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Patraeus Affair: No Indication of National Security Threat; New York Neighborhoods Still Without Essentials; Fiscal Cliff Countdown; Armstrong Steps Down from Livestrong Foundation; New Syrian Opposition Unity Deal; Finding Common Ground on Fiscal Cliff; Petraeus Friend Comes to His Defense; Keeping Holiday Spending in Check; Condoms Required in Porn.

Aired November 12, 2012 - 11:00   ET

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

ASHLEIGH BANFIELD, ANCHOR, "CNN NEWSROOM": Thank you so much Carol. Hi everybody. Nice to have you with us

It's 11:00 on the East Coast and 8:00 on the West Coast. Here is where we start. The secret is out. A heroic career is in tatters, multiple marriages may be on the line. and a city that thought it couldn't be shocked, that would be Washington is near speechless of the Petraeus affair. I said near speechless.

Lawmakers with oversight duties over national security, they are not speechless. They want to know why they didn't know the FBI had discovered the director of the CIA was having a fling with his married biographer. He's on the left, she's on the right and today we know the number two Republican in the House, majority leader Eric Cantor, was tipped off to the matter late last month.

But, officially, the White House itself was not told until last Tuesday, election day, after the case had been closed. It's now been almost 72 hours since the whole world learned of the downfall of the rock star, four-star general turned espionage chief and it's a scandal in three parts -- the affair itself with a hard-driving, high- achieving West Point grad named Paula Broadwell, the FBI probe of it which began with supposedly menacing e-mails sent by Broadwell to yet another woman with whom Petraeus is close and the fallout, congressional outrage over, A, being kept in the dark and, B, not being able to question Petraeus in this week's hearings on the Benghazi attack in September, at least perhaps not yet.

I want to bring in CNN Pentagon correspondent Barbara Starr. Barbara, adultery can be a crime in the military, but it is not in the CIA. It can, however, be a risky, risky endeavor.

Are there any indications at this point that our national security was threatened in the Petraeus case?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Ashleigh, so far there is no indication of that, but, look, do we know all the facts yet? I think everyone would agree the facts have not come out in public. Earlier today, retired General James "Spider" Marks, who Broadwell once worked for and also a man who knows Petraeus, addressed this very question.

(BEGIN VIDEO CLIP)

GENERAL JAMES "SPIDER: MARKS, U.S. ARMY (RETIRED): There's absolutely almost zero-percent chance that national security was compromised or was at risk.

Now, clearly, based on an initial investigation, I think there might have been classified documents that were found on her laptop.

Again, that might be more procedural than it is a large risk, so that needs to be looked into and that needs to be put aside so you can end that discussion and, frankly, you can let Dave Petraeus and Paula Broadwell get on with their lives because the CIA, frankly, is going to be OK.

(END VIDEO CLIP)

STARR: Now, look, apparently by all accounts, Broadwell, a reservist in the military, also had a security clearance, so if she had classified information on her computer, still to be acknowledged publicly whether that was allowed -- allowable classified information, the key question, Ashleigh is, did she have access to information through Petraeus that she should not have had and would it never have happened except for their personal relationship?

By all accounts, no, but, still, it hasn't all come out in public and the question fundamentally is one of General Petraeus' personal judgment. How could he have let this happen to him?

BANFIELD: Which he has already in a statement suggested was flawed because of this terrible lapse in judgment.

But I want to go back to the issue of clearance -- security clearance, information, and what level of clearance she may have had and I specifically want to refer to something she said very recently, Barbara, in a speech that she gave in Denver where she -- and you really have to watch the video.

For the folks at home right now who aren't watching their screen, come over and watch your screen because I'm not sure if maybe it's her body language that gives more away or I'm not sure if we're making too much of this, but she does say something very specific about information that heretofore was not public.

Have a listen.

(BEGIN VIDEO CLIP)

PAULA BROADWELL: I don't know if a lot of you have heard this, but the CIA annex had actually -- had taken a couple of Libyan militia members prisoner and they think that the attack on the consulate was an effort to try to get these prisoners back, so that's still being vetted.

(END VIDEO CLIP)

BANFIELD: Well, sorry. We cut that off a little too soon, but it almost looked as though there was a pause and I'm not sure. Is that something that our Pentagon staff was unaware of? Is this the kind of information that really is a bit of a shocker to be hearing in sort of a loose speech like that?

STARR: Well, the notion that the CIA had two Libyans it was holding at that compound and that may have been responsible in part for the attack, let me address that.

CNN reporters and producers have asked about this and been told categorically that it is not true, that it is not the case.

You know, we'll see. Are those the true facts? Is the CIA lying? It seems remarkable that they would over something like this.

There are sources who are adamant that she is simply not accurate in what she says.

But then, on the other hand, Ashleigh, this is a woman who publicly now for months and months in interviews about her book has talked about her personal access to David Petraeus and that she, indeed, had unprecedented access to him no other writer, no other reporter has had.

So, this just adds to the mystery. What really went on here? What did she know? What did she think she knew and, you know, why she was out there saying these things.

BANFIELD: And just quickly, I want to talk about this Benghazi issue, as well, because clearly these questions are not going to go away. This Thursday was scheduled to be time for him to testify about this.

We all know that Congress has subpoena power, so stepping down on Friday, many have said this was an effort to try to sweep it all under the rug and not testify. That's just not the case. If they want him, they got him.

STARR: Oh, you bet. Absolutely. Congress has complete authority to subpoena him to compel him to appear. But, as always, for Congress to subpoena someone, that becomes somewhat of a political decision.

The Senate intelligence committee run by the Democrats, would they go ahead and take that step? Who knows?

The House intelligence committee, of course, the House controlled by the Republicans, they may well. At this point, it's very unclear.

But it does seem that David Petraeus still has plenty of questions to answer and he might just find himself doing that in front of Congress.

BANFIELD: And no one's been able to get to Broadwell at this point? She's not talking, is she? STARR: By all accounts, she is not talking.

Look, this woman is married, a mother of two young children, has really gone underground, if you will.

There's a lot of family pain, both for Mr. Broadwell and also for Mrs. Petraeus in all of this, probably something that is well worth remembering there are two spouses here ...

BANFIELD: Yeah.

STARR: ... who clearly are in a great deal of personal pain.

BANFIELD: And Barbara, there are children. I saw a photograph of their home, the Broadwell's home. They had departed and there was chalk on the driveway and in that chalk it was written, "Dad loves Mom."

There are kids involved here so this is clearly, as "Spider" marks said, a lot of pain to go around throughout.

I know you have a busy day in checking a lot of these leads, so I'll let you go, Barbara. Thank you very much.

STARR: Sure.

BANFIELD: Barbara Starr at the Pentagon.

But, as I mentioned, there are complaints from Congress that members of the intelligence committees, both the House and the Senate, were kept in the dark about all of this.

Senate intelligence committee chairwoman Dianne Feinstein said this.

(BEGIN VIDEO CLIP)

SENATOR DIANNE FEINSTEIN (D), CHAIRWOMAN, SENATE INTELLIGENCE COMMITTE: We received no advance notice. It was like a lightning bolt.

CHRIS WALLACE, HOST, "FOX NEWS SUNDAY": And are you going to investigate why the FBI didn't notify you before?

FEINSTEIN: Yes, absolutely. I mean, this is something that could have had an effect on national security.

I think we should have been told. There is a way to do it and that is just to inform the chair and the vice chairman of both committees.

(END VIDEO CLIP)

BANFIELD: And Senator Feinstein said that she wasn't informed until Friday about all of this.

Let's bring in CNN contributor Tom Fuentes who is a former FBI deputy director and knows a thing or two about protocol. Tom, does the senator have a point? Did the FBI have a duty to inform congressional leaders like her as they were finding out this information?

TOM FUENTES, FORMER FBI ASSISTANT DIRECTOR AND CNN CONTRIBUTOR: Good morning, Ashleigh.

I think that remains to be seen whether they really did or didn't. The FBI has very strict protocols on who is notified on this type of a situation that could become very political, very public and would actually hurt the continued effort to investigate the case.

So, had the FBI in October determined that there had been a security speech or that Director Petraeus had been involved, potentially, in some criminal activity, then yes, they would make the notifications and that decision would be made by Director Mueller of the FBI.

But, while they're investigating, if they're not uncovering criminal activity and they're not uncovering a breach of security and, in fact, are getting towards the end of the investigation where they think they're not going to, then there really isn't a need.

And the second reason why they don't make these notifications as a matter of routine is that it then creates a media circus and, you know, political frenzy where it's difficult to continue the investigation.

If they have additional questions and they want to go back to the various people involved in the investigation, that becomes very difficult if the media is camped out in their front yard or at places of employment.

So, that's why these investigations are kept very confidential. That's the FBI protocol, to keep them confidential. And I think what you're seeing right now over the weekend actually proves the point of what happens when something that has this kind of tabloid nature, in addition to the fact that he's a high-ranking officer of the intelligence community, if not one of the very highest, makes it a reason to maintain the integrity of the investigation.

BANFIELD: All right, so, one of the things that I was not aware of was that the FBI can access all classified CIA e-mail. It's astounding.

So, given that, that's a lot of e-mail to go through, so perhaps that can add to the length of time that this took and, to my knowledge, it's not that they are looking for an affair. That's not illegal in the CIA. They're not looking for an affair. They're looking for any product of an affair that could be constituted as illegal.

With that in mind, doesn't protocol go out the window the moment an e- mail is found that constitutes the potential of classified information being in the hands of the wrong person, the mistress?

FUENTES: Well, I think the common protocol never goes out the window, in this case. That's why it's very strict and the mere fact that the FBI is investigating someone in and of itself can damage their careers irreparably.

So, that's why the strictness of the protocol to not have something that turns out to be unfounded actually damage somebody publicly, but, also, just hurt the integrity case, prevent them from continuing on a covert basis to uncover all of the material, make sure everything has been examined, which could be a lot of material, to ensure that there had not been a breach.

So, the fact that they had at no point uncovered criminal activity on Petraeus' part or a breach of security, that would dictate that there's no need to start notifying everybody in Washington about it because, once they do, it's going to become public and create a problem for continuing the case.

BANFIELD: All right, Tom Fuentes, thanks so much for your insight. Do appreciate it.

And I just want to do some other news here. There's a couple of newspapers here in New York that I want to show you the cover of, showing very prominently another woman, some actually titling her "the other woman."

Her name is Jill Kelley. Jill Kelley is apparently the woman who is being called the other woman, the woman who was allegedly the recipient of Paula Broadwell's threatening e-mails.

And I want to read a statement that Jill Kelley and her husband have released to the press. "We and our family have been friends with General Petraeus and his family for over five years. We respect his and his family's privacy and we want the same for us and our three children."

We can tell you that a source has told CNN that the e-mail that she received allegedly from Paula Broadwell was, quote, jealous in tone, but the source did not know anything more about the content of this e- mail or whether there was more than one e-mail.

We do know that the source said that Miss Kelley went to the FBI in Tampa where she lives. So, there you go. The other woman, whatever you want to make of her, has now released, saying that they are close with the Petraeus and they, too, have children.

Clearly, so many questions left to be asked and answered. We're back in a moment.

(COMMERCIAL BREAK)

BANFIELD: So it's been a very busy couple of weeks since Superstorm Sandy ravaged the East Coast of the country, leaving millions of people without homes or power or belongings.

So, since that storm hit, here's your news menu. There's been a national election, there's been a standoff in Florida's vote count, a second damaging nor'easter, a potential olive branch between members of Congress over the fiscal cliff and a scandal at the top of the CIA we just talked about that forced the director to step down. And as you are learning all of this news and going about your life, a small community in eastern New York that was hammered by Sandy has been waiting and waiting and waiting without power, without transportation, without food and, in some cases, without water. They have been waiting for help to arrive of any kind.

It's unconscionable, three weeks. CNN's Victor Blackwell is there today. He's outside the Ocean Village housing project. Going into our third week now, how did these people, Victor, fall through the cracks?

VICTOR BLACKWELL, CNN CORRESPONDENT: It has not been very easy at all, Ashleigh.

I just climbed up to the 14th floor of this building, took the 14 flight walk up to talk to Mrs. Doris Hood. She has been here since the 28th and she walked down just once to vote and then walked back up.

She has no running water. She has no heat. She has no electricity. She has gas so she has her oven on and that's how she's keeping her apartment warm.

We have spoken with people about the conditions inside the building and we saw them for ourselves. The smell is horrendous because the incinerator doesn't work and the people who don't want to walk to the incinerator because of the darkness kind of leave it in the hallway.

There's trash in the stairwells, so you can smell it when you walk in and do not walk in without a flashlight because you'll walk into walls.

We also spoke with a woman who says that she is fed up. Here's what she told us just a short time ago.

(BEGIN VIDEO CLIP)

STACY LAWRENCE, RESIDENT: The smell is horrendous. The staircase is dark. It's just scary. Every day I think, I'm coming down the steps, I might see a dead body somewhere. It's horrendous.

(END VIDEO CLIP)

BLACKWELL: Now, again, this is not just one building here in the Far Rockaway community in Queens. It's an entire community. Six hundred people live in that building alone.

There has been power restored to other communities around in this area. We now know that LIPA tells us, on the Rockaway peninsula, there are about 28,000 customers without power, but still tens and thousands more sitting in the dark, sitting in the cold at night going into the third week, Ashleigh.

BANFIELD: And, you know, Victor, the truth is there are 88,000 people still on the East Coast who don't have power, but I'm looking behind you. I see a generator that doesn't appear to be in use. I don't see any relief workers or I don't see any relief stands or goods or services or -- I don't see any FEMA trailers.

Have you seen anything to help these people?

BLACKWELL: We have seen inside there's an organization called Occupy Sandy. They are in a community room here with food and water and they walk it up those flights of stairs to people like Mrs. Hood.

But as it relates to the National Guard, who was here on Saturday, Doctors Without Borders, Mrs. Hood tells us that they came and they told her that they would bring her more insulin because she's a diabetic and she's running low.

She says they have not come back and she has a bottle with insulin left. She doesn't know if it's full, but she's concerned about how long it will take for that insulin to come when she needs it.

BANFIELD: Two weeks after the storm hit. All right, Victor, thank you. Keep an eye on that for us, if you will, and let us know when more assistance arrives to this place that desperately needs it.

Remember, as well, you can help and you should. It is needed. The victims of Superstorm Sandy are suffering along the East Coast. Impact Your World, a good place to go, at CNN.com/impact.

(COMMERCIAL BREAK)

BANFIELD: The countdown is officially on. Warning, there are now just 50 days until the country hits the fiscal cliff. That's when the automatic spending cuts go into effect and taxes go up for everyone.

It could have a potentially disastrous impact on the economy. Congress is off today, but they do come back tomorrow and Friday congressional leaders are expected at the White House. Oh, to be a fly on the wall on that one.

Our senior congressional correspondent Dana Bash is going to be with them. I'm kidding. She is not. It's going to be very closed-door.

But don't you wish you could be in that meeting and do you think that anything will actually happen?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Oh, of course. Because, look, publicly since the election there's been a more conciliatory tone on both sides of the aisle. It's been a basic post- election posturing after what really generally is a status-quo election.