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CNN RELIABLE SOURCES

Analysis of Coverage of Stock Market Roller-coaster; Press Casts Rove's Resignation as Seismic Event

Aired August 19, 2007 - 10:00   ET

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


(BEGIN VIDEOTAPE)
HOWARD KURTZ, HOST (voice over): Roller-coaster reporting. As the stock market plummets from its record high, are journalists fueling the fear or calming the nerves? And why didn't they warn us that the overheated mortgage market might collapse?

Larger than life. The press casts Karl Rove's resignation as a seismic event. Is he really Bush's brain, or have reporters exaggerated his importance?

Plus, anchor babes. Swimsuit model Lauren Jones takes the news desk in a small Texas town and is now the star of a reality show. Did the station sell its soul for a rating stunt? We'll ask her.

(END VIDEOTAPE)

KURTZ: Dow 13,000, Dow 14,000. It was no shortage of media excitement as the records fell, and everyone seemed to feel a little richer. But when the stock market elevator slammed into reverse, the bad news was even bigger news, especially this week when the newscasts kept leading with a painful toll on Wall Street.

(BEGIN VIDEOTAPE)

KATIE COURIC, CBS NEWS: On Wall Street today, stock prices closed sharply lower.

BRIAN WILLIAMS, NBC NEWS: Some retail forecasts out there. It sent stocks down once again today.

UNIDENTIFIED FEMALE: It is not just a Wall Street issue, it is a main street issue now.

CHARLIE GIBSON, ABC NEWS: It's doing fine. And then all of a sudden at 3:00, bam, it started dropping. Why?

MILES O'BRIEN, CNN ANCHOR: The stock market took a pennant- driven tumble today.

(END VIDEOTAPE)

KURTZ: But despite a one-day rebound on Friday, are the media making things worse with their drama-filled coverage? And why was the market plunge such a surprise, anyway? I put those questions earlier to Jim Cramer, the CNBC commentator and host of "Mad Money," and CNN financial correspondent Ali Velshi in New York.

(BEGIN VIDEOTAPE)

KURTZ: Jim Cramer, as the market goes through these wild gyrations the last couple of weeks, are the media casting it as scary or maybe not scary enough?

JIM CRAMER, HOST, CNBC'S "MAD MONEY": I actually think not scary enough. I think that there was a level for the first time of complacency among the media not recognizing exactly how dire things were behind the scenes.

KURTZ: Ali Velshi, when you're on the air talking about what's happening in the market, are you conscious of not making a 300-point or a 400-point drop that day sound like a huge calamity?

ALI VELSHI, CNN SR. BUSINESS CORRESPONDENT: It's tough, because it's a news event. And there's nothing I can teach Jim Cramer, but one thing to remember, when you look at the top mutual funds that America owns, the top mutual funds that people hold in their 401(k)s, 52 weeks they are actually up on average better than 10 percent. So people need to know what they make of these drops or increases of 200 or 300 points in a day.

They just don't know. Americans only want to know two things -- what does it mean, and what does it mean to me?

KURTZ: So, have the media overplayed this to the point that people have the sense that the sky is falling, the market is crashing -- Ali?

VELSHI: I think to some degree they have. I think Jim plays this very well because he answers people's specific questions about, what do I buy, what do I sell, where do I go?

I don't really think it's easy to convince people about what matters about Fed intervention and putting money into the system and injection and rate cuts. They need to know, what am I supposed to do with all of this information?

It's great news that the sky of stocks is falling. What do I do with that?

KURTZ: Now, Cramer, you expressed some rather strong opinions some days about Fed chairman Ben Bernanke and what he needs to do. This has become such a phenomenon on YouTube, it's been viewed 1.3 million times.

I want to play a little bit of it and I'll ask you about it on the other side.

(BEGIN VIDEO CLIP)

CRAMER: He has no idea...

UNIDENTIFIED FEMALE: Cramer...

CRAMER: I have talked to the heads of almost every single one of these firms in the last 72 hours, and he has no idea what it's like out there! None! And Bill Poole has no idea what it's like out there!

My people have been in this game for 25 years and they are losing their jobs. And these firms are going to go out of business. And he's nuts! They're nuts! They know nothing!

(END VIDEO CLIP)

KURTZ: I'm tempted to ask you to tell us how you really feel. Did you go too far?

CRAMER: No, actually. I think I didn't, in part. One, because -- although my own network had me on "The Today Show" to ask me if I caused a crash. The market went down that Friday. Actually, if you listened to me, you saved a thousand points on the downside.

Here's why I don't think I went too far. They didn't hear me. Literally, three days later they met and they said the predominant concern is inflation. That now has been completely discredited by what happened just this Friday, where they decided to open the discount window, cut the rates, and make it so that we could get what's known as liquidity.

Howard, they didn't hear me. It was only after everyone else told them that maybe Cramer's right that they finally...

KURTZ: They didn't hear you? You could hear it 20 blocks away from the studio.

But here's the point. You're talking about the substance of what you said. I'm talking about the way you said it.

People ask me, "Is Cramer certifiably crazy or is this something he just puts on for the cameras?"

CRAMER: Well, you happen to know because you actually came in for weeks and were on my training desk for a year. You know that was actually me on Xanax. You've probably seen me unmedicated.

KURTZ: Yes. I saw you do this when you were actually making multimillion-dollar decisions, as opposed to just being a TV star.

CRAMER: I know. And those days, the stakes were high.

KURTZ: But are you -- were you really mad or are you just playing?

CRAMER: I was very angry. I was very angry.

I was listening to the Bear Stearns conference call, a great American firm that could go under, talking to people, Countrywide Financial, a great American firm that was, I believe, close to going under. And most importantly, there are 14 million people who bought homes between 2004 and 2007. The people in the Fed made it sound like, oh, they went to the casino and they lost.

These are homeowners. These are going to be the soon-to-be- forgotten men. I thought it was someone's -- time for me to speak up.

KURTZ: All right.

Ali Velshi, when the Down broke 14,000 back, oh, I guess it was just a month ago, there was a lot of media chatter about how strong the market was, how corporate earnings were good, the fundamentals were good and so forth. Now, not so much.

Did we blow it?

VELSHI: No, that stuff is right. Though there are fundamentals in this market, unemployment is still low in this country, our home prices are not disastrous.

Jim's right, there are problems. We all knew these problems were coming. This mortgage crisis didn't get worse last week, it just worked its way up the system through the international financial system, and it's coming back to haunt us through the stock market.

The problem's not new, but we've got to be careful not to gauge our economy on what the stock market does. Stock markets are strong. World economies are strong. But we do have to understand that credit exists out there. It's in the ether...

(CROSSTALK)

KURTZ: Hold on. Hold on.

You say we all knew these problems were coming with the mortgage market.

VELSHI: Sure.

KURTZ: I watch a lot of TV, I read a lot of newspapers. With a few exceptions, I didn't feel like the media were telling me that this was a very...

(CROSSTALK)

VELSHI: Well, that's why you've got to yell like Cramer. That's why you've got to yell like Cramer, because we've been reporting this for a long time, these adjustable rate mortgages are going to adjust.

Someone has to get caught holding that bag. If you have a mortgage on a house that's bigger than the price of that house, someone has to get caught holding that bag. And guess what? People got caught holding the bag.

CRAMER: But Howard's got a good point, Ali. And this is from my point of view of being on the "Nightly News" and also "The Today Show". It's quite arcane, it's boring to talk about interest-only mortgages.

VELSHI: Sure.

CRAMER: It's boring to talk about the notion of teaser rates. And I found there was an (INAUDIBLE) to the story before it even got big to make it so that I just felt like every time, you know, "Jim, is it the same mortgage worries?" Yes. And I always felt that we were a numbers killer when it comes to ratings by talking about this.

VELSHI: Absolutely.

KURTZ: So this is -- this is -- go ahead. This is interesting, because I read a lot of articles in the last two years about the housing bubble and whether it would pop, meaning would the price of your own home continue to go up or would prices -- everybody's interested in that. But when it comes to the fundamentals of housing finance and loans, now I look back and people were getting loans with no money down, marginal credit.

You're saying, Jim Cramer, that the journalists basically knew about the risks that were built in here, but they were afraid of putting the country to sleep.

CRAMER: Well, I think that what happened -- and yes, and my network was unbelievably good on this. But you know what? You can only say for so long, the rates are about to reset, there are people having problem paying the teaser, the HELOC wasn't so good -- HELOC being home equity loans.

And after a while, people say, you know what?

KURTZ: Right.

CRAMER: That's got to be in the stock market. How can it still be an issue? I've heard these people talk about it for eight months.

VELSHI: If it's that bad, why is the stock market hitting 14,000?

CRAMER: Right. Right. And Ali's right.

VELSHI: I mean, that's the problem.

CRAMER: Ali's right, by the way. There's a substantial part of the Dow that will not get hurt here at all.

I am still actually using my 14,000 price target at year end if they cut. But the problem is, it was an eye-glaze-over story by February. It was tough to tell.

KURTZ: Ali, did you think maybe there was a reluctance because the market was going up and everyone likes that and it's good for ratings, a reluctance to appear to be too much doom and gloom by talking about that this house of cards could start falling down? VELSHI: Yes. I mean, this is not -- this is not high science. This is not high philosophy. This is people buying houses at inflated prices, people giving them mortgages that were too big for their houses, people not being able to budget or afford it. Too much advertising of these mortgages making it really easy, signing hundreds of pages of a mortgage document.

Who wants to hear about that, Howard? You know why they listen to Cramer? Because on a bad day, Cramer sounds like he's over the top. And when he really was mad, 1.3 million people downloaded.

That's what you have to do to make people interested in finance. You've got to yell at the top of your lungs because the rest of the time it does put people to sleep.

KURTZ: Cramer, does the stock market get pumped up -- and we saw this during the dot-com boom when you -- back when you were a Wall Street trader. Does it get pumped up by traders and stock analysts going on channels like CNBC and saying, everything is great, buy, buy, buy, this stock looks good, that stock looks good? Is that a problem?

CRAMER: No. I actually don't -- don't believe that. I would love to think that we were that powerful.

The reality is, is that the market is far bigger than any network. And what I think has happened is that there was a lot of money sloshing around, a lot of people making money, a lot of big hedge funds making money. Believe me, there's no hedge fund, and there's probably 6,000 more hedge funds than when I quit the game in 2000 that watches the network and says, wow, Cramer or Erin Burnett or Mark Haines said good things, I've got to buy.

Everyone was making a lot of money, and it wasn't necessarily the network that got caught up. It was the actual players who were caught up.

KURTZ: Ali, do you think that Jim perhaps understates what's been called the CNBC effect, which is people...

VELSHI: I absolutely think he understates it. I particularly think he understates the effect that he has when he gets angry and he says things.

This is a smart man. He knows what he's talking about. Jim downplays it by sometimes making it come across like he's lost a few marbles, but he's never lost a few marbles in his life.

CRAMER: I want you to come home with me and spend 24 hours with 16 and 13-year-old, who think not only do I have an unimportant TV show, but why is their dad, some 52-year-old bald guy, on TV at all? And who would watch him?

VELSHI: You tell them there's nothing wrong with being bald. And if you spend 24 hours with me giving me stock tips, you've got yourself a deal.

KURTZ: I think we have agreement on that point. But Cramer, let me give you 20 seconds to respond.

You -- people say -- Ali just said it, that you move the markets, whether you want to or not.

CRAMER: I would tell you that the reason why the market went down that day was because Bear Stearns was having a horrible quarter. If I really said to you that I'm that powerful, I've got to tell you, I should just go back to my hedge fund and make a trillion dollars and go buy an island.

KURTZ: All right.

Jim Cramer, Ali Velshi, thanks very much for joining us.

(END VIDEOTAPE)

KURTZ: Up next, family ties. Rudy Giuliani says back off, but journalists keep focusing on his wife and kids. And now Mitt Romney's five sons in the media spotlight as well.

Stay with us.

(COMMERCIAL BREAK)

KURTZ: His son says he's not campaigning for dad. His daughter is backing Barack Obama, according to her Facebook page. The media, fairly or unfairly, keep pressing Rudy Giuliani about his family. But this week, the question came not from a reporter, but from a woman at a town hall meeting in New Hampshire.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: He wanted to know how he could expect the loyal following of Americans when you were not getting it within your own family.

RUDY GIULIANI (R) PRESIDENTIAL CANDIDATE: I love my family very much. And the best thing I can say is, kind of leave my family alone. You know? Just like I'll leave your family alone.

(APPLAUSE)

(END VIDEO CLIP)

KURTZ: Joining us now to talk about this and the coverage of the '08 campaign, Elisabeth Bumiller, correspondent for "The New York Times," Matthew Continetti of "The Weekly Standard". In Boston, Michael Isikoff, investigative correspondent for "Newsweek" and co- author of the new paperback "Hubris: The Inside Story of Spin, Scandal and the Selling of the Iraq War". And in Fargo, North Dakota, Ed Shultz, host of "The Ed Schultz Show" on syndicated radio talk show.

Ed Schultz, that was an audience member raising the question about Rudy's kids, but what do you make of Giuliani saying to the press and the public, "Leave my family alone"?

ED SCHULTZ, JONES RADIO NETWORK: Well, I think it's -- he's assuming quite a bit here.

First of all, the social conservatives are going to play into this election, Howard. And they're going to play into this nomination. And for -- you know, you take at Rudy Giuliani, his past. It's going to be an issue with the Dobson crowd. The Dobson crowd and James Dobson, they are not going to support Rudy Giuliani because of his past.

KURTZ: Ed, is it an issue for you? Is it an issue for you? Is it something you'll talk about on your show?

SCHULTZ: I think it's an issue -- I think -- oh, there's no question about it, because character counts. There's a difference between an indiscretion and also a pattern in your life.

So, I think that this is going to be a big issue with a lot of Americans on the conservative side. Character counts and they want somebody that they can trust. Family does matter.

KURTZ: All right.

Matthew Continetti, is the press being overbearing here, or can a presidential candidate wall off his personal life from scrutiny?

MATTHEW CONTINETTI, "WEEKLY STANDARD": Well, I think it's fair to talk about Giuliani's character, Giuliani's own operatic personal life. But this "stay away from the kids," that's what I don't understand.

I mean, this is his daughter. She has a right to support whichever candidate she chooses. This is something that was on her Facebook page.

I know you have a Facebook page, Howie. I don't know if you want that -- the contents of that displayed on the front page of "The Washington Post".

KURTZ: I think we've all learned that anything you put on your Facebook page will probably become public. But what about his son?

(CROSSTALK)

KURTZ: His 21-year-old son tells "The New York Times" he has a strained relationship with his father.

We didn't force him to do that, did we?

CONTINETTI: No, not at all. And again -- well, you called him up. So in a way -- not you, personally.

KURTZ: I didn't...

CONTINETTI: But you were forcing the discussion.

Talk about Giuliani's character, what it says about him. Of course, he would prefer not to at all. He just wants to talk about the campaign. But fundamentally, though, I think people make decisions based on a candidate's policies and vision, not their personal life.

KURTZ: Elisabeth Bumiller, Rudy Giuliani had a very ugly, very public divorce from his second wife in New York. What do you recall about that?

ELISABETH BUMILLER, "NEW YORK TIMES": Well, I covered a lot of that, and I was at the press conference when Giuliani announced that he was leaving his wife before he had told her. So, I think, in this case, you can't blame the media for that.

And I also think character does count. And as we just saw, this issue with Giuliani's daughter was brought up by a voter, not member of the press. So of course we're going to cover that. And I do think it does speak to a candidate's (INAUDIBLE) to some degree about how -- his relationship with his family.

KURTZ: So, you know, Giuliani had this very difficult divorce. It's seven years ago now. He's remarried. His new wife, Judith Giuliani, has been the object of a lot of press scrutiny.

BUMILLER: Right.

KURTZ: It does seem that we don't want to let this go.

BUMILLER: Well, I do think, as I said before, that the way a candidate conducts his family life, you know, is a part of the overall picture. And I think it's unrealistic to expect that we're going to wall that off from any kind of coverage.

KURTZ: Michael Isikoff, sometimes it seems that half the campaign coverage these days is about Rudy's wife, Fred Thompson's wife, Hillary's husband, kids and all of that.

What explains this media focus on these matters, as opposed to, oh, I don't know, the candidate's health care plans?

MICHAEL ISIKOFF, "NEWSWEEK": Yes. Well, look, it's inevitable that all these things come up in every presidential campaign. But I actually think in this particular campaign with Iraq, with the economy, they're not going to be the predominant issues.

There are some particular issues. You know, Giuliani does face some issues on his social policies and running a Republican primary. But, while inevitably there's going to be characters, stories written by the press about all the candidates, it's not going to be the driving ones in this election.

KURTZ: Ed Schultz, are you just as comfortable as having the Clintons' marriage endlessly dissected and psychoanalyzed by the media as you are the Giuliani series of marriages?

SCHULTZ: I certainly am, because I think it could affect the personal time of the president of the United States. What are the priorities of the president? How focused is the president going to be? And I think how you conduct your personal life can affect how you do your job.

And so, this is all part of the territory. There's going to be a lot of pressures on the next president, and I think that Rudy Giuliani is trying to cut them off at the pass.

He knows he has got problems with his character, his past, and he needs to satisfy the social conservatives that isn't going to be an issue in the future. And I think Hillary's been pretty stable, but I think that you're going to see a lot of scrutiny on Bill Clinton coming up.

KURTZ: Let me get -- do you agree?

CONTINETTI: Just to pick up something Ed said, I think both Clinton and Giuliani would argue the exact opposite, that, in fact, the scandals in their personal lives didn't interfere with the execution of their offices. And I think both of them have a strong argument there.

The key, I think, especially as Mike says, when you have two hot wars going on at once, you have Republican corruption in Congress, competence of the administration, it's the competence that's going to be a key issue, not necessarily your messy personal history.

KURTZ: Speaking of the children of politicians, before we go to break, Elisabeth Bumiller, Jenna Bush getting engaged. How much would the media like to see the first White House wedding in 36 years?

BUMILLER: I don't know. The media, I think some parts of the media, would like to see the first White House wedding. I have no idea whether this is going to occur.

There was no date set, as we all saw. But sure, this would be -- it would be -- there would be some problematic coverage, I think, for the Bush administration, because anything that is very excessive would -- there would be talk about the fancy White House wedding at a time of war, I think.

KURTZ: I think television would just eat it up.

When we come back, Tony Snow says he's leaving as White House spokesman. Why now?

And later, a swimsuit model turns TV anchor. I'll ask her what she was thinking.

(COMMERCIAL BREAK)

KURTZ: Welcome back.

We were talking about the children of politicians.

And Matthew Continetti, Mitt Romney got a little flack this past week. He was asked about why none of his five sons who are all involved in his campaign have served in the military. He said the following: "One of the ways my sons are showing support for our nation is helping me get elected, because they think I would be a great president."

But is that a fair question? It's a volunteer Army. Isn't it up to each individual Romney?

CONTINETTI: Romney later backed away from that statement saying he misspoke. I think it is an unfair question. I mean, we do have civilian control of the military. We have freedom of speech. That's a choice his children made.

But I understand, again, the focus on the children. Talk about Romney, whether -- why he decided not to join the U.S. forces. If you're going it raise this question at all. I want to know, of course, if it's fair to ask that of Romney, why isn't it fair to ask Hillary Clinton why Chelsea isn't serving in Afghanistan? Because the Clintons support the Afghanistan war, yet Chelsea isn't serving.

KURTZ: All right.

Tony Snow made a little bit of news this week saying that he will leave his post before the end of the Bush term. He did not set a date. And Snow says it's about money, he wants to make more of it.

Now, he made a lot of money when he was at FOX News. His current salary is $168,000.

It's hard, Elisabeth, to avoid the conclusion that it's related to his cancer.

BUMILLER: Of course it is. And I don't want to pass judgment on his decision at a time like this.

He's got children and he's got a future he's looking at that's very precarious. So I would never want to say that he's made enough money already and what is he talking about?

KURTZ: Right.

BUMILLER: I think it's a very personal decision.

KURTZ: Michael Isikoff, you have to ask difficult questions of the White House from time to time. Is it your sense that the White House became more open or more responsive to reporters after Tony Snow succeeded Scott McClellan?

ISIKOFF: No. Actually, I was a little surprised knowing Tony Snow and certainly his background in the media just how combative he was as White House press secretary.

He started out with a sort of, you know, era of good feeling, and he was going to try to be responsive to reporters. And what I saw of him in his role as White House press secretary was somebody who was very aggressive in promoting White House talking points and not very illuminating in terms of information about what was going on in the White House.

KURTZ: Ed Schultz, I'm sure you disagree with Snow on just about everything, but would you credit him with being a good communicator?

SCHULTZ: I certainly would. And I think he's had a pretty tough job. I think he's a very brave man.

For him to go through cancer and have all these family responsibilities and to hopefully set the table for his kids to have a future in education, I think that he's balanced a lot of things. I have a lot of respect for Tony Snow.

Professionally, he's combative because he has got a tough job, and he's got a tough job to sell and protect the president and protect their positions. But personally, I have nothing but admiration for the guy -- to fight cancer, to come back and to stay focused.

As far as the money is concerned, Howard, I mean, you know, $168,000 a year in middle America is a lot of money. Inside the beltway it's a little bit better than pocket change. So, I think Americans understand that.

KURTZ: Especially when you've got kids to send to college.

Matthew Continetti, just briefly, Snow was a celebrity before he joined the White House, and he was glib behind the podium and combative, as Mike discussed.

How much did that help the administration?

CONTINETTI: I think it helped it quite a bit. But you got to the key of it, Howie. He was friendly, he was charismatic, and he was a great communicator. And that's going to be hard to replace in the White House.

KURTZ: All right.

Ahead in the second half of RELIABLE SOURCES, I'll ask our panel to stick around.

Karl Rove calling it quits. Have journalists inflated the importance of President Bush's long-time strategist, or have they demonized him?

Plus, from modeling bikinis to fronting a newscast, is Lauren Jones the future of local TV?

(COMMERCIAL BREAK)

KURTZ: Welcome back.

He's been called "The Architect" of the Bush administration and, a bit more pejoratively, "Bush's brain". Karl Rove got the credit when the president was elected and re-elected and he got the blame when Republicans lost Congress. No White House official has been portrayed in the press as more powerful and, as the critics see it, more insidious or divisive.

So, Rove's announcement this week that he is stepping down this week was big news.

(BEGIN VIDEOTAPE)

DAN ABRAMS, MSNBC: If Karl Rove had been a professional wrestler, they might have called him "The Constitutional Crippler".

LAURA INGRAHAM, RADIO TALK SHOW HOST: When it came to key issues, spending, the president's failure to veto spending bills, campaign finance, his signing it, and immigration reform, all three issues he bucked conservatism and the conservative trends and he lost big time.

HOWARD FINEMAN, "NEWSWEEK": The way Karl Rove conceived politics made it impossible for Bush to pass immigration, to pass Social security reform, to do deals with the Democrats because they spent a decade demonizing them.

JOE PAGLIARULO, RADIO TALK SHOW HOST: I think we have to admit what happened here, though, guys. When Karl Rove danced around like an idiot at that correspondents dinner, it was over. That was it for him.

(END VIDEOTAPE)

KURTZ: Elisabeth Bumiller of "The New York Times," when you covered the White House, how accessible was Karl Rove?

BUMILLER: Medium. Medium to not accessible. It depended on what Karl Rove wanted to get out. And, of course, he was very accessible after the 2004 election because that was a big victory for him and, of course, for the president.

KURTZ: But when you were able to talk to him, was he able or willing to give you much inside detail about what was going on behind the scenes?

BUMILLER: Not me. Apparently, he gave it to Bob Novak, but, no, we at "The New York Times" didn't do quite as well. We got what served his purposes.

KURTZ: Right.

Michael Isikoff of "Newsweek," Elisabeth just made reference to Bob Novak. Rove's involvement in the CIA leak investigation and the fact that he was a confirming source on Valerie Plame's identity to Bob Novak, to Matt Cooper, then with "TIME" magazine, was that a turning point in how he was portrayed in the press and how he was seen by the public?

ISIKOFF: Yes, I think it was an important point in terms of the perception of White House candor.

As you know, after the Valerie Plame leak, the White House very strenuously denied that Rove or anybody else from the White House was involved in the leak. It turned out that not only was Rove the confirming source for Novak, but he volunteered the information to Matt Cooper. And as a result, had five grand jury appearances and was under close scrutiny by Patrick Fitzgerald for more than three years.

And when the full story was told and when Rove's key role was disclosed, I think it hurt the White House in terms of the perception of it as leveling with the American public. It was an example of the White House being caught in what a lot of people saw was a mistruth.

KURTZ: And obviously, President Bush said he was going to fire any leakers and nobody got fired.

Ed Schultz in North Dakota, do you think that the White House Press Corps over the years, on balance, perhaps too easy on Karl Rove?

SCHULTZ: Well, Howard, if you're a conservative talk show host, this guy is the best thing that ever happened to you. He would set up the radio rows at the White House. He got you information, he got you access. He stayed connected.

He would BlackBerry conservative talk show hosts during shows and counter them on issues, and then get access to their airwaves. I mean, he understood the infrastructure of messaging and the audio culture to the American people.

On the other hand, I think what's going undercovered is the complete disdain that the Senate Democrats have for Karl Rove because they believe that he is responsible for a great deal of political divide in this country. Politicized the war, politicized all the domestic agendas that the president wanted to push forward, attacked people's patriotism, and he did it through talk radio. So if you're a conservative talker, they're going to miss Karl Rove.

KURTZ: And are you telling me, Ed, that Karl Rove was not a frequent guest on your liberal radio talk show?

SCHULTZ: I can tell you that I was not on his mailing list. I never got a Christmas card, nor did I ever get an invitation to the White House. But he had an agenda, he knew how to message to the American people, and he didn't want anything to do with progressive talkers.

KURTZ: All right.

Rove's relationship with the mainstream media very interesting. He actually leaks the announcement of his resignation to Paul Gigot, the editorial page editor of "The Wall Street Journal," a page that has been very staunch in its support of Rove and the administration.

Just this morning, he told NBC's David Gregory in an interview that, "My critics think all kinds of bad things about me, but I really don't care." And then there was the interview this week with Rush Limbaugh where he had this to say about "The New York Times".

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: You've been the brunt of all kinds of assaults and attacks, personal and otherwise, along with the president. How do you guys deal with it? KARL ROVE, FMR. BUSH SR. ADVISER: Rush, ignore it. I mean, if you have to wake up in the morning and be validated by the editorial page in "The New York Times," you've got a pretty sorry existence.

(END VIDEO CLIP)

KURTZ: Matthew Continetti, how would you assess the media coverage of Rove over the years?

CONTINETTI: It's a fascinating example of how the media builds up a reputation, only to then tear it down. I mean, Karl Rove's chief function has been as a lightning rod for media attention and Democratic attacks.

KURTZ: I mean, "Bush's brain" kind of suggests...

CONTINETTI: "Bush's brain"...

KURTZ: ... that the president needed someone to be his brain.

CONTINETTI: Exactly. There was always a good side of Bush, as represented by the former speechwriter Mike Gerson, and the bad side of Bush was represented by Rove. Now both of those sides have left and we're actually going to have to deal with the fact that this is President Bush. He is the president, he makes the decisions, whether you like them or not.

KURTZ: What about that point, Mike Isikoff? It seems that some would suggest that not that -- Matthew Continetti says the president's classic fashion built Rove up and then tore him down. But he had a lot more success in the first term than getting Bush re-elected than he did in the second term when Social Security went nowhere, immigration went nowhere, we had the war and so forth.

ISIKOFF: Right. But I actually don't think the media has overplayed Rove's significance.

If you actually look at the ark of the Bush presidency, he was critical in ways that go far beyond just the narrow, political brief that people thought he had. For instance, in the war in Iraq, Rove played a critical role in the selling of the war through the White House Iraq Group, but also in making a very strategic decision in 2002, first to politicize the terrorism issue. That was something that was not expected after 9/11, when the country was united.

We can go to the country on this issue of protecting America, Rove said at the Republican National Committee, in early 2002. And then in an absolutely important and, you know, long-term strategic move of positioning the Iraq war vote before the 2002 election, boxing the Democrats in so that if they buck the president on voting for the war in Iraq, knowing that they would be -- that they would be tagged as soft on national security before the 2002 elections.

KURTZ: Right.

ISIKOFF: It was a brilliant strategic short-term move, but, of course, a lot of people will, when they look back at the Bush presidency, say, that's what -- that's what led to the quagmire that we're in Iraq right now.

KURTZ: But, of course, he didn't do this single-handedly. So I'm wondering whether the press gave Rove more credit than he deserved for the successes and more blame than perhaps he deserved for the failures.

BUMILLER: I would agree with that. I have always said that the real Karl Rove is George Bush.

I mean, people forget that. George Bush learned politics -- the take no prisoners, the political operator of his father's White House. And believe me, Karl Rove and George Bush worked hand in hand in 2004 during the re-election campaign.

And, you know, Bush was deeply, deeply involved in that campaign, and where did we go? West Virginia. Why are we going there? Ohio, why are we going to this county and not that one?

(CROSSTALK)

BUMILLER: He -- Karl Rove would never have been allowed this kind of range without the president's approval and acquiescence.

KURTZ: What about the whole cult (ph) of the political consultant? I mean, modern era, James Carville, Mary Matalin, Bob Shrum, Dick Morris? It seems that the press builds up people like Rove who, in the past, might have been behind-the-scenes operators.

BUMILLER: That's certainly true. But I think -- here's what I think about the next White House Republican or Democrat.

I think the people at this White House will say that's now -- who've left this White House, that they don't think it was such a great idea to have Karl Rove, somebody so political, inside the White House. They would have been better served if Karl had been outside the White House, like he was...

KURTZ: Or at the Republican National Committee, or something like that.

BUMILLER: Right, an outside consultant.

KURTZ: Ed Schultz, I was doing an interview the other day, and the host said to me, well, you k now, "Among the things that Rove didn't do well, he lost Congress last year." And I'm thinking, Rove lost Congress on his own? What about Iraq? What about Katrina? What about the Capitol Hill scandals?

SCHULTZ: Well, there's a number of them. His advice to the president to go strum a guitar and raise money when there are people down in the southeastern portion of the United States suffering and looking for a future and some help I thought was a disastrous move.

But I think that the interview that Rove gave to Rush Limbaugh and the comment he made about "The New York Times," as if Americans -- there are a bunch of Americans in this country that don't matter, and he's willing to throw people to the side of the road like road kill if they don't think the way he does.

KURTZ: Right.

SCHULTZ: And he had an influence on the president. And that bothers Americans, and I think it's going to give the Republicans somewhat of an identity crisis going into the next election.

KURTZ: Just briefly, Matthew Continetti...

SCHULTZ: Are they going to be like Karl Rove?

KURTZ: OK, Ed. Got to go here.

Just briefly, there were cheers at a "Seattle Times" news meeting this week when Rove's resignation was announced. The editor, David Boardman, blew the whistle on that, David Boardman, and scolded his staff.

What did you make of that?

CONTINETTI: It was good that editor did scold his staff. Listen, the media likes figure heads to illustrate trend stories. The trend here is political polarization. But the fact is, polarization existed before Karl Rove ever came to work for Bush and it's going to exist after Karl Rove leaves.

KURTZ: All right. Got to go.

Matthew Continetti, Elisabeth Bumiller, Ed Schultz and Michael Isikoff, thanks very much for a good discussion this morning.

Still to come, an anchorwoman in a small Texas town becomes the star of a reality show, but did the station that hired her mortgage its credibility? I'll talk to Lauren Jones and her former boss, next.

(COMMERCIAL BREAK)

KURTZ: Lauren Jones is a swimsuit model who's been a diva for World Wrestling Entertainment and appeared in such movies as "Anger Management" and "Spider-Man 3". Her journalistic credentials, nonexistent.

Phil Hurley owns a low-rated CBS affiliate in Tyler, Texas, and was looking for some attention. So Hurley agreed to hire Lauren Jones as an anchor and reporter in what he knew would become a reality show.

Here's what happened when she was getting ready to join KYTX.

(BEGIN VIDEO CLIP)

LAUREN JONES, ACTRESS, ANCHORWOMAN: I'm just going to go down there and, like, do the news. And I'm so opinionated, this is such a good opportunity for me to really voice my opinion about things like, I don't know, terrorism.

I'm, like, packing. I don't even know what to pack. I have a sequined bikini. How do you think that would look doing the news?

UNIDENTIFIED FEMALE: You're not going to freak out while we're live on TV, are you?

JONES: No. It's not like I've never been in front of a camera. You know what I mean?

UNIDENTIFIED FEMALE: I don't know.

JONES I have cue cards. It's not like I'm a bimbo.

(END VIDEO CLIP)

KURTZ: "Anchorwoman" debuts Wednesday, 8:00 p.m. Eastern on FOX.

I spoke earlier with Lauren Jones in Los Angeles and Phil Hurley in Texas.

(BEGIN VIDEOTAPE)

KURTZ: Lauren Jones, at the beginning of your anchor stint, how were you received at the station? Were some people hostile? Were some of the women jealous?

JONES: I would say I had about 50 percent of everybody being a critic and 50 percent very excited. So, you know, I got both ends, but towards the end, I made a lot of friends and hopefully won a lot of people over.

KURTZ: Did you have the slightest interest before in being a journalist, or was this just another acting assignment for you?

JONES: No. My passion, every since I was a little girl was to be an anchorwoman. So, for me, this was an opportunity for me to fulfill my lifelong passion.

KURTZ: Phil Hurley, did you have any hesitation when this idea was presented to you, any concern at all that this might turn your station into a laughing stock? You've gotten certainly your share of criticism over this move.

PHIL HURLEY, PRESIDENT & GENERAL MANAGER, KYTX-TV: Howard, we worked on this thing for nearly two years before it came to fruition, and many times I had that thought. And even up until the first day that Lauren walked in the door, I still had some thoughts of that.

(END VIDEOTAPE)

(WEATHER REPORT)

KURTZ: More now of that interview with Lauren Jones, the model- turned-anchorwoman, and Phil Hurley, the general manager and owner of the station in Tyler, Texas. (BEGIN VIDEOTAPE)

HURLEY: I still had some thoughts of that.

KURTZ: Why then did you decide to go ahead?

HURLEY: Well, two or three reasons.

The first reason was we had -- we had very good knowledge of how the show was going to be done. The producer, Brian Gadinsky, had some news background. The director, Mark Jacobs, was a former news director. They understood what we did here and what we do every day. And so that was a comfort feeling.

I had some real good assurances from the FOX network of how they would treat the show and the station and the city during the production. And I had confidence in that.

KURTZ: All right.

HURLEY: And then the third thing was, we were trying to get anything we can do as a news station. We were looking for promotion and we felt like this was a good avenue to get it.

KURTZ: I was wondering when you'd get to the ratings question.

Now, let me show our viewers a little bit about how Lauren Jones looked as an anchorwoman, person, at KYTX.

(BEGIN VIDEO CLIP)

JONES: Welcome to this Sunday edition of "Eyewitness News".

I'm Michelle -- I'm Lauren Jones. And thank you for joining us. Sorry.

It's like going -- gunshots ring out at a Tyler nightclub.

There's nightclubs here?

UNIDENTIFIED MALE: No commentary.

JONES: Did I commentary?

UNIDENTIFIED MALE: Yes, you did.

JONES: I don't remember commentating. Oh well. Thanks.

(END VIDEO CLIP)

KURTZ: Lauren Jones, you read somebody else's name off the prompter.

JONES: That's right.

KURTZ: Was working as a reporter and an anchor, frankly, harder than you expected?

JONES: Oh, yes. I definitely had gotten myself into something, and I was in it. So I had to make it work.

KURTZ: Tell me how you went about doing that. Was this a difficult transition for you? I mean, obviously, since you had no, as in zero, journalistic experience, you were kind of playing the role of anchor.

JONES: That's right. Well, you know, all my experience I feel in the past lent a hand to the abilities and everything I brought to the table when I was given this opportunity. And a lot of the things that happened are just -- are pretty typical for anybody being thrust into a new environment and having to work their way out of that and make the best of the situation. And so, all these -- these (INAUDIBLE) and everything are caught on tape, and that's what you'll see on August 22nd on "Anchorwoman".

KURTZ: Phil Hurley, did you have any problem with Lauren's clothing when she would show up to work?

HURLEY: How about day one? And then just a few days later -- and we got a lot of comments from the audience. But each time, you've got to keep in mind, Lauren was -- you know, had a great work ethic, she had a great attitude. And if we gave her some direction on the clothing, she fixed it. But...

KURTZ: And what was this direction on the clothing? What were you objecting to?

HURLEY: We needed her to dress like an anchor and a little less like an L.A., New York model.

KURTZ: Now, Lauren Jones...

HURLEY: Not that there's anything wrong with that, but for inside this studio, it needed to be a different way.

JONES: Right.

KURTZ: Well, Tyler, Texas, is not New York or L.A.

JONES: No, it's not.

KURTZ: Lauren, did you exaggerate at all or embellish or play to the cameras? Because you were not just temporarily filling the role of anchor and reporter at this Texas station. You knew you had to provide some fodder for this FOX reality series.

JONES: Yes. You know, I had -- I had many hats that I had to wear while I was in Texas, and it posed a lot of challenges. But at the same time, I had a job to do. I had many jobs to do, and I took it very, very seriously, and I put, you know, all of my efforts into making sure that I was the best anchor and the best character for "Anchorwoman". I really am an anchorwoman. This is a -- you know, this is a real situation. I really am, you know, the new "Anchorwoman". And I'm having a blast with it.

It's been -- it's been a lot of fun. It's been a blast.

KURTZ: Phil Hurley, it is no secret that on television you can turn on any station, any channel -- there are a lot of good looking women, and men, for that matter, on TV. So, is this just an extreme example of that, picking someone who was a model, who's probably more -- who's obviously better known for her blonde good looks than for knowing how to cover a story?

HURLEY: Howard, it's probably a little extreme, but this has been going on for 15 years, this crossing the line between entertainment and journalist. And Lauren being a model, a very legitimate career, she's one of many that have crossed over and tried to learn this job.

So, yes, it's a little extreme, but it's probably because it has become a television show. But you can look back to many, many folks that have come from different backgrounds and different jobs and careers. It's just a -- it's just a matter of, do you want to do it, will you put in the time to learn it, are you committed to it?

And we need to always remember, she really did the job here. She wasn't an actress.

KURTZ: All right.

HURLEY: She came in and learned it.

JONES: That's true.

KURTZ: Let me get one last question to Lauren.

Did you -- were you so inspired, so excited by your time at the Tyler, Texas, station that now you're going to throw away your acting career and dedicate yourself to journalism?

JONES: That is true. My priority right now is to be the best anchor that I can be and to keep learning and to keep on this path.

And at the same time, though, I don't think there's anything wrong with multitasking. I mean, while, yes, I am hanging up the bikinis and I'm going in a more serious direction, I am going to continue being an anchorwoman, but why not a model on the side, or have an acting gig on the side? I don't see why someone can't multitask.

KURTZ: All right.

JONES: You know, I have the brains and the ability, so why not go for it?

KURTZ: Lauren Jones, hanging up the bikinis, as she put it. We're out of time.

HURLEY: Howard...

KURTZ: We're out of time.

Phil Hurley, Lauren Jones, thanks very much for joining us.

JONES: Thank you.

HURLEY: Thanks, Howard.

(END VIDEOTAPE)

KURTZ: When we come back, Jon Stewart and Stephen Colbert finding humor in a dead-serious lawsuit? That's just ahead.

(COMMERCIAL BREAK)

KURTZ: Time now for the latest in the news business in our "Media Minute".

(BEGIN VIDEOTAPE)

KURTZ (voice over): Jon Stewart and Stephen Colbert are two wild and crazy guys, but they may not be all that funny in a deposition. Viacom's Comedy Central is suing Google's YouTube for unauthorized use of clips of "The Daily Show" and "The Colbert Report," which, as you might guess, are wildly popular.

YouTube has listed Stewart and Colbert as possible witnesses as it tries to beat back the $1 billion lawsuit.

(END VIDEOTAPE)

KURTZ: Well, that's it for this edition of RELIABLE SOURCES.

I'm Howard Kurtz.

Join us again next Sunday morning, 10:00 a.m. Eastern, for another critical look at the media.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.voxant.com

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