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Illinois Governor Arrested on Corruption Charges

Aired December 09, 2008 - 15:00   ET

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

RICK SANCHEZ, CNN ANCHOR: And hello again, everybody.
This is a breaking news story that we are going to be following for you throughout the course of this hour. Stunning details are now coming in about the arrest of Rod Blagojevich, the governor of the state of Illinois.

We are expecting to have some tape momentarily of the governor's appearance when he was in court. We have a correspondent who is standing by there.

In the meantime, we are also going to be hearing -- yes, there is the picture. There's the live shot that is being set up outside of federal courthouse where moments ago we understand Rod Blagojevich had charges announced to him or read to him by a federal judge.

We also are expecting, if you stand by, within the next half- hour, possibly sooner, the comments of Barack Obama. Why is Barack Obama involved in this case? Because it was his seat, his Senate seat that he vacated that Rod Blagojevich, the governor, was now trying to fill.

And federal agents say he was selling his job of selling that seat, literally selling the job that Barack Obama had vacated -- all over that story.

Let's do this now. Before we do anything else, let's go to Drew Griffin. He has been following the story. He's standing by at that courthouse, where we just showed you moments ago.

Drew, did he have the charges read against him, and if so, how did that go?

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: Yes, both charges read against him in a fairly brief and efficient hearing here today, this afternoon on the 14th floor. Two charges were read, the governor standing in this odd-looking jogging suit with jogging shoes, the co- defendant, John Harris, his chief of staff, in a suit and tie.

The charges were read, the bail agreements signed, and said in court that they both understood them, and then it was over. And as soon as it was over, the governor walked over to one of the prosecutors and actually shook hands and tried to chitchat a little bit before the U.S. marshal escorted him over to the other side of the courtroom.

There is a $4,500 signature bond, which is about all, including surrendering of a passport, all the restrictions that are placed upon the governor and John Harris. Of course, they will be restricted to travel within the U.S., as they have given up their passports.

SANCHEZ: One of the remarkable things about this story, Drew, is that the governor was literally picked up, you know, almost Gambino- style, no disrespect to Gambinos in this case.

He was -- usually, politicians of this stature have their attorneys called. They work out some kind of deal. They surrender themselves to authorities. Not in this case, correct? And why?

GRIFFIN: That, I don't know the answer to as of yet. But based on -- unless he did his hair and was allowed to shave while he has been in custody, I think there was some indication that this might have happened, although he was dressed in this odd-looking blue jogging suit in a courtroom filled with dark suits.

But they did call him this morning at his home. It was about 6:00 a.m., I guess, according to the authorities. The governor asked, is this a joke? He said -- the caller on the other said, no.

And, after that, he came to the door and gave himself up, was handcuffed and brought into custody.

SANCHEZ: Well, here is what federal agents are saying. Those of who catching up with this story now just getting home from work, it is a stunning story.

In fact, the event, itself, the crime spree, as it is being referred to by federal officials, the words that they use are staggering, appalling, a crime spree that had to be stopped. One of the first things they wanted to stop was this governor's ability to sell the seat that has been left behind by Barack Obama, literally putting a price on what he is willing to give up and for what.

Here is how it is described now by Patrick Fitzgerald, the U.S. attorney in Chicago. Take a listen.

(BEGIN VIDEO CLIP)

PATRICK FITZGERALD, STATE'S ATTORNEY FOR THE NORTHERN DISTRICT OF ILLINOIS: Governor Blagojevich tried to sell the appointment to the Senate seat vacated by President-elect Obama. The conduct would make Lincoln roll over in his grave.

The governor's own words describing the Senate -- quote -- "It is a bleeping valuable thing -- thing. You just don't give it away for nothing" -- close quote. Another quote: "I have got this thing, and it is bleeping golden. And I am just not giving it up for bleeping nothing. I'm not going to do it. I can always use it. I can parachute me there" -- quote.

Those are his words, not our characterization, other than with regard to the bleep. The tapes reveal that Governor Blagojevich wanted a number of things in exchange for making the appointment to the Senate seat: an appointment as secretary of Health and Human Services, or an ambassadorship, an appointment to a private foundation, a higher-paying job for his wife, or campaign contributions.

And, finally, we should also note that the governor talked about appointing himself to the Senate seat for reasons not having to do with the better welfare of the citizens of Illinois.

He wanted to do it to avoid impeachment in the Illinois legislature for his conduct. He wanted to do it to have access to greater financial resources, if he were indicted. He wanted to do it to see if he could help his wife work as a lobbyist. He wanted to do it to remake his image to run for office in 2016, and he wanted to do it to see if he could generate speaking fees.

(END VIDEO CLIP)

SANCHEZ: Again, no official reaction yet from President-elect Barack Obama.

We are expecting to get some tape of Barack Obama in a statement that he may be scheduled to make any time within the next half-hour. We will turn that around for you, obviously.

Let me tell you what we are doing with this story as we wait for the first court appearance by Governor Blagojevich and that tape from Barack Obama.

We are going to have Jeffrey Toobin, our legal analyst. He is standing by. We're also going to have Rick Pearson of "The Chicago Tribune," who has been following the story for a long time, and not just this part of it, also Leah Fried with the electrical workers union is going to be joining us, and Congressman Danny Davis, who was one of the people who may have been chosen to replace Barack Obama, simply a candidate.

And we are also going to be joined by Elaine Quijano from Chicago perhaps talking about Barack Obama's statement.

Let's start with Jeffrey Toobin.

It seems, Jeff, that this was the last straw, and to put it the way that the federal prosecutors describe it, trying to sell a seat vacated by President-elect Barack Obama.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: It is really one of the most breathtaking political scandals I have seen.

It began with what you might call a fairly routine political scandal. Blagojevich has been under investigation for years in the so-called pay-to-play scandal, which is simply his alleged demand for campaign contributions in return for state contracts. That is something that goes on in a lot of states, and people have gone to jail for it for years.

What makes this so extraordinary are the two other parts of the scandal, the part where he is alleged to have said to the Tribune Company, the state of Illinois will help you with the sale of Wrigley Field if you fire a couple of editorial writers in "The Chicago Tribune."

(CROSSTALK)

SANCHEZ: Well, let me stop you, because we have that cut. In fact, that is cut two on our list, Dan. While Jeff talks about that, let's go ahead and let the folks at home listen to that, as it is described by the federal prosecutor as well, and then we will come back and talk more about it on the other side. Let's do it.

(BEGIN VIDEO CLIP)

FITZGERALD: "The Chicago Tribune" had not been kind to Governor Blagojevich, had written editorials that called for his impeachment. And Governor Blagojevich and defendant Jonathan -- John Harris, his chief of staff, schemed to send a message to "The Chicago Tribune" that if the Tribune Company wanted to sell its ball field, Wrigley Field, in order to complete a business venture, the price of doing so was to fire certain editors, including one editor by name.

In the governor words -- governor's words, quote, "Fire all those bleeping people. Get them the bleep out of there. And get us some editorial support" -- close quote. And the bleeps are not really bleeps.

(END VIDEO CLIP)

SANCHEZ: This is amazing. You want to sell Wrigley Field, fine. Fire some of your editors.

I mean, he is trying to control the news coverage.

Again, Jeff Toobin and Rick Pearson joining us from Chicago.

Jeff, start us off.

TOOBIN: Well, just remember what he is doing. He is using state money. He is -- his carrot here is he has the opportunity to use state money to help the Tribune Company involving this Wrigley Field deal.

And he is saying that the taxpayers' money will or will not be used depending on whether "The Tribune" fires some editorial writers. This is the taxpayers' money at stake here. And it is just, even by the standards of American politics, incredible.

SANCHEZ: You know what is amazing? Let me bring Rick Pearson into this conversation with "The Chicago Tribune."

There is also a quote today from the prosecutor and the FBI agent. This is Fitzgerald, by the way, who says: "I was losing sleep. I laid awake at night worrying about those editors being fired."

You work at "The Tribune." What does that tell you? RICK PEARSON, POLITICAL REPORTER, "THE CHICAGO TRIBUNE": I am very surprised. I think that all of us at "The Tribune" were absolutely stunned that he would try to broker some kind of a deal in exchange for the employment of editorial board writers.

Certainly, "The Tribune" has not been kind to Rod Blagojevich editorially, but this is really an interesting kind of political clout game.

SANCHEZ: Well, what does it say that Fitzgerald was worried something like this might actually go down? Does it speak to the power of this governor in a shakedown situation, getting people to do what he wants done?

PEARSON: Well, I think it speaks a lot to just some of the cynicism and mistrust that has been involved in Illinois and Chicago government for several years. I mean, we are just coming off of the heels of Rod Blagojevich's successor, some people trying to seek clemency for him for federal corruption charges that involved his tenure.

It is just kind of stunning that this kind of activity is alleged to have continued, and it continued at such a broad scale.

SANCHEZ: And I think I heard Jeffrey Toobin say just moments ago one of the real surprising things about this is the fact that this guy had been investigated for quite some time. There had been all sorts of talk in the media about his phones being tapped, and still he is caught not on just allegation one or two, but apparently now allegations three and four.

By the way, let me tell you about some of the other allegations, that he may have been allegedly shaking down the CEO of a children's hospital for $50,000, that he may have been shaking down the contractor on a tollway project for another $100,000.

Let's do this. Let's get a quick break. I want you to listen to the description of those two particular allegations. I'm also going to let you listen to how the FBI and the U.S. attorney actually took down the governor, made the arrest.

And we have several other guests on the other side of this break. And we are expecting tape from Barack Obama, his first official reaction to this announcement about the governor of his state.

Lots of news to cover. It is all breaking. And, as it comes in, I am going to bring it to you. Stay with us.

(COMMERCIAL BREAK)

SANCHEZ: Welcome back.

This is a breaking news story of some really incredible dimensions: the governor of the state of Illinois literally taken down today by federal agents. We are going to be taking you all through this story. Dan, if we can, before we do anything else, we want to get back to Jeffrey Toobin and Rick Pearson from "The Tribune," but do you still have that shot outside of the courthouse? Because just before we went on the air here at 3:00, I am told that Governor Blagojevich made his first appearance in court.

And now they have got a bank of microphones set up. We are not sure if the governor, as brass, as some -- as some have said he is, will literally come to the mikes and give his version of the events here or whether he is going to be sending his lawyers or whether we're going to hear further from prosecutors. We have got that set up for you and as soon as it happens, we will bring it to you.

By the way, I should let you know he was not the only one who was arrested in the case. His chief of staff is Lieutenant Governor John Harris, and he -- oh, pardon me. Pardon me. I misspoke. His chief of staff is John Harris. And he is going to be indicted as well as we understand.

The reason I said lieutenant governor is because the lieutenant governor of the state is Pat Quinn. One would expect that he would take formal duties, although the standing governor, Blagojevich, has not yet relinquished those duties, as far as we can tell.

In fact, as we pose that, let's go ahead and bring in Rick Pearson on that question.

Do we know how the state's business is going to be run henceforth, given this development?

PEARSON: The governor is still the governor, and the U.S. attorney made it very clear that, despite the arrest, the governor is still the governor. That has not stopped a number of leading statewide officials, the lieutenant governor, the attorney general, from saying that he should step down, resign permanently, if not at least temporarily, particularly with the Senate appointment pending.

SANCHEZ: We have got that, I think. Dan, this is cut number 10. It's the last one that put in today. It came in just about 20 minutes before we went on the air. See if you have that. This is the lieutenant governor, Pat Quinn, for the first time talking about Blagojevich.

Here it is.

(BEGIN VIDEO CLIP)

LT. GOV. PAT QUINN (D), ILLINOIS: The governor knows what he needs to do on behalf of the people. I think that he is going to step into the halls of justice at 1:30. And I hope he does the appropriate thing for the people of Illinois under our Constitution. I think that is what the people want.

And when you get elected to office, if you take an oath of office, if you don't carry out that oath of office, if you are seriously impeded in carrying out that oath, then you need to do the right thing. And that is to step aside.

(END VIDEO CLIP)

SANCHEZ: But he hasn't done the -- quote -- "right thing," as far as we know, yet.

And there is every possibility, Jeff Toobin, that, as the acting governor, or as the governor of the state, still, he could literally come out and choose this replacement of Barack Obama within the next five minutes if he wanted to, could he not?

TOOBIN: He could.

And what is so extraordinary to me, as a former federal prosecutor, is how this arrest went down, because, in white-collar cases, they are almost always arranged surrenders. The prosecutor will call the lawyer and say, look, we're going to arrest your guy tomorrow. We want him to surrender at the courthouse at 3:00. And they come in.

In this case, Fitzgerald's people went to his door at 6:00 in the morning. They arrested him like a mafioso, because they were afraid that he was going to continue to execute -- exercise the powers as governor. They were afraid he might today appoint someone as governor -- as senator. He might today sign a bill that is involved in the allegations here.

Now, it is true that, by the arrest alone, he -- Fitzgerald does not make Blagojevich the ex-governor, but, certainly, as a practical matter, he is going to have to resign, or he is going to be impeached.

But it was so urgent, Fitzgerald was so worried that Blagojevich was going to take some irrevocable state -- step on behalf of state government that he felt like he had to arrest him, like a common criminal.

SANCHEZ: Yes, yes, taken down like a Gambino, with all due respect to the Gambinos.

I want you to hear something else, Jeff. This is a federal prosecutor describing how this governor was allegedly shaking down the CEO of a children's hospital for I believe $50,000. Let's take a listen to this.

This is cut three, guys, in the control room.

(BEGIN VIDEO CLIP)

FITZGERALD: One involves Children's Memorial Hospital, a hospital that obviously takes care of children. At one point, the governor awarded funding, reimbursement funding to that hospital to the tune of $8 million. But he also indicated privately that what he wanted to get was a $50,000 personal contribution from the chief executive officer of that hospital.

In the ensuing weeks, that contribution never came. And Governor Blagojevich was intercepted on the telephone checking to see whether or not he could pull back the funding for Children's Memorial Hospital.

(END VIDEO CLIP)

SANCHEZ: The way that this governor is characterized, it was almost like an opportunistic situation where anything that he could -- again, this is what is being alleged by these U.S. prosecutors -- anything that he could turn into profit or benefit for himself or his campaign, for his wife, as described in one case, he would be able to do.

We are going to get back into that with Jeffrey Toobin in a moment, but I am being told now by my producers that this statement from Barack Obama is going to be coming in any moment now.

This is a meeting he had with Al Gore, but it is expected that he is going to be asked as well about the situation with Blagojevich. In fact, it is expected that is probably the first question that he is going to be asked, his vacated Senate seat.

Here now, President-elect Barack Obama. Let's go ahead and take this.

(BEGIN VIDEO CLIP)

BARACK OBAMA (D), PRESIDENT-ELECT: Hey. You guys are busy today.

UNIDENTIFIED MALE: Thank you.

OBAMA: Have we got everybody in here? OK.

Well, let me start off, obviously, like the rest of the people of Illinois, I am saddened and sobered by the news that came out of the U.S. attorney's office today. But as this is a ongoing investigation involving the governor, I don't think it will be appropriate for me to comment on the issue at this time.

The purpose of this meeting here today was to listen and learn from Vice President Al Gore on the extraordinary work that he has done around the issue of climate change.

And all three of us I think are in agreement that the time for delay is over, the time for denial is over. We all believe what the scientists have been telling us for years now, that this is a matter of urgency and national security, and it has to be dealt with in a serious way. That's what I intend my administration to do.

I think what's exciting about that conversation is that it is not only a problem, but it's also an opportunity. As I have already spoken about, as we've started to provide a framework for our economic recovery plan, we have the opportunity now to create jobs all across this country, in all 50 states, to re-power America, to redesign how we use energy, to think about how we are increasing efficiency, to make us -- make our economy stronger, make us more safe, reduce our dependence on foreign oil, and make us competitive for decades to come, even as we're saving the planet.

And so, we are not going to miss this opportunity. My office is going to be working with a whole host of stakeholders on this issue, including Vice President Gore, businesses, Republicans, Democrats, consumers -- everybody who has a stake in this issue -- and we all do.

I want to bring together the kind of aggressive, bold approach that is going to make the future better for my children and -- and all our children.

OBAMA: So I'm grateful that Vice President Gore has -- has shared the information that he has with us, and I'm looking forward to a busy next couple of years getting our handle -- getting our arms around this issue.

OK?

All right, guys. That's it.

(CROSSTALK)

QUESTION: Are you aware at all of what is happening with your Senate seat?

(CROSSTALK)

OBAMA: Hold on a second, guys. I will just answer this one question.

I had no contact with the governor or his office, and so we were not -- I was not aware of what was happening. And, as I said, it is a sad day for Illinois.

Beyond that, I don't think it is appropriate to comment. OK?

(CROSSTALK)

OBAMA: All right.

(END VIDEO CLIP)

SANCHEZ: As we watch that moment, that ending, talk about a story getting overshadowed on this day, vice president-elect, a president-elect, and the former vice president of the United States, a story that was going to be big on its own merit, but now obviously taking a back seat to what is going on in Barack Obama's hometown of Illinois -- of Chicago, Illinois, I should say.

Let's bring Elaine Quijano into this. She has been following a part of this story.

And, you know, it is interesting. If you catch his words there at the end, Barack Obama says, "I had not been in contact with the governor, had not talked to the governor."

What doesn't seem to still be clear is whether he had been in contact with the U.S. prosecutor, with Fitzgerald, about this investigation. Did he even know what was going on?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, yes, and certainly a lot of questions still, but what was clear from that is that the president-elect felt quite compelled to answer that question, understanding that there is a lot of -- that there are a lot of questions being raised right now surrounding this.

We should tell you that, originally, this was just going to be an opportunity of course to highlight the energy change and climate change discussions taking place with the former Vice President Al Gore. There was not talk of a statement at the beginning of this day.

And then, as the news developed throughout the day, we heard word that perhaps the president-elect might make a statement to the pool reporters who were going to be in that room. He decided to not only make a statement, but then again answered that question, decided to answer that one question.

I should tell you something we have learned as well, that the Illinois Senate president, Emil Jones Jr., has released a statement saying that he plans to call the Illinois State Senate back into session to pass legislation that would create a special election for the U.S. Senate seat to in his words help restore the confidence of the people of Illinois during this difficult time.

So, certainly some fast-moving developments here in the state of Illinois, really, what was supposed to be a message of the day for the Obama team, a message about energy and climate change, as you said, Rick, overshadowed here by this stunning development, the arrest of Illinois Governor Rod Blagojevich.

SANCHEZ: Yes. And, as you said, it is now looking like, rather than having the governor pick the person who will replace Barack Obama for his Senate seat, they are going to come up with a new process, perhaps actually just put it to the vote in a form of either a special election or a special session for lawmakers there in the state to choose one.

We are getting our way through this story, because, you know, the information is starting to come in, in drips and drabs. There you have the news conference from Barack Obama.

Elaine Quijano, we will be checking back with you. We thank you for that informative report.

In the meantime, we still have a microphone that is also set up outside the courthouse where Governor Blagojevich showed up moments ago. We don't know if he is going to be coming out to the mikes. If he is, we will certainly bring it to you as it happens.

Also, Jeffrey Toobin, the best in the business, he is going to be taking us through some of these allegations, how it was handled and what it means. Also, Rick Pearson with "The Chicago Tribune" is joining us to talk more about what is going to happen there.

And then this story, the part of this that is like the elephant in the room, Chicago politics and the corruption thereof, not our words, but the words of Grant, the FBI agent who released some of this information.

We will share with you what he said, what it means to Barack Obama and what is going on in that city, the Windy City -- all of this coming your way. Stay with us. We will be right back.

(COMMERCIAL BREAK)

SANCHEZ: For those of you just now getting home from work, a stunning announcement coming out of Illinois, the governor of Illinois taken down by federal officials today, almost in mafioso fashion, arrested while in his jogging suit, showed up at a federal hearing not long ago. We have a camera set up out there, we expect that either he or his lawyers may be coming to the microphone, a lot to get through on this case, because there is a lot of specific details in the charging document that we're going to be telling you about.

But right now before we get to Toobin, let's bring in Leah Fried, electrical workers union. She was talking to us yesterday because the governor went there to talk and support the workers.

Looking back on it now Leah, does it seem like the governor may have been using this situation for some reason? Other than what one would think when they first saw it?

LEAH FRIED, UNITED ELECTRICAL WORKERS: Well, what I can say is we have been getting tremendous support from all over the country and the world at this point. It's really quite impressive. We have seen many, many --

SANCHEZ: That's not the question I asked you though. Do you feel --

FRIED: Well, that is what is going on.

SANCHEZ: Leah, do you feel given the magnitude of this story and I know that your story is important as well, and we're going to continue to follow it, we're not giving up on you and what you have achieved so far is extremely impressive.

FRIED: Thank you. That is good to hear.

SANCHEZ: But do you feel like the governor's decision to come to you yesterday and make the announcement, the heat that he put on Bank of America may have been suiting another purpose other than the obvious benevolent one it seemed to be at the time?

FRIED: Well, I can say this, we did provide a statement on the governor, which I think is pretty much all we can say. You have that. But what I do know is that a lot of people feel that these workers are in the right. And obviously, they are hanging strong, they are day five of their people planned occupation. We are right now in the midst of negotiations with Bank of America and the company with the union committee.

SANCHEZ: And how is that going? What do we know about Bank of America so far?

FRIED: Well, so far we know that they are at the table and it seems like they are serious about resolving this issue. We hope they are.

SANCHEZ: And by resolving this issue you mean give a line of credit to the owners of this factory?

FRIED: You know, it would be wonderful if we could save these jobs, I think that's what really everybody wants to see in the recovery from this recession is how we can save jobs, how we can create jobs and keep jobs. So certainly that is something we are discussing how we could keep this place going and keep 300 people working here in Chicago. But also, you know, we want to just talk about justice, and see, and make sure that companies around the --

SANCHEZ: We, Leah, we --

FRIED: They need to respect workers rights under the law.

SANCHEZ: We get that and we appreciate you sharing that with us, but we have to get back to this other story and we're going to stay on top of your story and continue to cover it for you.

FRIED: Thank you Rick.

SANCHEZ: My pleasure Leah. We do want to get that statement that they say they put out, but she didn't have it handy apparently. Go back to Jeff Toobin if we can. Jeffrey, we described what he said, what they said in the charging document about shaking down the CEO of a children's hospital for $50,000. I want you to hear one more and then your reaction purely, this is the alleged shakedown of a contractor on a toll way project for allegedly $100,000 cut for it, Dan, let's go to it.

(BEGIN VIDEO CLIP)

PATRICK FITZGERALD, U.S. ATTORNEY : A month or so ago, a $1.8 billion toll way project was announced. While that toll way project was being announced Governor Blagojevich was privately seeking to have a person benefiting from that contract raise $100,000 in contributions. Privately the governor said I could have made a larger announcement, but wanted to see how they would perform by the end of the year. If they don't perform, bleep them. That is a quote. And the word bleep was not the word he used.

(END VIDEO CLIP)

SANCHEZ: Pattern here, Jeffrey Toobin?

TOOBIN: I guess so. Just imagine the thing that I couldn't get out of my head is that imagine you are the parent of a child at this children's hospital, and you hear that the governor of the state is deciding whether to give needed funds to this hospital based on whether he gets a campaign contribution. Think about the highway situation, obviously, we're hearing a lot about our damaged infrastructure, and here we learn that the governor of Illinois is deciding how and when to build highways and by whom based on whether he gets campaign contributions or not. It just contributes to the most cynical possible view of government.

SANCHEZ: Is there a defense, is there anything that you would expect that he might say, because oftentimes, it's a single incident in cases like this, what they seem to be showing is a series of events, they call it a crime spree, and a certain M.O. that they are associating with this Governor Blagojevich.

TOOBIN: Well, certainly, I can see what the defense would be to the Senate seat issue. The Senate seat, no money changed hands, no campaign contributions changed hands.

And the defense would be presumably, that, look, I'm a politician, I have a decision to make, who to appoint to the Senate seat. I am allowed to consider all sorts of factors, who is the stronger political candidate, I'm allowed to consider fundraising. These are appropriate concerns of mine and I don't have to -- there is nothing criminal about that. Similarly, for the newspaper argument he could say, look, I'm allowed to say that I think these columnists are terrible. I wasn't conditioning the support on the firing of the reporters.

SANCHEZ: But it is quid pro quo that you're talking about?

TOOBIN: That's right, it would be an argument about whether they were strictly speaking of quid pro quo there. It gets harder when you get into the campaign contributions, and state contracts in the first part of the case. That's -- then you sort of have to start parsing the words and saying, well I didn't really mean that, I didn't really say that. But that's the defense right there.

SANCHEZ: I will tell you, unbelievable story when you consider who we are talking about. We're not talking about a small state here, we're talking about the governor of Illinois, the third largest city in the United States by the way, representative of Rod Blagojevich taken down today by federal agents to stop quote, "a crime spree." We're going to be staying on top of this story.

There is an element of the story that's as interesting as any other. Let me read you something real quick as we go to break, just for a moment there Michael and Angie. From the charging document, December 4th, it's not long ago. Blagojevich notes he is going to meet with Senate candidate number five in just a few days. Apparently, and this is according to the "Chicago Tribune," he met or was going to meet in the next couple of days with Jesse Jackson, Jr., the south side and south suburban congressman said Blagojevich's office was looking to set up a meeting between him and the governor who has the sole power of filling the vacancy, that's from the "Chicago Tribune" that I'm reading to you.

So is Senate candidate number five as described in the charging document, Jesse Jackson, Jr., no indication there is, just a question, one of many about the people he was considering for the vacancy left behind by Barack Obama. We'll consider that and much else when we come back.

(COMMERCIAL BREAK)

SANCHEZ: Welcome back. We have had so many moving parts to the story, I really haven't had a chance to check the boards to see what you are saying about it. Obviously, a bevy of comments, plenty to say.

Let's just take a couple of quick ones if we can, let's go to our twitter board. The first one there, A-12 says, "Hmm, wondering about other governors now, too."

Now let's go down to this fourth one here, "We have known the governor was incompetent for years, it's good to see that his corruption will be prosecuted right there."

And so many more as we continue to follow that for you. All right, let's lose that now. Something else that we want to take note of today.

No CEO in America got a bigger compensation in 2007 than John Thain, some $83 million, $83 million. Yet are you ready for this? His company Merrill Lynch lost $12 billion the following year. In 2008, and now under his leadership, Merrill Lynch plans to layoff nearly 20 percent of its workforce. Laid off. Those guys and gals means zilcho, nada, no job, possibly unemployment lines. And while those workers worry about that, what did their former CEO argue yesterday, one of the highest paid CEOs in America?

Thain was busy asking for a bonus. That's right, he wanted a $10 million bonus, which is what you're supposed to get when your company has done well. Let me repeat, when your company has done well. Merrill Lynch has lost almost $12 billion this year. I say it again. This is an important part of our coverage plan yesterday on this show as we prepared it, and today we want you to know that Thain chose to do the honorable thing. Before the compensation committee had a chance to announce a decision on that bonus that we just told you about, Thain let them know he would pass on it. He said he would forego any bonus given current economic and market conditions. Job well done most would say.

All right, when we come back, the very latest on what's going on with the bust of the governor of Illinois in no uncertain terms, almost Mafioso style. For those of you just now getting home from work, there are plenty of developments on this story and reaction from President-elect Barack Obama.

Stay with us. We'll be right back.

(COMMERCIAL BREAK)

SANCHEZ: We welcome you back.

I have been looking through some of these charging documents that federal prosecutors have put out, and it's interesting because the way they describe some of the folks who were being approached by the governor for an alleged quote unquote shakedown are described as candidate number five or candidate number four. I read you that on December 4th, according to the charging document, he was going to meet with Senate candidate number five in the next few days and then we see an article in the Tribune saying that they had confirmed that that meeting was going to be between the governor and Jesse Jackson, Jr.

Now it's unfair to say that Jesse Jackson, Jr. was going to be receptive to the shakedown in any terms. That would be unfair and we're certainly not indicating that. But we can say that as this process goes on, Jeffrey Toobin, we'll start to learn not just what the governor did, but there were a lot of other people involved in this.

It takes two people to make a deal, I suppose, and we don't know at this point who was receptive or who wasn't, right?

TOOBIN: In the political world, it will not be helpful to be known as someone who is named in this document. Now, it may be true that no one else did anything inappropriate, but there are enough connections as you point out, there is enough give and take between the governor's office and candidate number five let's say that candidate number five will have to do some explaining, and politicians don't like to do explaining.

The one person who is likely to come out of this looking pretty good is Barack Obama. Because, this document that was filed by the U.S. attorney's office today is full of complaints by Governor Blagojevich about Obama, the fact that Obama is not helping him out. That he's not playing ball. There is a quote here that says, Blagojevich says, "He is not willing to give me anything except appreciation," then he uses a colorful word for (EXPLETIVE DELETED) him. So Obama will never have been happier to be insulted by someone than he is by Blagojevich in these taped conversations.

SANCHEZ: That's an interesting way of putting it.

By the way, I am being told by our producers we have to hit a break here, but there is more breaking news on this story. There is new information that's coming in right now. I will tell you what, we'll set it up during the break, we'll come back in just a minute and we'll bring you that, with Jeffrey Toobin as well.

Standby, we'll be right back.

(COMMERCIAL BREAK)

SANCHEZ: Well, it's kind of like a breaking news effect. There is breaking news to share with you right now, you're not going to believe this. That conversation I had with Leah Fried the electrical workers union where I was almost brushing her off because I was asking her questions about Blagojevich, but she wanted to talk about something else, unbelievable. We at CNN have just learned and can now confirm that Bank of America has sent notice to the company where the workers had decided to not leave because they were not willing to let this place shutdown, Bank of America lo and behold has just decided to extend the line of credit meaning there is every possibility that this company will be able to open its doors once again.

There's Leah Fried as we speak. You know what, we are trying to do, maybe I should even apologize to her. We are trying to get her back on the phone, so she can talk to us after pulling off what most workers all over the country will probably applaud. Workers coming together and saying, no, this is not being handled right. You can't shutdown our company, if companies like Bank of America are getting a bailout from the government, then that money needs to go to us, the American workers. Those are the words that were expressed yesterday, and now it appears that Bank of America has done exactly that.

We're all over this story, obviously. We'll try and get Leah back on to get her reaction from the company there. They are probably jumping for joy and cheering. I wish we had a microphone in there right now we'd let you hear it.

But let's do this. As we get that Angie, let me know as soon as you get Leah up and we'll go to her. Let's go to Jan Schakowsky, congress woman from Illinois who is on with us now to tell us what she believes the governor of her state should do.

Congresswoman, thanks so much for being with us.

REP. JAN SCHAKOWSKY, (D) ILLINOIS: I'm happy to be here.

As long as you interrupted Leah before, I'm going to interrupt you. I was actually at that plant on Sunday where the workers had more determination than any people I had ever seen.

SANCHEZ: It's a great story, isn't it?

SCHAKOWSKY: This is a great story. So that's a great thing that Bank of America is going to extend the credit. These are exactly the kind of green jobs that we want to create. They're Energy Star windows that they were making. Anyway, it's a great story.

In terms of the governor --

SANCHEZ: Now the not so great story.

SCHAKOWSKY: Yes, not such a great story, exactly.

I actually have called on the governor to resign and if he does not do that, to the legislative leaders I've called on them to have a special session which they can do to begin impeachment proceedings. This really is a sad day for Illinois.

SANCHEZ: Impeachment? Did you just say, you're on the record saying that you're now ready to impeach this governor if he does not step down?

SCHAKOWSKY: Well, the legislature can begin impeachment proceedings, which means that there would be a -- the charges in the House by a majority vote and then conviction would have to come from the Senate with a two-thirds majority, so it would be in the legislature. But I really -- SANCHEZ: Let me just stop you here.

SCHAKOWSKY: OK.

SANCHEZ: Because you've opened up a question that's very important. What would be the time frame? I mean, would he have to step down within the next couple of days, the next couple of hours? Do you have one drawn up yet?

SCHAKOWSKY: No, no, we don't. You know, the legislature would have to do that. None of these things actually are really prompt. Senator Durbin has called on the legislature to take away the appointment from the governor and call for a special election. Even there, there would have to be a bill passed in the legislature to allow for that.

SANCHEZ: But he has to step down, doesn't he? Or does he? Does he have to?

SCHAKOWSKY: No, he does not have to. In fact, it's not very clear to me. I think even perhaps from a jail cell, he could make an appointment.

SANCHEZ: Oh, my goodness.

SCHAKOWSKY: Right now, the power to appoint resides in the governor of the state of Illinois.

SANCHEZ: This is crazy. The idea that this governor could still actually appoint the replacement for President-elect Barack Obama while he's in jail is foolhardy.

SCHAKOWSKY: Well you know Senator Durbin and I agree with him. I think that it says that anybody that would be appointed at this point by the governor would be tainted by the whole deal that's come down and so taking it out of the hands of this governor, which, of course, if he resigned and there would be a new governor and the other way to go is to have the legislature just say there had to be a special election. But, you know, reading through some of the things that the governor said really makes it difficult to see how this -- any way that he should continue as governor of the state. It's so disappointing to --

SANCHEZ: Yes, especially the part about bleeping valuable thing that's been handed to me and I want to make sure that I get something for it and something to the effect that if I don't, maybe I'll just appoint myself. Those are the allegations, once again, as read to us by the U.S. prosecutor, the words of -- go ahead.

SCHAKOWSKY: Those are allegations except that you're quoting words that actually came out of the governor's mouth that were taken off of taped recordings. And so, you know, that's the part that is so disturbing, the disrespect for -- I concentrated mainly on the allegations dealing with the Senate appointment and, you know, to -- through the Senate, the United States Senate appointment, which is so important. I mean, right now, we're dealing with important issues like --

SANCHEZ: It just so happens that we're talking about the position vacated by the future president, the president-elect of the United States of America. It's a stunning development.

Congresswoman Schakowsky, thanks so much for taking us through this and for the breaking news on this.

SCHAKOWSKY: Thank you Rick.

SANCHEZ: That impeachment proceedings could possibly start against this governor. Stay with us. A lot developing. We're running out of time, we're trying to get it all in.

We'll be right back.

(COMMERCIAL BREAK)

SANCHEZ: Remember the pilot who ejected yesterday from the F/A- 18? We now have this picture, courtesy of the Associated Press after he landed. He got a cell phone from somebody and called to say where he was. Unbelievable development. Talk about a picture being worth a thousand words.

Here now, Chris Lawrence, with the rest of that story.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Don't breathe this stuff. It's an F-18. It will kill you.

CHRIS LAWRENCE, CNN CORRESPONDENT (voice-over): All this started with a young marine on a routine training mission practicing landings on an aircraft carrier. But as the pilot headed back to base, something went wrong with his plane. He radioed for help and officials ordered an emergency landing at Miramar Air Station. As the pilot crossed over this neighborhood, the plane failed. And marine officials say he tried to aim it at a deserted canyon.

CAPT. STEPHEN PAAP, U.S. MARINE CORPS: He did whatever he could to try to prevent the actual crash, but he had to eject and then once the pilot ejects, the plane kind of just takes its course.

LAWRENCE: Neighbors heard the engine screeching and looked up.

BERT, WITNESSED THE CRASH: I think I saw the pilot eject. I heard some funny noises and then I heard it hit and explode.

LAWRENCE: The massive impact ignited a fireball and destroyed two homes. One was empty. The other is where a grandmother, mother and two children lived. Three of them were found dead within hours of the crash. Some residents say an accident like this is just a matter of time.

JOHN JAMES, LIVES 3 DOORS FROM CRASH: They always have training missions and sooner or later, the equipment is going to fail. You know? This isn't the first and it's not going to be the last.

LAWRENCE (on camera): In addition to the two homes that were leveled, pieces of the jet broke off and hit three others as well. Burning debris scorched the surface of two of those homes.

MAURICE LUQUE, SAN DIEGO FIRE RESCUE: And a third had a big metal piece of jet part fly into the garage and cause a big slice.

LAWRENCE (voice-over): But in those homes, no one was hurt and with a high school nearby, investigators say this could have been much worse.

UNIDENTIFIED MALE: Theoretically, this could have wiped out over half dozen homes, depending on how it landed.

LAWRENCE (on camera): Fighter jets don't have black boxes like commercial aircraft, but they do have a data recorder. The investigators will be using that, as well as interviewing the pilot, to figure out what went wrong. We know the F/A-18 can fly and is designed to fly with just one engine but if it lost both engines, it would not be able to glide into a landing, it would more likely drop like a rock.

Chris Lawrence, CNN, San Diego.

(END OF VIDEOTAPE)

SANCHEZ: That's a story that is well put together. Chris Lawrence, great reporter.

Let's go to Susan Lisovicz, she's watching Wall Street for us. Wow, what am unbelievable day in politics.

What's going on there?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, we're having I would say an all too believable day on Wall Street which is a sell-off. We had 500 point gains over the last two days, we've given back more than half of it.

More signs of how corporate America is getting hurt by the recession. Texas Instruments as well as FedEx lowering their earnings outlook. Sony, Wyndham Worldwide as well as the NFL, Conway, which is a trucking company and Danaher, all announcing job cuts and we still don't know what is going to happen with the Big Three. And we're seeing a big sell-off.

See you tomorrow, Rick.

SANCHEZ: Susan Lisovicz, always a pleasure. Thanks so much.

Let's go over now to Wolf Blitzer. His hands are full with a remarkable story coming out of Chicago.

Wolf, over to you.

WOLF BLITZER, CNN ANCHOR: Remarkable, indeed. Thank you, Rick.