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NYT: Trump Team Hired Flynn Despite Investigation; Special Counsel Appointed In U.S.-Russia Probe; Former FBI Chief Mueller Picked To Lead Russia Probe. Aired 1-2a ET

Aired May 18, 2017 - 01:00   ET

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


[01:00:00] ANNOUNCER: This is CNN breaking news.

ISHA SESAY, CNN NEWSROOM ANCHOR: Hello and thank you for joining us, I'm IshaSesay in Los Angeles. Well, the breaking news out of Washington never seems to stop. The latest development to bring you, it turns out the Trump team knew weeks before the inauguration that Michael Flynn was under federal investigation. But working as a paid lobbyist for Turkey, and Mr. Trump still hired him as National Security Adviser - that is according to the New York Times.

Flynn was fired after three weeks because he didn't disclose the nature of his phone calls with the Russian Ambassador. And federal prosecutors are investigating Russian interference in the Presidential election, recently issued subpoenas for business records of people who have worked with Flynn. Meanwhile, the Justice Department just appointed a Special Counsel to investigate possible collusion between the Trump campaign and Russia. Our Jim Acosta tells us how the Trump administration is responding.

(BEGIN VIDEOTAPE)

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: The White House is reacting cautiously to the news that the Justice Department has tapped former FBI Director Robert Mueller to be the Special Prosecutor in the Russia investigation. President Trump issued a statement insisting there was no collusion between his campaign and Russia, adding that he looks forward to the matter concluding quickly. An administration official says the White House received almost no advance notice of the Mueller news before it was announced by the Justice Department, same goes for Attorney General Jeff Sessions, who is here at the White House when the news came down. It is unclear how the Mueller news will impact the White House, but one White House official described staffers here as exhausted, after 72 hours of damaging bombshells - all just a few days before the President leaves on his first foreign trip to meet with critical U.S. allies. Jim Acosta, CNN, the White House.

(END VIDEOTAPE)

SESAY: Well, a lot to get to. Joining me now, Attorney Randol Schoenberg; former FBI Special Agent, Bobby Chacon; Democratic Strategist, Dave Jacobson; and Republican Strategist and Talk Radio Host, Andrea Kaye. Thank you so much for staying with us for another hour. Dave, let me start with you. And let us just remind our viewers of what the White House Press Secretary was saying about the appointment of a Special Counsel just a couple days ago. Let's play Sean Spicer.

(BEGIN VIDEO CLIP)

SEAN SPICER, PRESS SECRETARY: There's frankly no need for a Special Prosecutor. We've discussed this before. You have two Senate Committees that are looking into this, the FBI is conducting their own review, and I think if you even look at what acting Director McCabe said last week, he made it very clear that they have the resources that they need and that the work continues.

(END VIDEO CLIP)

SESAY: That was then, this is now. Let's put up the President's statement. I know that Jim Acosta referenced it, but let's read the whole thing. "As I've stated many times, a thorough investigation will confirm what we already know, there was no collusion between my campaign and any foreign entity. I look forward to this matter concluding quickly. In the meantime, I will never stop fighting for the people and the issues that matter most to the future of your country." The President is adding somewhat sanguine about this development, but how much of a blow is it to this White House?

DAVE JACOBSON, DEMOCRATIC STRATEGIST: It's a political earthquake. I mean, stemming from the - if you look back a week ago at the bombshell when President Trump fired Director Comey and all of the sort of political aftershocks and earthquakes that have stumbled out of the White House every day since. I mean, it's creating political whiplash for GOP members of Congress, Republicans across the country, Democrats, independents, Americans, and people abroad.

I mean, it is just flat-out stunning; the controversy and the chaos that is stemming from this White House, whether it's the potential obstruction of justice, the Michael Flynn news. It is ever evolving and ever continuing, and it's almost like it's the - the campaign sort of never stopped. And so, you know, it's head-turning, and I guess, you know, people are wondering what news is going to come out of this next.

SESAY: Andrea, I know you're champing at the big - but before you do that, let me hit pause because President Trump gave a commencement speech on Wednesday at the Coast Guard Academy before the announcement of the Special Counsel. I want to play some of what he had to say.

(BEGIN VIDEO CLIP)

DONALD TRUMP, UNITED STATES PRESIDENT: You will find that things happen to you that you do not deserve and that are not always warranted. But you have to put your head down and fight, fight, fight. Never, ever, ever give up. Things will work out just fine. I guess that's why I won.

(END VIDEO CLIP)

SESAY: That's the President expressing some confidence before the news of a Special Counsel appointment. I mean, to David's point, is it a White House that's reeling?

ANDREA KAYE, REPUBLICAN STRATEGIST AND TALK RADIO HOST: Well, I think they're disappointed that there is a Special Counsel that's been appointed because as Sean Spicer said there was no need for it. The Acting FBI Director himself was not necessarily a Trump guy, said that he's got all the resources he needs, which by the way, blew out the false report that Comey must have been fired because he supposedly asked for more resources. And he said that this would-

SESAY: The President did say Comey - the Russia thing was on his mind and the investigation when he fired Comey. Let me just-

[01:05:11] KAYE: Well, yes. Well, yes, he did. And the reason why is because Comey would not acknowledge or go forward with an investigation in terms of the leaks, which was the only crimes that we found out so far. And in terms of this being such a bombshell that there's an investigation. Isn't the Democrat party the people who nominated a woman who was under federal investigation for violating the espionage act and obstruction of justice? I mean, come on. You know, it must not be that much of a bombshell to be investigated if you guys think that is chill enough to nominate somebody as President.

SESAY: Well, I'm going to let you respond to that because she's talking about the Democrats. Dave, you want to have at it?

JACOBSON: Hillary Clinton was cleared of any wrongdoing-

KAYE: Not when she was nominated.

JACOBSON: While she was criticized by the FBI-

SESAY: No charges were brought.

JACOBSON: That there were no charges were brought. But look, ultimately, I think the fact that you have the GOP House, the GOP Senate, essentially accelerating their investigations into this scandal, I think, speaks volumes about this controversy. And I think it increasingly shows this rift that you're seeing within the GOP. We're not even talking about the electoral fall-out. I mean, increasingly, the general ballot - if you look at the ballot test for house candidates upcoming in the 2018 election, Democrats are leading on the general ballot test by 11 points. That's incredibly-

SESAY: Pause. Randol, because I could be with you all night and I want to hear what you will say. So, I want to bring in Randol Schoenberg. Randal, you hear all of this. You hear Andrea saying that - you know, Andrea suggesting that this is just overt, you know, a partisan play that we're seeing here with this investigation going - basically, moving to a Special Counsel. Give me your thoughts on the significance of what is happening right now. And really to the point, should the White House be lawyering up at this stage?

RANDOL SCHOENBERG, ATTORNEY AND GENEALOGIST: I don't know about that, but I do think that this is an effort by Rod Rosenstein to really re- establish the credibility of the Department of Justice and the FBI. He managed to cooperate with the President in firing James Comey, and now he is separating the DOJ from the Russia investigation, which is a political hot potato. So, I think the hope there is that the Department of Justice and the FBI can get back to the real work of catching and prosecuting criminals and the political investigation maybe can be handled by Mr. Mueller. So, I think that's really what's going on here.

SESAY: OK. Bobby, to you, is Robert Mueller the right man to lead this investigation in your view, to restore the credibility of the FBI and the DOJ?

BOBBY CHACON, FORMER FBI SPECIAL AGENT: Well, number one, yes. I think he is the right man. Number two, I don't think he has to restore the credibility to the FBI because I don't think we ever lost any credibility. I think Director Mueller had become used as a punching bag by both parties, based on the events of the last ten months. But this team - in doing this investigation is a senior team of experienced FBI agents, experienced in Russian matters, in working this with their Intelligence Community partners, and Director Comey was the top of a very rigid command structure that's supervising this investigation. The leaks are being investigated. Everything else is being investigated. Now everything's on the table.

Director Mueller knows these investigators. They worked under him like I worked under him. So, he's the perfect guy to step in and retake control of this team. They know him. He probably knows them by name, because he's a Senior FBI Agent that is conducting this investigation. It does give a little distance from the political turmoil that Director Comey got in, in that respect. I don't think the Special Counsel was particularly needed. I don't mind that it happened. I think the agents just want to get their job done, and I think that it provides a little bit of political distance between all the turmoil that Director Comey was involved in. And so, I think for that reason alone, it kind of benefits the investigation, but I don't think the investigation was affected much by the events of the past few weeks.

SESAY: All right. Dave, to you - let's talk about Capitol Hill and a little bit more about the political side of things. Democrats have long been calling for Special Counsel, an independent commission, a chorus of approval once it was made known that Robert Mueller was taking the reins. Let's put up the statement from the Senate Minority Leader Chuck Schumer. This is what he say: "Former Director Mueller is exactly the right kind of individual for this job. I now have significantly greater confidence that investigation will follow the facts wherever they lead." Is this a win for the Democrats?

JACOBSON: I think it's a step in the right direction. I think the fact that now that we have four congressional investigations going on; not just the two with the House and the Senate Intelligence Committees, but you've got the House Oversight Committee, you've got the Senate Judiciary Committee overlooking this, and you've got this outside independent prosecutor who's going to have staff and resources hopefully behind his investigation. But I think ultimately, we need to get to a point where we've got an outside bipartisan, independent commission similar to what we saw with the 9/11 commission, where we've folks outside of congress, outside of the Department of Justice who are investigating this. I think at that point, then, we're going to have a robust apparatus, where we're really digging in in a position where we can get all the facts.

[01:10:14] SESAY: All right. Andrea, I want to read the Senate Majority Leader Mitch McConnell's statement. He had this to say, let's put it up on screen: "The decision by the Deputy Attorney General to appoint former FBI Director Robert Mueller as a Special Counsel confirms that the investigation into Russian intervention into our election will continue. As stated last week, by FBI Director Andrew McCabe, the Senate Select Committee on Intelligence will also continue its investigation into this matter." Some would say, you should be happy that there's a Special Counsel being appointed. You've got all these investigations, you'll finally get to the bottom of this. And you can - if there's no wrongdoing, this will come to an end.

KAYE: Well, I'm absolutely hopeful that we are actually going to have, the beginning at least now, a start of a true investigation into this. Because I want to know-

SESAY: So, does that mean you don't have any faith in the investigations that are being led by Republicans right now on Capitol Hill; numerous Republican investigations that Dave has just mentioned?

KAYE: Well, the Justice Department for eight years has not been run by Republicans. How many Obama holdovers do we have right now that are part of this administration?

SESAY: The House Oversight and Senate Intelligence - those investigations right now. Have those not possibly-

KAYE: The House Oversight brings forth people that, like, McCabe, who was not appointed, and he's not part of the Trump administration. You know, we've had a Justice Department - one of the reasons why I think that the left was so upset that Comey was fired, in spite of the yammering that they think that cost Hillary Clinton the election, they know that he was part of a Justice Department that was a part of enabling the left, hiding crimes, and properly investigating. It was not a proper investigation of Hillary. You want restoration of the integrity to the FBI, then, let's have a full proper investigation including the leaks. I want Seth Rich's laptop to be investigated. I want the DNC to hand over their server to the FBI; not handpick some-

SESAY: It is not the DNC that is being investigated now. Hillary Clinton is not in the White House. It is the actions and the potential for wrongdoing here that is being investigated here. That there might have been collusion between the Trump campaign and Russia.

KAYE: We can't have a proper investigation into the Russian interference in our election without getting into the DNC servers. Because supposedly that was what was involved because the DNC was hacked.

SESAY: Let put that to Randol. Is that true? I mean, talk to us about the scope of this investigation and how far this will need to go to get to the bottom of things? SCHOENBERG: Well, you asked earlier, who needs to lawyer up. And I

think the people who do have probably already lawyered up. Certainly, Michael Flynn and the other associates of Donald Trump who have ties to Russia, like Paul Manafort, Roger Stone, or Carter Page. Those are going to be the focus of the investigation. If you want to talk about who this development might be bad for, it's those four people. And then the question is: well, what else will come out when those four people are really under serious investigation?

So, you know, I think the - as to the scope of the investigation, it's limited to Russia as far as what Mueller can do. Russia, and anything related. And the real question will be whether it wanders, like previous Special Counselor, Independent Prosecutor investigations have. If you think of Ken Starr, who wasn't hired to investigate White Water and ended up bringing charges of perjury in a deposition about harassment. So, you have precedent for these wandering investigations, and that will be really the question, whether this wanders and in what direction, and whether it wanders towards the President. That's really the issue.

SESAY: That is the issue. Dave, before the bombshell announcement of the Special Counsel, there were Democrats on Capitol Hill that were beginning to more blatantly, confidently, loudly talk about impeachment of the President.

JACOBSON: Absolutely.

SESAY: Take a listen to Al Green, Representative from Texas.

(BEGIN VIDEO CLIP)

REP. AL GREEN (D), TEXAS: I rise today, Mr. Speaker, to call for the impeachment of the President of the United States of America for obstruction of justice. There is a belief in this country that no one is above the law. And that includes the President of the United States of America.

(END VIDEO CLIP)

SESAY: Does having Robert Mueller appointed now squelch the talk of impeachment on Capitol Hill, at least among Democrats?

JACOBSON: Not necessarily. Look, I know the Post actually wrote a story on Representative Green earlier, where he said it's indisputable that President Trump fired Director Comey knowingly thinking about Russia at the time, right? It's indisputable that he is, you know, potentially obstruction of justice. And I think - look, all of this wreaks of the chaos in the White House and the fact that, at the end of the day, if the Democrats win back the House in 2018, because ultimately this is a political move, right? It's a political move for congress to move forward on an impeachment.

There's no way this is going to happen with Paul Ryan being Speaker, with Mitch McConnell being the leader of the senate. I don't anticipate that we're going to flip the senate, but there is increasingly a possibility that we could flip the House 2018. And as long as the investigations continue to reverberate, and continue to be stretch out, and as we approach the looming 2018 elections. Increasingly, if Democrats do flip the house, you could very well see an impeachment process.

[01:15:13] SESAY: What are the ramifications for the Republican, Andrea?

KAYE: I thank for being honest about a political and one of the things that you said earlier in the show.

SESAY: Well, the impeachment proceedings.

KAYE: That's what this is about. Because you said earlier in the show that this is both the campaign hasn't ended remember in the debate when Hillary Clinton said the greatest threat to our Democracy is people are not willing to accept the free and fair result of an election. And that is exactly what this is about. In terms of impeachment, Pelosi herself said last night she said right now there are no facts to support impeachment. That came from Nancy Pelosi last night maybe Mr. Green didn't get the memo and not only that but these charges of supposed obstruction of justice by Trump because he supposedly said something that Comey later on May 3rd said didn't happen, well you know what Barack Obama did, he inserted himself in the Hillary Clinton investigation and went public and said, well, it's the same thing. If you're going to say that Trump obstructed justice, you know when you didn't make the same -- and go for impeachment, when you didn't do the same thing with Obama, I say the American people really don't like this us versus them and they don't like hand picking laws and deciding what obstruction of justice -

SESAY: We're going down the rabbit hole. We are going down the rabbit hole and this is a rabbit hole-free zone. So we are going to take a break. All of you stay with me. We will continue this conversation after the break.

Still to come in NEWSROOM L.A., a closer look at the man now leading the Russia investigation. What we know about Robert Mueller next.

Plus, Vladimir Putin offered to share transcripts of President Trump's meeting with Russia's Foreign Minister. Is the Russian President having the last laugh at the White House in crisis?

(COMMERCIAL BREAK)

SESAY: Welcome back, everyone. The man chosen to oversee the FBI's investigation into Russian meddling in the 2016 election has a long history with the department. But lawmakers in both parties say Robert Mueller is the right man for the job. CNN's Gary Tuchman tells us a little bit more about him.

(BEGIN VIDEOTAPE)

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: In the summer of 2001, President George W. Bush declared.

GEORGE BUSH, FORMER UNITED STATES PRESIDENT: It is my honor to nominate Robert S. Mueller of California to become the Director of the Federal Bureau of Investigation.

TUCHMAN: And it was exactly one week before the terrorist attack September 11, 2001, that Robert Mueller began his tenure as Director of the FBI. Mueller, a Princeton grad with a Masters from NYU, joined the marine corps after college where he served with honor Vietnam as an officer. Following his military service, he went to law school, then became a litigator and ultimately became a federal prosecutor. The day after the 9/11 attacks, Director Mueller said this.

ROBERT MUELLER, FEDERAL BUREAU OF INVESTIGATION DIRECTOR: The first objective is to determine, identify the hijackers on each of the planes. Having identified the hijackers on each of the planes, we then have sought to identify any of their associates remaining in the United States.

TUCHMAN: The nation was in chaos. Weeks after the attacks Congress passed and President Bush signed the controversial patriot act, which enhanced law enforcement investigative tools, including domestic surveillance and increased the opportunity to punish terrorist acts in the U.S. three years later, though, the bill's passage led to a showdown involving Mueller. He received a call from Deputy Attorney General James Comey late at night that President Bush's counsel Alberto Gonzalez, was on his way to the hospital, to persuade a seriously ill Attorney General John Ashcroft to reauthorize a key part of the act, dealing with the domestic surveillance program. But the Justice Department had determined it was against the law, so Comey, with Mueller's blessing, race to the hospital to stop Gonzalez.

[01:20:44] JAMES COMEY, FORMER DEPUTY ATTORNEY GENERAL: I was angry, I thought I just witnessed an effort to take advantage of a very sick man, who did not have the powers of Attorney General because they have been transferred to me.

TUCHMAN: Both Mueller and Comey threatened to resign over the incident, but were persuaded to stay. Once President Bush decided against pursuing the controversial surveillance program, enjoying partisan respect Bob Mueller served as FBI Director for 12 years, for two Presidents, George W. Bush and Barack Obama.

BARACK OBAMA, FORMER UNITED STATES PRESIDENT: I want to thank your outstanding Director, Robert Mueller. Not just for the introduction, but because Bob has led the bureau during incredibly challenging times.

TUCHMAN: Mueller has most recently been a partner in a private law firm and a visiting professor at Stanford. He will now leave those positions to take on this new and important responsibility. Gary Tuchman, CNN, Atlanta.

(END VIDEOTAPE)

SESAY: Back with us, Attorney Randal Schoenberg, former FBI Special Agent Bobby Chacon, Democratic Strategist Dave Jacobson, and Republican Strategist and Talk Radio Host Andrea Kaye. All stayed with me. Bobby Chacon, to you first, I want to get your reaction to this news to this New York Times reporting that the White House was warned about Michael Flynn weeks before the inauguration that he was under Federal investigation for secretly working at as a paid lobbyist for Turkey during the campaign, your reaction to that and as all these details come out, I mean what this could mean for this investigation headed by Robert Mueller now.

CHACON: Yes, when I first heard that, I really wondered who made the decision to go forward with the Flynn appointment. After hearing that, I think that you know if you're in the world of business, it's quite different when you promote somebody who keeps somebody on your executive staff. But in the government, things are a little more black and white. And you have to be much more careful with people's histories and what they've done. Particularly around national security, so you know when I heard that the White House was aware of that, I, you know, the first thing that jumped out at me was, you know, it's somebody that's not well versed in how the government works and people's backgrounds. And you know some of these issues are clear black and white.

And there's plenty of people in the national security world that could have been, you know been nominated and appointed, you know without that kind of baggage. And you may be able to get away with that in the private sector, but in the government service, generally, that's not a good idea.

SESAY: Yes, Andrea, what about that point, that it is - you know that it was a mishandling on the part of the White House, although you've got to make the point the Vice President was heading the transition team, was he not?

KAYE: Yes, absolutely. And you know I think that Bob made a good point there, in terms of the difference between corporate America, of which I come from originally, and government as well. And I think it -- we also don't know exactly how that was framed, that information. We all know that people can be investigated and be innocent. And it depends on what he was told in terms of what the investigation was, what it entailed. We also know that Flynn had lied to Vice President Pence as well as Trump in terms of what his conversations were and what was going on with him. And I think that once that was found out, I think they did the appropriate thing and let him go. I would have gotten rid of him immediately.

SESAY: Dave?

JACOBSON: I think the whether it was Pence or it was potentially Chris Christie who headed the transition operation before him, or President Trump ultimately, I think they looked the other way. I think it's clear that I mean they looked the other way when it came to the $35,000 plus that Flynn got to have dinner with Vladimir Putin, or the money that he received for appearing on the Russian propaganda arm, R.T. Network, where he repeatedly was you know on talking about you know his pro-Russian stances. I think all of that is emblematic of the fact that the Trump administration didn't care about Michael Flynn's background.

They saw him as a campaign surrogate, this is a guy who led the charge about lock her up, saying outrageous things. Obviously, he was a Trump loyalist and so they rewarded him by this high-level position in the White House. I don't think that they necessarily considered any of this other elements because clearly, it wouldn't hire him if that was the case.

KAYE: Why didn't the Obama administration get rid of him then if he was such a threat to -

SESAY: They did fire him. Randal, to go back to you here, and to fold in the Robert Mueller part of all this, as the new special counsel, I mean this as you've made the point, these investigations under special counsels can mushroom into something else. The fact that they end up requiring so much effort and they cost so much, does that put a pressure on the special counsel to at the end of the day, follow through with prosecutions?

SCHOENBERG: Well, I think that's a good question. Often these organizations, these special counsel or independent prosecutor organizations are in search of a crime. And have to go a long way to find one. The real question here, because this is an investigation has different elements. On the one hand, we're talking about Russian interference in the election. That's already something that's been investigated thoroughly. The intelligence community testified what was just a week ago, all the heads of the various agencies testified that it was absolutely clear the Russians intended to and did try to interfere with our election. Then the related question is, well, was there anyone in the Trump campaign who was involved in that? And that's a more difficult question, one that really needs to be investigated. And when you think of where this might lead, you have to compare impeachment proceedings that started to occur with Richard Nixon and then with Bill Clinton.

I think the important thing is, what is the underlying crime? With Richard Nixon, it was a political burglary. With Bill Clinton, it was lying about an affair. And I think how serious the crime is, the underlying crime is, that will determine how far this goes, in terms of the political ramifications.

[01:26:23] SESAY: As we consider next steps here and what way to look for in the coming days, Bobby Chacon, does the appointment of Robert Mueller ease the way now for the appointment of the next FBI boss?

CHACON: Well, I think, sure. I think that you know some of the Democrats were threatening not to hold a vote on the next nominee if a special counsel wasn't, you know, appointed. So now that argument is moot. So I think that it will definitely pave a smoother way for the new -- whoever that is, the new FBI Director, to take over because those Democrats who threatened that obviously, some of them, might have walked that back already today.

SESAY: Dave, for the Democrats, of course, you say it's a step in the right direction, getting the appointment of the special counsel. The question is, how do they conduct themselves in the days ahead, in the sense that, there's a danger, as there always is, of overplaying your hand?

JACOBSON: I don't know if that's necessarily the case here. Look at Donald trump's approval ratings. They're just continuing to nose dive. Look I think going back to the question about the FBI Director. I think Democrats have a point, that this shouldn't be a political figurehead, this shouldn't be an elected official or politician. It should be someone with immense integrity, preferably someone who's got experience as a prosecutor or in the FBI or as a law enforcement official. And I think a lot of Republicans also agree with that. And so you know earlier I think it's last week Mike Lee the Senator from m Utah had actually proposed Merrick Garland, and Republican, by the way, President Obama's nominee for the U.S Supreme Court where that was a fascinating pick. But I think there is going to be broad by partisan consensus around someone who is not necessarily an elected official, somebody who's from law enforcement, from prosecutor. And I think ultimately like the Senate can't just pass us at a 50-51-plus vote. Like this has to be something where you're getting 60, 70-plus votes to really build consensus.

SESAY: Or like (INAUDIBLE), 98 to nothing right?

JACOBSON: Precisely. So I think that's the play here.

SESAY: OK. Andrea as we talk about next steps, let me ask you this if you are a Republican who is up for re-election in the midterms, and you are in an unsafe seat, what are you thinking now with the appointment of Robert Mueller?

KAYE: What you're thinking right now is that what you're hoping you're going to get is an actual real investigation. And I disagree with the other guest who said well the investigation in the Russian interference is done. It's absolutely not. There's not been an investigation and a review of Seth Rich's computer. In which a former Federal investigator told the well-respected detective that 44,000 e- mails were the ones taken from him to WikiLeaks. Well, you know well let's take a look at it. And you know not to mention the fact that the FBI was denied access to the DNC servers. That's what is at the heart of this whole Russian hacking thing.

SESAY: There's been a lot more thousand.

KAYE: Well there is a lot more. But let's talk about the leaking; talking about lawyering up where is Susan Rice? Why did she refuse to go in front of Congress and answer questions about unmasking in the surveillance, we still don't know what the leaks were about. There's so much more to this that needs. So if you're a Republican in a seat, first of all, you want to get to the truth and you want it to be fair, but you also want to honor the pledges that you made to the voters, because how they're going to vote is not really based upon all this. I can tell you they're going to vote on whether or not they fulfill the promises they made on campaign.

SESAY: It does seem as if it's a zero sum game for Republicans, with either about the leaks or in fact it's only about the leaks, it's not about the investigation -

KAYE: Well no, I just said I want the investigation to be -

JACOBSON: I would argue that a lot of these Republicans in these seats the Hillary Clinton won and Republicans held on to down ballot, you're seeing a massive pivot. Darrell Issa, Steve Knight, Tom McClintock all California House Republicans all said that they support an independent outside prosecutor before today's announcement. So I think increasingly you're going to see those barbed Republicans who are feeling the heat from Democrats, they feel that electricity on the ground. They want to maintain their seat, they're going to increasingly move to the middle and call for outside investigation.

SESAY: Well I want to say thanks to my panel who have been with us the last two hours.

Thanks so much. Great conversation.

JACOBSON: Thank you.

SESAY: We'll have this conversation many more times in the days ahead. All of you get ready. Thank you all.

Next on NEWSROOM L.A., while chaos in the White House, Russia's president says the U.S. is developing "political schizophrenia." Details coming up.

And Wall Street finally reacts to the White House controversies. We will tell you how.

(COMMERCIAL BREAK)

SESAY: You are watching CNN NEWSROOM, live from Los Angeles. I'm Isha Sesay.

The White House is dealing with more explosive reports right now. First, a special counsel was appointed to lead the investigation into alleged ties between the Trump campaign and Russia. Deputy Attorney General Rod Rosenstein chose former FBI Director Robert Mueller, saying it's necessary for public trust. Mueller will have the ability to prosecute if the investigation uncovers any federal crimes.

On top of that -- yes, there is more -- more damning details are emerging about a recurring problem for the Trump administration, former national security adviser, Michael Flynn. "The New York Times" is reporting that Flynn told the Trump transition team he was under investigation for secretly taking paid work as a lobbyist for Turkey, but they hired him anyway, only to end up firing him weeks later. Keep in mind, Flynn was ultimately let go for lying to Vice President Mike Pence, who led the transition team.

President Trump did address some of these reports on Wednesday, sort of. He took a big picture approach, lamenting his mistreatment in a Coast Guard graduation speech.

Our own Jeff Zeleny has more.

(END VIDEOTAPE)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Over the course of your life, you will find that things are not always fair. (MUSIC)

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): President Trump offering a telling lesson today for graduates of the U.S. Coast Guard Academy. His remarks, shining a light on his mind- set for a White House consumed by crisis.

TRUMP: You will find that things happen to you that you do not deserve and that are not always warranted. But you have to put your head down and fight, fight, fight.

ZELENY: The commander-in-chief's words of encouragement, an inspiration overshadowed by the airing of his personal grievances.

TRUMP: Never, ever, ever give up. Things will work out just fine. Look at the way I've been treated lately.

(LAUGHTER)

Especially by the media. No politician in history -- and I say this with great surety -- has been treated worse or more unfairly.

(APPLAUSE)

[01:35:12] ZELENY: Presented with a ceremonial sabre, Homeland Security Secretary John Kelly told the president this.

JOHN KELLY, HOMELAND SECURTY SECRETARY: Use that on the press, sir.

TRUMP: Yeah.

ZELENY: Under deepening siege over the firing of FBI Director James Comey, the White House denying the president asked his FBI director to close down the investigation of former national security advisor, Michael Flynn, which Comey wrote in a memo at the time.

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: The president has been very clear, this is not an accurate representation of that meeting.

ZELENY: For all the finger pointing and endless talk of a West Wing shake-up, the root of the controversy sits in the Oval Office.

One top Republican close to the White House telling CNN, this is on him.

Few people rushed to the president's aid today, not Vice President Pence, not Republican leaders in Congress.

(CHEERING)

ZELENY: In his commencement speech, the president signaled he was settling in for a fight.

TRUMP: Don't give in, don't back down, and never stop doing what you know is right. Nothing worth doing ever, ever, ever came easy. And the more righteous your fight, the more opposition that you will face. ZELENY: Jeff Zeleny, CNN, the White House.

(END VIDEOTAPE)

SESAY: Russia's president is now speaking out about another controversy dogging the White House. Vladimir Putin denies that President Trump shared highly classified intel with Russian Foreign Minister Sergei Lavrov last week and said he'll gladly provide a transcript to prove it.

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translation): We see that a political schizophrenia is developing in the U.S. around this. And I can't find any other explanation for the president's supposedly revealing some kind of secret to Lavrov.

Incidentally, I had a talk with Sergei Lavrov this morning and had to rebuke him, to give him a telling off, that he didn't share the secret with us, neither with me, nor the Russian Special Services, and that was very bad of him.

(END VIDEO CLIP)

SESAY: Joining me now, Robert English, the deputy director of the University of Southern California's School of International Relations.

Robert, Putin seems to be enjoying all of this.

ROBERT ENGLISH, DEPUTY DIRECTOR, SCHOOL OF INTERNATIONAL RELATIONS, UNIVERSITY OF SOUTHERN CALIFORNIA: We're making it easy for him. It is entertaining. It is bizarre. But I think these comments are mostly directed at his domestic audience, right? A little bit of comedy there.

But there is actually an important point. A lot of people recoil in horror instinctively at the idea that we would share any classified information with the Russians, our adversary. But in fact, for the better part of 20 years, on a selective basis, we have intentionally been exchanging classified information on at least two major issues. One is terror and counterterror, and the other is organized crime, global crime. Which to me makes the appointment of Robert Mueller, the former FBI chief, very interesting. Because he has experience with Russia in both. He's not just a bipartisan man of great integrity to lead this investigation. He knows the Russia side of it really well.

SESAY: So if you're sitting in Russia, digesting the news, as we all are, that Robert Mueller has been appointed special couple, you're thinking what?

ENGLISH: Well, again, some might assume it's bad news for the Russians. Now their nefarious activities will come out, their collusion with the Trump administration, if, indeed, that happened, the worst that some suspect, then that's probably not good news for Vladimir Putin and he won't be laughing much longer. But what other people think, and myself included, is more likely, that there will be all kinds of financial shenanigans and questionable deals, consulting arrangements and hidden income, that won't necessarily impact U.S./Russia relations, it will cripple the Trump White House for a while. But let's get it behind us. Let's get it out in the open.

Your previous guests, we've been hearing the speculation, anger and emotion, but so much of it is based on worst-case scenarios, and we want fact, not fiction. Even the Russians probably want to get it behind so they can get down to real business.

SESAY: You make a good point, because the reaction out of Russia has kind of swung. We heard Vladimir Putin being light hearted about the brew ha-ha surrounding the sharing of information, but we've heard other Russian officials expressing something of an exasperation for all of this, that it continues to go on, and it continues to drag on. So which is it? Which is the truth? Are they enjoying it, or are they sick of it?

ENGLISH: I think the enjoyment was greater at the outset. But as with all of our partners and adversaries, they're now getting sick of it. They have to deal with the U.S., and it's time we got on to business.

[01:39:58] SESAY: But it's good for him politically, domestically, is it not, for Vladimir Putin? Does it not brandish his image as a strong man, as a man -

(CROSSTALK)

ENGLISH: Perhaps.

SESAY: -- a great tactician?

ENGLISH: Perhaps. But in the end, what they were hoping for, what they were hoping for was that they could do business with Donald Trump, that he would be more flexible and more friendly than Obama and Hillary Clinton would have been, and that's not proved true yet. So in a sense, they're impatient to get this behind them as well.

SESAY: But his making that statement about, "I will provide a record," was Vladimir Putin clearly, deliberately, inserting himself in the situation? Why?

ENGLISH: I think it was mainly just for comedy at the moment. It might be a gentle reminder that you Americans forget -- and that's what my initial point was, many of us have forgotten -- that there is a great deal of intelligence-sharing and cooperation as part -- even at the most adversarial of times in our relationship. Go back to Robert Mueller for a moment. He was director of the FBI when the Russian equivalent, the FSA, came to him, came to his organization and said, look, we have intelligence on a potential threat, this guy, Dzhokhar Tsarnaev.

SESAY: The Boston bomber.

ENGLISH: The Boston bomber. And because our cooperation had become hamstrung, we had some, but the blame is on both sides for that. That intelligence wasn't properly acted on. It was, in part, but in the end, it didn't go very far. The blame is shared for that. And we had, two years later, 2013, this bombing. All that happened, you know, the failure to cooperate better under Mueller's watch. That and much more. So he's seen both the potential for better cooperation on terror, on organized crime, as well as the cost of failure.

SESAY: Yeah.

ENGLISH: So maybe, in some ways, Putin is saying, you guys are schizophrenic, meaning that we do cooperate, we give you intelligence sometimes, you give it to us sometimes. Don't just go off the cliff in hysteria that Donald Trump shared something about a potential threat from ISIS with us. It's ordinary.

SESAY: But just respond to this point that has been made by some analysts, that when Russia does give intelligence to the U.S., there's always an underlying self-interest, that they're always trying to play their own game?

ENGLISH: Yeah. And so is it with us. That's why, in part, promising cooperation has been so limited. Everybody wants something in return. No intelligence for free. Our suspicion in the case of Tsarnaev was, they're only concerned that if he goes back to Russia, he could be a threat. They want us to help spy on him for their own reasons. And because of that suspicion on our part, we didn't take it fully seriously, that he was also a threat, a big threat to us.

So I hate to -- I don't want to be in the position of praising Vladimir Putin, right, a really odious guy in many respects. But on this point, we have potential for better cooperation and indirectly, he's making an important point. And maybe Robert Mueller, were he secretary of state, would be one to respond, but nothing will happen until Mueller finishes his investigatory work. Until then, U.S.- Russian relations remain frozen.

SESAY: Robert, we appreciate the insight. Thank you very much. It's always fascinating.

ENGLISH: You're welcome.

SESAY: Thank you very much.

Well, now, U.S. House Majority Leader Kevin McCarthy said a controversial comment he made about Russia's president was merely his bad attempt at humor. He's reportedly said there are two people Putin pays, Rohrabacher and Trump. And Dana Rohrabacher is a staunch defender of Mr. Putin.

(BEGIN VIDEO CLIP)

UNIDENTIFIED REPORTER: Do you think this is going to - (INAUDIBLE)

REP. KEVIN MCCARTHY, (R-), HOUSE MAJORITY LEADER: No, because if you listen to it, everybody laughed. So you know it's a bad attempt at a joke and that's all there is to it. No one believes it to be true. (END VIDEO CLIP)

SESAY: Well, "The Washington Post" said McCarthy's controversial comments last year during a private conversation with fellow Republican leaders. A recording of his comment was just released.

Quick break here. After a rough trading day, signs that U.S. investors may be starting to lose hope in the new administration. A closer look at the numbers just ahead.

(COMMERCIAL BREAK)

[01:46:20] SESAY: Well, there's been a lot of speculation over the past couple of days, whether U.S. President Donald Trump might be charged with obstruction of justice. Even if he is, proving it in court can be very difficult.

Our own Brian Todd explains.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): President Trump admitted he had something on his mind when he fired his FBI director, James Comey.

TRUMP: In fact, when I decided to just do it, I said to myself, I said, you know, this Russia thing with Trump and Russia is a made-up story.

TODD: Tonight, the troubling question following those remarks to NBC News, coupled with the revelation, according to sources, that the president asked Comey to end the FBI's investigation into Michael Flynn. Was it obstruction was justice?

UNIDENTIFIED MALE: I think what Mr. Trump said was an admission, and we ought to credit that as being the motivating reason why he fired Mr. Comey.

TODD: Legal analysts say that's close to what the law defines as obstruction of justice. But the bar for proving that in a criminal case is high, especially if it's a "he said/he said" dispute. You'd have to prove intent.

ROBERT PAINTER, FORMER WHITE HOUSE ETHICS ATTORNEY: The mental state of mind is very important. What you'd have to establish in this case would be that the president not only expressed a desire for the Flynn investigation be put to rest, but sought to apply pressure to the FBI director to end the Flynn investigation.

TODD: Experts say, based on the evidence made to the public so far, it's very unlikely Mr. Trump will be prosecuted while in office. He may be exempt from charges stemming from his acts as president while serving.

But that's not the only way to try the president for obstruction. Congress could attempt to impeach him. The House would have to investigate, draw up charges and vote on articles of impeachment. It would resemble a criminal trial.

UNIDENTIFIED MALE: The House of Representatives serves a function as grand jury. It's their job to indict or impeachment president and then it's the Senate that is the usual jury and judge. It's their job to hold the trial, to call witnesses.

TODD: Then, two-thirds of the Senate would have to vote to impeach the president. Experts say all this could take months if not years to play out.

(on camera): A huge question now is whether Congress, with both Houses led by Republicans, is going to have the political will to establish a commission to investigate the president, or to push impeachment or obstruction proceedings in the months ahead. Political analysts say that's going to depend heavily on what James Comey may say in testimony to Congress, what evidence he presents, and how he presents it.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

SESAY: Well, until now, Wall Street seemed to be taking the firestorms in Washington in stride, but that changed on Wednesday, when the Dow plunged 373 points. It's the biggest drop since September. Investors had been upbeat that President Trump would cut back on Wall Street regulations. It seems those hopes are fading.

Let's look at the Asian markets. The numbers are down right across the board. It's not pretty.

Let's bring in Ryan Patel for some more perspective. He's a global business executive.

Ryan, the markets have weathered past -- welcome, first of all.

RYAN PATEL, GLOBAL BUSINESS EXECUTIVE: Thank you.

SESAY: The markets have weathered past Trump controversy. So my question to you, what's different now? Why are we seeing this drop?

PATEL: Part of the reason is, when I was here a few months ago as well, we were talking about that he didn't show a plan. Now with uncertainty, more of it, over the last few days, it's caused a little bit of a panic. With uncertain markets with investors, they want to know the next step you're going to do. And the other thing behind this, the pullback of no one has seen, they're getting the sense that some of these reforms and promises are not going to happen. This is probably the first time in real sense that banks are getting pretty hard. This regulatory reform may not happen. This is probably the first time in real sense that banks are getting pretty hard. This regulatory reform may not happen. That has caused a lot of panic.

[01:50:13] SESAY: But it's not a full-blown panic?

PATEL: Correct. And I think part of the reason is, since President Trump came in, in January, and came on, there have been rumors and stories, will he last, will he not? So it's not like this is new news. There's not this high shocking value that this news comes out of nowhere. The market should have tanked a lot more, if it was any other president out there.

SESAY: OK, is this the beginning of a downturn? That is the question everyone's asking. Is this a blip, or will this go on?

PATEL: I feel before this, if you saw corporate earnings and consumer confidence, they were pretty high. But I think with the news right now, if it continues to do this, I would say we're going down that path. But I would hope that the administration would get their act together and be able to address some of these fires and I hope the market will be able to stay steady.

SESAY: But you said the administration, you pointed to that being something the administration could do. What would you say would bolster confidence, bearing in mind, things on Capitol Hill seem fairly mired and bogged down by controversy surrounding the White House?

PATEL: There's a lot of disruption right now and distractions with the market right now. So if I'm the administration, I'd be super aggressive to go after one of the key points that they want to do for Wall Street, do the markets, for businesses, to hit one of their reforms or spending bills, to be able to say, we're going to take this, we're going to actually do this, provide a step by step plan, and provide that confidence that buys them a little bit more time. You can't do all three of things, especially with the political atmosphere that's going on now. But you also can't ignore what's going on with Wall Street now. You have to be in it, hands on, aggressive, and still try to help it out.

SESAY: So the administration hears you, they're watching, and say, let's put out a plan. Is it let's put out a plan, let's do something to bolster the confidence? There is still the special counsel investigation under way. Does that not -- does that undercut any kind of confidence the administration may try to bolster?

PATEL: Yes and no. I think part of it is, those are two separate things. One --

(CROSSTALK)

SESAY: You don't see the special counsel affecting --

(CROSSTALK)

PATEL: The market?

SESAY: The markets.

PATEL: I do if it comes -- if it goes to a negative reaction. Like I'm not going to sit up here and tell you that, yeah, if something negative happens or for whatever reason the impeachment comes up, that markets will go up or down, I think it will have an impact, because whatever it is, globally, you can see the markets in Asia and Europe, they got hit pretty hard, because of what we're doing here in the U.S.

SESAY: It's that all contagion thing, right? That word again.

(LAUGHTER)

Ryan Patel, such a pleasure. We'll get you back in, because I know there's a lot to watch here with these numbers. Thank you.

PATEL: Yeah.

SESAY: Still to come on NEWSROOM L.A., the Obamas are opening up about life after the White House. The details they're sharing with the public are just ahead.

(COMMERCIAL BREAK)

SESAY: Hello, everyone. Former presidents usually keep opinions about their successes to themselves, but Barack Obama's private thoughts and salty description of Donald Trump have made their way into "People" magazine.

CNN's Jeanne Moos reports.

(BEGIN VIDEOTAPE)

[01:55:04] JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): They went from this house to this house. And now they're just "People." In a cover story on them, the magazine quotes two friends of the former president saying, Obama said of Donald Trump, "He's nothing but a bull (EXPLETIVE DELETED)." That was before President Trump tweeted, "Obama had my wires tapped."

Obama's opinion now, it hasn't gotten any better, says a friend.

Obama isn't the first to apply that term to Trump.

FAREED ZAKARIA, CNN HOST, FAREED ZAKARIA, GPS: He has spent his whole life bull (EXPLETIVE DELETED). He has succeeded by bull (EXPLETIVE DELETED).

MOOS: Michelle Obama seems mad at the Trump administration for messing with her Healthy School Lunch Program.

MICHELLE OBAMA, FORMER FIRST LADY OF THE UNITED STATES: But think about why someone is OK with your kids eating crap. What is wrong with you?

MOOS: The Obamas look as if there's nothing wrong, post presidency. "People" magazine says she's taking soul cycle classes and bringing her own lunch. Barack has admitted, "I'm trying to figure out how the coffee maker works."

Until recently they were specializing in tropical islands --

(SINGING)

MOOS: -- going kite surfing.

JOHN OLIVER, HOST, LAST WEEK TONIGHT: You're fiddling while Rome burns. Wee!

MOOS: Writing his memoirs at a South Pacific resort, Barack was photographed taking photographs of Michelle about David Geffen's yacht with passengers, Bruce Springsteen, Tom Hanks, and Oprah.

TOM HANKS, ACTOR: Imagine what it could have been like, triple it.

MOOS: Even out of office, President Obama ended up at the center of a hot-button issue. He went from a buttoned-up president to a guy showing a lot more flesh, a couple of buttons deep.

Tweeted one reporter, "Obama undoes an additional button for each month he's been out of office."

Michelle couldn't keep her lips buttoned.

MICHELLE OBAMA: The president's good, running around out there in the world with his shirt unbuttoned.

OLIVER: Wee!

(LAUGHTER)

MOOS: Jeanne Moos, CNN --

OLIVER: Wee!

MOOS: -- New York.

OLIVER: Wee! Wee!

(LAUGHTER)

(END VIDEOTAPE)

SESAY: They do seem to be enjoying life.

You're watching CNN NEWSROOM live from Los Angeles. I'm Isha Sesay.

I'll be back with much more news right after this. Do stay with us.

(COMMERCIAL BREAK)

[02:00:06] ANNOUNCER: This is CNN breaking news.

SESAY: Hello, and thank you for joining us. I'm Isha Sesay, in Los Angeles.