case, on loans. And this makes the banks a lot of money in the case of JPMorgan and lost them a lot of money. Now, let's talk about what this it is. What it is that they did?
Bottom line, Wolf, let's say you owe me money. And I'm not sure you're going to pay me. I can buy an insurance policy on that loan so that if you default on your payment, I get paid out. JPMorgan was the place you bought that insurance from. Investors would buy insurance on these loans. JPMorgan was betting that those loans wouldn't default.
Guess what? Just like AIG in 2008, the loans started to default. JPMorgan had to pay it out. Here's the rub. JPMorgan was acting like a bookie, because those investors had nothing to do with the underlying loan. This isn't like me buying a loan on your money that you owe me, insurance on money you owe me.
They were just betting on loans in general, and JPMorgan had nothing to do with the underlying loans. So, this was just a whole lot of betting and JPMorgan betting that the economy or various loans would go a certain way, and they risk their money doing it.
This is the kind of thing that has people very worried, Wolf, about whether other banks are doing it, because JPMorgan was thought to be better and smarter than this at risk management, and it does bring you flashbacks to 2008 that this is what happened at AIG. It's what happened at Lehman.
It happened with a lot of other places. Is this -- are we in danger of these too big to fail banks engaging in risky behavior that could actually affect the economy, Wolf?
BLITZER: I can't tell you how many people ask me is it safe to keep my money with JPMorgan Chase right now. What's the answer?
VELSHI: Well, you know, Wolf, my normal instinct would have said absolutely yes, but, look, Fitch has just lowered its rating on the company, and we need to know. We need to shine a light into the shadowy corners and dark holes (ph) to actually find out how serious this is. If this all it is, it won't make any difference to JPMorgan or the economy, but we need to see where else this kind of thing is going on, Wolf.
BLITZER: Is JPMorgan Chase, Ali, too big to fail?
VELSHI: Yes. They're all too big to fail. That's the problem. That's what hasn't changed since 2008. If one of these big banks got into big trouble, there would be no choice, but for governments and taxpayers to step in. Again, it does not look likely that we're anywhere close to this. JPMorgan is a profitable and financially healthy company.
It was even during the financial crisis, but when stuff like this happens and the boss comes out and says, this was not the kind of thing we're supposed to be doing, and it's unclear how much he knew about it, that kind of makes me a little unsteady.
BLITZER: Yes, when I heard about it, I only thought of Lehman Brothers. That was once the gold standard as well, and we know where Lehman Brothers is right now. I'm not saying that JPMorgan Chase is going to follow Lehman Brothers, but it is --
VELSHI: But let your mind goes that direction and that's the problem.
BLITZER: These are people's life savings that are at stake right now. So, the stakes, obviously, are enormous. Ali, thanks very much.
The JPMorgan Chase debacle is certainly new fuel for the 2012 presidential race as well. And it's driving home the very different positions taken by President Obama and Mitt Romney on financial regulation.
Romney is called for the repeal of the reform legislation President Obama signed into law after the 2008 financial crisis. President Obama slammed Romney's position last weekend while promising to stay tough on Wall Street.
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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Wall Street speculators reaped huge profits by making bets with other people's money. Manufacturing left our shores. A shrinking number of Americans did fantastically well, while most people struggled with falling incomes and rising costs and the slowest job growth in half a century.
Why else would he want to slash the investments that have always helped the economy grow? While at the same time, stopping regulations of the reckless behavior on Wall Street that helped -- make the economy crash?
Somehow, he and his friends in Congress think that the same bad ideas will lead to a different result. Or, they're just hoping that you don't won't remember what happened the last time we tried it their way.
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BLITZER: Let's bring in our chief political analyst, Gloria Borger. Gloria, constant tug between the Obama administration, Wall Street. This is going to add fuel to that.
GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Sure it will. I spoke with the senior administration official today, Wolf, who believes that this is not good news for the people who want to repeal or scale financial reform. JPMorgan chase has become exhibit A again.
You know, the whole idea for scaling back financial reform is that the banks are healthier and that reform will keep them from getting even healthier, because it will get in the way, and it will cost an awful lot of money and the banks shouldn't have to pay for that.
Now, Barney Frank, who is one of the authors of financial reform, said today in a statement, JPMorgan Chase, entirely, without any help from the government, has lost in this one set of transactions five times the amount they claim financial regulation is costing them.
Now, the big existential question here, though, Wolf, is if you had all of the financial regulation in place including the Volcker rule that Mary Snow was talking about, would it have prevented this $2 billion loss at JPMorgan Chase? A lot of people I talked to today said no.
BLITZER: What are the republicans saying about all of this?
BORGER: Well, they're tiptoeing around this. As you pointed out, Mitt Romney has been for less regulation. Today, his campaign put out a statement that to me sounded like it could have been written by a Democrat.
"JPMorgan's reported $2 billion trading loss demonstrates the importance of oversight and transparency in the derivatives market. As president, Governor Romney will push for common-sense regulation that gives the regulators the tools to do their jobs and gives investors more clarities."
That's a little vague. And, today, Senator Bob Corker of Tennessee called for hearing and said we need to have a hearing into what happened at JPMorgan. So, it's clear Republicans want to get to the bottom of this because they know politically what happened with this $2 billion loss is very difficult to explain.
BLITZER: On the other side, Senator Bernie Sanders of Vermont said he wants to break up these biggest banks because they are too big to fail, and it's too dangerous right now. JPMorgan chase, Jamie Dimon, they were the gold standard -- I hate to use that pun. The gold standard of all these
BORGER: They were.
BLITZER: Especially Jamie Dimon whose reputation is sterling, by all accounts.
BORGER: It is.
BLITZER: Brilliant guy. For this to happen on his watch must be such a humiliation.
BORGER: Well, as you saw today, he was quite critical of his own company, calling it sloppy saying that shouldn't happen. He's been quite outspoken against some of these regulations saying that they would strangle the banking industry, but I think he's going to be under the spotlight.
You know who else is going to be under the spotlight? All the regulators. The Securities and Exchange Commission and the fed because these are the people who are supposed to be watching the banks. So, they're going to be under the spotlight, as well. As Ali said, nobody wants a repeat of what happened.
BLITZER: You heard a report (ph) of "The New York Times" saying the Securities and Exchange Commission, the SEC, has already launched an investigation. Once you launch a federal investigation, you don't know where it's going to --
BORGER: Right, but they're going to be watched, too, because they should have known about it and aybe they did. We'll see.
BLITZER: Gloria, thank you. What a story.
Some air traffic controllers who were supposed to be monitoring the skies apparently were taking naps, playing computer games instead. A whistleblower files a frightening complaint.
And did the prosecution make its corruption cases against John Edwards? We're looking at a smoking gun potentially.
And President Obama accused of stunning aloofness that could threaten lives. We'll tell you what's going on.
BLITZER: John Edwards' lawyers are trying to get the corruption charges against him dismissed, but the trial judge said no. Edwards' team will start presenting the defense's case on Monday, and a lot of people want to know if the former presidential candidate will take the stand.
Joining us now, Diane Dimond. She's a special correspondent for "Newsweek" and "The Daily Beast" who's been watching this trial every single day. Diane, did the prosecution that has now rested, did they make the case that the money that went to Rielle Hunter was, in effect, a campaign contribution?
DIANE DIMOND, "NEWSWEEK" AND "THE DAILY BEAST" SPECIAL CORRESPONDENT: Well, you know, that is really in the mind of the jurors that have been watching this. Did they have a smoking gun? Did they have someone say that John Edwards said, you know, this might be a campaign contribution, but let's go ahead and do it anyway? No.
They did have Andrew Young, his wife, Cheri Young, and a woman named Wendy Button (ph) who had been a speechwriter for John Edwards testify that he knew where this money was coming from, but not that he thought it was illegal.
In fact, John Edwards told all of those people and even more that this was a completely legal thing. He had checked with legal experts, and there was no problem. Let's just keep doing what we're doing.
BLITZER: Because that's the burden of proof. They have to show that the money -- that they knew this money was a campaign contribution. That's a pretty high bar despite the fact they may think that John Edwards was an idiot, a really bad person, a liar, disgusting, whatever they think. They have to prove the prosecution that this was a campaign contribution, and they knew it. Is that right?
DIMOND: Right. And the language is even more specific. It's that they have to prove that John Edwards willfully and knowingly knew that he was violating the federal election campaign act. Now, you know, it's a really high bar, and of course, it is because it was passed by the United States Congress.
They were the ones that were going to have to stick to this law. So, can they prove that he knowingly and willfully did this? I don't know. But, as we heard today in court, there was a motion to dismiss the case which failed. The prosecution said, look, this crime began when John Edwards was in Iowa.
He learned that his mistress was pregnant. He called his aide, Andrew Young, back in North Carolina and said get her out of the state. The implication, Wolf, is that he was in Iowa. It was right before the Iowa caucuses. It was a campaign reason to get this woman out of the state not as the defense has said to try to keep it out of Elizabeth Edwards' sphere of information.
I think one of the most damaging things that we've seen here was the ABC interview that he did in 2008. We saw it yesterday. That was the end of the prosecution case. And in it, John Edwards, we now know, just blatantly lied about several things, and one of them was, "I already told my wife. Elizabeth knows everything," quote/unquote.
She knew in 2006. They're in this courtroom right now saying this was not about the campaign. It was about hiding it from Elizabeth. Well, wait a minute. I thought Elizabeth already knew everything in 2006. So, they've got themselves in a corner here, and I know that they were wishing this motion to dismiss went their way today, but it did not.
BLITZER: A lot of lawyers, criminal defense attorneys don't believe John Edwards will take the stand. What's the thinking there now that his attorneys will be able to call witnesses?
DIMOND: Well, I'm going to bet that he doesn't, but, I am -- a lot of people don't believe what I believe. There is an attorney here from Raleigh, North Carolina, who's been every single day, he's represented a lot of politicians and a lot of lawyers in court, and he said, you know, they just cannot help, but get on that witness stand.
They just think that they can convince people that they are right. And you know, Wolf, John Edwards started his career as a lawyer, convincing juries to give him multimillion dollar settlements in damages cases. So, you know, his ego may be in check by now or it may be not, and he may decide to tell his team I'm taking the stand whether you like it or not.
The big outstanding question is whether Rielle Hunter will be here, and I'm not convinced she'll be here either.
BLITZER: We'll watch it together with you. It would be a dramatic moment, indeed. Diane Dimond, thanks very much for joining us.
DIMOND: You bet.
BLITZER: All right. We're also watching another trial very closely. In a few minutes, we're expecting to get the verdict in the case of the man charged with killing three members of singer and actress, Jennifer Hudson's, family. We'll give to you (ph) the verdict as soon as we have it.
Also, Facebook's billionaire co-founder giving up his U.S. citizenship could make him even richer.
BLITZER: A verdict is expected any minute now in the case of the man charged with killing three members of singer and actress, Jennifer Hudson's, family. Mary Snow is monitoring that and also some of the other top stories in the SITUATION ROOM. What else is going on, Mary?
SNOW: Well, Wolf, you know, earlier it appeared the Chicago jury was having trouble reaching a decision, sending a note to the judge saying it's split in its deliberations, but adding, quote, "we are trying." Hudson's former brother-in-law faces charges of first-degree murder, home invasion, and burglary. When the verdict comes in, we'll bring it to you live.
In other news, Facebook co-founder, Eduardo Saverin is giving up his U.S. citizenship ahead of an initial public offering valuing the social network at more than $90 billion. Now, the move could reduce the tax bill for the Brazilian native now living in Singapore. It's becoming a growing trend among others living outside the U.S. looking to do the same.
And dramatic surveillance video of a shoplifter being wrestled to the ground by a Georgia grocery store employee. The man was apparently trying to flee the store with steaks hidden under his clothes and got into a brawl with a woman trying to stop him. That's when the team police stepped in. The suspect was charged with shoplifting, public drunkenness, and batter -- Wolf.
BLITZER: Lesson learn, don't shoplift. Bad idea. Thanks very much, Mary, for that.
President Obama has been called aloof before, but not like this. He's being accused of being cool to a deadly chapter of (ph) history. Stand by.
And it's the next best thing to being there. New details from inside George Clooney's home and that fundraiser he held for President Obama.
And Michelle Obama explains how she was able to tune out voices of doubt.
BLITZER: A powerful explosion rocks Syria's largest city late today. Opposition groups in Aleppo say the blast killed an unknown number of guards and an office of the ruling bat (ph) party. No word yet on the cause. Earlier, Syrian authorities said they foiled a suicide bombing in Aleppo.
This all coming day after a suicide attack that killed dozens of people in the capital, Damascus. Terrorism may be a dangerous new wildcard in Syria's bloody crackdown on anti-government forces, but there are a lot of questions about who's behind the new violence.
And Middle East scholar, Fouad Ajami, is joining us now from New York. Fouad, it looks like what's going on in Syria right now is entering yet another chapter, and perhaps, even more bloody and brutal if you can imagine.
FOUAD AJAMI, SENIOR FELLOW, HOOVER INSTITUTION: Well, Wolf, that was predictable. That was, in a way, you could tell that this is the radicalization of Syria foretold. If the powers were not going to come to the help of the Syrians, if the Arab governments were not coming, if Turkey was not coming, if NATO was not coming, now here we are in month 14 and we were destined to enter this phase of bloodshed.
BLITZER: Here's what "The New York Times" reporter Neil Macfarquhar (ph), writes today and I'll put it up on the screen as far as this most recent attack on the intelligence compound in Damascus, 55 people at least killed, 400 injured. "The attack put a spotlight on the growing involvement of Islamic jihadists in the fight against the government of President Bashar Al-Assad, particularly those from an Iraqi branch of al Qaeda that has been openly agitating to join the fray. That prospect raised fears that Syria was heading into the kind of chaos and bloodletting that plagued Iraq and served as a training ground for terrorists." Do you accept that?
AJAMI: Well, Wolf, I have great respect for Neil Macfarquhar (ph), but I think we should be careful about, you know in a way specifying who did this. We've seen this movie before; these cruel deeds in both Lebanon and Iraq, these explosions go off. We don't know who did them and no one claims any responsibility and if indeed, there are elements of jihadists who are coming to Syria to Iraq, then this is the chickens come home to roost because we know one thing. The Syrian regime sent many, many jihadists to Iraq when the jihadists were killing Shia and killing Americans. So, yes, there is a kind of -- there may be an involvement of the jihadist, but don't foreclose the possibility that this is the Syrian regime doing this particular deed in order to make sure that no foreign gathering, no foreign help can come to the rescue because once you have jihadists and once you have these car bombs then you discourage others from coming to the help of the Syrian people.
BLITZER: You wrote a powerful article in "The Wall Street Journal" the other day and among other things you said this about President Obama and his strategy in Syria. You said this. "His aloofness from the big storm that began in Tunisia and swept across Egypt, Libya and now Syria has been nothing short of stunning." Explain what you mean by his aloofness.
AJAMI: Well Wolf, I think our president is cool. I mean not just a cool guy, which he is, and he's running as a cool guy, but he's also cool to history's call, if you will. These events that took place in the Arab world, the so-called Arab Spring, it had many, many chapters and indeed, the president answered the call of duty in Libya and he answered it with great reluctance. He half answered it, so to speak, but on the case of Syria, with the Syrian case the Obama administration has been very skilled. They've run out the clock.
They have signaled in every way they can, Bashar Al-Assad, they're not coming to the rescue and when you have the NATO secretary- general, Mr. Rasmussen (ph) basically repeating day after day to the Syrian regime that no help to the Syrian people is coming, it tells us something. It tells us about the abdication of the Obama administration because the power is in the hands of the United States. The Arabs are waiting. The Turks are waiting. Everyone is waiting on President Obama and I think he's not going to answer this call.
BLITZER: Fouad Ajami thanks very much. We'll continue to stay in very close touch.
AJAMI: Thank you.
BLITZER: And Fouad is the author of a soon-to-be new book entitled "The Syrian Rebellion". I can't wait to read it, full disclosure Fouad, my former professor at Johns Hopkins University. "The Syrian Rebellion", looking forward to the new book.
An emotional moment is coming very soon for the actress and the singer, Jennifer Hudson. We're standing by for a verdict in the trial of the man charged with killing three of Hudson's family members.
Also, some air traffic controllers who were supposed to be monitoring the skies apparently were taking naps and playing computer games instead; a whistle-blower filing a frightening complaint.
BLITZER: The first lady Michelle Obama is offering advice to college graduate as they get ready to head into a very difficult jobs market. She gave the commencement speech today at Virginia Tech University and spoke about the doubts she had to overcome when she was young.
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MICHELLE OBAMA, FIRST LADY: Some of you may have grown up like I did in neighborhoods where kids had very -- very few of them had the chance to go to college. For being teased for doing well in school was just a fact of life, where well-meaning, but misguided folks questioned whether a girl with my background could get into the kinds of colleges I dreamed of attending, but I worked hard and I did my best to tune out those voices of doubt, including the ones inside my own head, and eventually I was accepted to Princeton and I got that education that my dad had always dreamed of. But the truth is, graduates, there will always be folks who make assumptions about you based on superficial things like where you're from or what you're wearing or how you look.
There will always be folks who judge you based on just one thing that you say or do, folks who define you based on one isolated incident, and here at Virginia Tech, I know you all know a thing or two about what that's like, but you also know that in the end, people can only define you if you let them. In the end, it's up to each of us to define ourselves. It's up to each of us to invent our own future with the choices we make and the actions we take.
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BLITZER: The first lady speaking to graduates at Virginia Tech University today. Congratulations to all those graduates indeed.
Now to the president. He's raising cash. He's shooting hoops also in Los Angeles. The White House says the president played basketball with "Batman" and "Spider-Man" this morning, otherwise known as the actors George Clooney and Toby McGuire (ph). The night before Clooney hosted a $15 million fund-raiser for the president on the basketball court of his Los Angeles home. The president told the star-studded crowd that he could raise all that cash because, in his words, everybody loves George -- they like me, they love him, the president's words.
Barbara Streisand, Billy Crystal, Salma Hayek (ph), Robert Downey Jr., Rob Reiner among the guests. CNN's Piers Morgan asked Rob Reiner about Clooney's political appeal. Listen.
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PIERS MORGAN, HOST, CNN'S PIERS MORGAN TONIGHT: You are obviously a movie man. George Clooney put on the event at his House last night. Whenever I see George Clooney I always get a sneaking feeling that we may one day be considering him as a serious candidate for president. What do you think?
ROB REINER, DIRECTOR/OBAMA DONOR: Well, I don't know what his thoughts about that are, but I do know that if he ever decided to run for elected office he'd be terrific. I mean he is obviously very articulate, knowledgeable. He is very passionate about issues and he does walk the walk. I mean you saw what happened in his being arrested with his father in Washington.
He has been a very deep and caring person when it comes to the issues. So like I say, he's very articulate. He's not too ugly to look at, and I think he'd do very well. I don't know that he's interested in running for public office, but if he decided to do so I think he'd do very well.
(END VIDEO CLIP)
BLITZER: I expect Rob Reiner is right. You can see, by the way, much more of that interview with Rob Reiner on "PIERS MORGAN TONIGHT", 9:00 p.m. Eastern only here on CNN.
Air traffic controllers allegedly napping and watching movies while on the job. Just ahead, alarming details revealed from a whistle-blower sent to the White House. That report sent to the White House and the verdict expected any minute now in the case of a man charged with killing three members of singer and actress Jennifer Hudson's family.
BLITZER: Guilty on all counts. The verdict is now in, in the case of the man who was accused of killing Jennifer Hudson's -- members of Jennifer Hudson's family. William Balfour convicted first- degree murder all three counts. Convicted of home invasion, residential burglary, possession of stolen vehicle, aggravated kidnapping. William Balfour, 30 years old, Jennifer Hudson's former brother-in-law.
The victims, Jennifer Hudson's mother Darnell Donerson, 57 years old. He killed her in her living room. Jennifer Hudson's brother, Jason Hudson, 29 years old. He killed him as he lay in bed. Also Jennifer Hudson's nephew, Julian King, only 7 years old. Investigators believe the boy was shot in the head as he lay behind the front seat of an SUV, all of this occurring back in October 2008. The evidence against him was enormous.
The assistant state attorney, Jennifer Bagby's, closing arguments among other things saying that Balfour, quote, "was fueled by his obsession, his jealousy, his determination to catch his wife Julia Hudson with another man." Going on, Jennifer Bagby said in her closing arguments "she didn't want him around. Her family didn't want him around, but in his mind she was his wife and if he couldn't have her no one else could." Guilty, all counts. William Balfour, 30 years old. He is now expected to spend the rest of his life in prison convicted on all those charges.
Our own Ted Rowlands has been in the courtroom. As soon as he comes out we'll get a little flavor of what was going inside when the verdict was read, but there you have it, William Balfour, Jennifer Hudson's former brother-in-law guilty on all counts. We'll take a quick break. We'll hear from our man on the scene inside Ted Rowlands as soon as we come back.
(COMMERCIAL BREAK) BLITZER: I just want to repeat the breaking news we reported to you just a little while ago, William Balfour, Jennifer Hudson's former brother-in-law convicted on all counts including first-degree murder. There you see shots from the courthouse in Chicago. William Balfour, 30 years old, convicted first-degree murder, home invasion, residential burglary, possession of a stolen vehicle, accused of killing Darnell Donerson, 57 years old. That would be Jennifer Hudson's mother, Jennifer Hudson's brother, Jason Hudson, 29, and Jennifer Hudson's nephew, Julian King, only 7 years old, all of this occurring back in October 2008.
Our own Ted Rowlands has been inside the courtroom. As soon as he comes out, we'll bring him in. We'll get a little flavor of what was going on. But William Balfour, 30 years old will now spend the rest of his life in prison, first-degree murder, killing three individuals.
Other news we are following. More reason for fliers to be nervous right now. Shocking new complaints of air traffic controllers sleeping on the job and goofing off. Brian Todd has been looking into this story for us. What's going on here?
BRIAN TODD, CNN CORRESPONDENT: Wolf, at least one whistle-blower has been raising red flags at the FAA over this issue and the agency that's assigned to protect whistle-blowers says someone has to start paying attention. Listen to some of these complaints from whistle- blowers about behavior in control towers, napping in the control tower while controllers are supposed to be monitoring air traffic, watching movies or video games while on the job, leaving their shifts early and slowing down air traffic arrivals and departures to increase overtime pay, all described by a whistle-blower air traffic controller named Evan Sealy (ph).
In 2011, he was stationed in New York at the FAA's Control Center there. His accounts are detailed in a new report sent this week to the White House by the Office of Special Counsel (ph). The most serious incident Sealy (ph) witnessed, a near miss in mid-air in January, 2011, that he says was caused by careless and casual language used by controllers speaking to pilots. The result, an American Airlines Boeing 777 came within a mile of two C-17 military cargo planes with altitudes only 200 feet apart, very close call there.
When Sealy (ph) raised conditions about what he had witnessed, he says he was ostracized and threatened. He has since been transferred to another post, but reportedly still works for the FAA. Now this government report sent to the White House this week says Sealy (ph) and other whistle-blowers who flag these problems need to be taken more seriously by the FAA and a spokesman for the air traffic controllers told us, quote, "we are concerned when we hear about rare examples that deviate from the high standards we have set for ourselves and we are determined to work with the FAA to correct any such issues."
The letter to the White House, Wolf, from the Special Counsel (ph) says their investigation has substantiated most of these allegations made by the FAA against these controllers. The report outlines corrective measures taken to fix the problems including disciplinary problems against several managers, Wolf. So they are getting after this, but hellacious problems in these control towers.
BLITZER: Yes and it's not the first time that air traffic controllers have been accused of taking naps while they are supposed to be doing their business. We'll stay on top of this story for our viewers.
BLITZER: Thanks, Brian. Thanks, very much.
I want to get back to the verdict in Chicago. William Balfour, 30 years old, William Balfour, convicted of first-degree murder. Convicted of home invasion, residential burglary, possession of a stolen vehicle. Jennifer Hudson's former brother-in-law. There you see the pictures of the courthouse. Our own Ted Rowlands has been inside, but I want to bring in Sunny Hostin, our legal analyst, who has been monitoring this trial for us. A huge surprise, not so much of a surprise, what do you think, Sunny that William Balfour convicted on all counts.
SUNNY HOSTIN, CNN LEGAL ANALYST (via phone): I am somewhat surprised because this wasn't a slam-dunk case for the prosecution. This was very much so a circumstantial case. And so with the missing forensics, I was a bit concerned that the jury would be unable to convict, because we hear so much about the CSI effect and jurors really want fingerprints. They want forensics. They want gun powder residue on you know a defendant's hands and a lot of that evidence was missing in this case.
So I'm surprised at the fact that they were able to come to a verdict in really a short amount of time, because it is Friday. They have only had the case for a couple of days. And just earlier today, they were split. They were split down the middle in terms of guilt or innocence. So really a win for the prosecution and justice for the Hudson family, for Jennifer Hudson, but this was not an easy case for this prosecution.
BLITZER: And Jennifer Hudson, the actress, the singer, she was there at that trial throughout. Isn't that right, Sunny?
HOSTIN: That's right. She was the prosecution's first witness, first witness on the stand and she was -- she has been there day in and day out, as she said she would be. Her fiance also there with her in the courtroom. She did leave the courtroom some times when evidence was going to come in, specifically evidence about the shooting death of her nephew, her 7-year-old nephew. Some of the more gory details about her mother and her brother's death. She was not in the courtroom for that bit of testimony. But by and large, Wolf, she was there every single day.
BLITZER: Ted Rowlands has just walked out of the courtroom. He is joining us now. Ted, tell us how it went down inside. We know he is guilty on all counts. TED ROWLANDS, CNN CORRESPONDENT: Yes. It was an emotional scene in the courtroom. It always is when a verdict, a jury verdict is read. Jennifer Hudson was with her fiance, David Otunga, and her sister, Julia. She was holding hands with both of them as the verdicts were read. And she broke down in tears after the verdicts were read. Immediately, when the first murder guilty verdict came down, David Otunga, her fiance, said, yes and she responded to that. And then after the third murder verdict was read, which was the last verdict to be read, she started to cry breaking down. She had tissue in her hair. It was a very emotional scene inside that courtroom.
BLITZER: She had been there almost every single day. Is that right?
ROWLANDS: Every single day, yes. A lot of people were surprised that she was there every day. And she did leave the courtroom during emotional testimony or graphic testimony, specifically when the coroner was on the stand or medical examiners were on the stand, even some crime scene investigators. They were giving her a heads up, hey, coming up here, there's going to be some graphic testimony. She would get up and leave, but she would be right back in the courtroom as soon as that witness was off the stand. She was here every single day and never missed a day at all of the 11 days into three weeks of testimony. Long days, too, sometimes going until 6:30, 7:00 at night.
BLITZER: Yes, the former brother-in-law, William Balfour is convicted. He had pleaded not guilty. And his lawyer had argued that there was no, quote, "forensic evidence linking him to the killing", so how did the prosecution effectively make the case that it was obviously a very effective prosecution?
ROWLANDS: Yes, and they had some hurdles because of the lack of DNA evidence. In their closing argument they said DNA in this case means do not acquit and they worked around the fact that there wasn't that CSE evidence that a lot of juries really demand. They want evidence, physical evidence that somebody was at a crime scene. William Balfour had no DNA, no fingerprints left at either one of two crime scenes, the Hudson home and the vehicle where the 7-year-old, Julian King, the little boy, was found dead. He had no fingerprints, no DNA in either one of those.
However, there was incriminating evidence and a lot of it was what he had said to the Hudson family, specifically Julia Hudson, threatening this exact scenario multiple times, saying that I am going to kill you, but I am going to kill your family first and you will be the last to die. This was the theme of the closing. This was the theme of the opening and it was the theme of a lot of the witnesses that took the stand for the prosecution. Emotion really was at the heart of this case.
BLITZER: And Sunny Hostin, quickly, I want to just make the point that some of the strongest evidence included a cell phone record that showed that Balfour was near the scene of the murders, also gun residue found on Balfour's clothing and on the staring wheel of his car and also the key to Jason Hudson's SUV found on Balfour when he was arrested. Jason Hudson, 29 years old, that was Jennifer Hudson's brother, so that's pretty compelling evidence even if there was no direct forensic evidence in this case and certainly enough to convince members of the jury that he was guilty, Sunny.
HOSTIN: That's right and it was very much a circumstantial case. A strong circumstantial case, Wolf, with the evidence that you just outlined. What was interesting to me is the jury didn't ask for a lot of evidence to be taken back into the jury room, but they did ask for those cell phone records and so it goes to show you that that blueprint, that sort of social media blueprint or cell phone blueprint is very important when prosecutors try cases because it can place the defendant at the scene of the crime as that's clearly what happened here.
BLITZER: Ted is the fact that he is guilt of first-degree murder does that mean he's going to get life without the possibility of parole or is there a possibility of parole or we don't know yet?
ROWLANDS: No, there is no possibility of parole. He will get life without parole and there are -- the sentencing guidelines are cemented. There is no leeway here for the judge, so when the sentencing takes place there is no other option in this case for William Balfour. He will be sentenced to life without parole.
BLITZER: Without parole and the death penalty in Illinois on hold at least for now. That's why he is going to get life without parole as opposed to the death sentence. And Jennifer Hudson has now left the courtroom. She has moved on. Is that right, Ted?
ROWLANDS: Yes, she has left the courtroom. She was allowed out along with her family before anybody else was allowed out and she presumably has left the building. We asked if she would be making a statement following this. And the point that we asked, the answer we got was probably not. So at this point, we don't know if she will say anything, but we believe she has left the courthouse.
BLITZER: Ted Rowlands thanks very much. Sunny Hostin, thanks very much to you as well. Once again for viewers just turning in William Balfour convicted, all counts, including first-degree murder for killing Jennifer Hudson -- members of Jennifer Hudson's family, including her mother, her brother and her nephew.
That's it for me. Thanks very much for joining us. Before I go, I want to wish all the wonderful mothers out there, a happy Mother's Day this Sunday. I'm Wolf Blitzer in THE SITUATION ROOM. The news continues next on CNN.