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THE SITUATION ROOM
Herman Cain Denies Veracity of Sexual Harassment Allegations; Passengers Stranded for Hours in JetBlue Airplane; NATO Officially Ends Mission in Libya; Team Obama Attacks Mitt Romney; U.S. Firm Devastated by Europe Debt; NATO Suffers Worse Loss of Life in Kabul in Decade
Aired October 31, 2011 - 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: And to our viewers, You're in THE SITUATION ROOM.
Happening now, Republican Herman Cain is denying he ever sexually harassed anyone. But he's left unanswered questions about a reported settlement with two accusers in the 1990s. We're digging deeper on the legal side to to this story that's weighing on Herman Cain's presidential bid.
Plus, JetBlue passengers vent their anger about being trapped on the tarmac for nearly eight hours.
What happened to the massive fines that were supposed to prevent this kind of nightmare?
And watch Russian spies in action working to steal America's top secrets. Stand by for some haunting glimpses into a notorious espionage ring.
We want to welcome our viewers in United States and around the world.
I'm Wolf Blitzer.
You're in THE SITUATION ROOM.
Right now, Herman Cain may be hoping that four words spare his presidential campaign from serious damage. The Republican declaring today. "I was falsely accused."
Cain is responding to a bombshell report about past allegations of sexual harassment while he was head of the National Restaurant Association, a lobbying group here in Washington. That response has been evolving since the story broke yesterday.
Our own Brian Todd caught up with Herman Cain here in Washington.
How did that go -- Brian
BRIAN TODD, CNN CORRESPONDENT: Well, Wolf, there were some questions that Herman Cain would not answer about all of this. But to the reported claims from two unnamed women that Cain sexually harassed them in the 1990s, Cain says it never happened. (BEGIN VIDEOTAPE)
TODD: (voice-over): Press by CNN on perhaps his toughest day on the campaign trail, Herman Cain first brushes off the allegations.
(on camera): Mr. Cain?
HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: Good morning, sir.
TODD: did you engage in unwanted sexual advances toward members of the Restaurant Association?
(voice-over): Then, from an elevator...
(on camera): Did you ever engage in innuendo with any members of the Restaurant Association?
TODD: (voice-over): In a more controlled setting at the National Press Club, after, at one point, someone there is enlisted to block cameras' views of him, Cain admits there was a complaint against him.
CAIN: While at the Restaurant Association, I was accused of sexual harassment -- falsely accused, I might add. I was falsely accused of sexual harassment. And when charges were brought, as the leader of the organization, I recused myself and allowed my general counsel and my human resource officer to deal with the situation. And it was concluded, after a thorough investigation, that it had no basis.
TODD: Cain said he never sexually harassed anyone in over 40 years of business experience.
His defense stems from a report in Politico that two female employees of the National Restaurant Association complained of inappropriate behavior from Cain when he led that group in the 1990s. Politico reports the women, not named, left that organization after receiving five figure separation deals.
When pressed, both Cain and his chief of staff said they weren't aware of those deals.
(on camera): If the accusations are false, why were there settlements in this case?
UNIDENTIFIED MALE: You'd have to ask the National Restaurant Association.
TODD: The Restaurant Association would only say in a statement: "The incidents took place nearly 15 years ago...and consistent with our longstanding policy, we don't comment on personnel issues relating to current or former employees."
Politico reports the women allege having conversations with Cain filled with innuendo, personal questions of a sexually suggestive nature, physical gestures that made women uncomfortable. And... JONATHAN MARTIN, POLITICO: One of the women, at -- at one point, was asked by Mr. Cain to come to his hotel room. And she complained, the woman did.
CAIN: I never sexually harassed anyone and those accusations are totally false.
TODD: We asked workplace attorney, Deborah Cats, about Cain's claim he knew nothing of separation packages for the women.
DEBRA KATZ, SEXUAL HARASSMENT ATTORNEY: Given the position that he held as CEO and he was a member of the board, it seems highly unlikely that any payment would be made in settlement of these kind of allegations and he would not be aware of it.
(END VIDEO TAPE)
TODD: Politico reports the women in question signed agreements that barred them from speaking publicly about their departures. Attorneys tell us Cain could release them from those confidentiality agreements.
When I asked him if he would do that, he did not answer.
Now, we called about a dozen people who were with the Restaurant Association at that time. The only two who would go on the record, Steve Calvera (ph) and Tom Kelly (ph), who worked under Cain at that group, said Cain was always respectful, went out of his way to be cordial and make people feel comfortable. Calvera (ph) said he never experienced anything like what was alleged of Herman Cain -- Wolf.
BLITZER: Cain has -- has offered at least some kind of an explanation late this afternoon, is that right?
TODD: That's right, Wolf. "The Washington Examiner" is quoting a taped appearance on Fox, where Cain says he does remember one woman at the Restaurant Association making an allegation against him. Cain says: "She was in my office one day" -- this is a quote -- "and I made a gesture, saying -- and I was standing close to her -- I made a gesture saying you are the same height as my wife, And I brought my hand up to my chin. My wife comes up to my chin."
Cain says that she put that in a complaint.
BLITZER: Brian, thanks very much.
Let's talk a little bit more about what's going on in this story, the legal points, the possible political consequences for Herman Cain's campaign.
We're joined by our chief political analyst, Gloria and our senior legal analyst, Jeffrey Toobin -- Gloria, did Herman Cain, at the National Press Club today, put this who whole issue behind him?
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: No, not at all, Wolf. He answered the question. He said, you know, he never sexually harassed anyone. He told us that he recused himself from this case, but that he was told by officials of the group that there was no basis for these charges.
But what he didn't tell us or explain how he did not know that there was money given to these women or that these women had actually left the Restaurant Association.
What he could do is say to the Restaurant Association -- his chief of staff has said go check with the Restaurant Association -- well, why doesn't he just say to the Restaurant Association, you can release my records and my affidavits in this matter and I will say I don't have any confidentiality, expunge these women's names if you want.
But why not make those records available?
Until he does that, I think there will be more questions that come out.
BLITZER: Well, let me ask Jeffrey Toobin if that's, you know, legal?
Is that appropriate?
Could he just ask the National Restaurant Association, a lobbying group here in Washington, to go ahead and release all documents, border they've said it -- you saw in Brian's report, they've said their policy is they don't discuss personnel matters, like most companies don't discuss personnel matters.
JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: But -- but he could certainly waive his confidentiality. He could waive any documents that he signed...
BLITZER: But, Jeffrey...
BLITZER: -- who says these women want all that information to come out right now?
TOOBIN: Well, not necessarily. It -- their names could be excluded. There are all sorts of ways you could disclose more information here, consistent with both normal corporate policies and protecting these -- these -- these women's privacy.
But it's important to remember, there are only two solid facts we know, undisputed facts. One is, as Cain said today, is there was a sexual harassment claim lodged against him. That's one fact.
The other fact is some money was paid to these women, as Politico reported yesterday.
TOOBIN: I mean this raises all sorts of questions that, if you're running for president of the United States, you absolutely have to answer.
BLITZER: But -- but let me just point out, Jeffrey, there are companies where there's a harassment -- sexual harassment and other harassment -- and a company pays money...
BLITZER: -- not because they think there's any guilt, but just to get it to go away so they don't have to spend a lot of money for legal fees. They just want to resolve it. They think that's more appropriate than letting this whole thing drag on in court or whatever.
TOOBIN: That is absolutely right. That is no question that is a possibility that gone -- that that happened in this case, particularly since, in fairness to Cain, Politico pointed out that the settlements were only in the five figures, which is not a lot of money for a sexual harassment case.
BORGER: But then that raises...
TOOBIN: But -- but -- but you have to answer the question.
TOOBIN: I mean imagine if Mitt Romney today said, well, you know, there were two sexual harassment complaints against me at Bain Capital, but, you know, they went away and -- and I'm not going to talk about them anymore.
BORGER: And if...
TOOBIN: We'd be incredulous. BORGER: -- and -- and if it was just go away money and if there was no validity to the claims, which may, indeed, be the case, why wouldn't a Herman Cain go to the Restaurant Association and say release these documents so I can clear my name and get on with the campaign?
BLITZER: How much damage, gallon, do you think already has been sustained on this campaign?
BORGER: Well, I think, clearly, this is a problem for Herman Cain, because we're not talking as much about 999 as we are talking about -- about this today. The other candidates are going to back off for a while. They're going to let this -- this story play itself out.
But as you know, this is like a spool of thread that starts unraveling. And if you leave questions open, more questions will be asked. And I think that's the problem Herman Cain has now, not only as candidate, but also his campaign has to figure out a way to control the damage. And in my experience covering political races, the best way to do that is to answer all the questions.
BLITZER: Jeffrey, does it make any difference who tipped off Politico originally about these allegations, whether it came from someone at the National Restaurant Association, someone else outside here in -- in Washington or whether it came from one of those other Republican presidential campaigns?
TOOBIN: I don't think it matters a bit. I mean Herman Cain can claim that this is some sort of conspiracy and he's being targeted. But, you know, welcome to the big leagues, pal.
TOOBIN: I mean this is a guy is running for president. And if you have something in your history that is embarrassing, even if it's not criminal, even if it's not all that significant, it's going to come out and you'd better tell the story or someone else is going to tell the story. And that's what's happening now. And, you know, he's just got to figure out how to -- how to tell the truth here and -- and be open about it, because it's just not going to go away.
BLITZER: You're -- especially if you're a frontrunner running for the presidential nomination...
TOOBIN: As he himself says, there is a bull's eye that's directed right on him.
BORGER: He's -- he's being vetted before our very eyes.
BORGER: That's what happens.
BLITZER: All right, Gloria, Jeffrey, thanks very much.
Much more on this story coming up at the half hour.
And also coming up on this Halloween, ghosts of cold war style spying in the 21st century. Stand by. You'll see some remarkable video of Russian agents in the -- in action here in the United States.
And remember Anna Chapman?
We're going to show you what's going on.
Plus, new evidence that Mitt Romney is the Republican President Obama's fears most. It could be an ugly general election campaign. Stand by for that.
And no food, no bathroom, no patience -- JetBlue passengers share their stuck on the tarmac nightmare.
BLITZER: Let's check in with Jack Cafferty for The Cafferty File -- Jack. JACK CAFFERTY, CNN CORRESPONDENT: The worst recession since the Great Depression may have ended more than two years ago, but millions of Americans aren't feeling much relief. "The Wall Street Journal" highlights some sobering economic statistics that explain why this achingly slow recovery feels more like a recession.
For starters, people are making less money. The income of the median household, which fell about 3 percent during the recession, has declined another 7 percent since the recession ended. It's estimated the income of the typical American household, adjusted for inflation, has fallen well below the January 2000 level.
Then there are the jobs The national unemployment rate remains stubbornly above 9 percent. Almost half the unemployed have been out of work for at least six months.
And having an education doesn't necessarily help that much, either. Research shows that since 2009, median incomes of households led by high school graduates, those with two year degrees and those with bachelor degrees all fell.
As for the housing market, it still hasn't rebounded. One in five mortgage holders has a loan bigger than value of their home. And a new report out now suggests the housing market has even further to fall, with home prices headed for a triple dip. It says by next June home values will have dropped to a new low of 35 percent below the peak reached in early 2006. One recent poll shows only one if five Americans think the economy will improve in the next 12 months.
Here is the question -- does the weak recovery feel more like recession to you? Go CNN.com/CaffertyFile and post a comment on my blog, or go our post on THE SITUATION ROOM Facebook page. It doesn't feel like the good times are here, does it?
WOLF BLITZER, CNN HOST, "THE SITUATION ROOM": A lot of work still has to be done, as you mentioned.
BLITZER: Thank you.
Horror and outrage not only from passengers, but also the pilot after a JetBlue airplane got stranded on the tarmac for hours and hours in the wake of an October snowstorm here in the United States. Our own Mary Snow is working the story for us, has more on the fall out, the latest. What is the fallout, Mary?
MARY SNOW: Some of the fallout is that Department of Transportation consumer protection division is investigating this JetBlue delay. One passenger describes the ordeal as traumatic. And just listen to the pilot's voice and you will get a sense of his frustration, trying to guess passengers off the plane.
(BEGIN VIDEO CLIP)
SNOW: Stranded on the tarmac at Bradley International Airport in Hartford, Connecticut, for about eight hours, a JetBlue pilot radios the tower Saturday night, clearly frustrated.
UNIDENTIFIED MALE: We can't seem to get any help from my own company. I apologize for this. But is there any way can you get a tug and tow bar to us and get us towed somewhere to a gate or something? I don't care. Take us anywhere.
SNOW: Flight 504 left Ft. Lauderdale shortly after 10:00 a.m., bound for Newark, New Jersey. But snowy conditions diverted it to Hartford, where the plane sat. Jimmy Brown, who is paralyzed, was on the flight with his wife, Francine. They told CNN affiliate New York one there was little information and rising tension.
JIMMY BROWN, STRANDED PASSENGER: A few people were blowing up and yelling and standing up. And a lot of people were getting irritated.
FRANCINE ROSE, STRANDED PASSENGER: By 6:00, 7:00, there was no more food at all. No potato chips, no snack boxes, barely any water. The bathroom stopped working. It got pretty crazy.
UNIDENTIFIED MALE: My priority right now is a tug and tow bar. Just give me a welding shop, I'd be will be willing to make one myself.
SNOW: Around 9:00 p.m., passengers were finally let off. But why did it take so long? JetBlue declined an interview, citing an ongoing investigation. It also cited the number of flights diverted, saying, "Obviously we would have preferred deplaning much sooner than we did," adding "The airport experienced intermittent power outages which made refueling and jet bridge deplaning difficult."
Bradley International said in a statement, "The airport took approximately 23 diversions on Saturday and our resources were stretched to the limit."
Former Transportation Department inspector general Mary Schiavo says it's the airline's responsibility to provide extra personnel. And she says even though a new rule is supposed to prevent passengers from being stuck on the tarmac for more than three hours, fines are minimal.
MARY SCHIAVO, FORMER TRANSPORTATION DEPARTMENT INSPECTOR GENERAL: The airlines are not fined because the Department of Transportation and Federal Aviation Administration really try to help the airlines and view themselves in partnership with the airlines. They like to look after their business and look after the bottom line.
SNOW: Now the Department of Transportation disputes that, noting its issued numerous fines for violation of airline consumables. As for that three-hour rule, it says since it went into effect in April of 2010, extended delays have been virtually eliminated and says that no airline has been fined. But the Department of Transportation points out that maximum tarmac delay rule carries penalty of $27,500 per passengers. In this case, that would amount to about $3.5 million. Wolf?
BLITZER: Any of that money go to passengers or just to the U.S. government?
SNOW: That money goes to the U.S. government. We were talking to Mary Schiavo earlier today, and she said that perhaps if the rules were changed that if that money went to passengers, perhaps that would be more incentive for airlines not to break that rule.
BLITZER: Yes, that sounds like a good rule to get at least some of that money to the people who were victimized in this kind of situation. Thanks, Mary. Thanks very much.
The GOP race for the White House is far from being decided, but the Obama camp is laser focused on one candidate. We will explain.
And move over ironman, look what just joined the U.S. army. You're going to find out what this new human-like robot can actually do.
BLITZER: NATO's mission to Libya officially ending just in a little while. We are watching what is going on very closely. Mary Snow is looking at that, some of the other top stories in THE SITUATION ROOM right now. What do we have Mary?
SNOW: Wolf, the Pentagon says that despite end of formal military operations there are plans to continue monitoring Libya from the skies. The U.S. is warning Libya it must act swiftly to form an inclusive new government. The close of the seven-month NATO bomb campaign comes almost two weeks since capture and killing of longtime dictator Moammar Gadhafi.
The United States is cutting funding for UNESCO, the U.N. agency focused on education and science after the organization voted to approve the controversial Palestinian bid for full membership, a move one U.S. official calls "deeply damaging." The vote is separate from the Palestinian membership bid in the United Nations and the first on the matter for a part of the world body.
President Obama has a clean bill of health. The White House has just released the report from the president's second periodic fiscal examination performed last week. The president is said to be fit for duty, and all data indicate he will remain so for the duration of his presidency.
And get this, the report also says the president is tobacco free.
And meet the Pet-man. The new human-like robot is being built for the army to test chemical protective clothing. You can see him walking on a treadmill, bending over, and doing push-ups. The company says Pet- man is designed to mimic human move many while being exposed to chemical warfare agents. He is reportedly 180 pounds and almost six feet tall. Wolf?
BLITZER: Pretty good. Thanks very much, Mary, for that.
It may be the last thing you would expect Herman Cain to do today. We're going to talk about his sudden outburst of song in the midst of denying sexual misconduct.
Plus a Russian spy drop in progress. It's the kind of thing you see in thrillers all the time and movies. But guess what, this time it is very real.
And we are tracking terrorists responsible for the worst loss of NATO lives in the Afghan capital in the decade of war.
(BEGIN VIDEO CLIP)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: You can see the size of the crater the sheer force of the explosion. But the key thing about is its precision. The suicide bomber knew exactly when to strike and where.
BLITZER: Herman Cain has been saying for weeks that he has a bull's eye on his back because of a surge in the Republican presidential polls. But he hasn't seen anything like the firestorm he is experiencing right now. The former pizza executive is denying past allegations of sexual misconduct back in the 1990s. Listen to some of Herman Cain's remarks during an appearance today at the National Press Club in Washington.
(BEGIN VIDEO CLIP)
HERMAN CAIN, (R) PRESIDENTIAL CANDIDATE: I would be delighted to clear the air.
Number one, in all of my over 40 years of business experience, running businesses and corporations, I have never sexually harassed anyone. Number two, while at the Restaurant Association, I was accused of sexual harassment. Falsely accused, I might add. I was falsely accused of sexual harassment.
And when charges were brought, as the leader of the organization I recused myself, and I allowed my general counsel and my human resource officer to deal with the situation. And it was concluded after a thorough investigation that it had no basis.
(END VIDEO CLIP)
BLITZER: All right. Let's bring in our senior political analyst, David Gergen.
David, Politico, the publication online that investigated this 10 days ago, they went to his campaign and they said, here's the accusations, we've learned about them. What do you say? They didn't really do much over these 10 days. Only today did we hear from Herman Cain.
It looks like how not to operate a damage control operation under way.
DAVID GERGEN, CNN SR. POLITICAL ANALYST: You're exactly right, Wolf. Herman Cain has done many good things in his campaign, he's excited a lot of people. He has ignited this debate over flat taxes. So a lot of Republicans like that and they support him.
But the one thing he did not do today was clear the air. He said that's what he was going to do, but I'm afraid it didn't quite match up.
BLITZER: Well, what does he still need to do, David?
GERGEN: Well, Wolf, I think what's centrally at issue here in the beginning is whether the National Restaurant Association paid women settlement fees to basically leave the organization and keep their mouths shut. And Politico, which has -- as you know, has established a reputation of being a fair-mined organization, they put a lot of time into the reporting on this, says at least one of those settlements was in five figures. That's a fair amount of money to pay to someone who has given a false allegation.
So the question becomes, what really happened? Were there settlements with these women? And if so, what are the women alleging and what did they find?
I think just to simply -- you know, frequently, in these sexual harassment questions, we've had a he said/she said. All we have heard so far is he said. So the air is not clear, and I think the National Restaurant Association, or the Cain campaign, or both, owe people a clearer explanation before the air is really cleared.
BLITZER: You know, he's on top of all of the polls right now in Iowa. "That Des Moines Register" poll, he is statistically even with Mitt Romney, although slightly ahead, 23-22 percent. In the national polls, he is doing really, really well.
I guess this comes with the territory, but how much damage potentially could these allegations prove to be for his campaign?
GERGEN: It's hard to say right now, Wolf. A lot depends on where it goes.
I mean, I think if he puts -- I think if he does clear the air, it could all fade away. There could be very little to it. If he resists, I think he is going to be under intensifying scrutiny about his whole record, and people are going to ask about how well he is running his campaign and all these other questions.
You know, when you get into this game, he may not -- I imagine there are people around him who never thought he would get this far. But once you get this far, and you're ahead, as you know, you come under an intense spotlight and they look under every rock. And you have just got to be prepared for it. And, you know, if they went to him 10 ten days ago, and it took this long to get a response, it's clear they weren't quite prepared.
BLITZER: It's not just the news media, of course, that's investigating every detail of all these presidential candidates. Very off, even more important, opposition research, some of these other campaigns that are investigating their arrivals every step of the way, and that's something that they all have to live with as well.
GERGEN: They do.
BLITZER: Go ahead.
GERGEN: And sometimes, Wolf, I think that, ,you know, we are too invasive of people's private lives. But if someone is president of a national association, and there are formal charges or some kind of accusations that come forward, and then there are financial settlements, that rises to the level that people need to know a little more about the candidate than they do right now.
BLITZER: Yes, and I suspect we'll be learning a lot more in the days to come.
David, thanks very much.
BLITZER: President Obama's team isn't waiting to see who actually becomes the Republican presidential nominee. Some of his top aides are focusing their attacks on one Republican, and that would be Mitt Romney.
Let's bring in our chief White House correspondent, Jessica Yellin.
Jessica, what's going on here?
JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Wolf, as you are covering, there seems to be a Republican contest still going on. But in Obama world, there is one candidate to watch. And as you point out, it is Mitt Romney.
CHRIS WALLACE, DEBATE MODERATOR: You are now leading, Mr. Cain, in two national polls this week.
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Romney is basically tied for the top spot with businessman Herman Cain.
WALLACE: Herman Cain and Romney, way ahead of the field.
BLITZER: A statistical tie if you look at the plus-or-minus sampling error, five points.
YELLIN (voice-over): While political watchers measure who is up or down in a tight Republican horse race, the Obama reelection team is already focusing its firepower on Mitt Romney.
Top White House adviser David Plouffe on "Meet the Press."
DAVID PLOUFFE, WHITE HOUSE ADVISER: He has no core. You get the sense with Romney that if he -- it was good to say the sky was green and the grass was blue to win an election, he would say it.
YELLIN: Ouch. And we haven't even gotten to Iowa yet.
Convinced most voters still don't know much about Romney, and persuaded he is likely to become the nominee, team Obama is jumping in to define him while he is still distracted with primaries. It's a biting two-pronged attack.
One, they will argue he's a flip-flopper. Press Secretary Jay Carney --
JAY CARNEY, WHITE HOUSE PRESS SECRETARY: It is always a question as to where he was and where he is and where he might be on any given issue.
YELLIN: Top campaign adviser David Axelrod --
DAVID AXELROD, OBAMA CAMPAIGN ADVISER: If you are willing to change positions on fundamental issues of principle, how can we know what you would do as president?
YELLIN: Two, they say he is a creature of Wall Street who won't help the middle class.
In a statement, Obama campaign press secretary Ben LaBolt said, "Rather than restoring economic security for the middle class, Mitt Romney thinks we should join a race to the bottom by promoting outsourcing, loopholes, and risky financial deals."
The president himself made the case after a Republican debate in which Mitt Romney suggested he wouldn't support an extension of the payroll tax cut.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: That's exactly what one of the leading Republican presidential candidates suggested we do during last night's debate, allow taxes to rise by up to $1,000 next year for struggling middle class families.
YELLIN: Wolf, the Romney campaign is not letting these attacks go unanswered. Campaign spokeswoman Andrea Saul said in a statement to us, "President Obama and his allies already signaled they are going to run a campaign of personal destruction to 'kill' Mitt Romney because they are intimidated by his candidacy. Americans know that Mitt Romney is a fiscally responsible businessman who will put in place pro-growth policies that will create jobs and undo the damage caused by the failed Obama presidency."
An early peek at a campaign, Wolf, that could be very harsh indeed.
BLITZER: Well, if you think harsh, it certainly could be harsh. Take a look at what Mitt Romney is saying about the president of the United States. In his stump speech, he's going after him big-time, like all the Republican candidates, but that's what presidential elections are all about.
YELLIN: That is true. BLITZER: They are going after each other.
But I do know -- and I write about this on my blog today -- that the Democrats are deeply worried that if Mitt Romney is the Republican nominee, he could get a lot of those Independent voters in some of those swing states and make a difference. That's why they are going after him, trying to soften him up right now.
Jessica, thanks very much.
The European debt crisis takes a huge toll on one of Wall Street's biggest players. Is it a sign of what's to come for other U.S. financial companies?
Plus, the worse loss for life in NATO in Afghanistan's capital in a decade. Ahead, growing U.S. concerns about who is responsible.
BLITZER: Europe's debt crisis is causing big trouble for a financial company right here in the United States. We are talking about MF Global. It filed for bankruptcy today, leaving behind more than $2 billion in debt. The firm has been run by the former New Jersey governor, Jon Corzine, who himself used to run Goldman Sachs.
Let's bring in our CNN anchor Erin Burnett.
What's going on over here, Erin? A lot of us know Jon Corzine. You've interviewed him. I've interviewed him. He is obviously a very smart guy.
ERIN BURNETT, HOST, "ERIN BURNETT OUTFRONT": Yes, he is a very smart guy. And this is a combination of a little bit of what we saw during the financial crisis, people just making bad decisions and taking on too much risk.
Now, the firm's name is MF Global. And, of course, we all know Jon Corzine, who you see there, as the -- well, he was the senator from New Jersey, a governor, and also, of course, was the CEO of Goldman Sachs. That's the role where he got most of his money, and you would think where he learned about risk.
But at MF Global, which is mostly a commodity firm, they do a lot of trading, Wolf, they took on about $6.3 billion in bets on European debt. And they did that with some of the firm's own capital.
Now when those bets have gone wrong, the firm doesn't have enough money. So that's why you are seeing this Chapter 11 filing and the firm going bankrupt.
But the broader lesson here is that this is why financial reform is trying to have banks keep more money on hand for a rainy day. MF Global, not a big enough bank to cause any problems in the system, but the financial reform laws, and keeping capital on hand, we've tried to have this so you can't see this happening now from a Goldman Sachs or a JPMorgan, where they're bigger now than they've ever been. We'd have to bail them out.
BLITZER: Now, when he left Goldman Sachs, he left with a lot of money, obviously. And then went into politics. As you say, a senator from New Jersey, a governor from New Jersey. Now he's gone back after losing his bid for reelection as governor of New Jersey.
When his firms files for bankruptcy like that, I assume it's not personal. He still walks away with some cash. He's not completely broke or anything like that.
BURNETT: No, definitely not. Obviously, although he spent some of his considerable several hundred million in fortune on some of those campaigns for governor and Senator, he got out of Goldman when the going was really good in terms of selling his stock. So he did well.
But I looked at the compensation numbers, Wolf, for you today for MF Global. While he had some stock options in MF Global, which is publicly traded, they were valued at $11.1 million when they were granted. But now, of course, if the firm is bankrupt and the price of the stock is zero, they're really going to be worth nothing. So he won't get anything from that.
But his salary was $1.5 million. He also got a $1.25 million cash bonus last year, Wolf, which was paid out in March of this year. So it's unclear whether there are clawbacks where he would have to return that money, but that is what he was actually paid for all of last year, which is the latest data I was able to find for you.
BLITZER: Give us a little preview of what's coming up on "ERIN BURNETT OUTFRONT" later tonight.
BURNETT: Well, you have been talking so much about Herman Cain. It's fascinating, what really happened. And as you were talking about with David Gergen, where really is the public's right to know?
We're going to be talking with a Republican rainmaker and king maker who has had plenty of positive things to say about Herman Cain. We're going to find out wheat the Republican governor of Mississippi, Haley Barbour has to say about Mr. Cain. He's going to be our special guest tonight.
He hasn't endorsed anyone yet. As you know, when he was head of the Republican Governors Association, he doubled their funding. So it's important what he has it say, and we are looking forward to that.
BLITZER: For our North American viewers, 7:00 p.m. Eastern right here on CNN, "ERIN BURNETT OUTFRONT."
BURNETT: Thanks, Wolf.
BLITZER: Erin, see you tomorrow. Thank you.
BURNETT: All right.
BLITZER: See you tonight, as well. Let's go to the Afghan capital of Kabul right now, and what is being called the worst loss of life there for NATO in a decade of war. Seventeen people were killed Saturday in a suicide blast targeting a NATO convoy. Among them, nine Americans.
Let's bring in CNN's Nick Paton Walsh. He's joining us with the latest.
Nick, you want to the site of this bombing, this explosion. It was massive. Tell our viewers what you saw.
NICK PATON WALSH, CNN INTERNATIONAL CORRESPONDENT: It is quite remarkable, not just because of the size of the crater, but the sheer fact that this bomb apparently brought by a suicide bomber in a vehicle laden with a huge amount of explosive blue tons of armored bus, these huge vehicle used to transport NATO personnel around the capital, blew it right across the road to the other side of the highway, over the reservation. So quite remarkable.
NATO officials today asking themselves whether something as powerful as this was simply an opportunist roaming around the capital, something I consider unlikely, or perhaps more sophisticated, preplanned -- Wolf.
BLITZER: Afghan officials suspect the work of what is called the Haqqani network. Is that right?
WALSH: According to us today, the Afghan Interior Ministry spokesman said they believe that preliminary evidence suggests the Haqqani network were involved. Now, that's absolutely vital, because the Haqqanis are considered by U.S. officials to have support and safe havens in Pakistan. They've been behind recent attacks here right in the heart of the capital against the Intercontinental Hotel and against the American Embassy.
The Haqqanis are deeply divisive. The U.S. increasingly saying that if Pakistan doesn't crack down on them itself, they will have to take tougher measures themselves.
But there are also some arguing that this increased emphasis against the Haqqanis buys a little bit of breathing room for peace talks, if there are to be any, with the rest of the insurgency. Remember, the Taliban, well, they are still here, they're still fighting. And some think that the more Haqqanis become public enemy number one, if you were, the more chance there is perhaps for them to talk peace to the Taliban. Far away, though, peace talks seem at the moment -- Wolf.
All right. Nick Paton Walsh on the scene for us.
Nick, be careful over there. Thank you.
The red-haired Russian spy who posed for a men's magazine is now featured in brand new videos. Guess who released them? The FBI. Stand by to see Anna Chapman working under cover during her heyday as a spy, a Russian spy, here in United States.
And Jack Cafferty asking, does the weak recovery feel more like a recession to you?
BLITZER: Let's get right back to Jack Cafferty for "The Cafferty File" -- Jack.
CAFFERTY: The question this hour, Wolf, is: Does the weak recovery feel more like a recession to you?
Brian in Illinois says, "To me, it actually feels as if we may be on the cusp of Great Depression Two, if we're not already there. The visibility of the Occupy movement is enough to prove that so many are struggling, even though much has been swept under the rug for a long time now. The theme of today's holiday says it all -- very scary, predicated on treats for the rich, tricks for everyone else."
Riley writes, "I think it's the new normal for the country. It's not going to be good for many, many people."
Kristen on Facebook, "Yes, it feels like a recession, but it doesn't feel like a new one. The old one never ended."
"My house is so under water, we're drowning. And my husband hasn't worked in a year. Recession is an understatement."
Sherrie writes from Indiana, "No, Jack, it does not feel more like a recession to me. It feels more like a depression."
"Long-term successful businesses are failing at horrendous rates here. People here have no money for anything other than necessities, and many don't even have that. Meanwhile, inflation and food prices is getting worse every day. It's a disaster, period."
Richard writes from Pennsylvania, "What recovery, Jack? Unemployment still high. The government is throwing money away on Solyndra, Beacon, and a car manufacturer in Finland. And Obama and his minions have no clue how to right the ship."
"Food prices are going through the roof, and there are continuous street demonstrations. How do any of these facts translate into any kind of recovery?"
And Doug in Massachusetts writes, "The economy is running on fumes: borrowed fumes, illusionary fumes."
If you want to read more on this, go to my blog, CNN.com/caffertyfile, or through our post on THE SITUATION ROOM'S Facebook page -- Wolf.
BLITZER: Jack, thanks very much.
Mary Snow is monitoring some of the other top stories in THE SITUATION ROOM right now.
Mary, the Arab League is proposing a plan to try to end the government crackdown in Syria. What's going on?
SNOW: Well, Wolf, Syria is due to respond today to an Arab League proposal calling on an end to seven months of violence against protesters. Arab countries made the proposal Sunday. It calls on Syria to remove tanks and military vehicles from the streets and to release political prisoners. Opposition activists say Syrian forces killed 28 people over the weekend.
Two suspected militants were killed today in a suspected U.S. drone strike in Pakistan. Intelligence officials tell CNN the drone fired two missiles on a vehicle in a tribal region of North Waziristan. Today's strike is the 59th this year.
Nearly 50 chemical and defense companies were victims of a coordinated cyberattack according to a report from security firm Symantec. That report says computers of at least 48 companies were infected with malicious software called Poison Ivy which stole company information. The attack, which took place July through September, has been traced to a man in China. Most of the companies hacked were based in the U.S.
And a new album from the late singer Amy Winehouse is set to be released in December. The announcement came today from her record label.
The posthumous album will contain new and reworked songs Winehouse recorded between 2002 and 2008. The singer was found dead in her London apartment in July. A coroner ruled last week her death was the result of accidental alcohol poisoning -- Wolf.
BLITZER: A sad story, indeed.
All right. Thanks very much, Mary, for that.
Coming up, remember that sexy Russian spy, Anna Chapman? Well, we have new glimpses of her courtesy of the FBI. Her secret meetings while she was working under cover here in the United States, stand by for that.
BLITZER: Imagine you're a fly on the wall watching one of the most shocking spy cases in recent years play out. We're now getting remarkable images, a window into the secret world of Anna Chapman -- remember her? -- and other Russian agents who were here, living, working here in the United States, pretending they were doing other stuff. They were on the prowl for intelligence. All this unfolding for more than a decade.
Our foreign affairs correspondent, Jill Dougherty, is joining us now with some new videos that have just been released by the FBI.
Jill, this is pretty amazing, amazing in many respects, especially that the FBI is releasing it.
JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: It is, really, Wolf. It's fascinating. You should take a look at it, because it's really the trade craft of spies, the real thing, captured on videotape.
DOUGHERTY (voice-over): Just in time for Halloween, the FBI releases a treasure trove of videos, photos, and heavy-edited documents from Operation Ghost Stories. A coincidence, the FBI says, but it's an undercover peek of how a Russian spy ring collected and passed on information, how the FBI trailed them, and finally cracked the operation.
In one video from January, 2010, Anna Chapman, the red-headed bombshell who later went on to fame in Moscow as a TV host, sits in a New York coffee shop wearing designer sunglasses, unknowingly talking with an undercover FBI agent about problems with her laptop that she uses to communicate with Russian officials.
"You are ready for the next step, OK?" he asks. "OK," she says. "This is not laptop to laptop, this is person to person," the agent says.
In another video, the classic spy technique, a brush pass, as another spy trades off a bag full of cash with a Russian official as they pass in a train station.
The FBI was forced to release the material recorded over the decade the FBI had the 10 Russians under surveillance as part of a Freedom of Information Act request. And it looks just like a spy movie, including one Russian digging up a package of money from what in spy lingo is called a "dead drop."
This spy ring is over, but the FBI says it's not the end of the story.
FRANK FIGLIUZZI, FBI: The U.S. remains the target of most of the world's spying. And again, as long as we have policy information, technology and research that the rest of the world wants, and as long as foreign intel services want to gain a strategic advantage against us, we'll continue to be the target of that kind of spying.
DOUGHERTY: And remember, Wolf, last year, Anna Chapman and her colleagues were returned to Russia in a spy swap, but their techniques live on.
BLITZER: You know, the intelligence community, Jill -- you know this, you've covered the intelligence community, the national security world for a long time, as I have -- what they're really worried about is undermining what they call sources and methods. In this particular case, some techniques.
By releasing this video under the Freedom of Information Act, are they concerned that they're sharing with the rest of the world, including America's enemies, how the FBI engages in counterespionage here in the United States?
DOUGHERTY: You know, Wolf, I asked that very question. What they released they feel they could release, that it doesn't really reveal anything that they wouldn't want revealed.
But I'll tell you, when I talked to the FBI agent, he did say that, granted, you've got some of the traditional things like the dead drop, and the passing by somebody, and switching bags, et cetera. But Anna, for example, Anna Chapman, and some of the others were using some pretty sophisticated things.
She was using a Mac. And when she was in that coffee shop previously, and in other places, she was using that Mac to communicate wirelessly with a van that, according to the FBI, that was circling around outside in the street. And so that's why she needed to get her Mac fixed. So some pretty sophisticated techniques in between the tried and true.
BLITZER: She was operating in plain sight, as they say.
Jill, thanks very much.
That's it for me. Thanks very much for watching.
I'm Wolf Blitzer, in THE SITUATION ROOM.
The news continues next on CNN.