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American Morning

Lay Will Plead the Fifth; Congress Tackles Campaign Finance Reform

Aired February 11, 2002 - 08:33   ET

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

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: First, we'll go back to the Enron case. Mum's the word this morning for Former Enron Chairman, Kenneth Lay. As we've been reporting, Kay -- Lay, that is, does plan to appear, but he will exercise his Fifth Amendment right not to testify before two Congressional committees tomorrow. But even as a silent witness, Lay's appearance on Capitol Hill will be very high drama indeed.

Joining us now to talk more about Enron and other things Congressional, CNN's correspondents Kate Snow and Jonathan Karl. They are in Room 253 of the Russell Senate Office Building where Ken Lay is expected to appear and remain silent, I guess, after being introduced. Good to see both of you. Thank you for joining us at this early hour of the morning.

KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Good to see you, Paula.

ZAHN: All right, Jon, I'm going to start with you this morning. Initially, we were given an indication by Senator Dorgan that Kenneth Lay probably was not going to take the Fifth. What happened?

JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, Senator Dorgan, the senior Democrat on this committee wanted to build the drama and excitement. They had gotten indications from his lawyers that he may in fact come here and answer their questions, sit at that table right over there and have the most high-profile and interesting hearing of this whole Enron saga.

But, what happened really isn't a surprise. After all, Paula, you may remember, Conrad Burns, a Republican on this panel, thought it was so unlikely that Lay would actually testify, that he said that if he did testify he would go on the steps of the Capitol and eat his hat. So people were not expecting a lot, and look what happened to Jeff Skilling.

I mean, Jeff Skilling came up before Congress, answered the questions, and what did he get? Members of that committee and the House went on television over the weekend add said, basically, that the guy lied, that he now faces legal prosecution or potential legal prosecution for perjury. So, and even his mother, I guess, Jeff Skilling's mother wasn't satisfied with the testimony. So, Ken Lay did not have a lot to gain. He's going to come here. He is going to take the Fifth Amendment. And, Paula, he's going to have to do it twice. Because this committee wants him to come here, before all the television cameras, raise that right hand, take the Fifth Amendment, refuse to answer the questions, then two days later, he has to go to the house and do the exact same thing. They all know he's got nothing to say, but they all know, they want him there before the cameras to take the Fifth Amendment, and, basically, publicly embarrass the guy.

ZAHN: Well, Jonathan, maybe there's a new test you have to pass, and that's the Jeffrey Skilling mother test. You just mentioned her. I want to repeat what she said in "Newsweek" Magazine. Because it is quite extraordinary.

She said "You can't get off the hook with me there. He's going to have to beat this the best way he can. When you are the CEO, and you are on the board of directors, you're supposed to know what's going on with the rest of the company."

Ouch.

Let's move along, Kate, to the issue of campaign finance reform...

SNOW: Right.

ZAHN: ...which heats up again this week. Tell us where the fault lines lie there and what kind of vote we might expect.

SNOW: Huge fault lines. And you know, a lot of it has to do with Enron, because the supporters of campaign finance reform were really able to gen up support, feeling that the public is worried about Enron and other big corporations dumping money into the campaign system. They've gone on -- they've built on that momentum, and that's one camp. So they're pushing for these reforms to go through this week.

Senator John McCain working the phones. He's not on the House side, but he's picking up the phone and calling a lot of House members. But you have a couple of divisions there. Most of the Democrats, I'd say a lot of Democrats, are supportive of campaign finance reform, but there is a subset, a group of Congressional Black Caucus members who have deep concerns about campaign finance reform. They're worried that in some of their inner city districts, they wouldn't get enough money if those rules went into effect. They just wouldn't be able to raise as much what they call "hard money." So that's one camp.

Then on the other side, you've got Republicans, the leadership, fighting this thing tooth and nail. They're very concerned that they think it will give Democrats an advantage. They also think it will ruin the political -- national political parties. But then they don't have all their Republicans on board either, because there's a group of about 50 Republicans, who, in the past, have voted for campaign finance reform. Both sides looking at that group as integral to all this, Paula. They're looking at that group to try to convince them to stick with them this time. You know what's different about this vote, though. They've voted on campaign finance reform before in the House. They've passed it twice with the help of those 50 or so Republicans. But this time, Paula, it's real. If they pass it, the president has given every indication, he's going to go ahead and sign it. That means they can't just vote for it and hope the Senate's going to kill it. That's not going to happen. Paula?

ZAHN: All right, before I let the two of you go. Any follow-up on that very heated exchange of last week between Senator Byrd and Treasury Secretary O'Neill, basically, when they got into a verbal competition over who grew up poorest?

SNOW: Yes.

KARL: Yeah.

ZAHN: Jonathan?

KARL: And Senator Byrd said, "You are no Alexander Hamilton" to O'Neill. I mean, the big talk immediately after was did O'Neill actually cry when he was responding? The general consensus is, no, he was really angry, but didn't quite get to the step of crying. The fall out (ph) -- I had a very interesting discussion, off the Senate floor, with Senator Byrd. Absolutely no conversations between the two men, no intention of one man -- of one to call the other to apologize. There is no kiss and make up here.

Senator Byrd sounded just as upset when I spoke to him late last -- late Friday, saying essentially that this witness, this witness -- Secretary O'Neill, came before Congress arrogant and showing utter contempt for Congress. Basically, these two guys will see each other at the next committee hearing that they face off, but there will be no phone calls, kissing and making up, that's for sure.

SNOW: You know, Paula -- I'm sorry. There's not a lot of love lost -- just to add to what Jon just said -- there's not a lot of love lost between Secretary O'Neill and a lot of members of Congress, particularly some in his own party, Republicans. Last fall -- it goes back to last fall -- there was a group of members in the House, the Ways and Means Committee -- they write the tax bills over there. They wrote an economic stimulus bill, and O'Neill called it "show business."

They didn't like that very much. And there was a point when they called him in here. He came in and sort of apologized to all these members. They were sitting around, I'm told, in this meeting in October, and they went around the room and every Republican sort of railed on O'Neill. And then, at one point, I'm told, O'Neill said to them, "I don't care if you're members of Congress, you can kiss my" -- and I can't say the word on television. Not a lot of love lost.

KARL: And, of course, the more unpopular he gets here on Congress -- up here in the Capitol Hill, probably the more popular he gets down at the White House. So, it's not necessarily a bad thing for O'Neill. ZAHN: Well, I guess we can all agree on, collectively. It was very sad to watch that verbal joust play out. Thank you, both, for being with us this morning. Thank you for the campaign finance preview. Appreciate it.

SNOW: Sure thing.

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