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The Situation Room

Romney Aide: No Decision on Running Mate; Interview with Hillary Clinton; "History Will Curse You"; Voter Purge Uproar; FDA Spying Scandal; North Korea Power Struggle; Global Financial Scandal; When Pigs Fly

Aired July 16, 2012 - 17:00   ET

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

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

Happening now, the secretary of State, Hillary Clinton, one-on-one with CNN in Jerusalem. She talks about her hostile reception in Egypt, her own words being used against President Obama in the presidential campaign and a whole lot more. The interview coming up.

Also, a spying scandal inside the Food and Drug Administration. The agency secretly reading e-mails by its own scientists.

And a possible power struggle at the highest levels inside North Korea. The country's army chief suddenly ousted.

We want to welcome our viewers in the United States and around the world.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

She's in the final stretch of a grueling two week mission that has taken her around the world. And today, the secretary of State, Hillary Clinton, was in Jerusalem, where she spoke to CNN about some of the most pressing diplomatic issues she's now facing, as well as some politics -- presidential politics, to be specific, back home.

Our foreign affairs reporter, Elise Labott, is traveling with her.

She conducted the one-on-one interview with the secretary of State.

Elise is joining us now from Jerusalem -- Elise, give us some of the highlights.

What did the secretary of State tell you?

ELISE LABOTT, CNN CORRESPONDENT: Well, Wolf, it was a very wide- ranging interview about her trip to Egypt, where she met with the -- she's the first U.S. Official to meet with the president, Mohamed Mursi.

She's -- she received a very hostile reception. We were bombarded with water bottles thrown at her, shoes, which is very disrespectful in the Arab world. And there's a lot of concern about U.S. Policy. We talked about that. We talked about Iran, Syria and about Mitt Romney using her own words against her about President Obama this during the 2008 campaign.

Let's listen to what had to say.

(BEGIN VIDEOTAPE)

LABOTT: Madame Secretary, thank you so much for joining us.

Let's start with your trip to Egypt. It wasn't a very warm welcome by a lot of Egyptians. There were very nasty protests, protesters throwing shoes in your meetings with Christian leaders, a lot of uncertainty about U.S. Policy. It doesn't seem very popular. They feel that you're siding with the Muslim Brotherhood.

HILLARY RODHAM CLINTON, SECRETARY OF STATE: Well, Elise, there's a lot of uncertainty and anxiety in Egypt right now. They're doing something they've never done in, you know, 5,000 plus years of history. They have had elections. They've elected a president, but they still don't have a government. They don't know what the platform is going to be. They're not sure of the legal standing of some of their new institutions.

And there are understandable concerns be many, many Egyptians. I -- I don't think that's at all unusual.

But what I was looking for was a chance to hear directly from people. And I knew very well there would be a lot of passion and conviction expressed, which I think demonstrates how invested the Egyptians are in trying to make sure their democratic transition works out for the benefit of all the Egyptians, men and women, Muslim and Christian, everybody.

LABOTT: Are you prepared to use U.S. Influence, like aid, to make sure the military lets that transition happen?

CLINTON: Well, we've been talking with everybody in Egypt about what we can do to try to help their economic situation, which is quite serious. But until there's a government in place, until there's a finance minister and a prime minister, people with whom we can actually talk specifics, we won't be able to know exactly what we can offer, what we can expect and then what kind of accountability to seek.

LABOTT: Let's talk about Syria. A year ago, when you were in Lithuania, you said that time was running out for the Assad regime. There were 1,000 people dead. When you were in Tokyo, you said the sands are coming out of the hourglass.

Now there are 10,000 people are dead.

Now, what is the threshold, Madam Secretary, that these don't become empty words and there will some type of intervention to get rid of President Assad?

CLINTON: Well, we are trying to intervene. We're trying to intervene in a way that brings about an end to the violence and a transition to a democratic future; that doesn't require adding to the violence, further militarizing the conflict, perhaps killing more people and pushing them across the borders.

I think that everyone is very wary, for good reason, of that kind of intervention.

But, certainly, what we've tried to do to get nations that have been skeptical on board with us, most particularly the Russians and the Chinese, what we've done to try to help reassure and provide humanitarian assistance to the neighboring countries that are absorbing the refugees.

But, you know, Elise, everybody is as outraged as I am -- and I think for very good reason -- at what we see happening. It's horrific what's happening.

But, you know, you have to look at all the consequences of any action that the outside could take. And, you know, there are many instances that I could point to where you could make things worse. You could add to the violence through some kind of military intervention, which is why you see the region itself, which is living with this terrible regime and what it's doing to its people, being especially careful.

So, yes, the time is running out. I can't put a -- a definite, you know, hour and minute on it. But the Assad regime is not going to survive. I just wish it would end sooner instead of later.

LABOTT: Yes, but you keep saying that the Russians need to pay a price. You're urging the world to show Russia there's a price.

What price is the U.S. Prepared to make Russia pay?

CLINTON: Well, our commitment is to try to get Russia to cooperate with us. So we want the rest of the world to put pressure on Russia, in the Security Council, so that they will support a Chapter 7 resolution, where we can impose very hard sanctions on people and institutions that support the regime. That would be the best signal we could send to Assad that his days are numbered. As long as he has Iran in his corner, which he does, and as long as he has Russia uncertain about whether or not to side against him in any more dramatic way than it already has, he feels like he can keep going. And that's the message we want to reverse.

LABOTT: I know you don't like to talk about politics right now, but Mitt Romney is using you in a campaign -- in a negative ad against President Obama -- using a clip of you talking in the campaign.

How does that make you feel?

CLINTON: Well, you know, I am out of politics. And I haven't seen any of the -- the ads that you're talking about. But I have to say, I think it's a waste of money. I mean everybody knows I ran against President Obama in 2008. That's hardly news. Everybody knows we ran a hard-fought campaign and he won.

And I have been honored to serve as his secretary of State, working with him to advance America's interests, values and securities.

(END VIDEO TAPE)

LABOTT: And, Wolf, as you know, Mitt Romney will be here just in a -- in a few weeks. So, obviously, we'll be having a lot of criticism about President Obama's policy, particularly on Iran. You know, a lot of the reason that Secretary Clinton is here is because of Iran. There have been a steady stream of U.S. Officials coming. You had the national security adviser, Tom Donilon, over the weekend. After the Secretary's visit, Leon Panetta, the Defense secretary, will be coming.

And this is all about those talks with Iran not going very well. And there's a lot of concern that the Israelis are going to bomb Iran, so much so, Wolf, that this has been dubbed by a lot of analysts as the "please don't bomb Iran tour of 2002."

The secretary said there has been unprecedented cooperation and consultations stepping up the Israelis.

But there's a lot of news in this neighborhood for her to discuss with the Israelis -- Wolf.

BLITZER: Certainly true.

Elise Labott, thanks so much.

Elise Labott just interviewing the secretary of State for us in Jerusalem.

That ad, by the way, that Elise was referring to, that's the Romney campaign ad that uses a clip from Hillary Clinton back in 2008, where she, effectively, is accusing the then candidate for the Democratic nomination, Barack Obama, of lying. And she says, "Shame on you, Barack Obama."

That's being used by the Romney campaign right now. And you heard the secretary of State in the interview with CNN just now saying it's a waste of money.

Romney campaign officials insist it is not a waste of money. They think it's a pretty powerful ad that they're throwing against the Obama campaign.

Much more on the political story coming up later.

But there's other news happening right now, including serious fighting in Syria. It has now spread directly to the capital. And a former regime army colonel is warning -- and I'm quoting now -- "the battle for Damascus is coming."

(VIDEO CLIP)

BLITZER: Gunfire could be heard in several neighborhoods of Damascus, as government forces clashed with opposition fighters and regime tanks have moved into some parts of the Syrian capital. Now, the former Syrian ambassador to Iraq is speaking out, after becoming one of the regime's highest ranking members to defect.

CNN's Ivan Watson is the only Western journalist to interview him.

Ivan is Istanbul and he's got the details.

IVAN WATSON, CNN CORRESPONDENT: Wolf, I sat down for a two hour, one- on-one interview with the most high-ranking Syrian official to publicly abandon his post and defect from the Syrian regime.

(BEGIN VIDEOTAPE)

WATSON: Nawaf al Fares was Syria's man in Baghdad for nearly four years -- that is, until a few days ago, when the Syrian ambassador to Iraq suddenly announced his defection.

(on camera): What prompted you to say, I've had it, I don't want to work this government anymore?

NAWAF AL FARES, FORMER SYRIAN AMBASSADOR TO IRAQ (through translator): I served the Syrian regime for 34 years in many different positions. But after what happened in the last year, during the holy revolution -- all of the killings, the massacres, the refugees -- I don't see how anyone can remain silent. So I decided to end my relationship with this regime.

WATSON (voice-over): Fares has long been one of Bashar al-Assad's trusted lieutenants, an insider who knows how the Syrian government works.

(on camera): Who is making the decisions in Damascus right now?

AL FARES: The regime in Syria is a totalitarian regime and a dictatorship. There is only one person who gives the orders. That person is the president.

WATSON: In his first interview with a U.S. news organization since his defection, Fares rejected Syrian government claims that the Syrian rebels are Al Qaeda terrorists. Instead, he accuses the Assad regime of cooperating with Al Qaeda ever since the U.S. invasion of Iraq in 2003, by paving a way for Al Qaeda militants to transit Syria to attack targets in neighboring Iraq.

AL FARES: Bashar al-Assad and his security forces are directly responsible for the killings of thousands and thousands of Iraqis and coalition forces, because he gave Al Qaeda everything it needed. He trained them and gave them shelter.

WATSON: Fares points to a controversial cross-border U.S. military raid in 2008 against the Syrian town of al-Sukkariyeh. Fares claims the American target was an Al Qaeda camp run by Assef Shawkat, the brother-in-law of the Syrian president.

(on camera): You saw with your own eyes that Assef Shawkat was leading this Al Qaeda in Iraq operation? AL FARES: One hour after the raid, Assef Shawkat was there at the location. A conversation took place between me and him. And he was angry about the attack made against al-Sukkariyeh and he was kind of scared.

WATSON: Fares is now in Doha, under the protection of the Qatari government. Syrian opposition members applaud the ambassador's defection, but tell CNN they don't trust a man who waited 16 months before joining the uprising.

(on camera): What message would you like to send to Bashar Al-Assad and to your former colleagues in the Syrian government right now?

AL FARES: My former colleagues, I ask them to join the people and leave this corrupt regime. There is still time.

To Bashar al-Assad, I say, you don't know history. Two wills cannot be defeated -- the will of God and the will of the people. History will curse you for the crimes you committed in Syria.

WATSON: A blunt warning from a man who was once one of the Syrian regime's top enforcers.

(END VIDEO TAPE)

WATSON: Wolf, perhaps the most surprising thing to hear from Nawaf al Fares was that he was publicly endorsing a foreign military intervention into Syria to overthrow his old boss, Bashar Al-Assad, the Syrian president, the reason being, he says nothing but force can drive out a man that he knows far too well -- Wolf.

BLITZER: Ivan Watson reporting for us with that exclusive interview.

Thank you.

The vice presidential buzz here in the United States -- seeking candidates and a whole lot more. We're going to talk about all of the latest developments in the race for the White House with our senior political analyst, Ron Brownstein.

Also, new developments in an effort to purge voter rolls. We're taking a closer look at the possible impact on the presidential election.

And when pigs fly, so does controversy. We have the uproar over some unusual service animals.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is here with the "Cafferty File" -- Jack.

JACK CAFFERTY, CNN CONTRIBUTOR: Wolf, some Republicans and Democrats have finally found a topic they can agree on. Mitt Romney's tax returns. Romney is come under fire from both sides of the aisle for releasing only two years of tax returns. President Obama and the Democrats are trying to turn this into a major campaign issue, suggesting that there's something in those returns that Romney, who's worth more than $200 million dollars, doesn't want Americans to see. And it's not just Democrats.

Alabama's Republican governor, Robert Bentley, conservative columnist, Bill Kristol, and former George W. Bush aide, Matthew Doud (ph), all say that Romney ought to release additional returns. Some Republicans think the sooner Romney makes this stuff public, the sooner the issue will go away. President Obama has released 12 years worth of his tax returns. They're all posted on his campaign website.

And Mitt Romney's father, George Romney, also released 12 years of tax returns when he ran for president back in 1968. For his part, Romney is holding firm. He told the (INAUDIBLE) Network today that his rivals want to make a mountain out of this issue. Romney said he'll release only two years of tax returns, which is what John McCain did in 2008.

If the IRS is OK with Mitt Romney's tax returns and if no laws have been broken, one could make the argument that it's nobody's business. Romney says all of this is a distraction from the real issues of the campaign, and that's the whole problem for Mitt Romney. The more the focus stays on his tax returns, his wealth, his offshore investments, the less people are focused on the economy. And the economy is an area where President Obama is vulnerable.

Here's the question. Does the public have the right to look at a candidate's tax returns? Go to CNN.com/CaffertyFile and post a comment on my blog or go to our post on the SITUATION ROOM'S Facebook page. At the moment, the Obama campaign, Wolf, is driving the dialogue in this race, and it's not about the economy.

BLITZER: They certainly are, and that's a very effective strategy on the part of the Obama campaign. They're keeping Romney and his team on the defensive on these issues

CAFFERTY: Yes.

BLITZER: Good point. All right. Jack, thank you.

Meanwhile, there's growing buzz about Romney's potential pick for a vice presidential running mate. The top aide, Eric Fehrnstrom, says flatly no decision has been made, at least not yet. Let's talk about that and more with our CNN senior political analyst, Ron Brownstein. He's the editorial director of the "National Journal."

Ron, let's first of all, talk about all the speculation that Mitt Romney, the vice presidential choice could happen, maybe some are even suggesting as early as Wednesday when he's in Toledo, Ohio. First of all, have you heard anything about that?

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Not that imminent, but certainly, you know, the trajectory in recent elections have made (ph) to do it before the convention to give yourself a kind of another bounce in public opinion. It is one of those moments as a challenger where you can get the country to look at you, where you can kind of send a message.

And if you think about Romney, he really has kind of two broad pools of choices, the kind of do no harm choices focused on governing and then the, perhaps, kind of edgier choices that would do more to animate the base. Look at like Tim Pawlenty and Rob Portman and the governing and do no harm category.

People like Paul Ryan and maybe Bobby Jindal and conceivably Marco Rubio in the other that is potentially more exciting, but also, perhaps, carrying more risk.

BLITZER: Well, let's talk about your first list, what you call the do no harm candidates. We will put those pictures back up on the screen. There, you see Rob Portman. He's the senator from Ohio, former special trade representative and budget director during the Bush administration, former congressman from Ohio.

They say Romney, the presidential campaign says he's going to be in Toledo on Wednesday. That might be a place, if he wanted to pick Portman, he can make that announcement before the Olympic Games. Tim Pawlenty, he was first runner up four years ago, two-term governor, Republican governor of Minnesota. And John Thune, he's the senator from South Dakota. If you have to look at those, who would you think has the best chance?

BROWNSTEIN: Well, Portman probably makes the most sense. I mean, certainly, everyone agree that he is someone who can be an asset in governing. He's held a variety of positions in executive branch. He has good relationships in Congress. And he also comes from a state that is critical for Republicans.

No Republican has won the White House without winning Ohio. The downside is, it is politically, at least, somewhat defensive pick. A Republican nominee in a close race should be able to win Ohio on his own. And if he can't, it's kind of a sign of weakness. But of those three, I think that Portman probably brings the most to the table.

South Dakota, not electorally important. Minnesota, some place that Romney unlikely to win even with the former governor if you put him on the table (ph).

BLITZER: Now, we have the second category of people that you suggest stir the base. We'll put them back up there. Paul Ryan, the chairman of the budget committee from Wisconsin, Bobby Jindal, the governor of Louisian, Marco Rubio, the freshman senator from Florida. I don't think Condoleezza Rice is really -- you don't really think she's seriously being considered.

BROWNSTEIN: No.

BLITZER: I think the others are being considered, but I don't think she is.

BROWNSTEIN: Well, Wolf, as you know, there's a history of using kind of nodding toward candidates who don't really intent to seriously consider as a way of expressing respect for different segments of the electorate or of your party coalition.

And as arguably one of the most prominent African-American woman in the Republican Party, it makes sense for Romney to talk about Condoleezza Rice or the people (INAUDIBLE) even if he's not serious. On this list, I mean, Paul Ryan and Bobby Jindal are kind of the intriguing names.

Ryan is someone who clearly would excite the Republican base. He's incredibly articulate proponent for the Republican small government message but who is personally identified as the author and architect of this very polarizing House Republican budget whose centerpiece is to convert Medicare from its current form into a premium support or voucher system.

So, it would bring that ideological debate directly into the presidential race. And of course, Romney has endorsed that approach. But Ryan would really personify it. Jindal is someone who could excite a lot of Republicans as well but would have certain questions about whether he is experienced enough to really step in his president should the need arise.

Rubio, same kind of thing. Rubio intriguing in many ways. Earlier this year, it seemed to be that they're not considering him. They pushed back against that, but it does seem like a long shot at this point. Plus, he has said repeatedly that he does not want that call, at least not in 2012.

BLITZER: Although, Romney says that Rubio is being vetted. He's the only one he specifically named in public as a candidate who is being vetted. That was under pressure, because there were a lot of criticism that he wasn't vetting someone like Marco Rubio, namely a Latino Hispanic candidate.

All right. We'll see what happens. Maybe it will happen Wednesday. Maybe it won't happen. If it doesn't happen this week, we probably will have to await the end of the Olympic Games in a few weeks.

BROWNSTEIN: Yes.

BLITZER: Ron, thanks very much.

BROWNSTEIN: Thanks, Wolf.

BLITZER: Two Americans kidnapped in Egypt now free. We'll have the latest on their condition and what ultimately led to their release.

Plus, is Lin-sanity leaving the Big Apple? Why a global phenomenon may be packing his bags?

(COMMERCIAL BREAK)

BLITZER: Lisa Sylvester is monitoring some of the other top stories in the SITUATION ROOM right now. What else is going on, Lisa?

LISA SYLVESTER, CNN CORRESPONDENT: Hi, Wolf. The pastor who's with the parishioner tells CNN he is in good health despite not taking his diabetic medication since Friday. The two were taken hostage along with their Egyptian tour guide when gunmen boarded their church bus heading for Israel.

A security official says negotiations were successful, but authorities did not give in the to alleged kidnapers' demands.

And at least 28 people are dead, four missing, and hundreds of others cut off by mudslides and downed trees in the wake of extraordinarily heavy rains battering parts of Japan. Authorities say the torrential downpours have damaged homes across the region and prompted the evacuation of thousands. Meteorologists warn (ph) more heavy rain could be on the way.

And a basketball phenomenon who brought Lin-sanity to New York City may soon be packing his bags. Jeremy Lin has signed a three-year $25.1 million offer sheet with the Houston Rockets. And there's no sign his New York Knicks plan to match it. They have until tomorrow night.

The speculation is growing that they may let him walk rather than spend what could amount to millions in extra tax payments to keep him.

And where there's a beach, well, there are usually some surfers, but not many surfers. That's right. That's what you're looking at. Two goats on a surfboard, wowing beach goers in Southern California. According to our affiliate, KGTV, the goat's owner loves to ride the waves.

And well, he thought that they'd like it too. So, he taught them how to do it. They look a little bit like, what am I doing here?

(LAUGHTER)

BLITZER: Surfing. Surfing goat. Thanks, Lisa. Thanks for that.

A purge of voting rules that critics say reached the politics now once they just upping the ante (ph).

Also, the Food and Drug Administration here in Washington spying on its own scientists.

(COMMERCIAL BREAK)

BLITZER: It's controversial and could have major implications for the November election. There are new developments in Florida's drive to purge ineligible people from voter rolls. CNN's John Zarrella is on the scene for us down in Florida. He's got details. What's going on here, John?

JOHN ZARRELLA, CNN CORRESPONDENT: Well, you know Wolf, as you mentioned, Florida certainly being watched very carefully by several other states that could be pivotal in the upcoming November election. They were watching to see if Florida would win the right to go ahead and start removing people from voter rolls, people who they say don't belong.

(BEGIN VIDEOTAPE)

ZARRELLA (voice-over): When Floridians go to the polls in November state officials are determined to make sure no one is voting who shouldn't be. And after a lengthy fight to make that happen, Florida is getting access to a critical Department of Homeland Security database.

GOV. RICK SCOTT (R), FLORIDA: Their database will allow us to make sure that in future elections you know non-USA citizens aren't going to vote.

ZARRELLA: Back in April, Florida began what critics called a purge of voter rolls, that those critics insisted were targeted at Hispanics and minorities who would vote Democratic.

(on camera): Using driver license information the state identified a possible 2,600 non-citizen voters. But it turned out the information wasn't very reliable. All but about 100 were U.S. citizens.

(voice-over): In one instance, a 91-year-old World War II Battle of the Bulge hero got a letter questioning his citizenship.

BILL INTERNICOLA, FLORIDA REGISTERED VOTER: And I never had any trouble. I voted here for the last almost 15 (ph) years (INAUDIBLE).

ZARRELLA: After that Florida officials focused their attention on getting a more reliable home and security database. It lists those legally here on green cards and visas, but not eligible to vote. Granting, Florida access has widespread implications, at least four other states potentially pivotal to the president election, Nevada, Colorado, Michigan and North Carolina have been watching Florida carefully, something Florida's governor noted.

SCOTT: Hopefully it will set -- it creates a path for other states that have the same concern.

ZARRELLA: Mitch Ceasar, chairman of the Broward County Democratic Party, thinks the whole thing smells.

MITCH CEASAR, BROWARD DEMOCRATIC PARTY: What I find disingenuous is that fact that all these Republican governors from all over the country who live thousands of miles apart seem to have come up with a situation where they have come up with the same idea of a voter purge.

ZARRELLA: But when a newly released Mason Dixie (ph) poll asked quote, "do you support or oppose the plan being implemented by Governor Scott and state election officials to purge the Florida voter rolls of persons or non-U.S. citizens", 54 percent of registered voters polled said they support the plan. The Florida secretary of state's office says it will begin using the database for cross-checks just as soon as the staff is trained.

(END VIDEOTAPE)

ZARRELLA: Now ultimately what will happen is a list of the names of people that the state thinks shouldn't be on the voter rolls will go to the 67 supervisors of elections in Florida's 67 counties and it will ultimately be their responsibility to go out and to identify these people and find out if in fact they are or they aren't U.S. citizens eligible to vote -- Wolf.

BLITZER: Good report. Thanks for the explanation, John Zarrella down in Miami.

A spy scandal is unfolding in an unlikely place, the Food and Drug Administration right here in Washington. A surveillance program targeting its own scientists has now been revealed. CNN's Sandra Endo has details.

(BEGIN VIDEOTAPE)

SANDRA ENDO, CNN CORRESPONDENT (voice-over): The Food and Drug Administration spying on its own scientists, tapping into tens of thousands of employee e-mails.

STEPHEN KOHN, FDA SCIENTISTS ATTORNEY: But FDA, they didn't care. They didn't care (INAUDIBLE) laws of confidentiality. They didn't care about the Constitution. They didn't care about privacy. They just went hog wild.

ENDO: A lawyer for the scientists says his clients were targeted because they were raising concerns about breast and colon cancer detection devices they say were unsafe. Steve Kohn, a well known whistleblower lawyer, says the scientists were taking their concerns to the Office of Special Counsel, the independent investigative arm of the federal government. A move protected under federal law.

UNIDENTIFIED MALE: The DEA (ph) went into those channels unlawfully to collect the information, to find out who was blowing the whistle, what they were blowing the whistle on and to learn what the allegations were.

ENDO: An FDA spokesperson defends the surveillance, saying it was enforcing the law to stop trade secrets from being leaked to the public. The FDA says "the agency's monitoring was limited to the government-owned computers of five individuals and was only intended to identify the source of the unauthorized disclosures." But screen shots of e-mails taken by the spy ware system off government computers show it searched for key words including Congress and OSC, which stands for the Office of Special Counsel.

KOHN: You see that one? So now they're going to the drives (ph) for Congress.

ENDO: Both the White House and OSC issued memos underscoring that federal law protects workers who disclose wrongdoing from retaliation. In this case, four scientists were since fired after the surveillance began. Senator Chuck Grassley's office was in contact with one of the scientists and one of Grassley's aide's e-mails came up in the surveillance.

SEN. CHARLES GRASSLEY (R), IOWA: Without a doubt it's intimidation because there's a great deal of peer pressure to go along to get along, not just in the FDA, in a lot of -- in a lot of agencies. It's not their institution. It belongs to the United States government. They're working for the people of the United States.

(END VIDEOTAPE)

ENDO: The FDA says at no time was it monitoring the e-mails of anyone in Congress and wasn't trying to stop communication. But Congressman Chris Van Hollen (ph), whose staffer's e-mails were identified in the surveillance is calling for a full investigation by Health and Human Services. And to cap this all off, based on the scientist complaints, the OSC concluded there may be a public safety issue concerning those cancer detection devices and referred the matter to the HHS secretary for further investigation -- Wolf.

BLITZER: Senator Grassley got pretty angry over there. You could see that. Sandra thanks very much -- Sandra Endo reporting.

A stunning political shakeup inside the world's most isolated country. Why it could be a sign of a major power struggle. We have details.

(COMMERCIAL BREAK)

BLITZER: A surprise shakeup at the highest levels in North Korea and it could be a sign of a power struggle inside the isolated country. CNN's Paula Hancocks is monitoring the story for us.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN CORRESPONDENT: This is a surprising development. (INAUDIBLE) was considered to be a regime heavyweight. He was effectively the commander in chief of the military, seconding only to the North Korean leader Kim Jung Un (ph). He was also considered to be a very close confidant of Kim Jung Un (ph). He was believed to have been the man who helped him through the succession and to also help him gain credibility and support within the military. At many of the public engagements you often saw Re Yung Ho (ph) standing or sitting next to Kim Jung Un (ph).

They were often sharing a joke and it appeared as though the two men actually had built up some kind of rapport. And also we did see Re Yung Ho (ph) side by side with Kim Jung Un (ph) when it came to the funeral procession of his father, the late Kim Jung Il (ph), but Re (ph) has now been dismissed and according to the state-run news agency, KC&A (ph) it is because of an illness. Now there are many different theories as to what the exact reason could be.

One North Korean expert told me that what we could be seeing is a power struggle between the military and the civilian in a circle of Kim Jung Un (ph). Others are also saying that it could be Kim Jung Un's (ph) uncle, Cham Sun Tec (ph), who is trying to influence Kim Jung Un (ph) and trying to assert his power and get rid of anyone he believes to be in his political way. Now others also say that it could just be Re Yung Ho (ph) being used as a scapegoat for the early errors that we saw with Kim Jung Un (ph), most notably that failed rocket launch in April, which was followed by widespread international condemnation. One thing that most experts agree with though is that it is very unlikely he was dismissed because of illness.

Paula Hancocks, CNN, Seoul.

(END VIDEOTAPE)

BLITZER: There are of course plenty of rules for people who fly, but did you know there are also new updated rules for pigs who fly? We're not making this up. Stand by.

(COMMERCIAL BREAK)

BLITZER: Jack Cafferty is back with "The Cafferty File" -- Jack.

JACK CAFFERTY, CNN ANCHOR: Question this hour, Wolf, does the public have the right to look at a candidate's tax returns.

Tom in Beverly Hills "we should be focused on the economy. Obama has made a class warfare the central theme of his campaign and Romney's fortunes are his target. Throughout his presidency Obama has attacked the rich and demonized them. Whether he's rich or not, Romney has done everything legally and that's good enough for me. Obama is using this as a distraction from his failed record on the economy."

Carla writes "absolutely. By allowing themselves to be considered for public office, they give up all right to privacy. We deserve to know what an individual who plans to lead us has done with his money and that they have nothing to hide. While that does not ensure that we're not still electing a crook, at least it gives us a shot at making a wise choice."

L. writes "no, tax returns are personal and not anyone's business. The IRS would investigate anything that looks suspicious anyway."

Jimmy writes "absolutely. And to know about extramarital relations and college transcripts and birth certificates and anything else that might discredit the candidate, no holds barred."

W.R. writes "we all know the tax returns are simply a vehicle to continue the attacks on Romney. I'm wondering how long Obama's team can continue to create a story for the American people to define Romney. It all smacks of a swift boat type approach, the very approach Democrats heaped scorn upon when it was used against John Kerry. Well I guess it's OK now when it benefits a floundering re- election campaign."

And Stephanie writes from Seattle "I suppose we have that right, but it really doesn't matter to me what he does with his money or what percentage he pays in taxes. A smart guy would make a lot and pay few taxes. Most likely a guy I'd like to have in charge."

If you want to read more on the subject you find it on my blog CNN.com/CaffertyFile or through our posts on THE SITUATION ROOM's Facebook page -- Wolf.

BLITZER: Jack, thank you. Meanwhile, a major scandal embroiling, some of the largest banks in the world is gaining traction right here in the United States with a number of U.S. senators demanding a Justice Department investigation into its potential impact on Americans. One of them, the New Jersey Democrat Robert Menendez (ph), is a guest on CNN's Erin Burnett "OUTFRONT" later tonight. Erin is joining us now. She's got a little preview. This story is escalating Erin and escalating. The ramifications are enormous.

ERIN BURNETT, HOST, "OUTFRONT": The ramifications are enormous and you know Wolf, what's so amazing about this story is that basically, banks around the world, everybody, they have to just report the money, the rate at which they lend to each other for all sorts of loans. This is based on their self-reporting. And obviously, sometimes they have incentives to over report or underreport those rates.

The central rate, Wolf that we're talking about is called LIBOR (ph). It stands for London Inter Bank Offering Rate (ph). Sounds complicated, but what it means is well if you look at an adjustable rate mortgage that you have or a credit card that you have, those rates are usually directly tied to LIBOR (ph). So if LIBOR (ph) goes up, so does your adjustable rate mortgage, so does your credit card rate.

And of course the same thing if it goes down. So this scandal about whether banks were manipulating the rate during the financial crisis during which time they would have actually been manipulating it lower because they were so worried that investors would lose confidence in them could mean that there were times where maybe it had been manipulated higher. This rate is at the center of all of our lives frankly when you look at mortgages and credit cards, so it's a crucial problem.

It really could crush confidence in the system and if some of these banks were guilty of manipulating the rate, it could cost some are saying now, Wolf, about $14 billion in fines for the banks, which may be well deserved but of course, that means even more uncertainty and perhaps less lending. So this is a situation that's just bad on all fronts but certainly in terms of consumer confidence in our big banks.

BLITZER: I'm going to look forward to your report later tonight. Erin thanks very much. An important story that deserves significant attention.

Meanwhile, coming up in our next hour, a huge breakthrough in the fight against HIV. This is also an important story, there's a pill now that can significantly reduce the chances of contracting the virus in some cases by 75 percent.

And up next, forget dogs. Some people now have pigs, even horses as service animals as they're called. Why you could see one on your next flight.

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BLITZER: There are plenty of rules for people who fly, but what you may not know is that there are also specific rules -- I'm not making this up -- when pigs can fly. The Transportation Department is updating its guidance on how airlines should accommodate people with disabilities and part of that manual includes instructions on what are called service animals like pigs. Lisa is back. She's telling us what is going on. Lisa, explain.

LISA SYLVESTER, CNN CORRESPONDENT: OK, Wolf. So you probably heard of seeing eye dogs but other animals are used by people with disabilities, too. There have been laws in place actually since 1990 requiring airlines to carry them. Well, now the Department of Transportation has updated what amounts to an instruction manual to help the airlines follow the law and that means, yes, sometimes pigs will fly.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: (INAUDIBLE) Good boy.

SYLVESTER (voice-over): Meet Bakeo (ph).

WENDY PONZO, V.P., NORTH AMERICAN POT BELLY PIG ASSOCIATION: The pig has the equivalent to the intelligence of a 3 to a 4-year-old child. It can open doors. It can close doors.

SYLVESTER: Wendy Ponzo is the vice president of the North American Pot Belly Pig Association and she is training Bakeo (ph) to be a service animal.

UNIDENTIFIED FEMALE: I myself have an autistic child. And I know that Bakeo (ph) and the pigs would help. And also, in nursing homes and stuff because they're just -- you just can't help but smile when you see them.

SYLVESTER: And when Bakeo (ph) Bakeo (ph) shows up at the airport, the Department of Transportation's new technical manual helps the airline decide if he really is a service animal and if he can fly. Using a pot bellied big as an example, it says quote "if you determine that the pot bellied pig is a service animal, you must permit the service animal to accompany the passenger to her seat provided the animal does not obstruct the aisle or present any safety issues and the animal is behaving appropriately at a public setting." At the airport, many people said bring on the animals but others had concerns.

UNIDENTIFIED MALE: If it is trained properly, I don't really have a problem with that flying on board.

UNIDENTIFIED FEMALE: I never heard of a service pig and I don't understand how a pig could help a person get along in life.

UNIDENTIFIED FEMALE: If it is a service animal and it's licensed to be a service animal they should be able to use them.

SYLVESTER: But it really doesn't matter what passengers think. According to the manual quote "you must not deny a passenger with a disability transportation on the basis that the service animal may offend or annoy persons traveling on the aircraft."

And it's not just pigs. A wide variety of animals can be used as service animals. Besides dogs there are horses. Yes, miniature horses like this one named Cuddles that hopped a flight standing in the front of coach.

(SOUNDS)

SYLVESTER: But if you're like Samuel L. Jackson and worried about "Snakes on a Plane" --

UNIDENTIFIED MALE: I've it with snakes --

(SOUNDS)

SYLVESTER: -- they are banned in the cabin along with ferrets, rodents, spiders and other reptiles.

(END VIDEOTAPE)

SYLVESTER: This new manual, in fact, clarifies the law. It is now open for public comment. But the bottom line is this. If someone shows up with a service animal, even if it's a pig, unless it meets one of the legal exceptions airlines will have to take it on board and at no extras cost to the passenger -- Wolf.

BLITZER: The words "when pigs fly" take on new meaning. Lisa thanks very much.

Happening now, the first bill to prevent HIV is approved by the Food and Drug Administration.

Treasury Department misconduct is exposed including officials soliciting prostitutes.

And Olympic athletes land in London amid new concerns about security at the Summer Games.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.