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American Morning

Deadly Bombing Wave In Baghdad; Can Petraeus Save Iraq Again?; GOP Walks Out On Tax Fight; Eight Soldiers Charged In Private's Death; Wal-Mart Pulls Formula After Death; Bank of America Settles Discrimination Suit; Icy Roads; What's Next in the Florida Hazing Case?; Bank of America Settles Discrimination Suit; Interview with Rev. Jesse Jackson; DOD, Afghan Airstrike Was Self Defense; GOP Walks Out On Payroll Tax Debate; Suit: Ariz Sheriff's Officers Shackled Pregnant Inmate

Aired December 22, 2011 - 06:00   ET


CHRISTINE ROMANS, CNN ANCHOR: The war after the war. A bloody morning in Baghdad, explosion after explosion. New fears that it could all come apart now that U.S. troops are gone.

ALI VELSHI, CNN ANCHOR: Countdown to the tax hike. The GOP walks out on talks to keep your paycheck fatter for a little longer. Both sides play hide and seek as time runs out.



RON PAUL (R), PRESIDENTIAL CANDIDATE: Because of people like you.


ROMANS: And Ron Paul getting defensive about racist newsletters written in his name from the past. Questions coming up again as he rises in the polls on this AMERICAN MORNING.

VELSHI: Good morning.

ROMANS: Good morning.

VELSHI: Good to see you.

ROMANS: You too.

VELSHI: Thursday, December the 22nd. I'm Ali Velshi along with my good old friend, Christine Romans on this AMERICAN MORNING. Welcome.

ROMANS: Welcome to all of you too.

Up first, new fears that it could be all unraveling this morning, a wave of coordinating and deadly blasts rocking Baghdad. Police say four car bombs and nine roadside bombs went off within two hours of each other.

Killing at least 63 people and wounding close to 200. This coming just a few days after the last U.S. troops left Iraq. It's the worst violence to hit that country since the political crisis erupted between Iraq's Sunni and Shiite factions.

Arwa Damon is live in Baghdad this morning. What's the latest on the ground there, Arwa?

ARWA DAMON, CNN INTERNATIONAL CORRESPONDENT: Well, Christine, this is very much Iraqi's worst nightmare coming true. Not only is the government crumbling like a house of cards it would see, but also this devastating violence here in the capital.

Some of those blasts were so powerful, they shook our building and we were not that close to any of those specific locations. These explosions, happening exactly at rush hour, between 7:00 and 9:00 a.m., one of the blast taking place very close to a school just as children were arriving.

Another one was targeting very busy place in Central Baghdad. It was right in front of the Integrity Commission. Part of that building collapsed. Other explosions taking place, marketplaces, busy intersections, a very, very difficult morning for Iraqi agents.

ROMANS: Arwa, CIA Director David Petraeus just made a quick visit to Iraq. It was supposed to be a thank you tour following the U.S. withdrawal. Was there more to it than that?

DAMON: Well, we spoke to the minister of finance, who is a member of the vice president's Iraqia bloc. Remember, the vice president has those charges of terrorism being levelled against him.

And so we saw David Petraeus. He said coming and trying to encourage all sides to go back to the negotiating table. He also according to sources reported to have met with the speaker of the parliament also a member of the Iraqia bloc.

The prime minister and then traveling north to meet with the Kurds, the great concern is that there isn't any sort of political resolution to this current government crisi.

We could only end up seeing even more violence. Many people are greatly fearful that reconciliation at this stage might be near impossible. All sides so polarized at this point -- Christine.

ROMANS: Every Iraqi's worst nightmare after the troop withdrawal coming true. Thank you so much, Arwa.

VELSHI: Here in the United States, the tax fight is turning uglier with nine days until the bickering in Washington takes a bite out of your paycheck.

There's no resolution in sight this morning, even after President Obama spent an afternoon on the phone with congressional leaders on both sides of both Houses.

House Democrats tried to force a vote on the Senate's two-month extension of the payroll tax cut, but Republicans gavelled the House closed to prevent them from having a chance ignoring Democratic Whip Steny Hoyer as they walked out the door.


REP. STENY HOYER (D-MD), MINORITY WHIP: Walking out. You're walking away, just as so many Republicans have walked away from middle class taxpayers, the unemployed and very frankly as well from those who will be seeking medical assistance from their doctors, 48 million senior citizens.


VELSHI: And in an apparent show of their willingness to reach a deal, House Speaker John Boehner held a news conference from the negotiating table, basically saying the Senate is going to have to come to him.


REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: We're here. We're ready to work. We're looking for counterparts to sit down with us so that we can do what the president, bipartisan leaders in the House and Senate all want and that's to extend the payroll tax cut for one year.


VELSHI: Dan Lothian is live at the White House right now. Dan, the president makes the next move with an event later today. What's likely to happen?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right. This is an event where the president will again lay out what's at stake here. The White House has been pointing out all week, that if, in fact, this expires, family members who make about $50,000 or so a year as a family will see about $40 less in each paycheck.

And so today the president again will be highlighting that and he will be accompanied by people who will be impacted, including some of those who have responded to this call by the White House to say what, in fact, they would do with $40.

So again this is another attempt to put pressure on House members to go ahead, bring this to a vote. This short-term extension of two months and then they can work later in the year, next year, on a longer term, a one-year deal.

That is what the president will be doing here today. It just is on top of what the president has been working on all week.

VELSHI: Talk about the president's holiday schedule. The rest of the first family is in Hawaii where the president normally spends Christmas. And there have been discussions about whether he should be there or shouldn't be there, whether it's optics. What's the president's plan?

LOTHIAN: You know, right now, that still remains up in the air. We had expected by now the president would have been in Hawaii with the first family, the rest of the first family.

But White House aides here saying the situation is still too fluid. So it's unclear if the president will even make the trip to Hawaii. What I can tell you is that he is purchasing Christmas presents so perhaps that is a hint of that he plans to go out there, give it to the first daughters.

Yesterday, he took a few moments on a scheduled trip to Alexandria, Virginia, where he went to a Best Buy store. He bought a Wii game for his daughters. He bought some gift cards. He also went to a pet shop, bought some toys for the first pet, Bo, and also picked up some pizzas. He spent about $300.

So it does appear that the president is getting ready for Christmas, but so far plans for travel to Hawaii is still up in the air.

VELSHI: Did you say he picked up some pizzas?

LOTHIAN: He picked up three large pizzas, yes.

VELSHI: If you're the president of the United States, don't you have somebody who can do that for you?

LOTHIAN: You know, I'm sure he does. And in fact, you know, when he paid, he pulled out a credit card, which I found that kind of odd. It apparently still works so not only was he picking up his own pizza, but he was paying for it over his own credit card.

VELSHI: Sometimes you have to do it to make sure the card still works. I suspect we're all going to be talking a lot the next few days. Dan Lothian at the White House.

All right, at 7:30 Eastern, Senators Dick Durbin and John McCain will join us. Durbin says Speaker Boehner has lost control of the House. McCain wants House Republicans to get in line too. He says this battle is hurting his party and it's unfair to the American people.

ROMANS: All right, alleged hazing and bullying on the battlefield. Eight U.S. soldiers are facing serious charges in connection with an apparent suicide of Private Danny Chen.

Some of the charges include dereliction of duty, maltreatment and involuntary manslaughter. Chen's family says the 19- year-old had complained about harassment dealing with racial taunts even physical abuse.

Chen was found dead in a guard tower in Afghanistan in October. It is believed he shot himself. Army officials say the investigation is ongoing and more charges could be filed.


CAPT. JOHN KIRBY, DEPUTY ASSISTANT DEFENSE SECRETARY, MEDIA OPERATIONS: Any single case of hazing or inappropriate conduct to a fellow soldier, airman, marine, sailor, coast guard member, is inappropriate and not acceptable.

Zero is the right number. We treat each other with dignity and respect. That's what this uniform requires. And when we don't, there is a justice system in place to deal with it.


ROMANS: Chen's family says they are glad about the charges, but they want to see convictions. Again, their son was 19 years old.

VELSHI: Wal-Mart pulls a batch of formula from its shelves after a baby's sudden death in Missouri. The retail giant recalled Enfamil Newborn from its stores nationwide as a precaution, but only batches with the lot number ZP1K7G.

This after a 10-day-old died from a rare bacterial infection. Officials are testing other environmental factors too including the water that was used to mix the formula.

The formula's maker Meade-Johnson Nutrition says the batch tested negative for the bacteria before it was shipped. It released this statement, "We are highly confident in the safety and quality of our products and the rigorous testing we put them through. We are working with the health authorities to support their efforts to identify the source or cause of this infant's infection."

VELSHI: All right, it's 9 minutes past top of the hour. Also making news this morning, Bank of America has agreed to fork over a record $335 million to settle claims that Countrywide Financial discriminated against minorities at the height of the housing boom.

According to the Justice Department, Countrywide, which was acquired by Bank of America back in 2008, Countrywide steered more than 200,000 black and Hispanic borrowers into high-interest rate subprime mortgages, even though they qualified for prime loans. Money from the settlement will go to borrowers who were identified in that investigation.

Coming up in less than 30 minutes, we're going to talk to Reverend Jesse Jackson Sr. about that settlement. He is someone who has been concerned about this practice in the mortgage industry for years.

Even before the bust, he was saying, look, something fishy is going on with some of these mortgage lenders. They are pushing people who are prime lenders into subprime loans so they can make more money and this is falling along racial lines and it's not fair. We're going to talk to him about this case.

VELSHI: We'll do that in just a little bit. Right now, snow could be a factor for some people as we head into Christmas weekend. Rob Marciano is off. Fellow snow lover, Reynolds Wolf, is in the Extreme Weather Center.

We say that snow could be a factor. Is it a bad thing? It's Christmas?

REYNOLDS WOLF, AMS METEOROLOGIST: Well, I mean, it could be a bad thing if you are just trying to get somewhere in time for Christmas Eve or Christmas day, but for Christmas day itself? It's all good stuff. You got to enjoy it then.

Speaking of the winter-like weather, take a look at what happened in parts of New Hampshire yesterday, we have the video to prove the crazy stuff. People were just trying to get to the store, trying to get to work. It was nothing doing on some of roadways.

You see this big heavy Econoline van just sweeping sideways. Water back up so a lot of problems even the school bus involved with it. You know, it's this time of the year when people have to sometimes drive with the ice or the snow, if you had to pick your poison, trust me, it's always easier to drive in the snow with ice.

One of the issues can be certainly the case there in New Hampshire. For today, some of the big travel troubles may be along in parts of the grapevine. If you're traveling through parts of the southwest, California, mountain passes really tough.

We've got wind gusts today. We're expecting from 45 to 60 miles an hour so downed trees and power lines are a possibility. Another big possibility that we have in your forecast is going to be the heavy snow that we might see through parts of Colorado, Grand Junction, back towards Denver right along 70 and where it intersects with 25.

This is actually pretty good news because although we have had some very, very heavy winter weather in parts of the desert southwest into the four corners, tell you what. There are a lot of places in Denver, Colorado, a lot of places in Colorado itself where they are desperate for snow.

This will help matters. Certainly some good news. We're going to see that extend to the parts of the Sangre de Cristo Mountains. As we wrap things up, one thing we really have to mention for today is why you don't keep a real sharp eye on parts of the southeast.

Because later this afternoon we might have a possibility of some strong storms and perhaps even some tornadoes that can cause some widespread backups, and we're going to have more on those backups and those flight delays coming up later this morning. Let's send it back to you in New York, guys.

VELSHI: Reynolds, thank you so much. We look forward to speaking with you for the rest of the morning as people get ready for their Christmas travel.

ROMANS: All right, a shocking new details in the latest autopsy report for suspected hazing victim Robert Champion. The Florida A & M student, he suffered injuries so brutal, it looked like he was the victim of a car accident. More details on that coming up.

VELSHI: And Chinese hackers targeting American businesses and the Chamber of Commerce. What they are looking for and why it could be costing us billions.

ROMANS: And Ron Paul walks out on an interview with our Gloria Borger when asked about racist newsletter written in his name that he may want to keep in the past. It's 13 minutes past the hour.


VELSHI: Welcome back. Florida medical examiners have released the final autopsy report on the death of the Florida AMU University drum major Robert Champion. The details are even more shocking than the first round was. Experts say Champion was beaten so severely that his muscles were virtually destroyed. They say his body looked like it suffered a car accident, a massive seizure, or torture.

ROMANS: Oh. Champion's death has been ruled a homicide, the result of hazing. And it's been more than a month since the investigation started and still no one has been arrested or charged. So what's taking so long?

CNN's George Howell is live in Atlanta. And clearly there must have been a lot of people who were witnesses to this so why are there -- why are there no arrests here?

GEORGE HOWELL, CNN CORRESPONDENT: And precisely for that reason. Clear to say there are a lot of moving parts to this investigation. We know, for fact, that there were at least 30 people on the bus when Robert Champion was killed.

So we turned to a person who understands large-scale investigations like this to get an understanding of the questions police are asking to find out who did this.


HOWELL (voice-over): It happened on a tour bus parked outside an Orlando hotel, November 19th. Florida A&M drum major Robert Champion died after a vicious beating. Investigators say it was a homicide that resulted from hazing.

MIKE BROOKS, HLN LAW ENFORCEMENT ANALYST: You look at a bus like this, the narrow aisles, the seats are close together, the ceiling. It's just such tight confines in here, and to have to walk from the front to the back of the bus, with people just beating the hell out of you, what must have he gone through?

HOWELL: We turned to HLN Law Enforcement Analyst Mike Brooks to take us into the minds of investigators trying to piece together what happened to the 26-year-old victim before someone placed this 911 call.

911 OPERATOR (via telephone): Is he breathing?

CALLER (via telephone): We don't know if he's breathing or not but we need to get and ambulance ASAP.

911 OPERATOR: I have help on the way already.

HOWELL (on camera): How do you determine the level of culpability? Who did what?

BROOKS: That's a great question. And as a law enforcement officer, I want to know who were the ones who were delivering the blows, the serious blows. Or is there one person who delivered the most blows that caused (INAUDIBLE) and caused his death? We don't know. Other people who might not have been involved at all.

HOWELL (voice-over): Band members who spoke to CNN say it may have been the result of a hazing ritual called Crossing Bus "C," where the victim walks backwards from the front of the bus to the back while being beaten repeatedly by fellow band members.

BROOKS: Investigators have their work cut out for them because they've got to interview everyone. But this bus is a crime scene. What happened? Where did it happen on this bus when he was being beaten with fists, maybe with musical instruments? Those are things law enforcement has to find out exactly what happened.

HOWELL: Robert Champion died of significant rapid blood loss due to blunt force trauma according to the autopsy report the victim of a severe beating. And with so many possible witnesses on the bus --

BROOKS: I find it hard to believe that if that much was going on inside the bus, that they were beating him so viciously inside that bus, that somebody on the outside didn't hear something, didn't see something.

HOWELL: Brooks says it's a complicated investigation to determine exactly what happened in the moments leading up to Robert Champion's death.

BROOKS: Did anybody try to stop this? Did anybody say, hey, he's had enough, he's had enough, knock it off? Did that happen? Only the people in the bus know.


HOWELL: It has been now more than a month since Robert Champion was killed in that bus. Both the Florida Department of Law Enforcement and the Orlando Sheriff's Office are jointly investigating this case at this point, Ali, Christine. No arrests have been made.

ROMANS: All right. George, thank you so much. George Howell in Atlanta.

VELSHI: The FAA, Federal Aviation Administration, is releasing new pilot fatigue rules. Every pilot must have at least a 10-hour rest period before reporting for flight duty and they must have an opportunity for eight hours of uninterrupted sleep during that time.

Now, these changes were sparked by a plane crash that you'll remember in Buffalo, New York in 2009. Fifty people died. Investigators conclude that pilot fatigue was a factor in that accident. The new rules will take effect in two years. That part strikes me as interesting why it would take two years for them to get that into place.

ROMANS: All right. A time-honored Navy tradition, the first kiss after a ship's return. For the first time on record, a same-sex couple was chosen for the homecoming kiss. Petty Officer Second Class Marissa Gaeta and her partner reunited in Virginia. She won the traditional kiss during a raffle. Gaeta spent 80 days at sea at the USS Oak Hill for training in Central America.

VELSHI: So the interesting part to me is that you win the kiss in a raffle. I didn't know that.

ROMANS: Who knew?

VELSHI: Still to come in AMERICAN MORNING, investigators track down some of that missing money from MF Global. We'll tell you where it turned up.


ROMANS: Welcome back. "Minding Your Business" this morning.

U.S. stock futures are higher after a quiet day yesterday. The Dow and S&P 500 just barely ending the day in positive territory. Investors were concerned that Europe's banks were in more trouble than originally thought.

But two hours from now, we're going to get a fresh read on jobs. The initial jobless claims report is expected to show that 380,000 unemployment claims were filed for the very first time last week. That was a good sign for the jobs market any time that number is below 400,000. So we'll look for another week of slowing (ph) layoff.

We now know the -- excuse me -- the housing bust was much worse than we originally thought. The National Association of Realtors, that's the trade lobby that represents the housing market, it reports that over the past five years actually existing home sales were 14.3 percent worse than it had originally reported. That's because some properties were listed by the NAR more than once and in some cases, new home sales were also counted. So that terrible housing bust worst than the housing industry admitted.

Investigators who are trying to track down the missing $1.2 billion in customer funds missing after the collapse of MF Global. They say that some of that money could be in the U.K. They've identified about $700 million that was transferred to England in the days before the firm's collapse. But investigators warn that getting that money back could be a long and drawn-out process.

Shares of R.I.M., the maker of BlackBerry, closed up 10 percent following rumors of a takeover. According to the "Wall Street Journal," Microsoft and Nokia were plotting to join forces to buy R.I.M. Reuter's also reported Amazon was considering a bid. But analyst tells CNNMoney the rumors don't make sense given BlackBerry's pretty poor sales lately.

And returning those unwanted gift is probably the most common post holiday tradition, right? This year according to the National Retail Federation, Americans will return more than $46 billion worth of merchandise. That's a record. And experts say many shoppers are already returning purchases to take advantage of additional markdowns.

AMERICAN MORNING will be right back after the break.



GLORIA BORGER, CNN CHIEF POLITICAL ANALYST (on camera): These things are pretty incendiary, you know, the --

RON PAUL, (R) PRESIDENTIAL CANDIDATE: Because of people like you. Goodbye.

ROMANS (voice-over): Ron Paul getting defensive, cutting short an interview with our own Gloria Borger. What's the story behind the racist newsletters written in his name on this AMERICAN MORNING?


VELSHI: Good morning. Welcome back. It's 29 minutes after the hour. Time for your top stories and this one is just in.

The Defense Department investigation into an air strike that killed 24 Pakistani troops back in November has found that U.S. Forces acted in self-defense. It's a decision that will likely further complicate relations between Washington and Islamabad. That's because Pakistan's military has repeatedly insisted that the air strike near the Afghan border was deliberate.

ROMANS: Also topping the news, a wave of coordinated and deadly bombings in Baghdad just days after the last U.S. troops left. Police say four car bombs and nine roadside bombs went off within two hours of each other, killing at least 63 people and wounding close to 200.

VELSHI: Nine days now until a tax hike and House Republicans walking out of an effort by Democrats to force a vote on extending the payroll tax. There's no resolution in sight this morning even after President Obama spent an afternoon on the phone with congressional leaders on both sides in both houses.

ROMANS: All right. Bank of America, the largest bank in this country, has agreed to pay a record $335 million to settle a discrimination lawsuit.

VELSHI: You remember, that Bank of America bought Countrywide. In the suit, charged that Countrywide Financial, which is based in California, discriminated against minorities, not by not giving them loans, but by steering them toward high-risk, higher interest rate subprime mortgages from 2004 to 2008, even though they qualified for less risky, lower interest rate prime loans.

Joining us now is the Reverend Jesse Jackson who has talked about this for years.

Reverend Jackson, you spoke to Christine about it back in 2006, I think.


VELSHI: We spoke about it. You said that they were doing this. Now, there's been a settlement. What do you think?

REV. JESSE JACKSON, PRESIDENT, RAINBOW/PUSH COALITION: The settlement does not cover the size the crime or the impact upon whole communities. We need to congratulate Attorney General Lisa Madigan for her determinative work to bring it to justice. But in some sense, we need to stop redlining. To stop redlining, we got Community Reinvestment Act.

They intentionally circumvent the law and target and steer by race to rob people of their homes, their money. People who lost their homes could not pay for their kids' college education. Whole cities sank on the weight of foreclosed homes because of bank's behavior.

ROMANS: You know, Reverend Jackson, you said back as early as 2005 and 2006, you were saying to us when you were watching this happen. So, in Washington, you were saying the best economy we have ever seen.

And you were saying -- have you gone into some of these neighborhoods? People are losing the American Dream? The black middle class is being decimated by some of these housing practices.

Now, it's taken six years for $335 million settlement. But many of these families have already been wiped out, knocked down a rung, haven't they?

JACKSON: Well, they have lost their credit rating, for example. Lost their dreams, most of them, black and brown wealth was in home ownership, so people who lost their homes are driven into poverty. Cities lost their tax base, which undermined public education.

And the banks made so much money. They made money on the original loan. They made money on private mortgage insurance. They made money on the -- on the bailout. They made money on the foreclosure.

I mean, they never stopped making money, so the -- yes, they have given -- given how much money they have made. This really is the cost of doing business. It's not really deterrent.

We need to restructure banks, not just refortify them. This is the time for bank reform, also on some sense real time to look at the Glass-Steagall Act. We cannot just refortify these banks. We must restructure these banks.

VELSHI: You know, Jesse Jackson, we hear from people, you hear from them too, that right now the situation is that why we are fortifying banks, a lot of people can't get homes. You must have a much higher credit rating to get a home loan, to get a car loan. And on some levels, we didn't want banks just giving loans and pushing loans on people.

So, where is this middle ground between where we are now, where banks are overly cautious and where we were in this period that we are talking about with these Countrywide loans, where they were not only overly cautious, they were putting people at risk? Where should we be?

JACKSON: Well, now, they're holding capital -- I mean, they got bailed out without links to lending or reinvestment. People got locked out. There must be some plans for community restoration and reconstruction.

I'm here in Detroit today -- 100,000 plus homes abandoned on vacant lots. Some government, some deal between HUD and banks to restore homes. If you look at -- if you begin to remove boards, put in window panes, begin to rebuild houses, put people back to work. Revive a tax base, begin to educate children, the ramifications of the bank store robbery has been devastating.

And just to pay $300 million, given the size of it does not deal with the homeowners who need to be restored, the citizens that have been sucked in in this avalanche.

ROMANS: You know, that takes money, though, you know? And if you have seen Washington, they can't even agree on how to pay for postage stamp these days. That's got us thinking --

JACKSON: I'm not convinced of that, you know? I mean, but the government needs to pay not to restore, or you pay for deterioration.

VELSHI: It's one way or the other. That's a good point.

JACKSON: The reconstruction stops the destruction.

VELSHI: You've got some influence in Washington, Reverend. Your son is a congressman. I'm sure you talk to him about this.

By the way, congratulations, just celebrated 40 years with the Rainbow/PUSH Coalition.

JACKSON: Thank you. I have been blessed. I went to jail in July 1960, 51 years ago, and began with Reverend King this month, 46 years ago coming out of Selma. And this year, 40 years, (INAUDIBLE)

By the way, you and Sister Romans, your new book is well-worth reading.

VELSHI: Thank you.

ROMANS: Thank you.

VELSHI: We appreciate you, Reverend. Thanks for getting up early for us this morning. I know you got up early every day anyway.

Reverend Jesse Jackson, the founder and the president of the Rainbow/PUSH Coalition. And he did talk to us about this in great detail. He said there's bad things happening in how people are getting their loans.

ROMANS: He was right. And it's taken several years and $335 million now to settle it.

All right. The game of leap frog continues in the GOP race. This time, it's Ron Paul leading a new poll in Iowa in some potentially ugly things bubbling up about Ron Paul's past.

VELSHI: He's been hammered with questions about racist newsletters that were written under his name years ago. Here's an example of one, an article criticizing President Reagan for signing legislation approving the creation of the federal Martin Luther King Jr. Holiday, complaining, quote, "We can thank him for our annual Hate Whitey Day."

He became very bothered about this when I asked him about a couple of days ago right here on AMERICAN MORNING. Listen.


VELSHI: I guess as you get closer to being president of the United States, folks want to know that you don't really dislike black people and people with AIDS and things like that. I get what you are saying --

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE: Why don't they -- excuse me. Why don't they concentrate on every word I've ever said, every speech I have ever given, every conference I have ever gone to?

VELSHI: Right.

PAUL: And maybe -- maybe that's where -- maybe my beliefs are more important than, you know, stirring this up.


ROMANS: Yesterday, Gloria brought it up to him, and then he bailed on the subject.


GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: So, you read them, but you didn't do anything about it at the time?

PAUL: I never read that stuff. I never read it. I was probably aware of it 10 years after it was written, and it's been going on 20 years, people have pestered me about this, and CNN does every single time. So, when are you going to wear yourself out?

BORGER: Well, it's a legitimate -- wouldn't you say -- you know, is it legitimate? I mean, is it a legitimate question to ask that someone went out in your name?

PAUL: And when you get the answer, it's legitimate that you sort of take the answers I get. You know what the answer is? I didn't write them, I didn't read them at the time, and I disavow them. That is the answer.

BORGER: But you made money off of it?

PAUL: If you know I made money on it, you know more about my finances than I do.

BORGER: Do you know that you didn't? I mean --

PAUL: I don't even know what you're talking about. I mean, you know, if -- it was published for 10 years, so if that was 1 percent of all of the newsletter, I made money off talking about gold stocks, I think you are confused.

BORGER: Well, it's just a question. I mean, it's legitimate. It's legitimate. These things are pretty incendiary, you know?

PAUL: Because of people like you.

BORGER: No, no, no, no. Come on. Some of the stuff was very incendiary and, you know, saying that in 1993, the Israelis were responsible for the bombing of the World Trade Center, that kind of stuff. So --

PAUL: Goodbye.


VELSHI: They were incendiary.

ROMANS: So, this is a newsletter.

VELSHI: It's a newsletter, went to 7,000 or 8,000 people with his name on it. It was very clear it was his name. Now, Ron -- I asked him, he said six or eight people might have been involved.

ROMANS: Somebody else was writing these newsletters for him.

VELSHI: That's what he said. So, I asked him if he could identify these six or eight people and we can interview them. And he declined. These were sold newsletters, so there was money to be made off of them.

And I think it's fair to say. We get a lot of tweets. We got of people saying you're unfair to Ron Paul. How many times have you interviewed him?

ROMANS: Dozens.

VELSHI: Countless times and we talked about Federal Reserve and the deficit and the gold standard. We talk about stuff with Ron Paul, everything he wants to talk about. So, I think it's a legitimate question. We wouldn't get away with writing something under our name and then not explaining how it got written under our name.

ROMANS: So, he's disavowing it.

VELSHI: He's disavowing it.

ROMANS: He knows who wrote it, but he's not going to tell everybody who wrote it.

VELSHI: Correct.

ROMANS: And it's ancient history and he doesn't agree with it.

VELSHI: It's 20 years old. But as I said to him on TV, as you run for president, you go up in the polls, people shine bright liens on all sorts of things they don't otherwise care about.

ROMANS: And that's why he may not have been talking about it for a while. But he's in the lead in Iowa according to some polls and so now, closer you get to the presidency, the more scrutiny.


ROMANS: All right. Coming up, Chinese hackers top America's top business groups in one of the boldest cases of digital espionage ever. We're going to tell you what these spies are looking for.

It's 39 minutes after the hour.


ROMANS: Welcome back.

It's called digital espionage, Chinese hackers breached the online defenses of the U.S. Chamber of Commerce last year, accessing information about its 3 million members and stealing thousands of e- mails. It was one of the boldest infiltrations ever. Cyber attacks like this cost the U.S. economy billions every year.

Joe Pappalardo is a senior news editor of "Popular Mechanics." Their cover story this month is about hack attacks from foreign countries. And Joe joins me now.

Did I say it right? Pappalardo?


ROMANS: There you go. Thanks.

Let me talk about this most recent report about the Chamber of Commerce. What is it that hackers, Chinese hackers in particular, are looking for from American companies?

PAPPALARDO: Well, in this case, it's jut broken, and like most of the victims are not eager to talk about what was taken if they even know. But --

ROMANS: By the way, our computer systems are not impervious to Chinese hackers. You don't want to really admit it.

PAPPALARDO: No one is impervious to Chinese hackers is one of the takeaways from our reporting. But in this case, they took a lot of e-mails, they took a lot of information from all of the members, and that can be used from further attacks, even if the information that they got from the chamber isn't immediately useful.

ROMANS: What kind of hacking are we talking about here? What kind of hacking are we -- I mean, I know I get e-mails all the time from my I.T. department that's not my I.T. department, or I get e- mails all the time through social networks, they're saying click on this, and I don't. These are all hack attacks.

Is this the way it looks when you're talking about corporate espionage?

PAPPALARDO: Very often, yes. I mean, this sort of classic spear fishing scenario where you get an e-mail that looks vaguely familiar, maybe there's key words that you may be lulled into feeling comfortable with you click onto a Web site and the malware is in the system, and everyone connected to you is now infected.

ROMANS: So, who is doing it? And why did -- I mean, in the U.S./China commission report, quadrennial defense review, and all kinds of big government reports, they're always talking about state- sponsored hacking, as being something that is an issue for national security and corporate security. It's the same thing.

PAPPALARDO: Right. I mean, one of the problems is that the attackers have what it appears to be from all accounts. And what the White House and other people are saying is a state-sponsored coordinated attack to take our intellectual property and spy on us. And the defense is a bunch of private industries in America, so you can't get a -- the same kind of coordinated defense as the attacker. The playing field is not really level.

They use it in a number of bad interesting ways, sometimes, to low bid on international contracts that that has occurred, to get, you know, -- to steal the research and development so they don't have to do those costs up front.

They can sort of press fast forward on military program, for example. And, they won't have to do their research by themselves, and they can really get a leap ahead that way.

ROMANS: You're reporting, I think you even had an example of a company that was underbid by just like $1,000 or something.

PAPPALARDO: Right. Right.

ROMANS: And later on they find out, wait a minute, you know, they knew. They knew what we were going to bid because they've been reading our stuff. PAPPALARDO: And they know the numbers and know the strategy, and they can excel that way. And, it's cheating to win, but at the same time, you know, that's -- you know --

ROMANS: The thing that really is frustrating about it is we're told how we can't compete, and we have this new global world and globalization. Americans have to learn how to compete better, and we have the higher costs of labor and all the stuff and higher costs of regulation, but that's just outright cheating. I mean, that's just cheating. It's not a fair game.

PAPPALARDO: You know, American companies are accused of doing similar things, and we highlight --

ROMANS: So, everyone is cheating.

PAPPALARDO: Everyone is cheating, but they're just really, really good at it.

ROMANS: All right. Thank you so much, Joe Pappalardo. It's nice to see you. Senior news editor at "Popular Mechanics."

PAPPALARDO: Thanks for having me.

ROMANS: Thanks so much.


VELSHI: Thank you.

Still to come on AMERICAN MORNING, leaving office for many in Washington is the first step to making some big bucks. I'm going to explain it to you.

And later, he captivated audiences as Sir Laurence Olivier in the movie, "My Week with Marilyn." Kenneth Branagh will stop by AMERICAN MORNING to talk about his recent Golden Globe nomination and what is next in his career and his movie if you haven't seen it.

It is 47 minutes after the hour. You're watching AMERICAN MORNING with Christine Romans and me. It's a busy morning. Stay with us. We're coming right back.


BROOKE BALDWIN, CNN CORRESPONDENT: Jason Messier (ph) redefines a celebrity junky.

UNIDENTIFIED MALE: I make celebrity portraits out of their actual crash and garbage.

BALDWIN: Jason matches the celebrity with materials that reflects them.

UNIDENTIFIED MALE: Like Florence Henderson sent me her junk to do her portrait, but then, I also used like Wesson bottles for the background. I just try to represent the person as best I can with the objects.

BALDWIN: It can take Jason up to 50 hours to finish a piece.

UNIDENTIFIED MALE: I try to map it out. I guess, the best way to describe it is like a jigsaw puzzle where, like, I'll try a little piece and I'll just like see where it's going to fit.

BALDWIN: Choosing subjects is easy.

UNIDENTIFIED MALE: My favorite are more like people who are cartoon-type people like Amy Sedaris, Phyllis Diller. I just like the idea of more cartoony people because I can go more from that.

BALDWIN: His dream portrait?

UNIDENTIFIED MALE: I would say like Lindsay Lohan. If she could send me bag of stuff or just more like all of cigarette butts or something.

BALDWIN: Up next, more portraits and possibly a coffee table book.

Brooke Baldwin, CNN, Atlanta.



VELSHI: Ten minutes until the top of the hour. Here's what you need to know to start your day.


VELSHI (voice-over): Dozens dead in Baghdad bombings overnight. Police say four car bombs and nine roadside bombs went off within two hours of each other killing at least 63 people.

A defense department investigation into an airstrike that killed 24 Pakistanis has found U.S. forces acted in self-defense. So, the agency also adds there was poor coordination between the two militaries. Pakistan has repeatedly insisted the airstrike near the Afghan border was deliberate.

Nine days now until a tax hike, and House Republicans walking out of an effort by Democrats to force a vote on extending the payroll tax. House Speaker John Boehner saying members still want it extended for the whole year, not just for two months.

Syrian rebels are asking the U.N. to help stop, quote, "acts of genocide" in their country. In the last two days, rebels say more than 250 people have been killed in a government crackdown on protesters. The Arab league is expected to send monitors into Syria today.

Wal-Mart pulling a batch of baby formula off its shelves after a 10-day-old Missouri boy died from a rare bacterial infection. The manufacturer of Enfamil says the formula tested negative for bacteria before it was shipped. Health investigators are also checking other factors like the water that was used to prepare the formula.

Arizona sheriff, Joe Arpaio, has been slapped with a lawsuit from a Mexican woman who says his officers abused her while she was pregnant. She clams officers kept her shackled while she was in labor. Arpaio also faces federal allegations of discriminating against Latinos.

A man thought to be a victim of serial killer, John Wayne Gacy, is alive. Ted Zolb (ph) vanished back in 1976. His car found abandoned near Gacy's home. He says he disappeared on his own, running away from the stress of a divorce.


VELSHI (on-camera): That is the news you need to know. AMERICAN MORNING is back right after this.


ROMANS: It's a live look at Atlanta, Georgia. Good morning, everybody there, and to you as well. Welcome back to AMERICAN MORNING this morning.

Republican presidential candidate, Newt Gingrich, has been criticized for his lucrative ties to Freddie Mac, but the former House speaker says, you know, he didn't need to lobby for the mortgage giant. He wasn't there to make a bunch of money off of them because he was paid so generously just to give speeches. He made money on the speaking circuit.

So, we wanted to look a little bit closer at the speaking circuit and the money there for former politicians, because they are celebrities, pulling in anywhere from a few thousands dollars to be a panelist to tens of thousands of dollars to deliver a keynote address. Newt Gingrich this week said he made at least $35,000 for each speech he gave after leaving Congress.

But when it comes to public speaking fees, former presidents make the most, and Bill Clinton is king. I wanted to show you this. Wow! $75 million in speaking fees since leaving office in 2001. In 2008, he made more than half a million for just one speech. And in 2010, he was making an average of about 205 grand per speech. How do we know this?

Because his wife is required to disclose it as the secretary of state. Ronald Reagan sort of started all of this. He famously made $2 million from a Japanese company back in 1989 for two speeches. And since then, American presidents have left their, I don't know, $400,000 a year jobs to make many times that speaking to audiences.

The Center for Public Integrity says that President George W. Bush has earned $15 million for about 140 speeches here and abroad since he left the White House. That comes out to about $107,000 a speech. Now, who pays? It's big corporations, it's universities, trade associations, and often it comes from the very industries the speaker once oversaw.

Goldman Sachs paid former treasury secretary, Larry Summers, $135,000 a speech. That's according to "Wall Street Journal" analysis of financial disclosure forms. Now, it's Washington insiders, it's politicians, and sort of politicians. In 2005, Donald Trump earned $3 million for three real estate seminars. And MTV reality show star, just to spice it up, Snooki, she made $32,000 for two speeches at Rutgers earlier this year.

Ali, it's interesting to the speech agent once told us, you know, these politicians are vilified, and as soon as they get out of Congress, suddenly, people are lining up to pay them thousands of dollars to speak.

VELSHI: I was enjoying the whole report. I really like it, but Snooki was --

ROMANS: I lost you at Snooki. They pay Snooki 35 grand. You know, what the --


VELSHI: At the height of it, I don't know if she's still getting (ph). Snooki was getting paid just to show up places like in parties on a Saturday night.

ROMANS: I know.

VELSHI: And that's the real money. You don't even have to write a speech.

ROMANS: But I will say not all former Congress members get that kind of money. I mean, they have to be a good speaker. And Newt Gingrich is known on the speaking surrogate as delivering. He delivers in those speeches.

VELSHI: All right. Christine, thank you.

ROMANS: You're welcome.

VELSHI: All right. Coming up ahead next hour, the House deadlocked over extending the payroll tax cut. Senators John McCain and Dick Durbin are here. Big names from two parties both saying the House is got to get this done.