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CNN LOU DOBBS MONEYLINE
Former Enron Executive Indicted; Cable Deal Helps Rally Stocks
Aired August 21, 2002 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JAN HOPKINS, GUEST HOST: Tonight, the first criminal indictment against a former Enron executive. Michael Kopper plead guilty to two felony charges. We begin our coverage with Ed Lavandera outside federal court in Houston.
ED LAVANDERA, CNN CORRESPONDENT: Jan, Michael Kopper is free tonight on $5 million bail. But already his guilty plea is leading investigators to much bigger fish in the Enron scandal.
JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: President Bush met with his top military advisers today here in Crawford, Texas. Iraq was not on the agenda, but the president did say after he would consult with Congress and key allies before settling on a course of action.
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: And I'll show you more videotapes CNN obtained from al Qaeda -- CNN obtained in Afghanistan. Tonight, trading for urban jihad. Experts who have seen these tapes say they show more than just training.
CHRISTINE ROMANS, CNNFN CORRESPONDENT: A resilient day for the Dow and S&P 500, helped by a cable deal and a huge rally in transportation stocks.
GREG CLARKIN, CNNFN CORRESPONDENT: Well it took more than six weeks to get here, but the Nasdaq is back, over 1400 tonight, thanks to chips and networking stocks.
HOPKINS: Also tonight, corporate fraud and the voting public. We'll take a look at a local election battle and how it may play out on a national level.
Also military spending. It was the top of the agenda today for President Bush and military drafts. We'll take a look at who's fighting for what and what it will ultimately cost you.
And six million acres burned to a crisp. We'll tell you why this is one of the worst years for wildfires in recent memory.
ANNOUNCER: This is LOU DOBBS MONEYLINE for Wednesday, August 21st. Sitting in for Lou Dobbs, Jan Hopkins.
HOPKINS: Good evening. He's turning out to be a key witness for the prosecution. Michael Kopper, a former Enron executive, today pled guilty to two felony charges. He's the first Enron executive to be convicted in relation to the massive fraud uncovered at the energy firm nearly a year ago. Kopper is also leading prosecutors up the chain of command at Enron, mainly to former Chief Financial Officer Andrew Fastow. Fastow was considered to be the mastermind behind Enron's off-balance sheet deals. Those deals eventually sunk the company.
Ed Lavandera joins us now from outside the federal courthouse in Houston -- Ed.
LAVANDERA: Well Jan, quite a day for federal prosecutors here in Houston, Texas. Over the last couple of weeks, the Justice Department was starting to come under fire for the pace of the investigation into the Enron scandal, but today they came up with a guilty plea from Michael Kopper.
The man considered to be the top lieutenant, the Chief Financial Officer Andrew Fastow. The two guilty charges that he pled guilty to were wire fraud and money laundering charges. And in exchange for that, he will agree to cooperate with investigators as they move forward to this.
Kopper was believed to have been heading up one of the partnerships that he worked with Andrew Fastow on, saying that he had worked -- in fact, at one point in court today, he had implicated Andrew Fastow -- not by name, only saying that the chief financial officer of Enron had ordered him to do the work that he did on the partnerships. That's as close as Andrew Fastow's name was to being mentioned publicly in court today.
But clearly, this is a day where Kopper has agreed to cooperate with investigators, a move that everyone here called significant, at least on the prosecution's side. But his own attorney, Kopper's own attorney saying that he did do wrong and that he is willing to cooperate at this point.
(BEGIN VIDEO CLIP)
DAVID HOWARD, MICHAEL KOPPER'S ATTORNEY: Today Michael Kopper has accepted personal responsibility for his role in the Enron tragedy. Michael has admitted that he misused his position at Enron to enrich himself and others and in so doing violated his duties as an Enron employee.
(END VIDEO CLIP)
LAVANDERA: Of course, the much bigger question here and perhaps the greater purpose of getting Michael Kopper for prosecutors is perhaps the information that he has will be able to lead them to prosecute the higher -- more higher profile executives at Enron. Of course, Kopper worked very closely with Fastow, so they will use that information, perhaps, against him.
And there's also, in part of the court documents that were filed today, Justice officials trying to go after Andrew Fastow's personal assets. In fact, more than 21 billion assets -- the paperwork started today to try to freeze some of those ads; about $20 million worth of assets belonging to Andrew Fastow. What happens with that isn't exactly clear. But prosecutors very tight lipped about what they will do with Michael Kopper at this point.
But it's clear that pretty much based on this agreement, that he has to answer every question prosecutors have of him, and based on the kind of information he passes over depends on what kind of sentence he will receive in the future.
(BEGIN VIDEO CLIP)
STEPHEN CUTLER, SEC ENFORCEMENT DIVISION: This case is but a first step, all be it a vital one, in our effort to hold responsible and to bring to justice those who participated in this massive betrayal of the investing public's trust. We anticipate that there will be other cases and that the information Mr. Kopper will provide will be a great assistance to the government as it proceeds.
(END VIDEO CLIP)
LAVANDERA: So far, the maximum sentence that Kopper could receive is 15 years in prison and a $500,000 fine. But as you just heard prosecutors mention, depending on the quality of information that he passes along, that sentence could be significantly reduced.
Jan, now back to you.
HOPKINS: Thanks. Ed Lavandera in Houston.
Today's conviction is a big step forward for the government and it's also a win for investors. As part of Kopper's plea deal, he has agreed to turn over millions of dollars to investors burned by Enron's meltdown.
Investors may also get tens of millions more from other executives given up today by Kopper. Peter Viles has that part of the story.
(BEGIN VIDEOTAPE)
PETER VILES, CNNFN CORRESPONDENT (voice over): To cut a deal with the government, Michael Kopper had to put something on the table that prosecutors rarely see -- cold hard cash, $12 million worth, finally making a reality of the warning the president made on Wall Street last month.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Corporate officers who benefit from false accounting statements should forfeit all money gained by their fraud.
VILES: Kopper agreed to give back $12 million he made in deals he now says were illegal. The money goes to a fund set up by the SEC and ultimately back to the investors who owned Enron stock.
LARRY THOMPSON, DEPUTY ATTORNEY GENERAL: The Task Force investigators, the FBI investigators, and our attorneys recommended this as the appropriate amount so that all of the ill-gotten gains could be returned to the Enron investors. VILES: Government prosecutors and regulators have long had the power to take back ill-gotten gains. In the last great wave of scandal, it took back 50 million from Ivan Boesky, 400 million from Michael Milken. The SEC currently has about 60 investor claims funds, some fairly successful.
In the case of the Infinity Group, a ponzi scheme that raised $28 million for more than 6,000 investors, the government got back nine million, 45 percent of valid claims. In the case of Enron, however, tens of billions were lost. Twelve million dollars may be a lot to Michael Kopper, but it isn't even close to one percent of what investors lost.
IRA SORKIN, FMR. SEC ADMINISTRATOR: It's a difficult process. It'll be a very difficult process here because of the size of the number of shareholders who will claim to be victims and the relatively small amount that is going to be put into this fund.
(END VIDEOTAPE)
VILES: The government tonight also going after Andy Fastow's allegedly ill-gotten gains. It identified $23 million above and beyond the 12 million Kopper will give back. Included in that list of what the government wants to seize is a house in Houston owned, Jan, by Andy Fastow.
HOPKINS: Interesting, but what's the best way for investors to get money back?
VILES: Traditionally the best way is through the court system, through shareholder lawsuits. Here it's unusual. Enron doesn't have any money. The shareholders, then, went after Andersen. Andersen put a lot of money on the table and shareholders said that's not enough. It was up to 750 million. Andersen now doesn't have any money because of what the government did to them. So the only money left is with the banks. The shareholders have gone after the banks that helped Enron construct these deals. If they could even get 25 or $50 million out of a couple of big banks, which isn't a ton of money to the banks, that's probably more than they can get from these executives at Enron.
HOPKINS: Thanks, Peter Viles.
Kopper's guilty plea today undoubtedly eases some of the pressure on the Justice Department, pressure, we must admit, we've been applying here every night on MONEYLINE with our Enron scoreboard.
So tonight, we're happy to finally make a significant change to the scoreboard. Thirty-seven-year-old Michael Kopper, a former managing director at Enron becomes the first Enron executive to face criminal charges tied to the company's collapse. The number of days it took to get this conviction, 262.
President Bush today said that he plans to consult U.S. allies and members of Congress before taking any action against Iraq. That followed a meeting between the president and his top military advisers at his ranch in Crawford, Texas. Mr. Bush insists Iraq did not come up during that meeting.
John King has this report from Crawford, Texas.
(BEGIN VIDEOTAPE)
JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice over): As advertised, a top-level meeting about military spending priorities, not a mention of Iraq.
BUSH: I know there's this kind of intense speculation that seems to be going on, kind of, I don't know how you would describe it. It's kind of a churning frenzy -- frenzy is how the secretary would describe it. But the subject didn't come up.
KING: That said, Mr. Bush made clear removing Saddam Hussein from power remains a top priority. And during a visit to Kazakhstan, the general who would lead any military confrontation with Iraq said planning is well under way.
GENERAL TOMMY FRANKS, U.S. CENTRAL COMMAND: Planning that is necessary in order to be sure that our nation, the United States of America and its allies have credible options, which can be presented to the president.
KING: General Franks was not among those on the helicopters arriving for their big meeting at the Bush ranch nor was Secretary of State Colin Powell, and the president seemed determined to calm those who think he's in a rush to war.
BUSH: I'm a patient man. And when I say I'm a patient man, I mean I'm a patient man and that we will look at all options.
KING: A fellow Texan offered help in the political debate. Tom DeLay, the number three Republican in the House of Representatives pointedly challenged other conservatives who have questioned the need to remove Saddam Hussein.
REP. TOM DELAY (R-TX), HOUSE MAJORITY WHIP: And every generation must summon the courage to disregard the timid counsel of those who would mortgage our security to the false promises of wishful thinking and appeasement.
KING: Mr. Bush says he will consult Congress and key allies once he settles on a strategy.
(END VIDEOTAPE)
KING: And while most senior U.S. officials now are convinced a military confrontation with Iraq is a near certainty, they say President Bush is not likely to face those tough decisions for several months -- Jan.
HOPKINS: Thanks. John King, Crawford, Texas.
Israel arrested five Palestinians suspected in attacks in Israel including a deadly bombing at Hebrew University last month. Nine people including five American citizens were killed in that July 31st attack. Israel says it will share its findings with the FBI, which launched its own investigation into the bombing. Israel says the five Hamas members were arrested Saturday night as they prepared to launch new attacks in central Israel.
The FBI has issued a nationwide alert for a Saudi Arabian man who may be connected with the September 11th hijackers. The bureau says it considers him armed and dangerous.
Kelli Arena has the latest -- Kelli.
KELLI ARENA, CNN JUSTICE CORRESPONDENT: Jan, his name is Saud Al-Rasheed and if he's found, he could provide a major break for investigators in the September 11th investigation. The FBI says that Al-Rasheed is 21 years old. He is Saudi, just like 15 of the hijackers. He is considered, as you said, armed and dangerous and his whereabouts are unknown.
Now he's important because investigators say that the image of his passport and photo was found on a CD-ROM during recent searches. Now also on the computer disk were pictures of several of the other September 11th hijackers. In fact, we're told that Al-Rasheed was the only individual pictured on this CD-ROM who was not a hijacker.
Now, that is leading to questions about what his involvement was, if any, in the September 11th plot. Here is what the FBI director said earlier today.
(BEGIN VIDEO CLIP)
BRUCE GEBHARDT, FBI DEPUTY DIRECTOR: We see a photograph, a passport photograph, of an individual, and he's with some other individuals that were of interest to us, the hijackers and we're not saying that he's connected to them. We're not saying anything like that. But we obviously have to be prudent and make sure that we notify everyone and if he is in the United States, someone might be able to pick him up and we definitely would like to interview him.
(END VIDEO CLIP)
ARENA: I apologize. I misspoke. That, of course, was the deputy director of the FBI. The FBI says that there is no indication at this point that Al-Rasheed tried to enter the United States. Sources say that there has not been any intelligence gathered or offered by other countries concerning his most recent whereabouts.
It's even unclear whether he's alive or dead. Now it is important to note that he's not facing any charges. He is just wanted for questioning at this point -- Jan.
HOPKINS: Thanks. Kelli Arena in Washington.
A modest rally on Wall Street. Technology and airline stocks leading the advance. Blue chips rose for the fourth time in the last six sessions. The Dow gaining 85 points; the Nasdaq rising 32; the S&P 500 adding 12. We'll have complete market coverage later in the broadcast.
When it comes to the job market, a new survey says that fewer Americans are satisfied at work. Only about a half of those surveyed said that they're happy with their jobs. That's down from 59 percent in 1995, according to the Conference Board (ph). The largest drop was among young workers, ages 35 to 44. Their satisfaction with work dropped sharply to 47 percent, from 61 percent in 1995.
Americans said the best part of work is the commute. Fifty-nine percent said that they were satisfied with it; that is down slightly. Job satisfaction is the subject of our MONEYLINE poll for the question tonight for you.
How satisfied are you with your job? Very satisfied? Somewhat satisfied? Or is it 5:00 yet?
Please cast your vote at cnn.com/moneyline. Of course, we'll bring you the results later.
Also still to come, the president and his defense secretary want to transform the armed forces. We'll have a special report on the tough budget choices facing the Pentagon.
"Terror on Tape", experts say the latest al Qaeda video show that terrorists training for operations in urban areas. Military analyst General David Grange will help us analyze the tapes.
And the wildfire season is far from over, but it is already one of the worst in recent memory. Fire historian Steve Pyne will be our guest.
(COMMERCIAL BREAK)
HOPKINS: As John King reported, President Bush held a top-level meeting at his Texas ranch today to talk about military transformation. The United States spends more on defense than the next eight largest military powers combined. But Defense Secretary Donald Rumsfeld is pushing for a much more agile and technologically advanced military and that will require some tough budget choices.
Tim O'Brien reports.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN CORRESPONDENT (voice over): President Bush and his top defensive advisers are mapping out their vision for natural defense for the years 2004 to 2009 and what Defense Secretary Rumsfeld calls the transformation of the Defense Department.
DONALD RUMSFELD, DEFENSE SECRETARY: I felt we had a very good chance today to discuss missile defense and the important programs that we have going forward for transformations. The cold-hard fact is that the United States lives in a very different security environment today in this 21st Century than we did prior to September 11th.
O'BRIEN: Rumsfeld wants the Defense Department to focus on new technology for missile defense, pilotless drone aircraft and enhance defenses against biological and chemical warfare. A transformation, which may require skipping a generation of traditional weapon's development.
LAWRENCE KORB, COUNCIL ON FOREIGN RELATIONS: You want to move aggressively with national missile defense so you can have something deployed by the end of Bush's first term. That's going to require more money. That will mean maybe canceling something like the F-22, which is a $200 million aircraft being built by Lockheed Martin.
O'BRIEN: It's a radar evading fighter jet, which the Air Force calls its highest priority. Also at risk of being cut, the V-22 Osprey tilt rotor aircraft for the Marines and the Comanche helicopters, a favorite of the U.S. Army. Resistance within the armed forces and members of Congress whose home districts are affected could be intense.
IVAN ELAND, CATO INSTITUTE: Weapon systems are like vampires. You never know if they're going to rise out of the coffin again. Just when you think you've put the stake in their heart, they're back again.
O'BRIEN: Although Congress has yet to give final approval to a Defense Department budget for next year, the Senate earlier this month approved a $355-billion defense appropriation, up nearly $35 billion and the largest annual increase in two decades.
(END VIDEOTAPE)
O'BRIEN: Congress is poised to authorize record sums for natural defense in recognition of 9/11 and the new challenges it brought, but there's anything but agreement overnight over how that money should be spent -- Jan.
HOPKINS: Thanks. Tim O'Brien in Washington.
New videotapes show how al Qaeda built urban environments in a remote part of Afghanistan. Experts say they were used for training exercises designed to prepare terrorists for urban warfare. The tapes are among an archive of 64 al Qaeda videos obtained by senior international correspondent Nic Robertson.
Nic joins us now from CNN center in Atlanta -- Nic.
ROBERTSON: Well Jan, the tapes show that al Qaeda has created in the fields and hills of Afghanistan, not training so that they can fight coalition forces that are in Afghanistan now, but training to make them feel at ease and operate effectively in an urban environment. They've built stone and canvas houses. They go into these houses and blow up the houses, fire gunshots into them.
The houses are set out as if they're in a village. We also see in these tapes a bridge being blown up. Now what experts are telling us about this is that this means that al Qaeda is training to put its operatives in an urban environment in Europe or in the United States. They also say that from what they can see from these tapes, that some of the al Qaeda trainees are training at a very, very high level, that their hostage taking, their ambush techniques have been trained to a very, very high level. They train in small groups on just using small weapons, then come together to put all these specialities together.
And what we're seeing here, not any training perhaps, but rehearsals for particular operations, and the thing that concerns the experts is that the fact that al Qaeda has committed this training material to tape. They question how many people has this gone out to, when did the training take place? How many people have seen these tapes and can have learned from them?
HOPKINS: Information about explosives training, right?
ROBERTSON: Indeed. One particular tape, it's a three-hour tape and it shows exactly how to -- how to make pure TNT. Well what's really worried the experts with this material is that it's not just making TNT, because the experts say that knowledge can be gained fairly easily. But it's making the detonators that go with the TNT, and al Qaeda's proving in this videotape that it knows how to do it.
There's a list of chemicals that goes with this videotape. And that list shows how it's very easy to get these chemicals from grocery stores and pharmacists. So what concerns the experts with this particular video is that al Qaeda operatives can travel around the world, go to a country, be completely undetected when a simple workshop, make a very effective bomb that they can detonate wherever they want to.
And because they can't -- because the things that they're buying to make the bombs are not the sort of things that intelligence agencies generally look for, it means the al Qaeda operatives are going to be relatively safe and secure during this process.
HOPKINS: Now what we're looking at now is information about using shoulder-fired missiles. This is pretty sophisticated stuff.
ROBERTSON: Indeed and that did give a big surprise to several of the experts who looked at that. Now, surface to air missiles have been in Afghanistan since the mid 1980s. The Mujahedeen, when they got their hands on these through their backing from the United States and from Pakistan, essentially were able to drive the Soviet forces out of Afghanistan, but what concerns the experts that looked at this tape, is these are not -- this is not a stigma (ph) missile; it's an SA-7, a surface-air missile. It's a Soviet generation weapon, if you will.
The fact that there's a training video on it, again, shows the level of sophistication, level of dedication that al Qaeda wants to use these weapons, that it's showing its operatives how to use them. And the threat that the experts say is perhaps military aircraft safe because they have deterrent mechanisms for defeating surface-to-air missiles, but it's civilian aircraft. Again, experts saying look, they're training for the urban environment. We believe that potentially -- potentially they could want to use this type of surface, the air missile system against civilian aircraft and that gives them great cause for concern.
HOPKINS: Thank you. Nic Robertson.
My next guest says the al Qaeda video show nothing more than basic infantry tactics. To talk about the tapes and other issues, we're joined now by CNN military analyst General David Grange. But, what about these training tapes? Are there things on them that concern you?
BRIG. GEN. DAVID GRANGE, (RET) U.S. ARMY: Not that they concern me, Jan, but just that they have some rigorous training. They rehearse quite a bit. In fact, the final results for the videos I'm sure were taken after several rehearsals to make sure they got it just right so they could use these tapes as a how-to, to train other people.
But it doesn't take away from the fact that the tapes are significant and that they're used to export training of how to do things whether it be assassinations, kidnappings, destruction of a bridge, taking down a building, et cetera. So it's a force to be reckoned with, but not one that our people can't handle.
HOPKINS: What about the trainers? Where did they get their training? Do you have any idea ...
GRANGE: Well ...
HOPKINS: ... from what you can see?
GRANGE: Yes, that -- Jan, that's a good question. Where were the trainers trained? And a lot of these tactics, techniques and procedures come out of other places around the world to include our allies or maybe even Americans that now are trainers for hire and different places in the world. They had to learn these things somewhere and how that training is exported is just as dangerous as exporting weapons.
HOPKINS: And so, what should our military, FBI, et cetera be on the alert for as a result of what you can see in these tapes?
GRANGE: Well, again, the force protection measures that need to be taken, continue to be taken to avoid assassinations, kidnappings in places like Kabul, embassies around the world, even some of our key facilities in the United States of America is something to think about.
That should be a concern. Surface-to-air missiles are always a danger to commercial aircraft. And those have been proliferated around the world, and in some places they can be smuggled in. And so, we have to be aware of that.
HOPKINS: The other topic that we'd like to talk to you about today is the president's meeting with his military brass and apparently there was no discussion of Iraq. Do you find that a little unbelievable?
GRANGE: It's hard to believe that the word Iraq or Saddam would not come up in a meeting like this. But I think the focus was most likely on the military in general, how to employ resources at hand to the armed forces, to shape the armed forces for what to meet around the world in the future. And it's only so much to give out and there's quite a few missions. And so just discussions probably on how to handle that and that's a tall order.
HOPKINS: Now, we have other information this week that (UNINTELLIGIBLE) has died in Iraq. Does this mean there is a connection between al Qaeda and terrorists and Iraq?
GRANGE: I think so. I mean, just the fact that he was allowed to live there, and not taken out of Iraq to give to Israel somewhere else where he conducted terrorist acts, even in Europe. Saddam harbored him. He's a terrorist. He gave sanctuary to him.
Al Qaeda, I would believe is in Iraq, as well as it in other Middle Eastern countries in the area, and the crackdown on grabbing these guys or kicking them out or turning them over is not as aggressive as it should be. So I think there's a distinct relationship between these people, even though they have a common enemy -- us the United States, Israel, other countries. And so, the common enemy is more powerful than any friction they have among themselves and so you've got to look at who they think the real bad guys are and that's us. And so to me, that means that they support terrorism.
HOPKINS: Brigadier General David Grange, thanks for joining us.
GRANGE: My pleasure.
HOPKINS: Up next on MONEYLINE, thousands of Chinese soldiers reinforce flood disasters. A lake the size of Luxembourg is in danger of bursting its bank.
Twenty-three wildfires are burning in the United States. We'll talk to a fire historian about the devastation next.
And corporate fraud in the mid-term elections. We'll have a special report on the CEO crime wave and its effects on voters.
(COMMERCIAL BREAK)
HOPKINS: The West Nile virus continues to spread. South Dakota and Wisconsin are reporting their first cases of human infection. And the Centers for Disease Control indicates the virus has shown up in birds and animals in Colorado and Wyoming. More than 270 people have been infected in a dozen states. Thirteen deaths have been attributed to the West Nile virus. And Monday, the government approved a national test to see if the hepatitis drug Interferon (ph) can help fight that virus. Tonight, millions of Chinese are in danger of losing their lives from flood water. Rising water levels in one of the country's largest lakes is threatening to burst through weakening levies and engulf more than 10 million people. Lake Dongting covers about 1,000 square miles in the southern province of Hunan. Heavy rains have filled that lake to overflowing.
Ten people died when a 125-year-old dam in central India collapsed. After four days of rain, some villages are under eight feet of water; 10,000 people were moved to higher ground.
Flood waters continue to wash through Germany. Thousands of people were evacuated from three towns as the River Elba surged through the north; 50,000 troops have been called in to fight those floods. Meanwhile, the clean-up continues downstream. Flood waters last week ruined landmarks in Dresden. Damage estimates run to tens of billions of dollars. European floods have killed about 100 people in recent weeks.
In this country, the massive Oregon wildfire continues to spread. The Biscuit fire has now grown to nearly 500,000 acres. But humidity and less windy conditions have helped slow the fire's progress; 6,600 people are battling that blaze. The cost of fighting the fire is now estimated at $85 million.
Favorable weather is helping firefighters in South Dakota. The wildfire burning near Mt. Rushmore has blackened 11,000 acres, but winds pushed the fire back on itself making it easier to control.
There has been -- this has been one of the worst wildfire seasons in nearly a half century. Nearly 60,000 wildfires across the country has blackened more than 6 million acres of land since the beginning of the year. Joining us now to put this fire year in perspective is fire historian Steve Pyne. He is also author of 14 books, the most recent is "The Year of Fires."
We're hearing a lot about fires this year, and they are bad compared to recent years. But if you go back in history, we've had a history of bigger and more fires, haven't we?
STEVE PYNE, FIRE HISTORIAN: That's true. We're seeing an intensity of fires really over the last 30 years and, in particularly, over the last 15. We're seeing a very intense spike in kinds of fires. Nature's fire economy seems to be showing the same kind of volatility as the New York Stock Exchange.
And we are seeing more damaging fires. They seem to be off the scale ecologically, and certainly threatening to lives and property. But if you were to go back to a century ago, the United States looked a lot like Brazil in recent years. There was an extensive amount of burning, much of it associated with agriculture and new land clearing, railroads and so forth. Far, far more land was burned. And there was a great deal of deliberate burning and there was, of course, these eruptive fires. But what we have lost is that sort of background count. So these now stand out with particular ferocity.
HOPKINS: And is this kind of media attention that makes us so aware of the fires?
PYNE: Well, there's a fact behind the media attention, certainly. But, I think really beginning in 1988 with the Yellowstone fires, fire suddenly got on the media menu, and we've had what we might consider an era of celebrity fires. They seemed to be singled out. The media seems to know how to handle it and has a way of coping. So, it's acquired more attention than it had for many years.
HOPKINS: But we live very differently now than 100 years ago. The suburban areas have spread out around the country and more homes are in danger. That's why we fight fires differently, right?
PYNE: Well, that's one reason, though oddly, if one goes back, say, to the 19th century, we really have a mirror image now of what had occurred. That is to say during the early years of pioneering and settlement, there was a great deal of land clearing, logging, fuel scattered all over the landscape, lots of fire around. And there were horrific fires, extremely damaging, and hundreds of people killed, and then it all went away. The land was converted into something else. The fires were, in a sense, domesticated. We established fire protection. We quit lighting fires, prevention work. And it looked like the problem had disappeared.
But now we're recolonizing rural American, but we're doing it with urbanites, very different values. They're not doing all the stuff that had gone on before, which means that the fuels are now building up precisely because people aren't treating them. And so we're seeing in an odd way a kind of recapitulation of that older pattern.
HOPKINS: Thanks for joining us. Steve Pyne...
PYNE: My pleasure.
HOPKINS: ... fire historian, we'll have to bring you back.
PYNE: OK.
HOPKINS: Thanks.
Still to come on MONEYLINE, investors give the market a lift as they bet stocks have hit a bottom. We'll have live reports from the New York Stock Exchange and the Nasdaq.
Taking a pulse of the nation's voters. We'll have a special report on the impact of corporate fraud on the mid-term election campaign.
(COMMERCIAL BREAK)
HOPKINS: Stocks gain momentum in the final hour of trading. The gain came on relatively light volume, 1.3 billion shares changed hands on the Big Board. The Dow added 85 points, the Nasdaq jumped 32, the S&P 500 up nearly 12. Christine Romans is at the New York Stock Exchange and Greg Clarkin at the Nasdaq -- Christine. CHRISTINE ROMANS, CNN FINANCIAL CORRESPONDENT: Well, Jan, after a summer of speculation, AOL and AT&T have struck a deal to unwind their Time Warner entertainment partnership. Both stocks rallied. AOL Time Warner will pay AT&T $3.6 billion and give it a 21 percent stake in Time Warner cable systems. The deal simplifies AOL's corporate structure and eases AT&T debt load, at least that's how Wall Street saw it.
Meanwhile, transports rallied 3.5 percent. Delta Airlines up 15 percent after JP Morgan made a bullish call on airlines. Brokerage stocks tumbled, though, on a bearish call from Salomon Smith Barney. And Radio Shack cut earnings targets, tumbling 16 percent.
Now to the Nasdaq and Greg Clarkin.
GREG CLARKIN, CNN FINANCIAL CORRESPONDENT: Well, Christine, the unwinding of that AOL/AT&T deal benefiting another company as well. It is Comcast. Now, the cable company will be acquiring that stake in Time Warner Entertainment in a deal with AT&T later this year. Today, shares of Comcast rose nicely, up about 14 percent on the day. Now, consumer electronics chain Ultimate Electronics fell after rival Radio Shack cut its earnings estimate. And we did see nice strength in the chip and the networking stocks. Those are among the big winners today. Intel up about three percent. We had networker Cisco and Tellabs up nicely as well.
Now, with today's move, which brings the Nasdaq back above 1400, is the first close above 1400 since July 8. Jan, back to you.
HOPKINS: Thanks, Greg.
Our next guest says that a slow recovery is under way and he says a double-dip recession is unlikely at this point. Economist Lakshman Achuthan joins us now.
Lakshman, today, we had a record number -- we hear that a record number of people in the last week filed mortgage applications because these interest rates are so low. Are these consumers really smart to lock in now or are rates going to continue to stay low or go even lower?
LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: Well, they're smart to lock in now. These are very low rates. If they get it right at the bottom, nobody can really do that. But I think what it's telling us is that they're confident enough to make such a big commitment. And that speaks volumes when we're having this debate about how strong is this recovery, are we about to fall into another double-dip. The debate is all over the place, but the consumer is very consistently on track. They're not going anywhere right now.
HOPKINS: And taking advantage of the deals in autos and in homes.
ACHUTHAN: Yes, autos, we're going to have another wonderful month of sales, home sales here. And with these home sales, when you take out your mortgage applications or you refinance and you give a consumer a pile of cash, even if they're carrying some heavy debt loads, they're financing of those debt loads is very, very low because of these low interest rates.
And a consumer with cash usually spends it. And so that disconnect where the consumers are more confident about the future than businesses will have to be reconciled. And if the consumer keeps doing what they're doing, I think the businesses get dragged back to spending. I mean, they're already, it is clear, they're not firing.
HOPKINS: It is interesting. One of the fed governors today said that we're in for a bumpy recovery. But it isn't the responsibility of the Federal Reserve to smooth out all the bumps. Do you agree with that, that every time we get nervous, it isn't necessarily time for the Federal Reserve to lower rates?
ACHUTHAN: Well, sure. I mean, the Fed has -- this is a really big boat. And so, there is going to be a few waves here and there and you can't adjust for each one of them. I think the fallacy that we got used to was this new economy, that things were perfect, and that the Fed could cure all ills. And that's just not the case.
In a big market economy like this, the Fed is one of the tools that helps stabilize the economy. But market economies have contractions and that's not going to go away. And that is, I think, the big message that people need to remember and learn, as we go forward and we think about what we should price everything.
HOPKINS: And your view is that the economy is basically righting itself. The boat is turning in the right direction.
ACHUTHAN: It is. And it is never pretty. And we tend to kind of persist on whatever happened recently. So, we just lived through a recession, and that gives you the doom and gloom outlook. The reality is we're somewhere in the middle. And if you watch the objective indicators, that's what they've been telling you, a slow and sustained recovery and everybody is coming to that view now.
HOPKINS: May not feel like much of a recovery, but it is one.
ACHUTHAN: We would love it to be faster, but it isn't right now.
HOPKINS: Lakshman Achuthan, thanks.
Now a reminder to vote in tonight's MONEYLINE poll. How satisfied are you with your job? Very satisfied, somewhat satisfied or is it 5:00 yet? Cast your vote at cnn.com/moneyline. We'll have results for you later in the broadcast.
Still to come, a special report on voters and corporate fraud. We'll tell you how the CEO crime wave is affecting campaigning for the mid-term elections.
(COMMERCIAL BREAK)
HOPKINS: Campaigning is well under way for the mid-term elections in November. One of the big issues facing candidates is how to address concerns about corporate fraud. Casey Wian has that story from California.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): Tim Escobar faces an uphill battle. The little known Republican U.S. congressional candidate is running in a largely Democratic district near Los Angeles. His opponent is the sister of U.S. congresswoman Loretta Sanchez and a former labor leader.
LINDA SANCHEZ (D), CALIFORNIA CONGRESSIONAL CANDIDATE: My opponent, in contrast, has worked for a big investment firm that right now is under investigation for part of their role in the Enron debacle. And so, I think that's definitely going to be something that will play well in this district.
WIAN: confronts the issue of his job as a Merrill Lynch financial adviser head-on.
TIM ESCOBAR (R), CALIFORNIA CONGRESSIONAL CANDIDATE: I have clients whose accounts are down, who have been hurt. My job as a personal financial adviser, a small business adviser, boy, I tell you, that's been painful. We as leaders who are willing to stand up will say let us make sure that our future is secure, that we move forward honestly and openly.
WIAN: One hundred and eight miles north is Tulare County, in a district dominated by dairies, farms and Republicans.
(on camera): While corporate corruption is a concern here in Tulare County, it takes a backseat to other issues closer to home, such as water, the environment and high unemployment. Underdog Democrat David LaPere, another former labor leader, wants to keep the issue alive.
DAVE LAPERE (D), CALIFORNIA CONGRESSIONAL CANDIDATE: We have put our trust in corporations to the point where we invest in them almost blindly. And to our detriment here lately, we're finding out that we can't trust them all.
WIAN: His Republican opponent is 28-year-old local dairyman Devin Nunes.
DEVIN NUNES (R), CALIFORNIA CONGRESSIONAL CANDIDATE: I think you're seeing the Democrats make the issue trying to make it a national issue to try to take back control of the House, to blame the economy, the problems that we're having with the stock market on the Republicans. It is completely ridiculous.
WIAN: Last month, House Minority Leader Richard Gephardt reportedly told Democrats they could pick up 40 seats in November if corporate scandals remain in the news. Majority Leader Dennis Hastert scoffs at that, saying Republicans are focused on fixing the problem.
Casey Wian, CNN Financial News, Los Angeles.
(END VIDEOTAPE) HOPKINS: Former Enron financier Michael Kopper today pleaded guilty to two felony charges. They are the first criminal charges since Enron went bankrupt more than eight months ago. And it opens the way for prosecutors to pursue other former Enron executives. CNN legal analyst Jeffrey Toobin joins us now.
Jeffrey, were you impressed with this case at this point?
JEFFREY TOOBIN, CNN LEGAL ANALYST: Absolutely. This is a major, major case. And even more impressive than the plea itself was the cooperation agreement, the written form that Michael Kopper signed because in that, when he described his own role, he said, effectively, I stole this money and I stole it with Enron CFO Andrew Fastow. So, he didn't just lightly implicate Fastow. He directly implicate Fastow. It means unquestionably, the Justice Department will be turning against Fastow sooner rather than later.
HOPKINS: And your hunch is that if Fastow and then up the...
TOOBIN: That's clearly the plan. When you look at this case, this case is about money that actually was put in people's pockets. Kopper made money. This is not a grand scheme about to inflate the stock price. This is direct money out of the partnerships that Kopper admitted taking illegally, and he says Fastow took illegally as well. It's important to say that the two main targets here, Jeffrey Skilling, the former CEO, Ken Lay, the former chairman, there is no evidence that they were directly involved in these partnerships at all. So, it may be a tougher to implicate them in that way.
HOPKINS: He faces jail time?
TOOBIN: No question about it.
HOPKINS: He's basically talking because he doesn't want to go to jail, right?
TOOBIN: You betcha. Absolutely. And he's facing a lot of jail time. One of the things Michael Chertoff, the assistant attorney general, said at the press conference today is that under the federal sentencing guidelines, Kopper would be looking at 10 years plus. With the government's letter, with the government's say-so, he gets out of those guidelines altogether and federal courts are very good to cooperators. He could be looking at no jail time at all. It's a big difference, zero to 10 years.
HOPKINS: But he is handing over $12 million.
TOOBIN: A lot of money...
HOPKINS: Apparently, his ill-gotten gains.
TOOBIN: His ill-gotten gains. And that is going to be a big part of these pleas, if there are more pleas, because, you know, right from President Bush on down, the administration has said, you can't profit from this. So, it's not just going to be about pleading guilty. It's going to be about giving back money too. HOPKINS: Do you think there is pressure from the president for the Justice Department and the SEC to do something?
TOOBIN: Absolutely. You look at that last story. The Democrats are trying to exploit this for political gain. There's been a lot of pressure on the Justice Department, do something, do something. And that comes, you know, not just from the press, it does comes from the Republican establishment as well.
HOPKINS: Because it comes from the voters.
TOOBIN: Because it comes from the voters. And so this is important legally. It's also important politically, today's plea.
HOPKINS: Jeffrey Toobin, thanks very much for joining us.
Still to come on MONEYLINE, your e-mails and "In Their Words."
Plus, a new type of cargo rocket blasts into space. It's designed to be more durable and dependable than any other rocket.
(COMMERCIAL BREAK)
HOPKINS: History was made at Cape Canaveral within the last hour. The Atlas Five, the most powerful rocket built since Saturn Five, took off just moments ago. And for the first time ever, a U.S. rocket is being powered by Russian-built engines. Lockheed Martin claims the Russians build a better engine system for expendable launch vehicles. The Atlas Five will be used to launch military and commercial vehicles.
Meanwhile, NASA has found its missing satellite. The $159 million Contour is apparently orbiting the sun as planned. However, it has broken into pieces, which was not part of the plan. NASA lost contact with the craft last week when it was leaving earth's orbit. Scientists are still hopeful that they will receive a signal.
Now, the results of tonight's MONEYLINE poll. How satisfied are you with your job? Twenty-seven percent of you said very satisfied; 13 percent said somewhat satisfied, and 59 percent responded is it 5:00 yet?
"CROSSFIRE" begins in a few minutes. For a preview, let's go to Tucker Carlson and James Carville in Washington. And you're not looking for 5:00 yet, right?
TUCKER CARLSON, CO-HOST, "CROSSFIRE": Not us. We work at night, Jan. You know, the Constitution limits presidents to eight years in office. But unfortunately, they can stay in the news forever if they get their own talk show. Bill Clinton is considering doing just that. If the price is right, $100 million. How appalling is that? That's our debate.
JAMES CARVILLE, CO-HOST, "CROSSFIRE": Well, I tell you what, if they want to give any of us, and you too, Jan, $100 million, I'd be glad to do it. No problem. I'll take the money. We'll also be talking to a sheriff in Steubenville (ph), Ohio who arrested a woman on a charge that she allowed her children to be sunburned. And we'll talking to Oklahoma Governor Frank Keating about some of the problems and challenges facing the Catholic Church today. As you know, he's been appointed by the bishops to head up a commission on this. So, we're going to have a pretty good show here tonight, going to have a lot of fun.
HOPKINS: Sounds like it. Thanks.
Coming up next, your e-mails, your thoughts on the day's news events. And today's newsmakers "In Their Words."
(COMMERCIAL BREAK)
ANNOUNCER: Tomorrow, a look at the changing scope of political fundraising. With tarnished corporate reputations and tighter campaign finance laws looming, are donations from big business dangerous? Tomorrow on LOU DOBBS MONEYLINE.
HOPKINS: Now, for a look at your thoughts. Virginia Kosydar in Oregon writes: "Martha Stewart is a scapegoat because she's a well- known name and a prime example of the old free enterprise system that built this country. She made 40-some thousand dollars on the advice of a friend. How much did Ken Lay make? How many people lost their jobs because of Martha's indiscretion? How many employees have lost their jobs? How many people lost their life savings because of Martha?
Elizabeth in Texas writes: "I don't think that Martha Stewart is being singled out at all because she's a celebrity. I believe she is fully aware of what she did."
S. Bellamy in Maryland writes in with a suggestion for our Enron scoreboard: "Now that we finally have the first Enron guilty plea, you should start counting down until they get a guilty plea on conviction from Kenny Boy Lay."
Anthony in Tallahassee, Florida writes: "Michael Kopper will be paraded before the court and media so we can point the finger at someone and say there's the bad guy. After the scapegoat is punished, we'll forget about the other corporate executives who have plundered our country because they no longer interest us."
On CNN's "Terror On Tape" series, Sam Parmar in Canada writes: "These tapes are disturbing, but not surprising. If one were to know all the evil things that are heard, said or done in this world, it's certain that many of us would not be able to sleep at night."
Saeed in Texas writes about the tapes as well: "What's the big deal about CNN's 'Terror on Tape'? Please do not make these militant Islamists bigger than they really are, just some angry, heartless, hopeless terrorists."
E-mail us at moneyline@cnn.com and please include your name and address. Those are in your words. Now, "In Their Words." And we begin with the dramatic announcement of the verdict in the David Westerfield trial.
(BEGIN VIDEO CLIP)
PEGGY SIRNA, COURTROOM CLERK: The people of the state of California, plaintiff, versus David Alan Westfield, defendant, case number FTD165805, verdict: we, the jury, in the above and title cause, find the defendant, David Alan Westerfield, guilty of the crime of murder in violation of penal code section 187, parin (ph) A, as charged in count one of the information, and (UNINTELLIGIBLE) the degree thereof as murder in the first degree, dated, August 21, 2002, signed juror No. 10, foreperson.
GOV. GEORGE PATAKI, NEW YORK: The most important panel will have the names of the heroes we lost on September 11, so that as the tens of thousands of people a day come here, they can see the names, reflect back, offer a prayer and in their own way, pay appropriate respects. We will also have interpretive panels showing the history of this site and also showing what is ongoing, the construction and rebuilding at the site.
COLIN MCADIE, CHAIRMAN, NATIONAL HURRICANE CENTER: The committee concluded that Hurricane Andrew was a category five hurricane at the time of (UNINTELLIGIBLE) landfall with sustained winds of 165 miles per hour. These winds, in our estimation, were experienced over the open waters of Biscayne Bay, and also, along the immediate coastline, in areas with overexposure to them. This decision makes Andrew the third known category five U.S. landfall. (UNINTELLIGIBLE) and Hurricane Camille of 1961.
(END VIDEO CLIP)
HOPKINS: That's MONEYLINE for this Wednesday evening. I'm Jan Hopkins in for Lou Dobbs. Thanks for joining us. Good night from New York.
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