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Lou Dobbs Tonight
Obama Reversal; Geithner under Fire; Hacking Attack; Harman Caught on Tape; Rights under Assault
Aired April 21, 2009 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, HOST: Thank you, Wolf. Good evening everybody.
President Obama reversing course and saying former Bush administration officials could be prosecuted for authorizing harsh CIA interrogations or torture. This is the latest in a series of reversals by the Obama administration. We'll have that story.
Also Treasury Secretary Geithner faces a barrage of new criticism over the massive government bailout of Wall Street. This as the government watchdog says it's launched 20 criminal investigations into fraud in the bailout program.
And what could be another hacking attack by communist China against the Pentagon. The $300 billion joint strike fighter project is the target this time, but the Obama administration is not saying who is responsible for this cyber warfare against the United States.
We begin tonight with the latest reversal by the Obama administration on a critically important issue. President Obama today raised the possibility that former Bush administration officials who justified harsh CIA interrogations could be prosecuted. President Obama said the attorney general, Eric Holder, will ultimately determine whether any prosecutions are required.
His remarks contradicted comments by White House press secretary Robert Gibbs just 24 hours earlier, and White House chief of staff Rahm Emanuel 48 hours earlier. Ed Henry has our report from the White House.
(BEGIN VIDEOTAPE)
ED HENRY, CNN WHITE HOUSE CORRESPONDENT (voice-over): A dramatic reversal -- the president now leaving the door open to his attorney general prosecuting former Bush Justice Department officials who crafted policies allowing alleged torture of terror suspects.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: With respect to those who formulated those legal decisions, I would say that that is going to be more of a decision for the attorney general within the parameters of various laws, and I don't want to prejudge that.
HENRY: A sharp break from what his press secretary said 24 hours earlier. Joining Chief of Staff Rahm Emanuel and saying the president didn't want prosecutions.
(on camera): Why not the Bush administration lawyers... (CROSSTALK)
HENRY: ... who in the eyes of a lot of your supporters on the left twisted the law? Why are they not being held accountable?
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: The president is focused on looking forward. That's why.
HENRY (voice-over): In the last 24 hours, Senate Intelligence Chair Dianne Feinstein urged the president to withhold judgment and the liberal group MoveOn.org circulated a petition demanding Attorney General Eric Holder appoint a special prosecutor.
UNIDENTIFIED REPORTER: Is this an example of this White House giving in to pressure from the left?
GIBBS: I don't -- I have not -- I doubt the president has been on MoveOn.org in the last 24 hours.
(CROSSTALK)
HENRY: The president did suggest he would be willing to accept a 9/11-style commission to probe the matter.
OBAMA: To the extent that there are independent participants who are above reproach and have credibility that would probably be a more sensible approach to take.
(END VIDEOTAPE)
HENRY: Now the president is also getting flak from the right with former Vice President Dick Cheney charging the administration is withholding other memos which show that the controversial terror tactics actually helped prevent attacks. The White House today dismissed that as a continuation of a long policy battle with the former vice president. The fact is this is also a political battle and this White House would much rather engage in one of those with the former vice president who is very unpopular than with some of their allies on the left, Lou.
DOBBS: Engaged they apparently -- are intent upon doing but the vice president whether popular or unpopular has raised a very salient point and that is to what degree did those interrogation techniques produce useful and effective intelligence for the United States and why isn't that a legitimate not a political issue?
HENRY: Fair question. I put it to Robert Gibbs today. He basically said he doesn't have any control over whether the CIA releases such memos. He told me to call the CIA. The CIA obviously is not going to just turn those memos over to CNN either. But the president, in fact, does have the power to classify such memos if they exist.
He obviously declassified some memos last week. That's what the former vice president is getting at as to whether some of these memos are being selectively declassified. We should point out charged with a level that the Bush administration many times as well. So the fact is this president has the power to declassify those memos if they exist, and obviously in fairness if there is evidence that these tactics helped prevent terror attacks that should probably be part of the public record as well, Lou.
DOBBS: Ed, thank you very much -- Ed Henry reporting from the White House.
Senate Republicans immediately blasting the Obama administration for its reversal on the issue of prosecuting former Bush administration officials -- Senate Minority Leader Mitch McConnell said the president's apparent contradiction is a bit surprising.
(BEGIN VIDEO CLIP)
SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: I wish there were as much focus in this administration on policies that will keep us safe here in the United States. I think it's important to remember from 9/11 until the end of the Bush administration not another single attack on the U.S. homeland. We were obviously doing something right.
(END VIDEO CLIP)
DOBBS: McConnell added it is troubling that President Obama wants to change policies that have kept the country safe for the past eight years.
The Obama administration tonight also facing strong criticism on another issue -- the way that it has managed the government bailout of banks and other financial institutions. Treasury secretary Timothy Geithner today faced demands for more transparency and more accountability.
Rising anger about the way the government has spent nearly $600 billion so far on the so-called TARP Program -- Dana Bash with our report from Washington.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: This hearing is now called to order.
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): This bailout watchdog panel was formed six months ago but this is the first time anyone from the Treasury Department agreed to appear and Timothy Geithner was bluntly told that speaks to a huge problem.
ELIZABETH WARREN, TARP OVERSIGHT CHAIR: People need to understand why you're making the choices that you're making.
BASH: One of many choices that perplexes taxpayers is why the Treasury Department may say no to banks who want to return government money.
REP. JEB HENSARLING (R), TEXAS: Why wouldn't you take the money back? TIMOTHY GEITHNER, TREASURY SECRETARY: My basic obligation and our responsibility is to make sure that the system as a whole, as a whole, has the ability to provide the credit that recovery requires.
BASH: Geithner tried to convince the panel he understands that Americans deserve information about how hundreds of billions in bailout funds are being spent.
GEITHNER: I believe in the importance of transparency and accountability oversight.
BASH: But even as he testified, the bailout program's inspector general released a withering report chastising the rescue program for lacking transparency and revealing 20 criminal investigations and six audits.
NEIL BAROFSKY, SPECIAL INSPECTOR GENERAL: Our investigations really run the gamut from smaller banks to larger financial institutions. Did these banks lie to us when they presented their financial information, lied to Treasury to get this money.
BASH: Neil Barofsky's report also ripped a new Obama initiative to free up credit, a public/private partnership to buy bad assets saying it could expose taxpayers to fraud.
UNIDENTIFIED MALE: I just don't get it, Mr. Secretary, how this represents protecting the taxpayer.
BASH: The congressional watchdog panel also raised concerns that the Obama plan tilted in favor of private industry and exposes taxpayers to too much risk.
DAMON SILVERS, TARP OVERSIGHT CMTE.: And if we eat through the equity in those partnerships is it not the case that the FDIC and the Fed are on the hook?
(END VIDEOTAPE)
BASH: Now Secretary Geithner argued that their plan to buy bad assets really is the best option for getting credit flowing again, but the inspector general made very clear today he doesn't think that's the best idea. But he said if the Obama administration is insistent on going forward they must put safeguards in place to avoid waste, fraud and abuse. Lou?
DOBBS: Dana, that's all well and good, the fact is over $600 billion put forward by the taxpayer here. I did not hear a straightforward answer from the Treasury secretary as to why he would not accept payoffs of TARP money that have been put on the balance sheets of major banks that want to return that money. Why would he not be forthcoming, and why would that panel, that oversight panel, sit there like mute dolls and not respond?
BASH: Well, he did get a little bit of pushback on that issue, but the basic gist of his answer to that question is that he believes that the government has a bird's eye view of what is and isn't good for the financial -- for the health of the financial sector and he says that he will decide whether or not a specific bank can and should give back money.
And I will tell you that already we are hearing from Republicans who were not in that hearing, but who will actually have a press conference tomorrow saying, no way, that is absolutely the wrong approach. The bank says they want to give back government money they're ready to do that, why not let them?
DOBBS: Dana, the relative I.Q. disparity between Timothy Geithner, the Treasury secretary, and the CEOs of most of those banks, sufficiently large, that he might be somewhat modest in his responses and hopefully a little more well, open to the possibilities. I still don't understand why an oversight panel was behaving as if they had their hands tied behind their backs, but we'll get to that another day. Dana thanks very much -- Dana Bash from capitol hill.
The Treasury secretary today said there are $110 billion of the so-called TARP funds that haven't been spent. Of the $700 billion authorized by Congress, the Bush administration spent over, well, about $360 billion. The Obama administration has authorized spending of 235 billion so far. By some estimates the federal government and the Federal Reserve have now committed almost $13 trillion, all of that in grants, in loans and, of course, guarantees and pledges.
Americans are unsure whether or not Treasury Secretary Geithner is doing a good job. The most recent Gallup poll shows 42 percent of Americans approve of the way he's handling his job; 40 percent of those surveyed disapprove; 20 percent have no opinion.
Up here next, what could be one of the most serious hacking attacks against this government -- a threat to our most important and expensive fighter jet program and an influential congresswoman caught on tape apparently promising to influence an espionage case against two pro Israeli lobbyists. She had something she wanted in return as well. We'll have that story and a great deal more next. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: Today for the first time an American terror suspect has been added to the FBI's "Most Wanted" list. The man is Daniel Andreas San Diego. He is wanted for bombing of two offices in California in 2003. Both attacks caused minor damage. There were no injuries in either. Investigators say the 31-year-old computer specialist is an animal rights activist who turned to domestic terrorism.
This left-wing terrorist comes just days after the Obama administration's Department of Homeland Security had singled out returning veterans from the wars in Iraq and Afghanistan and others who are concerned with border security as recruits for right-wing extremists. Computer spies have hacked into this country's biggest and most expensive military project, the $300 billion Joint Strike Fighter.
There are suspicions that hackers in communist China are responsible for this latest attack. The Obama administration, however, and the Pentagon are refusing to say anything about the suspected identity of those who have hacked into our most sensitive computer systems. Chris Lawrence reports from the Pentagon.
(BEGIN VIDEOTAPE)
CHRIS LAWRENCE, CNN CORRESPONDENT (voice-over): America's newest, most advanced fighter aircraft compromised by computer hackers. Senior defense officials say the hackers broke into thousands of confidential files over two years. They stole information on the F-35's performance, design and electronics system.
UNIDENTIFIED MALE: (INAUDIBLE)
LAWRENCE: How did they get in? Officials say through the computers of Pentagon contractors who design and build the jet. But the prime contractor says no classified data has been lost in a cyber attack.
BRUCE TANNER, CFO, LOCKHEED MARTIN: There are no -- there's never been any classified information breach and like the government, these attacks to our systems are continuous and we do have stringent measures in place to both detect and stop these attacks.
LAWRENCE: But it goes beyond one plane. Officials say the hackers also busted into the air traffic control system of the Air Force where they could see the locations of military aircraft in flight.
UNIDENTIFIED MALE: Obviously what they're trying to do is place, Trojan horses, you know pieces of code that they can call up later and basically phone home.
LAWRENCE: Mike Leacle (ph) runs Integrity Global Security, which built the operating system for the F-35. That's the most sensitive information, and it was not compromised by the hackers. Defense officials say the intruders were able to cover their tracks and make it look like the break-ins were coming from all over the world.
UNIDENTIFIED MALE: And so often the trail leads to China.
LAWRENCE: "The Wall Street Journal" reports some former U.S. officials claim these attacks appeared to originate from China, but no current U.S. official can say who's behind it and tell us it's hard to determine if the hackers represent an actual government, corporation, or they're just private citizens.
(END VIDEOTAPE)
LAWRENCE: Now "The Journal" is reporting that investigators traced those hacks back to what they think are Chinese I.P. addresses, ones that have been used in attacks before. For its part, China has called previous reports like this Cold War-style allegations and says it forbids cyber attacks. Lou?
DOBBS: Chris, the fact that the Obama administration is not protesting these attacks, secondly, that there is any ambiguity at all about the origin of these attacks suggests that this country is in deep, deep trouble.
LAWRENCE: Well, you know just a couple of months ago the Pentagon put out a report where it referenced some other attacks on other U.S. government computers that they thought you know could be traced back to China. But even there they couldn't necessarily trace it exactly to the Chinese government. I think in this case they are saying that none of the classified, the really declassified information, was compromised, but it certainly raises some questions going forward in the future.
DOBBS: It certainly does and it raises also the question if anyone, because this administration said there will be accountability, has anyone been fired for permitting such, such an intrusion, an invasion of our most sensitive military information or computer system?
LAWRENCE: Not that we know of, Lou.
DOBBS: All right -- Chris Lawrence reporting from the Pentagon. Thank you, sir.
LAWRENCE: You're welcome.
DOBBS: Up next, caught on tape a leading congresswoman allegedly trying to help lobbyists accused of spying and we'll tell you what happened after bees swarmed a San Diego beach. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: One of the most influential Democrats in Congress, Congresswoman Jane Harman, is at the center of a major controversy tonight. The congresswoman reportedly had conversations with a pro- Israeli official and that conversation was intercepted on a National Security Agency wiretap. Jeanne Meserve has our report.
(BEGIN VIDEOTAPE)
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Congresswoman Jane Harman is outraged by reports that her conversations were secretly wiretapped.
REP. JANE HARMAN (D), CALIFORNIA: I frankly think my name is clear. My conscience is certainly clear. And I think the question is about does our government -- or did our government abuse the rights of American citizens including members of Congress with legal or illegal wiretapping?
MESERVE: In a letter to Attorney General Eric Holder, Harman writes "this abuse of power is outrageous and I call on your department to release all transcripts and investigative material involving me in an unredacted form."
LARRY SABATO, UNIVERSITY OF VIRGINIA: This could be career ending. She must be aggressive. She must fight it at every turn. She has to fight it on every front, legal and political, in the public forums and private forums.
MESERVE: Sources say Harman was overheard talking to an investigative target whose conversations were being legally intercepted. "Congressional Quarterly" and "The New York Times" report that Harman discussed using her influence to reduce espionage- related charges against two officials of the American-Israeli Public Affairs Committee. In return, the person with whom she was speaking would lobby then House Minority Leader Nancy Pelosi to appoint Harman chair of the House Intelligence Committee. Pelosi says there was no such lobbying.
REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: It isn't true, no, Mrs. Harman, Congresswoman Harman has many friends who advocate for her and to juxtapose that on any other activities that are going on is just not -- just not correct.
MESERVE: In her letter to Holder, Harman says it is "entirely appropriate to converse with advocacy organizations" and denies contacting anyone to influence the AIPAC case. "CQ" also reports that after the intercept the FBI tried to open an investigation of Harman, but Attorney General Alberto Gonzales pulled the plug because he wanted Harman's help defending the controversial Domestic Warrantless Wiretapping Program which she supported.
(END VIDEOTAPE)
MESERVE: Today the former attorney general had no comment. The Justice Department says only that it is reviewing Harman's letter and as for that deal that was allegedly discussed, Harman didn't get the intelligence committee chairmanship and the trial of the AIPAC officials is slated for June. Lou?
DOBBS: And the fact that she didn't get that chairmanship, instead Sylvestre Reyes taking that committee chairmanship, Jeanne that was one of the big surprises of the Democratic takeover of 2006 in that election, wasn't it?
MESERVE: It was, but it's also known that Nancy Pelosi isn't always a great friend or fan of Congresswoman Harman and the thinking was at the time that that might have had some effect. I should say that today in a conversation with Wolf Blitzer that Congresswoman Harman did not deny that she had had conversations.
In fact she said "I talk to AIPAC and other advocacy groups all the time. There is nothing wrong with that." But said it was four years ago. She couldn't recall the content of those conversations. That is why she says she wants to see those transcripts released.
DOBBS: Making it, I'm sure, at this point unanimous. We all want to see them now.
MESERVE: We certainly do.
DOBBS: Jeanne Meserve, thank you as always -- Jeanne Meserve from Washington. Another top Democrat facing controversy tonight -- Senator Dianne Feinstein is accused of violating Senate ethics rules in what is a possible conflict of interest. In January the senator introduced legislation that moved $25 billion of taxpayer money to the Federal Deposit Insurance Corporation; this to stop home foreclosures.
Within days the FDIC had granted the commercial real estate firm C.B. Richard Ellis (ph) a contract to sell foreclosed properties at higher the normal rate. The conflict -- the senator's husband is the chairman of the board of the company. Senator Feinstein claims that she and her husband were unaware of that contract until after it was awarded.
Some other stories across the country tonight -- in Orlando, Florida, a bank robber literally left a trail for the police to follow, leaving no doubt who took the money. The thief ran out of the bank, as you see here, with a bag of money and a dye pack hidden in the bag exploded, streaming the red smoke that you see there. A UPS driver saw the man running with the smoke. He called the police and, as you might guess, they tracked rather easily the thief and caught him.
It's bee-swarming season and in San Diego, California, one swarm found a new home -- in this jeep on the beach -- thousands upon thousands of honey bees swarming the jeep sending people running for the ocean. Honey bees are actually vanishing in certain parts of this country. The bees eventually flew away from the jeep and amazingly no one was reported stung.
And we have some good news tonight out of Elkhart, Indiana -- Elkhart is of course hard hit by our recession. A mother of three is the winner of a $1.9 million lotto jackpot. She lost her job a year ago in the health clinic where she worked was closed down. Elkhart has had widespread layoffs and has a jobless rate of more than 18 percent.
Up next, the pro-amnesty open borders lobby at it again, now challenging the very legality of our border with Mexico. We'll have that story.
And the Ninth Circuit Court of Appeals, the most liberal in the nation, rules that the Second Amendment of the Constitution actually applies in California. But there is a small caveat they issued along with it. We'll have that story and a great deal more. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: A victory tonight for gun owners -- the Ninth Circuit Court of Appeals has handed down a ruling defending the constitutional right to own and bear arms. That ruling guarantees that states, even states that do not have such guarantees, cannot interfere with Second Amendment rights. Bill Tucker has our report.
(BEGIN VIDEOTAPE) BILL TUCKER, CNN CORRESPONDENT (voice-over): The citizens of California now have a constitutional right they probably always thought was theirs, their rights under the Second Amendment.
(SHOTS)
UNIDENTIFIED MALE: With yesterday's decision the Ninth Circuit Court of Appeals basically recognized that right for the Californians, who did not have a right to keep and bear arms.
TUCKER: In writing the opinion for the Ninth Circuit, Judge Escalon (ph) wrote, quote, "the right to bear arms is deeply rooted in the history and tradition of the republic. It is a means to protect the public from tyranny."
In a concurring opinion Judge Gould agreed saying quote that "we have a lawfully armed populace adds a measure of security for all of us." But the judge goes on to say those rights are not in consistent with reasonable regulation.
The judges noted that the Supreme Court has previously found that laws forbidding firearms in quote, "sensitive places such as schools and government buildings are reasonable." As such the Ninth Circuit found that the County of Alameda near San Francisco can ban guns shows on county property. Gun control groups like the Brady Campaign, which filed an amicus brief supporting Alameda, welcomed the ruling.
PAUL HELMKE, THE BRADY CAMPAIGN: What we've been arguing all along is that we've got the extremes off the table. You can't have near total gun bans like Washington, D.C. did, but you can't have any gun anywhere, anytime, anywhere. You can have restrictions and the court said that in this case yesterday.
TUCKER: There are six other states besides California whose constitutions don't specifically guarantee a person's right to keep and bear arms -- Minnesota, Iowa, Kentucky, Maryland, New Jersey, and New York.
For those reasons, gun rights advocates want the case to be appealed to the Supreme Court.
DAVID KOEL, INDEPENDENCE INSTITUTE: It would be a great vehicle for the Supreme Court to definitively say on a nationwide basis that the Second Amendment limits not only the federal government but it also applies to state and local governments.
(END VIDEOTAPE)
TUCKER: And it would also give the court a chance to more narrowly define what it means by a sensitive place. Don Kilmer, the head lawyer for the plaintiffs in the case, says he's not sure what he'll do next.
The case was filed in 1999. He's been living with it for 10 years. He's going to take a few days, talk to the plaintiffs and decide what's next. Lou, most attorneys I spoke with today expect the case will be appealed.
LOU DOBBS, CNN ANCHOR: Well, they've only put 10 years into it. Why shouldn't they invest another half decade or so? That in and of itself is unconscionable. The import, of course, is that the Second Amendment has been affirmed by the most liberal appellate court in the nation.
Thank you very much, Bill Tucker.
Shocking claims tonight from the League of the United Latin American Citizens. The group's California chapter saying the United States must stop the deportation of illegal aliens. The California LULAC Chapter also says the entire border between the United States and Mexico may be illegitimate.
Casey Wian has our report.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): The United States/Mexico border was established in 1848 by the Treaty of Guadeloupe Hidalgo which ended the Mexican/American war and the Gadsden Purchase in 1854.
A century and a half later the California chapter of the League of the United Latin American Citizens is questioning the very legitimacy of the order, as part of their effort to secure amnesty for illegal aliens following President Obama's recent trip to Mexico.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My country has been greatly enriched by migration from Mexico. Mexican-Americans form a critical and enduring link between our nations. And I am committed to fixing our broken immigration system.
WIAN: LULAC claims that 2008 Supreme Court decision in a Texas death penalty case involving a Mexican citizen could render the 1848 border treaty invalid because Congress failed to make the treaty binding on individual states.
So its California director says, "The government of Mexico should exercise its rights to third-party arbitration and reopen all questions of immigration including the rights of Mexican citizens in the United States and the legitimacy of the border itself."
The group says Mexicans in the United States were treated unfairly after Guadeloupe Hidalgo and should now be given legal status.
JAN TUCKER, LULAC, CALIFORNIA CHAPTER: Mexico didn't get what it bargained for in giving up its land, then why should it be bound by that border? And even if we're not going to revisit the issue of the border per se, shouldn't Mexico have a right to a third party examination?
WIAN: California LULAC suggests Canada, Brazil, Great Britain or France could help renegotiate the border treaty.
LULAC's national office did not respond to requests for comment on its California chapter statement which also criticized the Obama administration's appointment of Allen Bornstein as border czar. He's a former San Diego U.S. attorney credited with cracking down on illegal immigration during the 1990s.
(END VIDEOTAPE)
WIAN: We spoke with Santa Clara University law professor David Sloss who's written extensively on the Medellin versus Texas Supreme Court decision. He called LULAC's claim that the border is illegitimate, quote, "pretty absurd."
However, Sloss says there is the small possibility that a small number of descendants of Mexicans living in the southwest in 1848 could have a claim to U.S. citizenship, Lou.
DOBBS: All right. And one would hope that they are already citizens.
We appreciate it. Thank you, Casey. Another bizarre part of what is often a very messy issue, illegal immigration, border security. You would think it should be so straightforward, wouldn't you?
(CROSSTALK)
Rhetorically. Oh, my gosh, I should know better than to even say such a thing rhetorically or otherwise.
Casey, thanks very much. Casey Wian.
Up next, a shift in policy with what the president says now about investigations into the interrogations of terror suspects and who's responsible and who should be investigated. Our radio panel joins me and treasury secretary Geithner grilled over the bank bailout. I'll be talking about the lack of oversight to this bailout and other issues.
I'll be talking with Dennis Shaughnessy here next. Stay with us.
(COMMERCIAL BREAK)
DOBBS: President Obama today signed the Edward M. Kennedy Serve America Act into law. The massive volunteer service bill provides money to almost triple the number of AmeriCorps volunteers raising it from 75,000 to 250,000 over the next eight years.
Critics of the legislation say most AmeriCorps volunteers end up in government agencies, essentially then increasing the size of the federal government.
Today's bill, by the way, will cost the taxpayers almost $6 billion. We'd like to know what you think. Here's our poll question tonight. Do you find it laughable the day after the president called for $100 million in budget savings from his Cabinet that he signed into law a volunteer program that will cost taxpayers almost $6 billion?
Yes, we'd just like to hear from you. Just a point of interest. Vote, if you will, at Loudobbs.com. We'll have the results upcoming.
A government oversight panel today grilled Treasury secretary Geithner on his management of the massive federal bailout of banks and other financial institutions. The biggest recipient of taxpayer funds is the insurance giant AIG which has received more than $180 billion. All sorts of issues confronting our corporate America and our financial industry.
So joining me now one of the country's smartest corporate restructuring specialist is Dennis Shaughnessy, chairman of FTI Consulting, and we should point out right off the bat, AIG is one of your firms, is it not? That you're a representative?
DENNIS SHAUGHNESSY, CHAIRMAN, FTI CONSULTING: In communications and some other work, not restructuring right now.
DOBBS: Dennis, it's great to have you here.
SHAUGHNESSY: Thank you.
DOBBS: It is a difficult time to put it mildly in the financial services industry. We just saw Timothy Geithner before the oversight panel. My opinion is, as I watched, I thought they were -- I have great respect for Professor Elizabeth warren, the chair of that oversight panel, but I found it unusual that a treasury secretary doesn't even respond with any kind of substance to an oversight panel.
What is your -- what are your thoughts, first, on TARP, how well it's working, and the fact that some institutions can't even give the money back at this point?
SHAUGHNESSY: I think there's three things to focus on there. One, I think, TARP as implemented beginning with Bush and continued through the Obama administration probably has put a floor. We may debate, you know, how low the floor was but it's put a floor under the stability of the financial community.
DOBBS: Which is a great thing?
SHAUGHNESSY: That is a great thing and I think that's an accomplishment that looks very good right now. I think that from the point of view of will it stimulate the economy, you know, will it lead to more lending, there's a lot of industries right now that banks are being smart fundamentally not to lend to, but there's others where we're seeing lending, you know, the velocity and acceleration improved.
We're seeing IPOs now starting to come out in the capital markets. There was one the other day and then, of course, Goldman Sachs was able to raise $5 billion and then finally we're seeing the bond market open up.
So I think TARP, if you look at TARP as a catalyst to, one, put a floor under the financial system here in this country, two, you know, free up some of the constraints on the capital markets.
And then finally, you know, has it helped create confidence? I think to a certain extent it has but I think therein lies the real challenge for this administration and anyone trying to implement these programs.
DOBBS: You just mentioned Goldman Sachs, a $5 billion offer, those proceeds plus other money to be used specifically for the purpose of paying off the TARP money.
Timothy Geithner, the Treasury Department, saying it's the financial Hotel California, you can check out anytime you want, but you can't leave. They will not accept the money.
Is that an incorrect or correct position for the treasury secretary to take?
SHAUGHNESSY: Well, I think the position seems to be in conflict with the idea of instilling confidence and getting, you know, the private markets, the private capital and individuals feeling better about themselves right now.
I mean, you know, what's a better show of confidence than a company that can step up and say I'm repaying all your money, I'm repaying it early, I'm repaying it because I've raised the money from the private world, which is what you said I needed to do to given with.
So, no, it doesn't make any sense and it seems to be in direct conflict with what their major job is and that's to restore confidence.
DOBBS: Restoring confidence is critical. On this broadcast, Dennis, I have said for months, criticizing first the Bush administration and from transition until about three weeks ago the Obama administration for talking down the market, talking down the economy.
We have reached a point where we have legislators who are congressmen and senators who are attacking corporations and businesses. And by the way, I am as much of big business in this country as anyone but attacking them for sponsoring a golf tournament, attacking them for doing business under -- in some sort of normal fashion, for flying corporate aircraft, many of which, by the way, are manufactured right here in the United States or North America.
I mean, this is craziness. What do we -- this is debilitating to confidence, is it not, rather than restoring it?
SHAUGHNESSY: Oh, I think it's focusing on totally the minutia when, I guess, the CEO adage of -- you're focusing on the forest from the trees. I think that, you know, really you're -- you have companies that are sick. You have industries that are sick. And structurally they need to be worked on.
We need to make changes. We need to make tough decisions. You have other industries that are on the sidelines that -- would be influenced by it because of a lack of confidence and I think having all this recrimination about salaries, about jets, about golf tournaments, it makes for good press.
It might make people feel good in a committee hearing. It doesn't help one iota solve the problems that we have or create confidence.
DOBBS: I'm one of those guys who's conflicted because I believe CEO compensation at-large in corporate America is excessive and unwarranted. I am at the same time adamantly opposed to government setting that upper limit on that compensation and would like to see shareholders be given far more power than they now hold.
But as we look at what is happening with regulation. This great contest, whether it's the nationalization, the socialization of our economy, or whether it is trying to repair and return it to the vigor, the vitality of a free enterprise democracy, the idea of regulation.
We still have hedge funds that are unregulated. We have immense means needs for regulation in our markets. What are your thoughts there? Should we be regulating hedge funds? What needs to be done in terms of regulation?
SHAUGHNESSY: Well, FTI is very involved in the investigations of a lot of the hedge fund abuses. Madoff, you know, being an example. I think we absolutely have to bring in hedge funds and even their feeder fund to funds into some degree of regulation.
I think you're looking at firms that over-levered themselves significantly, that purported to have a black box strategy to invest money magically for outsize returns and obviously took outsize fees to do it. So they didn't represent the interest of their institutional or individual investors and we shouldn't forget that a lot of us are in these hedge funds through 401(k)s, through mutual funds, through state pension plans.
So I think you have to regulate them. You have to pull them in and, you know, you have to hold them accountable to a standard that we hold every other investment firm to and banks. You can't just simply let them be this dark, mysterious, you know, wonderful group of people.
Investing is tough. There's no free lunch and I think what we're seeing now, you know, with the pressures of the economies on these funds, is that they didn't have a magical way of making money. Their way of making money was to borrow much more than they should, place a lot of big bets, keep their fingers crossed and hope it all worked out.
DOBBS: And collected a lot of fees.
SHAUGHNESSY: They did do that.
DOBBS: Dennis Shaughnessy, it's great to have you with us. Appreciate it. FTI Consulting. I hope you come back soon.
SHAUGHNESSY: Thank you. I will.
DOBBS: Guide us through this mess.
SHAUGHNESSY: We'll try very hard.
DOBBS: Thanks, Dennis Shaughnessy.
SHAUGHNESSY: Thanks.
DOBBS: Coming up at the top of the hour "NO BIAS, NO BULL." Roland Martin in for Campbell Brown.
Roland, what you got?
ROLAND MARTIN, CNN ANCHOR: Lou, tonight, we're digging deeper into the White House's apparent reversal of possible criminal prosecutions stemming from CIA interrogation of terror suspects.
Also we'll have the latest on the arrest of a med school student in the killing of a woman who may have been contacted through Craigslist.
Plus, we'll talk about prosecuting a Somali teen who's been charged in the hijacking of the Maersk Alabama.
And of course, the controversy over Miss California's response to a question about same-sex marriage continues to grow. We'll be taking your calls and comments on that.
All of that at the top of the hour. Lou?
DOBBS: No free speech in those Miss Universe contests apparently.
MARTIN: You ask the question, you get an answer.
DOBBS: Roland, I asked a question, I got an answer. I'm gong to try to figure how that works as we compute that.
(LAUGHTER)
DOBBS: Roland Martin, thank you.
MARTIN: Thanks, Lou.
DOBBS: Up next, President Obama reverses course now saying Bush administration officials could be prosecuted over those CIA interrogations and a leading congresswoman caught on tape and not the way that she would like. We'll be talking with our panel of radio talk show hosts here next. Stay with us. We'll find out what their listeners were thinking and what they're saying. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: Joining me now three of my now favorite radio talk show hosts. In Cincinnati, WLW Radio, syndicated talk show host, Bill Cunningham.
Bill, good to have you with us.
In Little Rock, Arkansas, KARN, Dave Elswick. Dave, good to have you.
And here in New York with me, WOR, Steve Malzberg. Good to see you.
STEVE MALZBERG, WOR IN NEW YORK: Good to see you, Lou.
DOBBS: Let's start out with this reversal on prosecution -- Bill, let me turn to you first -- on prosecuting Bush administration officials. What's your reaction?
BILL CUNNINGHAM, WLW IN CINCINNATI: Well, we shouldn't criminalize legal advice. The policy was set by Georgie Bush. It was not set by the cuff links in the Justice Department. I think what this is going to set is a precedent where maybe Georgie Bush should have indicted Bill Clinton and his advisers for the Denise Rich thing.
Or maybe the next precedent Mitt Romney is going to indict Obama Justice Department for what Eric Holder is doing. It makes us look, Lou, like a banana republic where each succeeding administration looks backwards.
And I think right here, Obama is flip flopping from Sunday with Rahm Emanuel to today with his presidential press secretary. And what message does it send to the world when we start indicting lawyers for giving advice?
DOBBS: I don't know. But it's one I -- the way you just styled that is one I might want to think about a little bit.
Dave, what's your reaction? Do you feel the same way?
DAVE ELSWICK, KARN IN LITTLE ROCK: You know -- well, yes, I feel a lot the same way. The bottom line is they've been salivating in the Congress for months, if not years, that they wanted to go after the Bush administration.
They put pressure on the president and the president is folding on it. I think it's stupid, but he's going to do it anyway, I think.
DOBBS: All right. Let's turn to the Miss USA pageant. Let's go to something really important.
(CROSSTALK)
Because what I love is Donald Trump managed to capture the imagination of talk show hosts all over the country. We were talking about it today because this lovely young lady answered incorrectly to Perez Hilton a question about gay marriage. The uproar that followed -- I mean, Donald Trump, you know, he has to be saying, I'm a genius to himself.
MALZBERG: Yes.
DOBBS: And I'm sure it's the first time he's ever thought that about himself.
MALZBERG: Yes, right, since about five seconds ago. No, God bless this young girl who today said that she was being tested by God by being asked that question and she handled it the correct way.
And you know, it's this Perez Hilton guy who later blogged about her in a very vicious and malicious way on his blog. Called her all kinds of names. He should be the one under scrutiny right now, not her. She did what she supposed to be doing.
DOBBS: Well, let's -- any other thoughts, gentlemen? Otherwise, we'll move on to something...
(CROSSTALK)
ELSWICK: They both have freedom of speech. One on a blog. One on a stage. If you don't like it, change your channel, turn off your computer, how's that?
MALZBERG: But he went over the top. He went over the top. He was mean and vicious and they -- you know, those...
DOBBS: Yes, we never...
MALZBERG: ... who give crank and demand tolerance don't get -- don't give tolerance on the other hand.
ELSWICK: The First Amendment never said that we weren't supposed to be vicious. Take a look at some of the early (INAUDIBLE).
CUNNINGHAM: Lou, I'll look at it this way. Miss USA ought to represent of the US of A. And whenever we in the US of A have actually vote on this issue, 67 percent say we don't like gay marriage. Call it a civil union. But marriage is our term, it's not their term. So if this gorgeous young blond who looks hot to me is Miss USA...
DOBBS: Wait a minute, Bill, are you married?
CUNNINGHAM: Yes, I am.
(CROSSTALK)
DOBBS: Wait a minute, I want to -- I've got toll preserve -- I've got to support marriage here. I want you to get out of trouble.
MALZBERG: I'll pick that up. She looks hot to me. I'm not married. She looks really hot to me.
DOBBS: We're going to be right back with our panel and we'll have the poll results as well.
A preview of my new movie, I brought along Russell Crowe, Ben Affleck and few others. Still my movie. We'll be telling you all about that. We'll be back with our panel in just one moment. Stay with us.
(COMMERCIAL BREAK)
DOBBS: We're back with our panel, Bill Cunningham, Dave Elswick and Steve Malzberg.
Let's turn first to the issue of Jane Harman. She seems to be in a lot of trouble. Going -- apparently making a deal on tape with two lobbyists from the Israelis' biggest lobbyist, AIPAC. Your reaction.
MALZBERG: Well, and supposedly saying, reportedly saying this call never happened. Now...
DOBBS: But saying it on tape.
MALZBERG: Saying it on tape. You know, she's turned the issue around. The NSA or the FBI, how dare they take me? But if she was talking legitimately to a suspect and they legitimately taped her, she's the one in hot water. I don't see how she gets out of this one except that the media comes to her rescue.
DOBBS: No...
CUNNINGHAM: And the other thing, we have two congresswomen from California, Nancy Pelosi and Jane Harman who were briefed ahead of time about the NSA. Jane Harman is like the piano player in the house of ill refute not knowing what's happening upstairs.
She knew there was taping going on. She was conducting possibly a legal, criminal behavior that was picked up. And thirdly, she suffers from Bush delusional syndrome going back in time. And I hope the media doesn't give her a free pass.
They wouldn't give someone like Newt Gingrich a free pass when he was in the Congress. Hold Jane Harman to a high standard here.
DOBBS: Dave, you get the last word.
ELSWICK: Well, bottom line, Jane Harman, Barbara Boxer, what's the surprise? They're all crooks.
(CROSSTALK)
MALZBERG: Feinstein. Feinstein. Feinstein.
ELSWICK: Feinstein. Pardon me.
MALZBERG: Yes.
ELSWICK: Throw them in.
CUNNINGHAM: It's not good, Lou. Sweet Lou, it's not good.
DOBBS: All right, gentlemen. Bill, thank you very much. Dave, appreciate it. Steve, nice to see you.
ELSWICK: Thanks a lot, Lou.
DOBBS: Well, I want to tell you about my new movie. I've always wanted to say that. I have a role so small that it can be called small in the new Russell Crowe/Ben Affleck Thriller, "State of Play." The movie about the -- it's a murder mystery thriller. I'm not going to give anything away.
Russell Crowe plays a brass newspaper reporter. Ben Affleck plays Congressman Steven Collins, and I play, well, here's a sample of my dominating performance.
(BEGIN VIDEO CLIP)
DOBBS: Mr. Collins moved to staunch a growing tide of hostility towards him this afternoon when he appeared together with his...
UNIDENTIFIED FEMALE: The long line of politicians, why we had triumphs and disappointments and we both made mistakes...
DOBBS: ... apologized for his affair and offer an apology to his constituents.
BEN AFFLECK, ACTOR: Can you believe this? We're on six channels simultaneously.
(END VIDEO CLIP)
DOBBS: More in focus there, don't you? I should have been more in focus and I think probably bring the -- well, anyway, we can maybe fixed that a little later. It's playing in theaters around the country. I hope you go see it. "State of Play."
And our poll result. 85 percent of you say you find it laughable that the day after President Obama called for $100 million in budget savings from his Cabinet that he signed into law a volunteer program that costs taxpayers $6 billion.
Time now for some of your thoughts. Willy in Florida said, "After the uproar regarding the recent Homeland Security report, how convenient to find a leftist-leaning domestic terrorist. I thought that term was now not in use."
Apparently, Janet Napolitano changed her mind. A lot of that happening these days in Washington. We love hearing from you. Send us your thoughts to Loudobbs.com. And a reminder to join me on the radio, Mondays through Fridays for the "LOU DOBBS SHOW" 2:00 to 4:00 p.m. each afternoon on WOR 710 Radio and in New York, preceding Steve Malzberg's show.
And go to Loudobbsradio.com to get the local listings in your area. And we want to welcome a new member to our LOU DOBBS TONIGHT family. Cooper Michael Holland born April 12th to our senior producer Phillipa Holland and her husband Tom.
Baby Cooper weighing in at 6 pounds, 14 ounces, joining his big brother Tommy. We congratulate the Holland family. Wishing them all the very best.
"NO BIAS, NO BULL" starts right now. In for Campbell Brown, Roland Martin.
