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Fallout From Terror Tapes; Saudi Retreat From Markets Contributes to Wall Street's Woes; Secret Court Disagrees With Justice Department

Aired August 24, 2002 - 10:00   ET


KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Good morning to Arizona, the rest of the West and to all of our viewers across North America. Welcome to SATURDAY EDITION. I'm congressional correspondent Kate Snow. Straight ahead, fallout from the terror tapes.
ANDREA KOPPEL, CNN STATE DEPARTMENT CORRESPONDENT: I'm State Department correspondent Andrea Koppel. President Bush says he's patient, and what that means for U.S. diplomacy and a possible attack on Iraq.

CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: I'm financial correspondent Christine Romans. How a Saudi retreat from U.S. markets may have contributed to Wall Street's woes.

DEBORAH FEYERICK, CNN CORRESPONDENT: I'm CNN correspondent Deborah Feyerick in New York. A secret court reigns in the terror fight waged by the attorney general and the FBI.

KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: And I'm White House correspondent Kelly Wallace. President Bush hits the campaign trail and protesters hit back. Plus, the president's weekly radio address is just a few minutes ahead. But first, a check of the news headlines with Charles Molineaux in Atlanta.


WALLACE: Well, we have seen President Bush out on his working vacation. He has been hitting the road.

But we have seen something that we have not seen since September 11, really. Take a look at this tape, you guys. We have seen hundreds of protesters out in Oregon, outside the president's hotel in Portland. Many of them protesting his environmental policies; some, though, his policies on Iraq, the Middle East. Skirmishes with police. Police using pepper spray to deal with these protests.

It is something, again, that we really haven't seen in this number since September 11. And it does appear, again, many of these protesters protesting his policies on the environment. He was out there talking about a very controversial position in terms of thinning of forests. But it is something we've seen that looks like this president now is not immune from criticism.

SNOW: Did they know -- did the White House know that there might be that many people in Portland who were angry, who were going to come out on the streets? Because it seemed like they sort of were caught off guard, weren't they?

WALLACE: And the White House is admitting, it seems that it was caught off guard. The White House press secretary, Ari Fleischer, saying Friday that they were surprised, surprised by the numbers and surprised also by sort of the angry protesters, the skirmishes with police. They will say, of course, obviously, people have a right to get out there, but a little concern, of course, about the criticism of the president.

KOPPEL: So where do they this going, Kelly? Are they afraid that there will be more protests? Do they see this as an isolated incident? Most of them, apparently, were environmental activists.

WALLACE: Exactly. One thing we can take a look at is the president's approval rating. It is now at 65 percent, according to the latest CNN-USA Today Gallup poll. Take a look at that. That is still a great number for a president in his...

KOPPEL: Yes, but it was 70-plus, wasn't it?

WALLACE: Seventy-six at the beginning of the summer, and only I think in July dipped to 69 percent. Before that, it was before September 11 before we saw anything in this range. So a little bit of concern. Aids will say they never expected the president's numbers to say incredibly high, they knew they would come down. But how this would impact Republican candidates in November, that's a key question -- Deborah.

FEYERICK: Kelly, you have to wonder, though, whether these environmentalists who are passionate to begin with, whether they would be supporting the president regardless. So I think that's also another issue.

WALLACE: And you raise a very important point, which is, many of these people have been protesting this president since he entered the Oval Office, calling him not a green president, not supporting his environmental policies whatsoever. So, again, very important.

But just the fact that you saw sort of this organized, hundreds, I think close to 1,000, does again -- and, Kate, you've probably seen this on the Hill, that the president's not immune now.

SNOW: No, he's not immune, and we're going to talk about Iraq a little bit later.

I want to ask you about the firefighting policy real quick, because he's going to talk about that this morning in his radio address. That was sort of a big deal, that he announced this clearing of brush.

WALLACE: Obviously. What is it, six million acres in terms of dealt with with forest fires. So he is basically trying to kind of ease regulation, so that you can have more thinning of forest to prevent these forest fires. Environmentalists would say this is basically just kind of giving a rubber stamp to the timber industry. The president has some political cover, though, because people again are concerned. Communities are concerned. They've seen their homes affected by these fires.

I believe Senate Majority Leader Tom Daschle in South Dakota has pushed for this very same thing in his state.

SNOW: Yes, it's not all Republicans saying thin out the forest, there are some Democrats, Democratic governors particularly.

WALLACE: So he seems to -- he has some political cover. It is controversial, obviously. He's calling for easing of regulations. Congress definitely will take it up when they come back after Labor Day.

SNOW: Let's take a listen to the president now as he delivers his weekly radio address live.


While visiting the West Coast this week, I saw the destructive effects of one of the worst wildfire seasons in history. The catastrophic blazes we have seen this summer, in which I saw firsthand in Oregon, threaten the safety of forest communities and firefighters, destroy homes, businesses, farms and critical wildlife habitat, and leave behind long-lasting environmental damage. I join all Americans in thanking the brave firefighters for their service.

As we work to put out the fires and bring relief to their victims, we also have a responsibility to prevent the devastation that can be caused by future fires.

For too long, America's fire-prevention strategy has been shortsighted. Forest policies have not focused on thinning the clearing of the forest floor of built-up brush and densely packed trees that create the fuel for extremely large fires like those experienced this year.

This hands-off approach to forest management has been devastating to our environment, and it can take more than a century for forests to recover from these fires.

One forest ranger said of this year's fire season, "In the next few years to come, it won't be the exception, it will be the norm because of how we have managed our forests."

We need a different approach. People who fight fires and study forests agree that we must strengthen the health of our forests through a combination of thinning and quickly restoring areas damaged by fires. By actively managing our forests in this way, we'll help our environment by reducing the number of acres of forest land that catastrophic fires burn each year.

On Thursday, I announced important new steps to restore the health of America's forests and help prevent the kind of devastating fires we have seen this year. We will guard against excessive red tape and endless litigation that stand in the way of sensible forest management decisions.

I have directed Secretary of Agriculture Ann Veneman and Secretary of the Interior Gale Norton to reduce bureaucracy and speed up the process of thinning on public lands. And I urge Congress to pass legislation that will ensure that vital forest restoration projects are not tied up in courts forever.

Some members of Congress have already gotten important forest reform passed for their states because they know it is the fastest and most effective way to get forests thinned. We should pass this important report to help protect all of America's forests.

My administration will work with Congress to deliver on the unfulfilled promises of the 1994 Northwest Forest Plan. The plan was crafted to protect wildlife habitat and recreational areas while employing more than 100,000 people through sustainable timber harvesting in a small portion of the forests.

My proposals will reduce the threat of wildfires that have destroyed people's homes and livelihoods. They will restore the health of America's forests, provide greater safety to our citizens and protect our environment for generations to come.

Thank you for listening.

WALLACE: And there is the president in his weekly radio address.

He is keeping busy. He is on the road again today in New Mexico. You guys, he is really doing a lot of campaigning, a lot of fund- raising. He's going to Arkansas and Oklahoma this week, doing whatever he can to help Republican candidates in November.

KOPPEL: And breaking records.

WALLACE: Breaking records, $10 million this month. But the president, the vice president raising much more in comparison to former President Clinton.

KOPPEL: All right, well the president and diplomacy, as the U.S. plots a future course with its enemies like Iraq and its allies like Pakistan, up next, as CNN's SATURDAY EDITION continues.

And we want to hear from you. E-mail us at



BUSH: I'm a patient man. And when I say I'm a patient man, I mean I'm a patient man, and that we will look at all options and we will consider all technologies available to us and diplomacy and intelligence. (END VIDEO CLIP)

KOPPEL: President Bush talking to reporters Wednesday after his meeting with some of the members of his national security team, saying he and his advisers had not discussed Iraq and that they consider Iraqi President Saddam Hussein a threat.

Interestingly enough, Secretary of State Colin Powell was not present, which is why I said "some of the members of his national security team." He's off on vacation.

But certainly -- and, Kelly, you know from following this day in and day out -- one of the reasons that you have the president saying that he's going to consider all options and that he's a patient man and that he's going to consult with Congress and that he's going to consult with allies is because of the hubbub and the furor and the drumbeat that has been developing over the last number of weeks because the administration, many say, has been putting the message out there, sending leaks to members of the media saying that they're looking at war plans, they're looking at various options for an invasion of Iraq.

WALLACE: And just last week, also, Condoleezza Rice in an interview was saying that Saddam Hussein is evil and must be dealt with. The question is, just -- even this meeting, though, we know it was not about Iraq. But even just sort of the symbolism...



WALLACE: We got that message: "It was not about Iraq." But the symbolism of members of the president's national security team, not Secretary of State Colin Powell there. And just the question is, has he been marginalized just a bit? I mean, is the president listening more closely to the hawks -- Vice President Cheney, Donald Rumsfeld, Paul Wolfowitz at Defense?

KOPPEL: I would say certainly when it comes to policy on the Israel-Palestinian situation, Secretary Powell has been marginalized. But when it comes to any decision on Iraq, he hasn't made one yet.

So certainly they have his ear, and they had his ear this past week in Crawford, but I wouldn't jump to any conclusions yet. I would certainly wait to see what the president decides in the weeks ahead. And in fact, there may not be an invasion of Iraq, despite all of the press reports hinting that there could be.

FEYERICK: Andrea, you know, on one hand the president is saying, "Well, I'm a very patient man," but on the other hand, there's definitely been a buildup of weapons in that entire Persian Gulf region. So how does he rectify (sic) the two sides, saying, well, I'm willing to look at all of the options but, at the same time, is moving different things that could be necessary in the event that there's a strike? KOPPEL: Sure. I would say, Deborah, that there are certainly some mixed signals that are out there, and that the president is covering all the bases. He is sending additional military equipment to the region, but that doesn't mean that there's going to be an invasion. In fact, it would still be a matter of months before they would have enough manpower, enough weaponry in place for there to be an invasion.

And it's just a smart thing to do to have your equipment in place so that Iraq, Saddam Hussein doesn't say, "A-ha, you know, they're moving the ships and the equipment, it must be around the corner."

But I would just point out, there is a poll out there that the president must also be aware of, and that shows that Americans' support this past week has now dropped from June, where it was 61 percent in favor of sending U.S. troops for war or an invasion of Iraq, to 53 percent. So that certainly has to be on the president's mind as he makes these various public announcements.

ROMANS: And the president has been very focused on what's going on in the U.S. economy, and there are a lot of people on Wall Street who are even more opposed than that poll would show, because the question, the uncertainty that any kind of invasion in Iraq would bring would hurt -- you know, spike oil prices, hurt the U.S. dollar, it would be troublesome to the stock market.

SNOW: And I'll tell you what, you started hearing it on Capitol Hill this week. Senator Lugar, for example, also Senator Chuck Hagel out in Nebraska making the point that we need to be cautious.

You know, there are some on the Hill, not a lot, but some -- in fact, Dennis Kucinich, congressman, the other day held a briefing for reporters. He was all by himself up there with some other experts, against going to war with Iraq. But he said we're like birds on a wire, and eventually there are going to be more and more birds, he said, landing on that wire.

Now, on the other hand, though, I'm sure you all saw this speech by Tom DeLay this week sort of on the other side of things. There's still, obviously, a very big chorus of support for President Bush. In fact, I think we have some sound from Tom DeLay giving his speech this week, saying it's time to go after Iraq.


REP. TOM DELAY (R-TX), MAJORITY WHIP: Every generation will be tested. Every generation will be called to defend our freedom. And every generation must summon the courage to disregard the timid counsel of those who would mortgage our security to the false promises of wishful thinking and appeasement.


SNOW: Apparently, he got some tips, Kelly, from Condoleezza Rice and perhaps others in the administration. I know his staff said he had had conversations before he gave that big speech. So, I mean, he's on the same page as the hawks.

WALLACE: He's on the same page. And just a quick note, which is just that the mixed signals, because again, on the one hand, the president is at the bully pulpits saying, "You know, what's all of this churning?" And Rumsfeld says, "There's a frenzy. Why are you all talking about something happening in Iraq?"

But again, on the other hand, you've got these conversations going with Tom DeLay, and encouraging that of course. Condoleezza Rice saying, "We cannot sit by and do nothing."

So there does appear to be sort of mixed signals coming from this White House.

FEYERICK: You know...

KOPPEL: And not just on Iraq. I'm sorry, Deborah, I was going to say also on Pakistan. This week the Pakistani president, General Pervez Musharraf -- I emphasize the "general" -- made this grand pronouncement that he was adding 29 amendments to the country's constitution. He was just doing this on his own.

Does that sound like democracy? No. What did you hear the White House say today -- or excuse me, this week? You heard them say -- President Bush say he has full support for President Musharraf, and that he believes that he is a supporter of democracy.

Reading between the lines, one administration official said to me, look, we know this is not Jeffersonian democracy. We recognize that. But the U.S. agenda with Pakistan is so much more than just democracy. It's also the war in Afghanistan, the war on terrorism, and Kashmir, where you still have hundreds of thousands Indian and Pakistani troops poised for war.

FEYERICK: Isn't it the whole theory of sort of strange bedfellows? I mean, it seems to me that General Musharraf is really pushing the envelope. He knows that the United States needs him for any sort of campaign that they're doing in Afghanistan or in that region now. And so he's saying, "OK, well, you know, I've got you now, and so here we go. I'm going to try to put this into effect," knowing full well that he's still going to get the U.S. support.

Is that sort of an overstatement, or is that...

KOPPEL: Well, my understanding, from talking to officials within the administration, is that General Musharraf is afraid that he's going to go the way of the guy that he overthrew in a coup -- Sharif, the former prime minister -- or Benazir Bhutto, the other Pakistani prime minister. And so, he is trying to put his ducks in a row such that nobody can do to him what...

WALLACE: What he did to others.

KOPPEL: ... he did to others. And so, he's ensuring those 29 amendments make it impossible for the parliament in Pakistan to do anything that he didn't approve. ROMANS: What about the internal dissent in Pakistan? Is there any...

KOPPEL: Not much.

ROMANS: ... strong enough?

KOPPEL: Not much. I mean, in fact, many people thought, following the president's speech in which he was speaking out against militants -- this is back in January, when he said that he was going to do what the U.S. wanted him to do, which was to crack down on extremists within his own country, there weren't any protests following that.

This is something he is doing really to cover his own bases. And in fact, the State Department this week said, "Hint, hint, hint, Pakistani people, you need to do something, you know, to perhaps move democracy...

WALLACE: They want them to question...

KOPPEL: ... in the right direction."

WALLACE: Exactly.

SNOW: They'd rather it be internal than the U.S. making the overt suggestion.

KOPPEL: Exactly. And I should also say that Secretary Powell's deputy, Richard Armitage, is in Pakistan today delivering privately the message that says, "Remember, democracy is a good thing."

SNOW: Talk about powerful pictures this week, some of the powerful pictures that we saw from inside al Qaeda. The videotapes of terror on CNN this week showed the capabilities and the confidence of those terrorists.

We're going to talk about reaction to the tapes when CNN's SATURDAY EDITION continues.



ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: From the president's point of view, there is ample evidence, before the tapes, now with the tapes, that al Qaeda, if allowed, would hit us again. And that's why the United States is working as hard as it is to prevent that from happening, either here in the United States or abroad.



White House Press Secretary Ari Fleischer talking about the impact of those al Qaeda videotapes show on CNN this week. Among the powerful images, experiments with chemical weapons and explosives, training around the world, and a sense of the terrorists' media savvy, the fact that they were taping almost everything that Osama bin Laden does. Wherever he goes, there is a camera on him.

These tapes -- I guess probably the one that got the most attention was the one that CNN aired on Monday, which had the dogs apparently being exposed to some kind of chemical agent. I know, at least when I went home, my family and people I was talking to said that was the one that just really knocked their socks off.

ROMANS: The tapes, overall, were absolutely captivating. You know, how they were obtained, unbelievable story. What was the reaction on the Hill?

SNOW: Well, you know, everybody was saying, and I think similar, Kelly, to what the White House said, which was lawmakers who I talked to, -- and I talked to a lot of them -- were saying they're not surprised by anything they see on the tape. I mean, one lawmaker said it's not as if we didn't know that al Qaeda is experimenting with these kind of weapons and looking at chemical capabilities. But there it was in full color, on the screen, and to an extent we perhaps hadn't seen before. So it was sort of visualizing how terrible this all is.

Another lawmaker said to me, look, we've all sort of forgotten how bad al Qaeda is. You know, since 9/11, not a lot -- we haven't had a lot of threats directly from them lately or news about them lately. And so, you sort of get into this mode where you don't remember how bad the bad guys are, is what one lawmaker said.


FEYERICK: I think it's really going to be interesting to see whether, in fact, there is a change or a shift in policy, to see whether, in fact, now that we know how al Qaeda operates, we're not going to be sending guys out looking for these big training camps anymore. Yes, they may exist, but I think what also came through in the tapes very clearly is that these guys are getting tapes, they're getting CD-roms.

You can get five men in a house to look at this, and basically at night, under the cover of darkness, run their own practices, run their own operations. Clearly, they're not going to be firing guns, they're not going to be firing weapons. But you don't need that in order to get components to build TNT.

So it, I think, takes it into a very personal arena, which is these guys may be doing this training, you know, right from the privacy of their own kitchen.

WALLACE: And you know, Deborah, what I was going to sort of say is officials have also talked about the concern about complacency, no question. And so, by having these tapes out there, of course in August too, it reminds the American people about the threat.

But I wondered -- I wanted to ask you, Kate, and even Andrea too -- if you're picking up any sense that, you know, all this talk about Iraq, Iraq, Iraq, Saddam Hussein. And now these tapes, officials saying many of this information we knew already. But coming out are some people saying, "Hello? Let's not be focused on Saddam Hussein. We still have al Qaeda all around the world to deal with." Are you picking that up?

KOPPEL: I would say that I think the sense that I've gotten, the tapes were obviously released by CNN, not by the U.S. government. As the CIA said this week, you know, CNN -- there are more journalists in Afghanistan and they have more money to throw around than the U.S. government does.

But having said that, I think that there is no doubt within the administration that al Qaeda is a real threat, and this was just further confirmation of that fact.

So, as Kate said, on the Hill, certainly within the State Department and elsewhere, no surprises, just a more graphic picture that was painted for those of us on the outside and certainly the viewers at home.

ROMANS: From a journalistic perspective, though, Nic Robertson traveling 17 hours through, you know, Afghanistan to get those tapes, choosing 60 out of a cache of some 150 tapes. The story of the tapes, in many respects, is almost as captivating as the story that the tapes tell.

SNOW: Well, and then there was the issue over the money, which we probably shouldn't ignore. I mean, CNN has now said that they paid $30,000 for the tapes, and also noted though that they didn't want to get that figure out there earlier this week. CNN officials saying they didn't want to expose the fact that journalists are walking around with that kind of cash.

KOPPEL: But the fact of the matter is that we know that all journalists who operate in foreign countries, especially a place like Pakistan, have to pay fixers, they have to pay drivers. And so, they are carrying huge amounts of cash. It's obviously not...

SNOW: Fixers, you've got to define that.

KOPPEL: Sure. The locals, the, in the case of Afghanistan, the Afghans who work there and who have contacts who can help journalists do their job a little better.

WALLACE: There was one interesting thing because the question is some of the tapes, I believe, CNN has turned over to government officials to look at of course. And I did see something that interesting, the tapes of the bodyguards around Osama bin Laden, giving kind of a sense to U.S. officials of how he moves and how he is guarded almost like President Bush would be guarded, a U.S. president with a bodyguard and people around him.

Andrea, you wanted to jump in.

KOPPEL: I was just going to say, as we're looking at the picture, does it strike you that he's not as tall as you imagined? I kept hearing, gosh, a 6'4" Afghani would stand out in as crowd.

FEYERICK: Maybe he just has really tall bodyguards.

KOPPEL: He must because...

FEYERICK: I think he has, yes, very tall bodyguards, I think, because also think about it. If somebody is going to put a bullet to his head, you definitely who you're head-level with.


You know what I mean?


FEYERICK: Maybe somebody who is going to take that bullet for you. So I think you're looking for tall people, basically. It's a requirement or something.

SNOW: I want to turn to one other thing from the Hill this week that came up, going back to Iraq, Andrea. The offer was made by the Iraqi government again -- they've done this a couple of times now -- that, no, they don't want U.N. weapons inspectors but they would accept a congressional delegation to come over and do weapons inspections.

Well, the idea was basically laughed at by most people I talked to on the Hill. They said, "Look, we're already rejected this before. It's not our place to go in and provide -- we're not experts in weapons inspections."

There was one member who said to me that -- and this is somebody who opposes war with Iraq, that he might be a little more open to it. But most of the members I talked to said, "Not a great idea."

Is the administration, Kelly, even concerned about getting inspectors back in there, or are they such a war footing now that that's not something they're focused on?

WALLACE: Well, you all know, and you're heard the line, I mean, U.S. officials say the same thing really privately, which is that, you know, the whole issue of inspectors is not really the issue. It's not kind of the goal in and of itself. The goal is making sure Saddam Hussein and Iraq, that they don't have weapons of mass destruction.

And they also feel like these inspectors need to be able to go any place, any time, anywhere. And so they're skeptical. They think that -- they never think that Saddam Hussein will allow that, so they don't hold out a lot of hope for inspectors at all.

ROMANS: All right, moving from international policy to the economy, Wall Street chose to take a more optimistic view of the future this week. We'll talk about an Enron guilty plea, as well as the impact of Saudi Arabian investors on the markets, coming up.

But first, a new alert with Charles Molineaux in Atlanta. (NEWSBREAK)

ROMANS: Still to come in the next half hour, the markets and the super-rich investors of Saudi Arabia, how a secret U.S. court clipped the FBI and the attorney general, and another act for the comeback kid, a talk show for Bill Clinton?

All just ahead on CNN's SATURDAY EDITION.


ROMANS: An important source of information about the news of the day, the terrorism investigation, and the economy all can be found online at, AOL keyword CNN.

This week, the government chalked up a major victory in the Enron investigation. Former Enron executive Michael Kopper pleaded guilty to conspiracy to commit wire fraud and money laundering. He's the first Enron executive to face criminal charges.


DAVID HOWARD, MICHAEL KOPPER'S ATTORNEY: Today, Michael Kopper has accepted personal responsibility for his role in the Enron tragedy. Michael has admitted that he misused his position at Enron to enrich himself and others and, in so doing, violated his duties as an Enron employee.


ROMANS: Boy, this really got a lot of attention on Wall Street this week, you can imagine, because the Enron scandal's what started this whole string of worries about corporate malfeasance. So this first guilty plea really got a lot of attention and caused a lot of folks on the street to wonder if there are going to be many, many more indictments and criminal charges to come.

One thing that's interesting about this, he still faces up to 15 years in jail. Also, $12 million he's turning over to the government. So, turning back money, also facing jail time. Lot of folks saying this is a sign that the government is going after money, the government wants jail time, is trying to send a very significant message. And that this is just the beginning, the first domino in what they hope will be a series of dominoes to fall, regarding Enron.

KOPPEL: It seems to me also, though, that the government has taken a lot of criticism for not bringing charges against Enron. But in getting this guy, Kopper, they really seem to have gotten somebody who will be able to unlock the door to, really, a guy like Andy Fastow, who holds all the key.

ROMANS: Absolutely, absolutely. And Andy Fastow has had money already freezed. We just heard this late this week, that his funds have been frozen. A lot of people think that Kopper will turn Fastow. Perhaps Fastow can lead further up the chain, maybe not. So that is really an important piece. You mentioned the criticism of the government. You know, a lot of folks have been saying, it's been nine months, how come there haven't been any indictments, what's the government doing...

SNOW: Yes, Capitol Hill was saying that just a couple weeks ago -- Byron Dorgan, Daschle.

ROMANS: Yes. And former federal prosecutors are now telling me this week that this is a classic, you know, very steady, very methodical put-together case, and that it doesn't look like the government is lackadaisical anymore. It looks as though the Justice Department really has its act together on this one.

KOPPEL: So any sense, Christine, as to where they're going next with the investigation?

ROMANS: Well, it's interesting, because what they're investigating right now is not so much the corporate company and brown chip trading, you know, a lot of inside, baseball kind of energy type deals. It's really these partnerships in which the executives of this company looked as though they were really enriching themselves. Corporate malfeasance at its best.

SNOW: That's the thing that struck me this week, is I thought Enron, in the beginning anyway, when we had hearings on Capitol Hill, the whole story was that they had these outside partnerships and that they were hiding, and that was making them look more profitable than they really were, right?

ROMANS: Right.

SNOW: But now it comes out that they've got cars and houses and money that the top-level people were -- not only them, but their wives, their partners were getting this kind of stuff. Was that another layer to this that we didn't know about?

ROMANS: It is. It's this corporate enrichment. It's using a company as your own personal piggybank. We saw that with Adelphia. Those are the charges against Adelphia, of course, the former -- that's a cable company. But those executives, you know, say they didn't do anything wrong.

It's not just one company or two companies. This is happening...

WALLACE: It happens elsewhere in corporate America.

I had a question. How are the markets responding? Because it looks like we've seen some gains, and I don't know...

ROMANS: We have.

WALLACE: Exactly. Now, is that just people going in, seeing a lot of bargains, the real professional investors, or are people responding to these sort of corporate wrongdoers going behind bars, getting indicted? What do you see? ROMANS: Five weeks in a row now, the Dow and the S&P have been up. That hasn't happened in two years. So you're right, your sense that things feel a little bit more stable, that is right. Some of these things getting behind us, Iraq -- the Iraq factor, the Iraq dynamic, as they call it in the markets, already built in, they think. So they've already had the worst fears about that built in to the markets.

Also, there were these reports this week about Saudi investors who had pulled perhaps up to $200 billion out of the U.S. market. Fears that their accounts could be frozen in terror probes, or some people say unhappiness with the Bush administration in the way the U.S. is posturing against Iraq. One of the biggest Saudi investors, though, Prince al-Awhad, said that, no, he's keeping his money in the market.

And a lot of folks on Wall Street saying that, you know, savvy investors have been pulling their money out of the market because it's been a terrible market. So that's probably why the Saudis were pulling out there. So that was another big story this week that captivated Wall Street.

FEYERICK: How much of an impact would that money have if it is taken out of the market? I mean, we're not talking about -- we're talking about $200 billion there. So what kind of a real effect would that have on the market? Or is that money that's sort of transferred, perhaps, to a European market?

ROMANS: Right, it's psychological, the impact is. But psychology is what Wall Street runs on. So that was an important thing that people were talking about this week.

But it's important to note, as well, that those speculation about $200 billion was over the course of the last year, as well. So it would have already been felt in the markets if it did have a material impact.

KOPPEL: I actually just got back from spending a couple of weeks in the Middle East on vacation. And in speaking with people who were in the financial world there, who were big investors working for major banks, they were all saying, at least to me privately, that they were advising clients to pull their money out of the market, that they in fact were pulling their money out of the market, the U.S. market.

I'm wondering, is that in fact, are we seeing that? Are we seeing foreign investors...


KOPPEL: ... withdrawing? Yes.

ROMANS: It's interesting, yes, we are seeing that, which is why the euro is strengthening and the U.S. dollar has been weakening a bit, which has been the trend for a while now, since this summer.

But that's a classic sign of a market bottom, which is what a lot of people say. When you get people throwing in the towel, smart people saying, "Forget it, you know, I'm not going to have anything to do with this anymore," and piling their money into the bond market overseas, that's when a lot of people say you've really reached a bottom in the market and there are really good bargains.

SNOW: I have to ask you about Martha Stewart.


Martha Stewart turned in like, what, a thousand documents this week to a House committee that's...

ROMANS: Yes, e-mails and everything.

SNOW: ... been looking into her, and apparently blacked out, though, some of the information. So now they're asking for some of the documents again.

She just doesn't seem to really want to play ball their way, does she?

ROMANS: You know, it's interesting because Martha is quite a bit of hot water about all of this. This has to do with ImClone. She sold her shares of ImClone just before there was a negative announcement about the company. For those of you at home who don't know what we're talking about, it's the feeling, the whiff of insider trading.

It's interesting, a lot of people telling me that Martha's mess may not be insider trading at all. But now people are worried, people think perhaps they can find signs of trying to cover up what was perceived to be insider trading. So now they're looking at everything. And, you know, 4,000 shares was not a lot.

KOPPEL: And she is suffering in her piggybank. I mean, the irony is, if in fact all of this true, and she was trying to save a $300,000 loss on that stock, she's taken a much harder hit as a result of the fallout.

WALLACE: And you all talk to your friends, colleagues. What is it about Martha Stewart?

ROMANS: People love to hate her.

WALLACE: And there is a sense that they do, and is there a sense of sort of a kind of double standard, or even is she getting sort of tougher treatment by government prosecutors, by members of Congress than maybe others in other cases? I mean, there's just this...

SNOW: Well, look, they're on this corporate responsibility kick on Capitol Hill. You've got members that have been having hearings ever since Enron broke.

One of the congressmen, Jim Greenwood, who chairs the subcommittee that's been going after Martha, did anybody know who Jim Greenwood was before six months ago? I mean, outside of financial circles, people didn't really know his name. And now he's up there on the podium. They're not going to stop until...

WALLACE: So, is it holding out Martha Stewart as an example? Is that it, to their constituents and others?

SNOW: Another high-profile example.

FEYERICK: Well, she's also put herself out there. I mean, she's really put herself out there. Everybody knows who Martha Stewart is, and everybody has had a chance to form an opinion on her one way or another. She comes across really kind of the perfect hostess...

WALLACE: She sells perfection.

FEYERICK: And, God, it just drives you crazy.


Anyway, so people have, really, I think have been able to form an opinion, do I like her, do I not like her? And then when they see her doing this kind of thing, doesn't mean that everybody else isn't doing it, it just means that you know her, and so you're more easily apt to make an opinion.

ROMANS: She sells perfection, and what has happened to her is the picture of imperfection. It's messy. It's not a nice little magazine cover. I mean, her stock price is plummeting, and yes, it doesn't look good.

FEYERICK: She's got problems.


FEYERICK: She's really got problems.

Well, listen, from the crackdown on corporate corruption to the war on terrorism, we're going to explore why a court that operates in secret came down hard on the FBI and Justice Department's fighting tactics.

We'll be right back.



Who spies on the spies, and who polices the police? A lot of people learned some answers to those questions this week when a secret court went public and slapped down the FBI and the Justice Department.

The secret panel is called the Foreign Intelligence Surveillance Court, and the court rejected a call from the Justice Department to loosen restrictions on prosecutors and counterintelligence investigators.

Now, first of all, what is the secret court doing? They are separating prosecutors and intelligence agents from sharing information, specifically stemming the direction that the intelligence flows.

There's a very valid reason for it. Intelligence agents from places like the FBI and the CIA have different legal standards when it comes to gathering all this intelligence. So these agents go to the secret court, and the judges authorize wiretaps and warrants under what's called the Foreign Intelligence Service Act.

It is much easier for an intelligence agent to get a warrant than it is for, let's say, an FBI agent who is investigating the Mafia. And the reason for that has to do with burden of proof and probable cause. In a regular criminal matter, prosecutors have to show probable cause that there's enough evidence to show someone's likely committed a crime. The judge then gives them the wiretaps or the search warrants. But the intelligence agents don't have to meet that standard. They have a much lower burden of proof.

So the secret court basically is saying, prosecutors can't go to intelligence agent and say, "We've got a hunch about someone. Get your special wiretaps and then bring us back the information," because it's information they could not get on their own if they had to show probable cause. The court basically said that is a clear violation of the Constitution.

KOPPEL: So, Deb, I got to ask you, this court has been in place since 1978. Why only now are they raising these questions?

FEYERICK: Well, I think it seems, from what happened over the last couple of days, that they had raised these questions over the last couple of years. Because this court basically found 75 examples of -- or incidents, I should say, where the FBI and the Justice Department may have extended or overreached the information that they needed and how they were going to use it. And that is a big problem.

Again, you can't just have a prosecutor saying, "Well, I've got this feeling about somebody. You know, go ahead, get the information and bring it back to me," and that's the issue. The intelligence agents cannot give the prosecutors that information, because it's information that they may not have been able to obtain had they gone through the system that's in place for the prosecutors.

KOPPEL: Interestingly, I think, from some of what I've read, they're saying now that they believe that this may have impacted the way that the FBI responded to the Moussaoui case and why they were reluctant to ask for those before 9/11, last August, one year ago. And that may have impacted their reluctance to ask for those wiretaps.

FEYERICK: Absolutely. The secret court -- it's not really secret at all, it just happens to deal with all these spy issues -- made this ruling back in May. And they cited examples going back to 2000.

So, the question is, was the FBI and the Justice Department -- had they been reprimanded and were they being overly cautious because of the fact this court may have said, you know, "You're treading on thin ice here, you've got to be careful," and that's something that we don't know right now. WALLACE: And, Deborah, I have a question. From the prosecutors and other sources you talk to, are we seeing the beginning of, really, more questions raised about the administration's handling of terrorism issues and going after in terms of anyone alleged of terrorism?

Because I know a friend who's part of the American Bar Association and meeting here a couple weeks ago, there's a real concern from many people, judges, that they feel concerned about what they're seeing on many different levels going on around the country.

And so, are you picking up that from people you talk to?

FEYERICK: We're in a very interesting time right now, which is kind of trite, but we are. I think, really, what's going on is that, you know, the government, the administration is trying to invoke the U.S. Patriot Act to say that we need to have a much better flow of information. And, yes, there's no question that we do, because there was a lack of information that perhaps put us, to some extent, in the position we're in right now.

But at the same time, the courts are saying, yes, there's got to be a better flow of information, but, no, you cannot do it if it means violating the Constitution and violating the system of laws that we have in place. So it's very interesting. And there is going to be a period where things calm down a bit and we begin to see decisions being made because it does violate rights and it does go against the Constitution.

ROMANS: Janet Reno, presumably, was better or more, I guess, adamant about a firewall between these two different paths, is that what we're learning?

FEYERICK: Well, we're learning that a lot of the information that was perhaps wrongly passed to prosecutors came under the last administration. So it seems that it was happening before, but now the Bush team has said, "Well, we've got this U.S. Patriot Act." So they're sort of invoking a different set of qualifications as to why we should have this flow of information.

And so, what's interesting, though, is that the court did say, "You know, we're not going to -- we're not saying don't share at all, but what we are saying is that if you want to use the intelligence that our agents have gotten, then we've got to have our own lawyer present to make sure that the information you're getting is legit, that it's information that you could have gotten by yourselves."

So it's really, it's extremely, extremely interesting.

KOPPEL: Deb, I want to ask you another question about the latest batch of deportations that just took place, I believe, this week from the United States of Pakistani detainees who had been held by the U.S., was it since 9/11, before 9/11? And this is now the second group of Pakistanis to be deported. What do we know about this?

FEYERICK: Well, what we do know is that, you know, the INS is a little sensitive when you ask them about these detainees, in the sense that you say, "Are these the" -- I referred to them at one point as the post-9/11 detainees, and someone who I was speaking to said, "Well, you know, it's not necessarily that we rounded them up after 9/11." And I said, "Well, what information do you have on them that shows they were rounded up before?" And the man didn't have the information about actually who these guys were.

But there are about 100 of them. They were picked up from various detention facilities around the nation, brought to Waterproof, Louisiana, and then returned to Pakistan. There was a Pakistani consulate official onboard the plane who was facilitating documents.

And the position of the Pakistani government is that, on some levels, they're happy because they didn't want their guys kept in jail without any charges being brought against them. All of these men, it seems, had visa violations. There was -- we don't know to what extent there was any sort of terrorism investigation, but it all seems to have been visa problems. So...

SNOW: Andrea, does that happen all the time? I mean, there are always going to be people who are under INS watch, but this is unusual, right?

KOPPEL: This is unusual. This is only the second time since 9/11. And I think it goes back to the point that Kelly was making that's being raised by a lot of libertarians and civil rights activists out there, that there are countless -- we have no idea how many detainees from foreign countries who've been held in U.S. detention facilities, U.S. prisons. And many charges...

WALLACE: Those held as enemy combatants also...

KOPPEL: ... haven't been made.

WALLACE: ... there are questions about those individuals as well.

KOPPEL: Exactly. Exactly.

SNOW: One side show of the terrorism war has been the sniping between this Bush administration and the Clinton team. And now former President Clinton may have a new way to get his arguments across. As CNN's SATURDAY EDITION continues, we'll talk about Bill Clinton.



SHERIFF FRED ABDALLA, JEFFERSON COUNTY, OHIO: We don't want this woman to go to jail for 15 years like it's been reported. I don't know where that comes from. Eight days is enough. We wanted to give her a wake-up call. We wanted intervention form Children's Services, which is going on right now. And this woman has been familiar with Children's Services in the past on parenting issues.

(END VIDEO CLIP) SNOW: Sheriff Fred Abdalla of Jefferson County, Ohio, who was at the center of a case involving a 31-year-old woman and her three children. The mother was locked up for a week in the country jail. She faced felony charges originally for allowing her children to become severally sunburned at a county fair. She ended up pleading not guilty to a misdemeanor charge, and she's been released at this point, although she still could face some jail time.

She had three children -- two little twins, 10 months old I believe, and a little girl, 2 years old. The sheriff said they were red, they looked like they'd been painted in red paint was how he put it. They sent them over to the hospital, and originally they said they had second-degree burns. Now the hospital is saying, "No, they had first-degree," so not quite as badly burned.

But real controversy over whether -- does a woman deserve to go to jail because she's walking around with sun-burned kids?

KOPPEL: I got to tell you, I think that it was an overreaction on the part of the sheriff. I think he had every right and was certainly doing the right thing by approaching the mother and by telling her that she needed to cover her children or put sunscreen on them, but to put her in prison.

And we don't know, he just sort of alluded to the fact that there were other problems that she had had. But we don't know if this was the first time she had ever had a problem dealing with her children.

ROMANS: Is it a sheriff's or is it a law-enforcement role to make a decision based on past, you know, past events anyway? Right? That's what I worry about.

SNOW: Deborah, you're a mother. You ought to jump in. FEYERICK: You know, well, yes, it seems to me that the sheriff sort of shot first and asked questions later. You know, it's extremely difficult to be a perfect mom 100 percent of the time. And I just, you know, we don't know sort of what the situation was.

I think there's -- it would have been reasonable for him to talk to this woman and say, "Your children are very badly sunburned," and then start a line of questioning. But to bring her up all of a sudden on felony charges, I mean, every mother's...

SNOW: Can I just quickly play devil's advocate though, just quickly? The other side here is, I see -- you know, have you ever been in the grocery store and somebody is yelling at their kids or hitting their kids, and you just want to jump in and say, "What are you, crazy?" So I can see where the sheriff was coming from in that sense.


WALLACE: But one provocative subject to another, former President Bill Clinton in the news again. Talks under way with another network about President Clinton hosting a daily daytime talk show. Now, people close to him not saying much. Some people say, "Look, we just don't believe this could ever happen." But could it be Oprah and then Jenny Jones and Bill Clinton? Andrea?

KOPPEL: The only question actually that I had, and it was one that was echoed in today's "New York Times" by another comedian who has his own talk show, he said: "Will President Clinton be able to stop talking and let his guests fill in the blanks?"



WALLACE: That's a key question.

FEYERICK: What sort of personal things is he going to talk about or how is he going to get his audience to basically respond? You know, you just have to wonder is the next Jerry Springer? Is he sort of going to feel their pain...

WALLACE: Well, Jerry Springer was a mayor...

SNOW: ... and then share his experiences...

KOPPEL: Well, Kelly, wouldn't he have to be sort of serious, if he did it?

WALLACE: Well, that's what people close to him say. He would want to do something serious, talking about international affairs, domestic issues, race. But the question is, can you sustain rating with those issues? Would he have to be sitting down with celebrities and talk about issues like the sunburned kids?

KOPPEL: He's a very charismatic speaker, too.

SNOW: OK, guys, thank you.

Thank you out there for watching CNN's SATURDAY EDITION. We've got to cut it now.

A news alert is up next, followed by "PEOPLE IN THE NEWS." This morning, Elvis Costello, David Bowie and Bono. Stay tuned.