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Foreclosure Fix Revealed; Financier Accused of $8 Billion Fraud; Swiss Bank Shocker; CSI Science Under Fire

Aired February 18, 2009 - 17:00   ET

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


WOLF BLITZER, CNN ANCHOR: To our viewers, you're in THE SITUATION ROOM.

Happening now, Iran reveals new details of its unmanned aircraft -- planes it now claims can reach across the entire Middle East, including in Israel.

Could they also be used to launch attacks?

President Obama unveils his costly complex solution to the housing crisis.

How does it work and who benefits -- I'll ask the president's top economic adviser, Lawrence Summers. He's standing by live.

Plus, a chimpanzee on a rampage -- his owner says he's ripping her friend apart and pleads with police to shoot him. We have the dramatic tape of that 911 call.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

President Obama unveiling his plan to fix the foreclosure crisis and help keep millions of Americans in their homes. As with his stimulus plan, he calls it bold and swift action that's absolutely necessary to avert disaster. But also like the stimulus, some of the details at this point still are vague. We have questions for the president's chief economic adviser, Lawrence Summers. He's standing by live to join us. You'll hear that interview coming up.

But first, let's go to CNN's personal finance editor, Gerri Willis, to tell us what we need to know about the president's plan, as it was unveiled today -- go ahead, Gerri.

Tell us what happened.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, sure thing, Wolf.

President Barack Obama announced a foreclosure rescue plan today aimed at reducing the tide of Americans losing their home while making what the government estimates will be a $1 trillion mortgage debt more affordable to consumers.

(BEGIN VIDEOTAPE) WILLIS (voice-over): The wide-ranging program comes with a price tag of $75 billion. It targets two groups -- homeowners who, because of falling real estate values, owe more than their home is worth. Group two, those families caught in the wave of massive lay-offs.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Through this plan, we will help between seven and nine million families restructure or refinance their mortgages so they can afford -- avoid foreclosure. And we're not just helping homeowners at risk of falling over the edge, we're preventing their neighbors from being pulled over that edge, too.

WILLIS: The multi-pronged plan will modify loans for borrowers who are struggling to make pmts and facing foreclosure. The goal -- bring payments to no more than 31 percent of a borrower's income; refinance loans for homeowners currently making pmts into a 15 year or a 30 year loan with a fixed rate of interest; give bankruptcy judges the power to reduce the mortgage debt of individuals in bankruptcy; encourage lenders to cooperate by offering them a payment of $1,000 for mortgages that are modified successfully.

Professor Nicolas Retsinas runs Harvard's Housing Research Center.

NICOLAS P. RETSINAS, HARVARD UNIVERSITY: How successful it will be will be, in part, determined with how successful the stimulus is in putting people back to work. If people keep losing their jobs, we'll see more and more foreclosures.

WILLIS: On the other hand, the federal government is in a better position than at any time before to influence the housing industry because it operates the largest lender to first time home buyers. Plus, its cash injection is the nation's lending industry gives it leverage over banks.

(END VIDEOTAPE)

WILLIS: The devil is in the details here and we will have more of those when eligibility requirements are released March 4th -- Wolf.

BLITZER: What's the initial reaction to what was announced today -- Gerri?

WILLIS: Well, I have to tell you, there's been a lot of positive reaction, even from the lending industry. The Financial Services Roundtable today had some positive things to say. And, of course, you probably saw that the stock market didn't lose hundreds of points. It was essentially flat. So the read from the market pretty much positive.

But I am sure, over the coming days and weeks, we'll start to hear some criticism of this plan.

BLITZER: I'm sure we will.

All right, Gerri. Thanks very much.

WILLIS: Thank you.

BLITZER: And we're standing by to speak live with Lawrence Summers, the president's top economic adviser. He'll be here in THE SITUATION ROOM. We have some good questions for him.

But let's go to CNN's Ed Lavandera right now.

Federal Investigators have been trying to track down the Texas financer accused of bilking clients out of billions and billions of dollars -- Ed, some are suggesting it's almost like the Bernard Madoff scandal.

ED LAVANDERA, CNN CORRESPONDENT: Those comparisons, Wolf, have already started. Federal investigators say that he masterminded a financial fraud that could cost some of his investors closed to $8 -- more than $8 billion.

But right now, nobody knows where he is.

(BEGIN VIDEOTAPE)

LAVANDERA (voice-over): Crowds of people swarm around Allen Stanford's bank in the Caribbean island of Antigua. News of his legal troubles has bank customers worried their money is on the verge of disappearing.

U.S. investigators say the fraud committed by Stanford will be felt around the world.

In Houston, Memphis and Tupelo, Mississippi, investigators raided the offices of Allen Stanford's investment firm. Federal authorities say Stanford and two other executives are responsible for a fraud of "shocking magnitude." The Feds say Stanford lured investors into buying $8 billion worth of usually safe C.D. Investments, promising breathtaking rates of return that don't exist.

Investors are stunned.

UNIDENTIFIED FEMALE: Initially, we put our money in this institution and in the C.D. Because we were nervous about the markets and we thought it was a safe place. It's -- I'm so -- just upset right now, I can't even talk about it.

UNIDENTIFIED MALE: I find this disgusting.

LAVANDERA: Stanford's father appeared stunned today, as well, by the allegations against his son.

UNIDENTIFIED MALE: We've had problems before, but nothing of this magnitude or of this -- apparently maybe (INAUDIBLE) of a serious nature. I hope -- hopefully it's not.

UNIDENTIFIED MALE: Gentlemen, if you've ever wondered what $20 million U.S. looks like, here it is.

LAVANDERA: Allen Stanford lives the life of a high-flying billionaire, sponsoring high stakes cricket matches in the Caribbean. He has dual citizenship in the U.S. and Antigua. He was knighted by the Caribbean nation and is known as Sir Allen Stanford. "Forbes" magazine says he's worth more than $2 billion.

And it prompted this question during an interview with CNBC last year.

(BEGIN VIDEO CLIP, COURTESY CNBC)

UNIDENTIFIED MALE: Is it fun being a billionaire?

ALLEN STANFORD, FINANCIER: Well -- yes.

(LAUGHTER)

STANFORD: Yes. Yes. Yes, I have to say it is fun being a billionaire.

UNIDENTIFIED MALE: I think a...

STANFORD: But it's hard work.

UNIDENTIFIED MALE: I think a one word answer...

STANFORD: But it's hard work.

(END VIDEOTAPE)

LAVANDERA: And it may prove to be hard work to track down where he is at this point. To be clear, there are no criminal charges against him so far. So because of that, there is not an arrest warrant issued for them. But that could come at some point later on down the road.

We've made repeated attempts to reach him, of course, and his attorneys. We've had -- been unsuccessful so far. But he's believed, perhaps, Wolf, to be in Antigua. He could be there. No one really knows for sure. But that's where it stands right now, as people try to figure out if they have any money or what kind of money or amounts of money they have lost up to this point -- Wolf.

BLITZER: Yes. It's a heartbreaking story, this one, too -- just like a Madoff story. He does have dual citizenship, as you point out.

Ed, thanks very much.

Ed Lavandera reporting.

We'll stay on top of this story for our viewers.

Let's go back to Jack Cafferty right now for "The Cafferty File" -- Jack. JACK CAFFERTY, CNN ANCHOR: Well, they're back. Two of the big three American automakers holding out their hands once again. They want more of yours and my taxpayer dollars.

General Motors and Chrysler say they need another $21.6 billion to stay afloat. This is in addition to the more than $17 billion they got a couple of months ago, remember?

The companies have both put out plans for how they'll restructure in order to survive.

I thought they were already supposed to have done that.

G.M. says it will cut 47,000 more workers, close five more plants in North America and cut half its brand -- Saturn, Pontiac, Hummer and Saab -- leaving them with just four -- Buick, Chevrolet, Cadillac and GMC. The company also says it's making headway in talks with the United Autoworkers and bond holders to find additional ways to cut costs.

Chrysler says it will cut another 3,000 jobs and discontinue three models -- the Dodge Durango, P.T. Cruiser and Chrysler Aspen.

Meanwhile, this all puts the Obama administration in a tricky spot. Either they give them the money and hope the car companies don't come back asking for more in a few months, or they say no -- which will probably force G.M. and Chrysler into bankruptcy.

The White House says it's reviewing the proposals, insists that more will be required from all parties involved in order to turn their prospects around.

The third Detroit company, Ford Motors, posted its biggest lost ever in the fourth quarter, but says it can get along OK so far without government loans.

Here's the question, then: Should General Motors and Chrysler be given additional taxpayer money?

You can go to CNN.com/caffertyfile and post a comment on my blog -- Wolf.

BLITZER: Jack, thank you.

A housing crisis, a banking crisis, automakers seeking billions more of your tax dollars -- the president's top economic adviser, Lawrence Summers, he's standing by live to join us. I'll ask him about all that and more.

Iran releases new details of its unmanned spy planes, claiming a range that could reach Israel.

What if those drones are modified to carry weapons?

Plus, a cartoon controversy mixing news of the day with political satire and some say, racism. Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: We want to go back to Zain Verjee.

There's a story developing right now, just coming into THE SITUATION ROOM -- Zain, what's going on?

ZAIN VERJEE, CNN CORRESPONDENT: We're just getting information about this, Wolf.

Switzerland's largest bank, UBS, has admitted, Wolf, to helping U.S. taxpayers hide money from the IRS. Now what's happened is that UBS has agreed to pay $780 million in fines, as well as turn over account information. As you know, Wolf, Swiss banks have some of the toughest banking secrecy laws. But they are going to do that. It's unclear how many people are involved at this point. This agreement was approved by a federal court judge in Fort Lauderdale, Florida today -- Wolf.

BLITZER: All right, Zain.

Thanks very much for that.

Zain will stay on top of this story for us.

Let's go back to our top story right now -- the president's foreclosure plan -- how to save millions and millions of Americans and let them stay in their homes.

Joining us now is Lawrence Summers.

He's the director of the White House National Economic Council, a former Treasury secretary.

Larry summers, thanks very much for coming in.

LAWRENCE SUMMERS, CHAIRMAN, NATIONAL ECONOMIC COUNCIL: Wolf, good to be with you.

BLITZER: When will homeowners who are struggling right now be able to start receiving help?

SUMMERS: They'll be able to renegotiate their mortgages under this program in early March. So it's only a -- only a small number of weeks -- weeks away.

BLITZER: What about people who aren't near foreclosure but really have high interest rates?

Would they benefit at all from this plan?

SUMMERS: In many cases, they can. You know, there's been a real gap in our mortgage market that's hurt millions of Americans who have paid their bills, they've done everything right. It's just that their house value has gone down and so they haven't been eligible for a re- fi because they haven't been able to qualify as having enough equity in their house.

And today, with the support of the GSEs and the government working together, those people are going to be able to refinance their homes and refinance them to low market rates that, in some cases, are in the 5 percent range.

BLITZER: How do you prevent people from getting help who really don't qualify, but go out and do certain things to try to get some help in their mortgage -- in other words, people abusing the system?

SUMMERS: Well, it's very clear you have to be an owner occupier. You can't be an -- you can't be an investor. There's close auditing by the servicers designed to prevent those kinds of abuses. So -- frankly, there's been too much abuse in the mortgage market already. And so we're being very careful to avoid that.

BLITZER: The former Federal Reserve chairman, Alan Greenspan -- a man you know very well -- he told the "Financial Times" this. He said: "It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring. I understand that once in a hundred years, this is what you do."

Those are pretty surprising words coming from Alan Greenspan.

But is that wise?

SUMMERS: You know, I'm not going to get into a public argument with Alan Greenspan. And I know very well from the time that I was at the Treasury Department that on financially sensitive questions, the Treasury secretary speaks for the administration.

What I will say this is that we need a lot of financial repair in this economy. And Secretary Geithner has laid out a framework that provides for that. It starts from stress tests of financial institutions so that we have an accurate assessment of where they are. Frankly, given the way regulation has worked for many years now, we don't have that accurate sense of where we are.

And then we'll be in a position to move forward. And we'll be in a preservation to move forward where we're restarting the flow of credit, where we're assuring all those in the real economy, outside the financial economy -- whether it's the homeowners who have a mortgage, whether it's the depositors...

BLITZER: All right...

SUMMERS: ...whether it's the lenders -- that they're -- that this financial system is going to be made to work better for them than it has been in recent months.

BLITZER: But is it fair to say you want the American people to assume -- and correct me if I'm wrong -- that you have no plans or don't think it will be necessary to nationalize...

SUMMERS: Wolf, I think I...

BLITZER: ...the banks?

SUMMERS: Wolf, you know how this game -- you know how this game works. I think I made very clear where the administration stands.

BLITZER: Yes. Well, obviously, I -- when you said you didn't want to disagree publicly with Alan Greenspan, I assume you disagree with him.

SUMMERS: I think I made clear where the -- I think I made clear where the administration stands. And it's certainly for a strong and vigorous program of financial repair. And certainly that program is going to have a great deal of emphasis on accountability for those within financial institutions who have contributed to the problems that we have.

BLITZER: All right. You're an economist, one of the best in the business out there. He says -- Alan Greenspan, also -- he believes this current recession is going to be in his words: "the longest and deepest" since the ones -- the one back in the 1930s, the Great Depression. And we went and checked. The longest recession since the Great Depression, 16 months, '73-'75. Sixteen months, '81-'82. Currently, this recession has been 14 months, going back to December of '07.

Do you believe this is going to be -- how long -- let me rephrase the question.

How long will this recession go on?

SUMMERS: I like the first question you asked better. I fear the economy is extremely likely to recede for more than another two months. And that means it will be the longest recession. Just when the turn will come is not something I'm prepared to -- prepared to gauge.

I would say, though, that these problems took a long time to make, whether it was the financial excess, the bubbles, the problems in the housing sector. And precisely because they took a long time to make, they're going to take time to resolve. And there's not going to be any silver bullet.

At the same time, the president has still, within his first month in office, put forth really a remarkably vigorous program in housing today, with respect to the banking and financial system; with respect to the real economy and job creation; with the Economic Recovery Act.

And we're going to keep leaning forward, trying to do all the things that we can to propel the economy forward, because as the president has recognized, the risks of doing too little are much greater than the risks of doing too much.

BLITZER: Good luck, Larry Smith.

A lot of people are counting on you guys to do it right and we hope, of course, you do.

SUMMERS: Thank you very much, Wolf.

BLITZER: What's the fallout for Republicans opposing President Obama's stimulus plan?

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: Over the long run, you don't gain by not contributing to the solution.

(END VIDEO CLIP)

BLITZER: But is the former president, Bill Clinton, right?

I'll ask Paul Begala and Ed Rollins. They're standing by live. We'll discuss what's going on.

And a desperate 911 call -- a chimpanzee's owner pleading to police for help. We have the dramatic tape. That's coming up.

(COMMERCIAL BREAK)

BLITZER: Let's go live to our homeland security correspondent, Jeanne Meserve.

She's watching a story involving lab testing -- forensic science -- that could have potentially life and death ramifications for a lot of folks out there.

What are we learning today - Jeanne?

JEANNE MESERVE, HOMELAND SECURITY CORRESPONDENT: Well, Wolf, we're talking about ballistics, hair and bite mark analysis -- all those forensic tools that, as you say, are used in the courtroom to help determine guilt or innocence.

The question in a new report -- are they reliable?

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Television shows like "CSI" make forensic science look infallible.

(BEGIN VIDEO CLIP FROM "CSI," COURTESY CBS)

UNIDENTIFIED MALE: All right.

UNIDENTIFIED MALE: Bingo.

UNIDENTIFIED MALE: Your bullet came from that gun.

UNIDENTIFIED MALE: You're sure?

UNIDENTIFIED MALE: Yes, I'm sure.

UNIDENTIFIED MALE: We got him.

(END VIDEO CLIP)

MESERVE: But that is a myth according to a two year National Academy of Sciences study.

CONSTANTINE GATSONIS, BROWN UNIVERSITY/STUDY CO-CHAIR: I don't know of any science that is infallible. So I don't know why forensic science would be infallible.

GATSONIS: The notion of zero error rates is a misnomer. And we need to get that out of our heads.

MESERVE: With the exception of DNA analysis, the report says the scientific reliability of forensic tests has not been established, even though they're used by the justice system to determine matters of life and death, freedom and imprisonment.

Take the case of Brandon Mayfield. He was arrested in Oregon after FBI analysts claimed his fingerprints matched prints obtained from the evidence from the Madrid train bombings. Later review proved the FBI was proved wrong.

The new report says there are no universal protocols for forensic tests, no standard certification for laboratories, lab technicians or expert witnesses. Problems with a crime lab in Houston were so serious, three men were exonerated after it was determined they'd been convicted with faulty forensic evidence.

TIMOTHY O'TOOLE, NATIONAL ASSOCIATION OF CRIMINAL DEFENSE LAWYERS: This whole myth of infallibility has caused jurors sometimes to rely on it more than they should.

MESERVE: The report recommends a total overhaul of what it calls an understaffed, under funded and fragmented system of federal, state, local and private crime labs. It says they should be independent of police and prosecutors to minimize bias and it urges the creation of a new national institute of forensic science to set and enforce standards and spearhead research to improve the quality and credibility of forensic evidence.

(END VIDEOTAPE)

MESERVE: The Innocence Project, which has used DNA testing to exonerate 232 individuals, predicts this report will lead to a seismic shift in forensics. In the short-term, defense lawyers are expected to use it as a road map to undermine the credibility of forensic testing in the courtroom -- back to you.

BLITZER: All right. Thanks very much, Jeanne, for that.

Former President Bill Clinton speaking out on Sarah Palin.

(BEGIN VIDEO CLIP)

CLINTON: Through no fault of her own, she became a negative on September 15th.

(END VIDEO CLIP)

BLITZER: We're going to take a look back at what happened on September 15th that the former president thinks turned Sarah Palin into a liability.

Also, outrage in New York over a newspaper cartoon that some say seems to liken President Obama to a chimpanzee. Some are calling it racist. We'll let you decide.

And Michelle Obama is continuing her efforts to reach out to the community and invite them into her new house -- the White House. We're going to show you what she's doing today. You're looking at live pictures from the White House.

Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: To our viewers, you're in THE SITUATION ROOM.

Happening now, Wall Street not overly impressed with the Obama administration's new foreclosure rescue plan. The Dow gained just over 3 points on the heels of yesterday's huge sell-off. Today's close, 7555.

An about-face for Facebook -- the social networking site is reverting to its old policy of giving members full control of the content on their posts on their sites. Earlier this week, thousands of members threatened to cancel their accounts after learning Facebook had changed its policy, reserving the right to archive members' content, including personal photos, even if they wanted them off the site.

And demonstrators in Baghdad are demanding that the release of that Iraqi journalist go forward -- the journalist who threw his shoes at the former president, George Bush. Muntadhar al-Zaidi is charged with assaulting a foreign leader. His trial is set to begin tomorrow.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

Let's get some more now on our top story.

Our senior political correspondent, Candy Crowley is standing by.

She's here in THE SITUATION ROOM.

This foreclosure plan that the president announced, more details yet to come. But we got the gist of what he has in mind.

CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: We did. And it's massive and it includes a lot of money -- $75 billion -- a lot more than we thought.

But when you look at it, Wolf, there are about 75 million Americans right now living in their own homes. This covers just a small fraction of them. But when President Obama talked today, this was all about everybody.

(BEGIN VIDEOTAPE)

CROWLEY (voice-over): It is a plan as complex as it is costly -- $75 billion in taxpayer money.

OBAMA: We will save ourselves the costs of foreclosure tomorrow -- costs born not just by families with troubled loans, but by their neighbors and communities and by our economy as a whole. Given the magnitude of these crises, it is a price worth paying.

CROWLEY: It's a controversial plan, nonetheless. And that's one of the reasons the president took pains to talk to the vast majority of homeowners still paying on time.

OBAMA: But I want to be very clear about what this plan will not do. It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans.

CROWLEY: The president said that includes speculators, dishonest lenders and people who bought homes they knew they couldn't afford. As for those it does help, the president says that's between seven to nine million homeowners. That includes at-risk borrowers in subprime loans. The plan has incentives for lenders to reduce mortgage payments for five years down to 31 percent of income.

OBAMA: Subprime loans, loans with high rates and complex terms that often conceal their costs make up only 12 percent of our mortgages, but account for roughly half of all foreclosures.

CROWLEY: If homeowners who qualify for the plan pay on time for five years, the loan is reduced by $5,000. And there is relief for qualified homeowners who have kept up with their payments but can't refinance to lower rates because their mortgage is bigger than the value of their house.

OBAMA: These families are unable to sell their homes, but they're also unable to refinance. So in the event of a jobless or another emergency, their options are limited.

CROWLEY: Only those with loans held or guaranteed by Fannie Mae or Freddie Mac are eligible and the amount of the loan is tied to the current value of the loan.

(END VIDEOTAPE)

CROWLEY: Now one of the things we're already beginning to hearing some objections from Republicans, Wolf, more questions that have to be answer about this. But we should also note that the $75 million does not have to be approved by Congress. This is something that the administration largely can implement on its own. And they're tells us that it should happen by March 4th. That people ought to be able, some time shortly after that, to take advantage of some of these programs.

BLITZER: So relief is on the way.

CROWLEY: Right.

BLITZER: Candy, thanks very much.

Let's talk about this and more with Democratic strategist, CNN political contributor, Paul Begala, and Republican strategist, Ed Rollins. They're both CNN contributors.

In fact, Paul, listen to what your former boss, the former President Bill Clinton told Larry King last night when it comes to Republicans and their strategy.

(BEGIN VIDEO CLIP)

CLINTON: It may be that there's a political strategy involved here, maybe if they do what they did to me in '93, and say just say no and this is the end of the world. And they think there'll be some gains. The evidence is they may get a short term gain in the next congressional election or not, but over the long run, you don't gain by not contributing to the solution.

(END VIDEO CLIP)

BLITZER: All right. He, obviously, remembers what happened to him in '93 and then what happened to the Democrats in those midterm elections in '94 when they lost control of both Houses.

PAUL BEGALA, DEMOCRATIC STRATEGIST: Right. And I -- I do think he makes a good point. I mean, look, when you get 100 percent of Republicans in the House and 96 percent of the Republicans in the Senate voting against the president's plan, you've got to think there's some politics going on here.

But I -- look, he's my old boss and my mentor. I do think he's right. What the Republicans need, not to give them free advice, are some new ideas. You know, Ronald Reagan came in. Ed Rollins helped bring him to Washington. I didn't support his ideas, but by golly, he had ideas.

He came in. He challenged the established orthodox. He had some new ideas. That's what Bill Clinton did. That's what Barack Obama did. That's what a successful political leader does.

It seems to me that in the public mind today most of the Republicans are viewed as simply obstructionist. I don't like this Obama guy. I'm going stop him from implementing his ideas. I can tell you, over time, that's a losing strategy for the Republican Party.

BLITZER: Ed? ED ROLLINS, REPUBLICAN STRATEGIST: Well, we have to see. I mean, first of all, I've sat here for two days now, Paul in saying that we don't have any ideas. You don't know what any ideas (INAUDIBLE). We've never been invited near the room to participate in this process. And I think...

BEGALA: No.

ROLLINS: Come on. I mean the reality is, there was not a single Republican in the room when they drew up this plan either in the White House or in the Congress. And I think at the end of the day, Republicans didn't feel -- they felt this is against their principles.

You know, at the end of the day, you guys have the votes, you can do whatever you want to do, but once again, this is a very expensive program.

BLITZER: So...

ROLLINS: A very expensive program. Let's see where it goes.

BLITZER: Ed, Ed, so when the president went up to the Hill and met with the Republican caucus and the Senate and House, when we invited Republicans to come to the White House, wasn't that reaching out to the Republicans?

ROLLINS: No, no. He didn't, he didn't...

BLITZER: And asking them for some input?

ROLLINS: No, no. He did not, he did not say, here's my plan. Here's my bill. The Democrats were drafting the bill in Nancy Pelosi's office. There wasn't a single Republican in there. When they went to the conference committee, there was not a single Republican, even though there were four who was supposed on the conference committee, none of them were in there to basically have input.

At the end of the day, there were no amendments allowed. This was a process unlike Reagan who basically not only basically brought Democrats into the process, could not have passed his legislation without their support.

BEGALA: Right. And here's the difference. Democrats did reach across the line and help President Reagan. I didn't agree with them. I was angry with them at the time. But there was a real effort from both parties to be bipartisan.

This president could not do more. He -- he's offered three Republicans top seats in his Cabinet. He met with the House and Senate Republicans. He -- I think he was offering to mow their lawn, to wash their cars, walk their dogs...

ROLLINS: Paul, Paul, Paul. Come on.

BEGALA: Come on. You cannot -- you could fault Barack Obama for a lot of things. You cannot that man for not reaching out to Republicans.

ROLLINS: Reaching...

BEGALA: This is a political strategy.

ROLLINS: Well, you don't know...

BEGALA: Look what they're doing. It's a political strategy.

ROLLINS: You don't know if it's a strategy or not at this point in time.

(CROSSTALK)

ROLLINS: They don't agree with the positions. And at the end of the day -- you know, I wish we didn't have these problems, I wish we had a majority, then you could see what we could do or not do. But at the end of the day, we don't. It's your game now. You get to move the ball forward.

BLITZER: All right.

ROLLINS: If you want us in the room, you have to basically let us have some say in the room.

BLITZER: All right. Let's move on. I want to play another clip of what former president Bill Clinton told Larry King last night. This one on Sarah Palin and why, what happened on one day in September, from her perspective and the Republicans' perspective, changed everything.

(BEGIN VIDEO CLIP)

CLINTON: I think she was a net plus before the failure of Lehman Brothers and the collapse in the stock market, because she gave him credibility on the Republican right through no faults of her own and she became a negative on September 15th because nobody on their team had any economic experience and the burden against the Republicans was overwhelming.

(END VIDEO CLIP)

BLITZER: All right, Ed, what do you think of that analysis?

ROLLINS: Well -- you know, the bottom line is she carried it for the first two weeks after the convention. It was John McCain that basically got hurt on September 15th and that he basically couldn't put forth his ideas, his concepts.

I don't think you can blame the loss on Sarah Palin. You can blame it on George W. Bush, you can blame it on John McCain, you can blame it on (INAUDIBLE) campaign. You can -- or you can basically say it was a brilliant campaign on Barack Obama's.

But to say that Sarah Palin failed and therefore didn't have sufficient experience, she was a governor, she had that kind of experience. Barack Obama didn't have experience as running anything. He's now the president of the United States.

BLITZER: Paul?

BEGALA: Well, I think President Clinton is being exceedingly charitable toward the governor of Alaska. It was not the collapse of Lehman Brothers and the drop in the stock market that all of a sudden revealed Sarah Palin to be a weakness on the ticket. It was the governor's performance.

Ed is right, fundamentally. It was John McCain who lost the election and Barack Obama who won. But in choosing Governor Palin and rejecting, say, Governor Ridge, Tom Ridge, the governor of Pennsylvania and the secretary of Homeland Security, Senator McCain looked like he was playing politics and not putting country first.

The McCain brand was country first. And I think that going beyond that brand, going outside that brand, playing politics here, by picking someone who was helpful with the Republican right, but I think, frankly, unqualified, I think that's what did him in. It was not the fall of Lehman Brothers that made Sarah Palin give that...

BLITZER: All right.

BEGALA: ... interview to Katie Couric where she'd had a like Miss Teen South Carolina. You know what I mean? She performed poorly on the stump and she was a detriment to McCain.

BLITZER: Paul and Ed...

ROLLINS: Miss Teen Alaska.

(LAUGHTER)

ROLLINS: Miss Teen Alaska.

BLITZER: All right, guys.

BEGALA: No, you remember that Miss Teen South Carolina...

BLITZER: All right. We remember. We remember, Paul.

(LAUGHTER)

OK. Thank you. We'll continue tomorrow.

A woman mauled by a chimpanzee. The pet's owner pleading with police to shoot the animal. We now have the tape of that 911 call for help.

Plus, a controversial new senator fighting to save his reputation and his political life. Now there are growing calls for answers from Senator Roland Burris. And there's talk of perjury.

ANNOUNCER: "First 100 Days" is sponsored by...

(COMMERCIAL BREAK) BLITZER: We now have the tape of that frantic 911 call from the owner of the chimpanzee that mauled a woman.

Let's go to Mary Snow. She's got an update on this horrific story for us.

What do we know now, Mary?

MARY SNOW, CNN CORRESPONDENT: Wolf, we just got a medical update within the last hour. The 55-year-old woman mauled by a chimpanzee in Connecticut is making slight progress. This according to doctors in Stanford, Connecticut who say four teams of surgeons worked on Charla Nash for seven hours. She remains in critical but stable condition.

Meantime, we're learning more about what happened when 200-pound chimp called Travis went on a rampage. We should warn you the tape you're about to hear is pretty graphic. Police released the audio of the 911 calls made by the chimp's owner when Travis the chimp went on a rampage Monday.

(BEGIN VIDEO CLIP)

911 OPERATOR: What's the problem there?

SANDRA HEROLD, CHIMP'S OWNER: Hurry up!

911 OPERATOR: I need you to talk to me. I need you to calm down. Why do you need somebody there?

HEROLD: What? Please god.

911 OPERATOR: What is the problem?

HEROLD: He's killing my friend.

911 OPERATOR: Who's killing your friend?

HEROLD: Chimp -- my chimpanzee.

911 OPERATOR: Your chimpanzee is killing your friend.

HEROLD: Yes. He ripped her apart. Hurry up. Hurry up, please.

911 OPERATOR: There's someone on the way.

HEROLD: Shoot him, please. Shoot him.

UNIDENTIFIED MALE: The monkey? The monkey is beating up on somebody.

HEROLD: Shoot him.

(END VIDEO CLIP)

SNOW: Now the chimp's owner continued to plead with police. She thought her friend had been killed. And you can hear the animal in the background.

(BEGIN VIDEO CLIP)

HEROLD: Send the police.

911 OPERATOR: What's the problem?

HEROLD: Send the police.

911 OPERATOR: What's the problem there?

HEROLD: The chimp killed my -- my friend!

911 OPERATOR: What's wrong with your friend?

(END VIDEO CLIP)

SNOW: Now Sandra Herold, the owner of 14-year-old Travis, said she considered the chimp almost like a son. IN an interview with NBC's "Today" show she describes in detail what she did to subdue the animal.

(BEGIN VIDEO CLIP)

HEROLD: I was trying to, you know, hit him with a shovel to stop it and it wasn't working so I went and I had to go and get a knife.

UNIDENTIFIED MALE: And you stabbed him?

HEROLD: I had to. He looked at me like, mom, what did you do?

(END VIDEO CLIP)

SNOW: Herold said she doesn't know what set off the chimp, calling it a freak thing. Meantime, the state's attorney general says he wants a ban on all wild animals as pets -- Wolf?

BLITZER: What a horrific, horrific story.

All right, Mary, thank you. Mary, reporting from New York.

There's another story happening in New York right now. I want to bring in Brian Todd. It involves a cartoon in the ""New York Post" that's causing some outrage out there.

Tell us what's going on, Brian.

BRIAN TODD, CNN CORRESPONDENT: Wolf, a real escalation now over this cartoon. As you mentioned, today in the "New York Post," it's got the newspaper trading jabs with civil rights activist Al Sharpton.

The cartoon depicts two police officers standing over the body of a chimpanzee they've just shot. That's a reference as you saw it to the story Mary just reported, that recent killing of a chimp by Connecticut police after it mauled that woman. Now in the cartoon, one officer says, "They'll have to find someone else to write the next stimulus bill." Now the actual stimulus bill, as we all know, was a top priority for President Obama and Al Sharpton believes the inference is clearly racial.

(BEGIN VIDEO CLIP)

REV. AL SHARPTON, NATIONAL ACTION NETWORK: The issue is there's a stark racial stereotype of calling African-Americans monkeys. How you have a chimpanzee there as one who personifies the economic stimulus package, there clearly is advocated and authored by the president, the first African-American president is clear.

(END VIDEO CLIP)

TODD: Now the response couldn't be much stronger from the "New York Post." The cartoonist tells CNN this is controversy is, quote, "absolutely friggin' ridiculous." Sean Delonas, the cartoonist, also said -- here's another quote -- "Do you really think I'm saying Obama should be shot? I didn't see that in the cartoon."

The paper's editor-in-chief Col Allan says the cartoon is supposed to broadly mock Washington's efforts to revive the economy and Allan, in a statement says, again, quote, "Al Sharpton reveals himself as nothing more than a publicity opportunist" -- Wolf?

BLITZER: Any indications this is going to escalate further, Brian?

TODD: Well, Sharpton is calling for the "Post" to reprimand the cartoonist. No word yet from the paper on whether it's going to do that. But as those rebuttals may tell you, you know, we shouldn't hold our breath for that. We'll see what happens from here.

BLITZER: Brian Todd, thank you.

2008 was the bloodiest year for U.S. troops in Afghanistan since the start of that war back in 2001 and now a top U.S. military commander says there's -- the violence there is about to spike again. We'll update you on why.

And the new attorney general causes a bit of a stir with this comment.

(BEGIN VIDEO CLIP)

ERIC HOLDER, U.S. ATTORNEY GENERAL: Well, this nation has probably thought of itself as a ethnic melting pot. In things racial, we have always been and we -- I believe we continue to be, in too many ways, essentially, a nation of cowards."

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BLITZER: Brian Todd's working on another story involving Iranian claims that it has now created a new drone, potentially with a range of reaching Israel. Brian, what's going on?

TODD: Well, Wolf, if this new claim is verified, it is another ominous signal that America's main antagonist in the Middle East is moving its weapons program full speed ahead.

(BEGIN VIDEOTAPE)

TODD (voice over): If what Iran now says about its weapons program is true, what you're looking at is basically child's play. This grainy video shows what looks like a toy plane. Experts say it's an unmanned drone, designed to take pictures of enemy positions.

But if you believe Iran now, they've developed something with better capabilities. Iran's deputy defense minister tells the country's semi-official news service the regime's produced unmanned spy planes with the range of 1,000 kilometers, calling it an "important achievement."

GUY BEN-ARI, CTR. FOR STRATEGIC & INTL. STUDIES: A thousand kilometers is over 600 miles and that basically gives you fantastic coverage as far as the Iranians are concerned over the entire region, starting with Israel over here, to U.S. forces in Iraq over here, U.S. forces in Afghanistan to the east, and in the south, U.S. forces in the Persian Gulf.

TODD: That means the Iranians could use the aircraft to take surveillance of U.S. and Israeli military positions. This comes less than two months after a top Iranian air force commander said his country has designed a radar evading aircraft capable of taking out high-value targets. Experts say that could mean a drone which could fire missiles.

The Iranians have said all their weapons are for defensive purposes. U.S. officials tell CNN they're looking closely at Iran's new claims about these unmanned aircraft. Weapons experts say the Iranians may be exaggerating, that the best drones they have may be a lot less sophisticated than, for example, the American Predator that you see here.

But if they are enhanced, the Iranian drones could be used to guide deadly weapons.

JOHN PIKE, GLOBALSECURITY.ORG: Possibly to be able to attack them with long-range ballistic missiles, cruise missiles, that's the sort of thing with these drones you have to worry about.

(END VIDEOTAPE)

TODD: Now experts say Hezbollah used Iranian drones to target their missiles against Israel in that 2006 war. But at the moment there is no indication that Iran is planning to develop further these unmanned aircraft for anything more than surveillance. At the moment, Wolf, but we've got to watch it.

BLITZER: Key words.

TODD: Right.

BLITZER: Thank you, Brian, for that.

Let's go back to Jack for "The Cafferty File" -- Jack.

CAFFERTY: Question this hour: Should General Motors and Chrysler be given additional taxpayer money? They're back asking for 21.6 billion additional dollars on top of the $17 billion that they were given awhile ago.

Tom in Switzerland, we get this e-mail: "Apply the thumb screws really hard. Don't give them another dime except for the development of production of truly high -- highly fuel-efficient alternative energy vehicles. Otherwise put them out of their agony and let those obsolete dinosaurs go extinct. The planet will breathe a lot easier."

John in New Hampshire writes: "Giving them more money while they continue to cut jobs is sort of like going to the track and betting your entire week's paycheck on the dead horse. It's just not smart. Unfortunately for the people who depend on the big three for income and revenue, I don't think more money is going to do anything. The market should decide their fate. And if it comes to bankruptcy, so be it."

Ben in Boston: "Not another penny of government money until the entire board of directors and all executives are replaced. The workers could run the place better by themselves. What turkeys."

Janice in South Dakota: "The stakes are the same as they were before. Bail them out or risk the loss of a million auto related jobs. I don't exactly think that many lost jobs would stimulate the economy. It would tank even further and risk putting suppliers out of business who are critical to all the car companies as well as aerospace and other industries.

"When the economy recovers, a strong auto industry with more green cars is what we'll need moving forward. Hold our noses, and the executives speak to the fire. But yes, bail them out."

Mike in Buffalo: "Jack, I'm guessing my next car will be a Ford."

Rex writes: "I'm tired of hearing what GM and Chrysler want. They got themselves into this, let them get out of it by themselves. I've been without a job since November. I'm the same as a lot of others and nobody's bailing us out."

And John in California writes: "Only when all parties involved in manufacturing cars are on their hands and knees with their tongues hanging out and are truly ready to resolve their problems."

If you didn't see your e-mail here, you can go to my blog, CNN.com/CaffertyFile. Look for yours there among hundreds of others, or not -- Wolf?

BLITZER: A lot of people do and for good reason, Jack. Thank you. A group of young students get the tour of a lifetime inside the White House from the first lady herself. We'll show you what happened.

Plus, foreclosed homes falling into disrepair, becoming neighborhood eye sores. Now some residents are fighting back.

(COMMERCIAL BREAK)

BLITZER: The first lady, Michelle Obama, marking Black History Month today by welcoming 6th and 7th grade students from a local D.C. school into the White House. And she shared the mansion's own African-American history with them.

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, FIRST LADY: As the people's house, we believe the White House should be a place for learning and for sharing new and different ideas. Sharing new forms of art and culture and history and different perspectives. We want you to visit and we want you to take advantage of these opportunities, and maybe see something for yourselves that maybe you never thought you could do or be.

So I'm happy to welcome you here for our little Black History Month celebration. I'm glad you guys are here. So many milestones in black history have touched this very house. Just to name a few. Did you know that African-American slaves helped to build this house? You knew that?

Did you know that right upstairs in a bedroom called the Lincoln Bedroom, President Lincoln signed the Emancipation Proclamation that marked an important step forward in ending slavery? Did you know that happened right here? You knew that?

Well, did you know that in 1878, Rutherford B. Hayes was president at the time, and Marie Seilka became the first soprano, the first African-American artist, to perform right here in the White House. That was in 1878. Did you know that? Because I didn't know that.

And in the 1960s, did you know that Dr. Martin Luther King and other civil rights leaders met here with Presidents Kennedy and Johnson to debate and discuss the end of segregation? Did you know that?

STUDENTS: Yes.

M. OBAMA: Pretty cool, huh? Yes. Well, you're yawning. Wake up. I'm just kidding. And of course, who lives here now? President Obama. And he's making history every single day. Why? Why?

(CROSSTALK)

M. OBAMA: He is the -- that's correct. Would you like to stand? You want to say that one more time?

UNIDENTIFIED FEMALE: The first African-American president of the United States of America.

M. OBAMA. Very good. Very good.

(END VIDEO CLIP)

BLITZER: The students, by the way, were also treated to a performance by the female a capella group Sweet Honey in the Rock.

Let's turn over -- go over to Lou Dobbs to see what's coming up one hour from now on "LOU DOBBS TONIGHT."

I love it when she goes out there and speaks to the community, especially these young kids.

LOU DOBBS, CNN ANCHOR: That was terrific. Very engaging. And obviously her audience, very well informed. She wasn't bringing any new -- certainly not much new information to that group of youngsters. They knew pretty much their history. Delightful to watch and to listen to.

Well, Wolf, tonight at the top of the hour, we'll be examining at 7:00 p.m. Eastern here on CNN the most underreported story in the national media right now, and that is our right to bear arms being under attack.

You may not know it, but our Second Amendment rights are quietly under assault from a number of quarters. That fight is being waged in communities and courthouses, large and small, all across the entire country.

All of this, as gun sales across the nation are reaching record heights, and staying there. The FBI ran more than a million background checks just last month. Many gun experts say the increase is driven by the belief that lawmakers and the president's new administration will crack down on gun ownership and ammunition.

Tonight, we're reporting on all of that. I'll be talking with two people at the center of the landmark lawsuit on this very issue. We hope you'll join us in an hour as we examine one of our most critical freedoms and the assault on it.

Wolf, back to you.

BLITZER: See you in one hour, Lou. Thank you.

DOBBS: You have a deal.

BLITZER: And to our viewers, you're in THE SITUATION ROOM