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THE SITUATION ROOM
Obama Claims No Contact With Illinois Governor; Rod Blagojevich Could be Impeached; Caroline Kennedy's Senate Interests
Aired December 15, 2008 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: Happening now, the breaking news we're following. Barack Obama's staff is set to reveal what it knows about the scandal over the Illinois governor. You're going to find out if Obama or anyone on his team had contacts with Governor Blagojevich.
Also, we're awaiting a Barack Obama news conference. He's expected to nominate team members concerning two issues you care about: energy and the environment.
And it's the scene seen around the world, a man throwing shoes, aiming at President Bush. Amid extremely tight security around the president in Baghdad, how could this happen? And why did it happen?
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
Well, we begin with the breaking news. Barack Obama's transition has just released a new statement regarding the political scandal hovering over the Illinois governor. It addresses questions of whether or not the president-elect himself or any member of his transition team had any contact with Governor Blagojevich regarding putting someone in Barack Obama's Senate seat.
Let's go straight to CNN's Jessica Yellin. She's covering the transition in Chicago.
All right, Jessica. What's the latest?
JESSICA YELLIN, CNN CORRESPONDENT: The latest, Wolf, is Barack Obama promised results of his fact-finding inquiry today, and we do not expect to hear him say much when he takes the podium.
In this statement he has released, he reveals that they've completed that investigation, but the U.S. Attorney's Office has asked them to hold off on sharing any details until December 22nd. That's when Barack Obama will be away on vacation.
What this does reveal, it says, "That the review affirmed the public statements of the president-elect that had he no contact with the governor or his staff, and that the president elect's staff was not involved in appropriate discussions with the governor or his staff over the selection of his successor as U.S. senator." It goes on to say that the lawyer for the transition Gregory Craig, has been in constant contact with the investigators, the U.S. Attorney's Office, and that they remain in touch.
So this still leaves many questions unanswered, Wolf. It says that Barack Obama's staff didn't do anything inappropriate, but it does not answer the question, did they have conversations, what was in those conversations, were they aware of any wrongdoing by Blagojevich, and what may they have done about it?
As you know, we've already reported that his chief of staff, Rahm Emanuel, has been informed he's not a target of the investigation, and there's been reporting that Emanuel did have conversations with the governor's aides. Today, I do not expect that we will get to the bottom of exactly what happened in those conversations -- Wolf.
BLITZER: We'll see how he answers these questions, if in fact he does at this news conference.
We also know, Jessica, he's going to make some cabinet announcements. Talk a little bit about that.
YELLIN: That's right. He'll be rolling out his new energy, environment and climate change team. Among the four people who will be with him here today are Dr. Steven Chu, a Nobel Prize-winning physicist who is going to be named to head the Department of Energy, and Carol Browner, who will take a new role as a sort of energy environment czar in the White House trying to coordinate all their efforts. As you'll recall, she was EPA administrator under Clinton.
Barack Obama really wants to highlight today his impetus, his focus on changing U.S. climate change policy. And the big question hanging over that is, how much can he get done in these tough economic times? How much of a priority will it be? This is what we expect him to address in his opening statement when he takes the stage in just about an hour -- Wolf.
BLITZER: And then he'll take reporters' questions after that. Is that right?
BLITZER: OK. And I'm sure there'll be several important questions, and we'll have it live, right here in THE SITUATION ROOM.
Jessica Yellin, thanks very much.
The Illinois governor's grip on power appears to be weakening right now. Today a top lawmaker in that state announced that since Rod Blagojevich won't resign, he could be pushed out. And this hour, there's a legislative session to discuss what to do now that the governor's accused of trying to sell Barack Obama's Senate seat.
Let's go to Springfield, the Illinois capital. Ed Lavandera is on the scene for us.
All right. It's an historic moment. They've just reconvened. Is that right?
ED LAVANDERA, CNN CORRESPONDENT: Yes, they're about to do that. And while there are many things on the plate as to exactly how state lawmakers want to handle the governor of Illinois, one of the issues at the forefront this hour is the move for impeachment proceedings to begin, and the speaker of the House unveiled that plan just a few hours ago.
(BEGIN VIDEO CLIP)
MICHAEL MADIGAN (D), ILLINOIS HOUSE SPEAKER: I'm not going to be one who's going to rush to be judgment about the possible impeachment of a sitting governor of the state of Illinois. Consequently, we have given the governor six days to resign. President-elect Obama, Senator Durbin, all of the state constitutional officers have called for his resignation.
He's declined to take the opportunity to resign. I think it's time that we move forward with the appointment of a committee of inquiry that could lead to impeachment.
(END VIDEO CLIP)
LAVANDERA: Now Wolf, the problem with the impeachment process is that it's going to be slow and tedious and it could take weeks, if not months, to complete. So state lawmakers are also moving on a couple of other fronts.
In fact, there is a bill in the works to essentially strip the governor of his ability to appoint the next U.S. senator from Illinois and create a special election to fill that seat, as well. That's what Republicans are pushing for intensely. And there's also a move by the attorney general here in this state to ask the Supreme Court to declare the governor unfit to lead, essentially removing him from office.
There is a great deal of intensity and a wish that much of this would move much faster. But since the governor hasn't resigned and doesn't appear to be inclined to do so at this point, this is the option -- the process of impeachment is the issue that state lawmakers say they will begin in earnest today -- Wolf.
BLITZER: And I've heard there's some talk also going on, Ed -- and I assume you've heard it as well -- in Springfield that one option would be for him to step aside temporarily, but to continue receiving his salary. He says that he has no money and needs that salary while this process goes forward. And he wouldn't name a successor to Barack Obama's Senate seat in the process.
So what are you hearing about that?
LAVANDERA: We haven't heard much about that. In fact, the state lawmakers here, when asked if they had had any contact with the governor at all since these allegations came forward six days ago, every lawmaker we've spoken with so far have said that they have not had any contact.
However, there was some reporting out of the Springfield area that the governor would be open to signing this. It was the great irony in all of this, that if these lawmakers passed this legislation, essentially creating this special election, or stripping him of the ability to appoint the next U.S. senator, it would be Blagojevich who would have to sign that legislation. And it appears that he might be inclined to do so at this point.
BLITZER: Well, we'll see what Barack Obama has to say about all of this at the news conference that we're awaiting.
All right, Ed. Thank you very much.
Ed's going to stay on top of this story in the Illinois capital.
In the meantime, let's go to Jack Cafferty. He's got "The Cafferty File" -- Jack.
JACK CAFFERTY, CNN ANCHOR: We're about into the second week on this Blagojevich nonsense, right?
CAFFERTY: And nothing's happened. You want to know why there's corruption in Illinois and has been since time in memoriam? Nothing's happened.
They talk -- we'll give him six days. We might do this. We might do that. It could take days, it could take weeks, it could take months. Nothing's happening.
Blagojevich has got to be laughing out loud. He's still the governor, still holding all the cards. Nothing's been done to him.
He was picked up, let go on $4,500 bond, and it's back to business as usual. It's a disgrace.
Like father, like son. Just like President Bush's father will forever be remembered for throwing up on the prime minister of Japan at a state dinner in Tokyo, so will this weekend's video of our beloved president follow him for all the days of his life.
An Iraqi reporter threw his shoes at President Bush while he was holding a news conference in Iraq with Prime Minister Nuri al-Maliki. It was a deliberate insult directed at Bush. For Muslims, sitting with the soles of your shoes facing someone, or throwing your shoes at someone is a sign of contempt.
The reporter works for an Egyptian-based newspaper -- a television network, I'm sorry. And when he threw the shoes, he yelled out, "This is a farewell, you dog" in Arabic.
He was put in jail. If Saddam had been there they would have probably cut his head off.
He was put in jail. He remains in jail while Iraqi officials try to decide whether or not he will face charges for assaulting an official. That sounds like the Blagojevich thing.
As for President Bush, he made light of the whole thing, announced to reporters the shoes were a size 10. Missing the point once again.
Questions have been raised about the seemingly delayed Secret Service response and why the man was able to throw a second shoe after throwing the first. But apparently, President Bush waived off Secret Service officers at first. They were in a controlled environment. Everybody in the room had to pass through security, et cetera.
Thousands of Iraqis rallied in support of the reporter's actions. Some said, though, that he should not have thrown his shoes at President Bush in the presence of the Iraqi prime minister.
Here's the question: What does it say about our image when a foreign reporter throws his shoes at the president of the United States?
Go to cnn.com/caffertyfile. You can post a comment on my blog -- Wolf.
BLITZER: Get ready, Jack. You're going to get a lot of e-mail on this one.
CAFFERTY: I already have. This stuff goes up about an hour before the show. Tons of e-mail already pouring in.
BLITZER: I know. I know. There's high interest.
All right, Jack. Thank you.
So what do Steven Spielberg, the owner of the New York Meets and the Royal Bank of Scotland have in common? They appear to be victims in a potentially $50 billion investment scheme. The scandal is shaking investors, many well-known, around the world.
And the Bush administration ponders ways to help automakers. But could one option create a new showdown between the White House and Congress?
Plus, Barack Obama will name names for energy, his energy secretary and environmental teams. We're waiting. His news conference in Chicago, that's coming up, and a lot more, right here in THE SITUATION ROOM.
BLITZER: And this is just coming into THE SITUATION ROOM as well, word out of sources close to Caroline Kennedy she is, in fact, very interested in getting that seat vacated by Senator Hillary Clinton in New York State.
Let's go straight to New York. Mary Snow is working the story for us. All right, Mary. What's the latest?
MARY SNOW, CNN CORRESPONDENT: Well, the very latest, Wolf, is that Governor David Paterson, the Democratic governor of New York who has the power to appoint someone to this Senate seat, has said that he spoke with Caroline Kennedy today. He just had a news conference with Senator Chuck Schumer, and let's take a listen to what both men said. They said essentially that they spoke with Caroline Kennedy and she has expressed her interest in the Senate seat.
(BEGIN VIDEO CLIP)
GOV. DAVID PATERSON (D), NEW YORK: She told me that she was interested in the position, she realized that it was not a campaign, but she was talking to other people because she thought that a number of people she felt should know that she's interested in the position. She would like at some point to sit down and tell me what she thinks her qualifications are.
SEN. CHARLES SCHUMER (D), NEW YORK: I talked to Caroline Kennedy and she's clearly interested. The bottom line is that the governor and I talk regularly on this, but we've decided to keep each other's counsel. So that's all I'm going to say right now.
QUESTION: Do you think she's qualified?
SCHUMER: As I said, I think there are 12 candidates whose names have been mentioned. I think every one of them is qualified, every one of them would be a great partner. And I'd look forward to working with any of the 12.
(END VIDEO CLIP)
SNOW: Wolf, this would be a big departure for Caroline Kennedy, 51 years old, has never held public office. She has been fairly shy from the public cameras until this past year when she came out to publicly endorse Barack Obama.
I just spoke with Joel Klein. He's the chancellor of the New York City school system. He said he has spoken with her a number of times, they are close friends. And he said he wasn't really surprised by her decision saying that he felt she became very excited while she was working during the Obama campaign, and that he called it part of what he described as her evolution, saying that she also wanted to make sure that her children were at the right place -- they're a little bit older now -- and she has called several Democrats throughout the day saying that she was interested in this.
BLITZER: All right. Mary Snow, thanks very much.
Caroline Kennedy wants to be the next U.S. senator from the state of New York. We'll stay on top of this story and see what the governor, David Paterson, decides to do about that.
Meanwhile, check your calendar. Today is a very important day in terms of installing Barack Obama as the next president of the United States.
Our Senior Political Analyst Bill Schneider explains -- Bill.
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Wolf, it's Election Day, Monday, December 15th. Um, didn't we do that last month? Actually, no. You may have thought you were voting for president on November 4th, but if you look very closely at your ballot, you were voting for electors. The electors actually choose the president.
When? Today, in their respective state capitols. Electors are real people selected by the state parties because they can be relied upon to vote for the candidate who carried their state. We expect Barack Obama to get 365 electoral votes and John McCain 173 when the votes are counted at a joint session of Congress on January 8th.
Do the electors have to vote for the candidate who carried their state? In about half the states they can voted for anyone they want. Occasionally, what's called a faithless elector votes for somebody else.
In 2004, one Minnesota elector who was supposed to vote for John Kerry actually voted for John Edwards, Kerry's running mate. But faithless electors have never affected the outcome.
Isn't it a little undemocratic for voters to rely on electors to choose a president for them? Yes.
In 2000, you may recall, Al Gore got the most popular votes, but George W. Bush got elected with a bare majority of electoral votes. Why didn't the voters rise up in anger and do away with the Electoral College? Because they were so angry about what happened in Florida, they didn't pay much attention to the larger problem -- Wolf.
BLITZER: Bill Schneider on this Election Day in the United States. Thank you.
A major new ruling in favor of smokers. What the United States Supreme Court has to say about big tobacco and the marketing of those so-called light cigarettes.
And did the president's security drop a shoe? How was as Iraqi man able to get away with throwing both his shoes at the president of the United States?
Stay with us. You're in THE SITUATION ROOM.
BLITZER: To our viewers, you're in THE SITUATION ROOM.
Happening now, we're awaiting a news conference by the president- elect, Barack Obama. He's expected to nominate new team members involving energy and the environment. He's also getting ready to answer reporters' questions.
We'll have that news conference live. That's coming up, right here in THE SITUATION ROOM.
Also, Senator John McCain, he's back in the U.S. Senate after his defeat. But don't expect him to fade into the political background by any means. We have new details coming in on his next act.
And a controversial "Saturday Night Live" skit about New York's legally blind governor, why David Paterson isn't laughing. A lot of folks aren't laughing. They say the show simply went way too far this time.
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
By now, I am sure you have seen the video, amazing video. The president of the United States made a surprise visit to Baghdad yesterday to meet with the Iraqi government. There you see Nuri al- maliki, and there it goes -- one shoe, the president ducking. An Iraqi journalist throwing his shoes, both of them, at the president of the United States, causing quite a stir.
Brian Todd is working this story.
And I guess a lot of people wonder, Brian, how is that possible? He is so well protected, the president. He's got Secret Service agents all the time around him. How is it possible that a guy like this, maybe one shoe. But a second shoe, you would think he would have been trampled before he could get a second shoe off.
BRIAN TODD, CNN CORRESPONDENT: A question that everyone is asking, Wolf. The Secret Service tells us there were many layers of security and that press room in Baghdad, that everyone there had been searched for weapons and their Ids, and credentials had been checked. Still, in the span of about 2.5 seconds, one agitator was able to cause a scare and set off a wave of security questions.
TODD (voice-over): He got off two accurate shoe throws and a verbal insult before being swarmed. Was security no match for an angry journalist? An official with the Secret Service tells CNN the response from its agents was quick enough, even though the man was able to snap off a second throw.
We ran that by Bill Pickle, a former Secret Service agent who headed Al Gore's protective detail during his 2000 presidential campaign.
(on camera): One throw you can understand.
BILL PICKLE, FMR. SECRET SERVICE AGENT: One throw.
TODD: Two, even though it was in quick succession, shouldn't an agent maybe have been there even quicker?
PICKLE: No. Physics. Physics. It's just pure physics.
Again, it's 2 to 2.5 seconds. So you have a human reaction. You see something, you process it, and then you react. It would be almost impossible unless you knew it was going to happen to respond any quicker. TODD (voice-over): But this journalist, Muntadar al-Zaidi, caused a stir beyond this modest press room. Observers say images of this are plastered on Web sites and newspaper covers from Baghdad to Beirut.
OCTAVIA NASR, CNN ARAB AFFAIRS EDITOR: More people are hailing him as a hero, as a national hero, someone who dared to pick up his shoe and throw it at the U.S. president in the setting that he did it in. So basically, people saying that he represents them.
TODD: Others in the region are looking upon this as shameful against the Arab Muslim cultural dictates of treating guests as royalty.
Experts also point to this image, Iraqis pounding the fallen statue of Saddam Hussein with their footwear after Baghdad fell to U.S. forces in 2003. They say there literally could not be a more insulting gesture in the Muslim world than to be assaulted with one's shoe.
UNIDENTIFIED MALE: The shoe is seen as unclean. When people go to a mosque, they take it off to say their prayers. The shoe was then aimed at striking the head, which is considered in Islam a repository of wisdom and knowledge.
TODD: Ahbar Ahmed (ph) says if this had happened on the street anywhere in the Muslim world between two ordinary guys, it would have turned violent and it would have escalated very quickly. That's how insulting the symbol of the shoe is, Wolf, when you're hit with it, even when it's shown to you.
BLITZER: Yes, because the sole of the shoe walks on all sorts of dirty things.
TODD: That's right. Exactly.
BLITZER: And as a result, it's seen as a grave insult in the Muslim and Arab world. Is the U.S. Secret Service reviewing this incident?
TODD: Absolutely, they are. They say even though the response was good, in their view, they are their own harshest critics. They are going to take a long look at this, see what they might have been done better, if anything. Bill Pickel (ph) says, this is going to be on a training film of the Secret Service before too long.
BLITZER: All right, Brian Todd, thanks very much for that.
I want to go to our senior White House correspondent, Ed Henry. He's over at the White House.
What are they saying about this? How does it impact the president of the United States, Ed? ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, the president is trying to brush off this incident. But it's awful timing for this White House, because it comes just as some former top aides are trying to step up their efforts to promote his legacy.
HENRY (voice-over): Critics of the Iraq war are no longer just hurling verbal insults at the president. They're firing shoes at his head. But, even before Sunday's incident, a loyal group of former aides have been rallying to Mr. Bush's defense, trying to burnish his image.
ARI FLEISCHER, FORMER WHITE HOUSE PRESS SECRETARY: I think one of President Bush's legacies, he, because he hung so tough on Iraq, has now made it very likely that Barack Obama will be able to, thank God, bring our troops home, but home in a position of victory.
HENRY: CNN has learned, this coming Friday night, the president will host a pre-Christmas dinner with a slew of these former and current senior aides, a final White House reunion for Ari Fleischer, Karl Rove, Dan Bartlett, and Karen Hughes, among others, just days after the president's farewell tour of Iraq.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The war is not over. But with the conclusion of these agreements, and the courage of the Iraqi people, and the Iraqi troops and American troops and civilian personnel, it is decisively on its way to being won.
HENRY: Immediately after that statement, however, an Iraqi journalist threw both of his shoes at the president and called him a dog. The president later noted the mood of the Iraqi people cannot be judged by one protester. But it was a dramatic reminder of the mixed legacy for a president who's been getting sentimental since shortly after the election.
G. BUSH: I will be honored to stand with you at the finish line. May God bless you.
HENRY: A mood likely to continue at Friday night's celebration with staff.
FLEISCHER: I think it's going to be very nostalgic. I wouldn't be surprised if the president tears up. He's going to remember what it was like for him coming here on January 20, 2001.
HENRY: And there has just been an addition today to the president's schedule. Later this week, on Thursday, he's going to give a speech at a conservative think tank talking about his domestic policy achievements so quickly after this foreign trip.
But, there again, a mixed legacy on the domestic front, dozens of months of job growth now wiped out by this recession -- Wolf.
BLITZER: He's getting ready also in a little while to light the menorah for Hanukkah...
HENRY: That's right.
BLITZER: ... in the White House. Is that right?
HENRY: He is. He's going to do that just next hour, Wolf.
And, in fact, I can hear the helicopters just around me. He's just arriving back from this secret trip to Iraq and then Afghanistan. And then you're right. Next hour, he will be lighting the national menorah -- Wolf.
BLITZER: All right, thanks very much for that. Ed Henry is at the White House.
When you're the president's dog, you get lots of celebrity shout- outs.
(BEGIN VIDEO CLIP)
MICHAEL PHELPS, OLYMPIC GOLD MEDALIST: Hey, Barney, I'm glad the decorations are finally coming together, and you're using my favorite colors, gold.
(END VIDEO CLIP)
BLITZER: The Olympic medalist Michael Phelps gives a special greeting to Barney, the first family's dog. It's Barney's final doggie video.
And even the rich and powerful fall victim to one man's alleged greed. How much might they lose in this potentially $50 billion scheme?
And Barack Obama getting ready to hold a news conference in Chicago. We will be there live. He's expected to name names for his energy and environmental teams and to answer reporters' questions. Stand by for that -- right here in THE SITUATION ROOM.
BLITZER: The nation's Big Three automakers wait while their very existence hangs in the balance, especially Chrysler and General Motors.
The White House is pondering options to quickly get billions of dollars to the car companies. But working out the details with Congress will not be easy.
Let's go to Capitol Hill. CNN's Kate Bolduan is working the story for us. What is the latest, Kate?
KATE BOLDUAN, CNN CORRESPONDENT: Hey there, Wolf. Well, while the ball is clearly in the administration's court now, both congressional Democrats and Republicans have been consulting Secretary Paulson on how to help the automakers, and, as expected, pushing their respective plans to put conditions on the money.
BOLDUAN (voice-over): From Congress...
UNIDENTIFIED FEMALE: On this vote...
BOLDUAN: ... back to the president. A senior Democratic leadership aide tells CNN to anticipate an announcement Tuesday of the Bush administration's plans to help the auto industry.
But big questions remain concerning how much the administration will lend, where the money will come from and with what strings attached.
REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: I think all the signals coming from the White House are that they know that bankruptcy is not an option and that TARP funds are the only recourse that they have.
BOLDUAN: House Speaker Nancy Pelosi, along with other Democratic leaders, are calling on the president to attach the restrictions of the House-passed rescue plan to any automaker loan. This could include appointing a car czar, deadlines for restructuring, and proving a return to profitability.
SEN. CARL LEVIN (D-MI), ARMED SERVICES COMMITTEE CHAIRMAN: Once the president makes a deal, he is not likely to walk away from it.
BOLDUAN: But Republicans want the administration to adopt provisions introduced by Tennessee Senator Bob Corker...
SEN. BOB CORKER (R), TENNESSEE: What we have offered is incredibly reasonable.
BOLDUAN: ... including the congressional deal-breaker, reducing autoworker wages to be more level with pay at the U.S. plants of foreign auto companies.
A top Senate Republican aide warns, if the administration doesn't adopt the Corker amendment, Republicans won't be motivated to devote any more money to the auto industry.
BOLDUAN: Now, truth is, outside of pushing for what they want, there's little Congress can do now. I mean, they have no congressional review over how the White House proceeds, nor over what restrictions the White House puts on the money at this point -- Wolf.
BLITZER: Kate Bolduan is going to stay on top of this story for us on the Hill. Thank you. Meanwhile, big investors, banks around the world, charities, pension funds, they are all exposed to an alleged $50 billion pyramid investment scheme carry out by a Wall Street luminary, Bernard Madoff -- Wall Street now becoming increasingly nervous, as more and more firms admit exposure to Madoff's funds.
CNN's senior correspondent, Allan Chernoff, is joining us now with more on this story.
What have you learned today, Allan?
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, Wolf, Bernie Madoff was absolutely charming. And that's one reason he was able to attract so much money from investors.
Now federal investigators are looking at the firm and trying to figure out if Bernie Madoff operated on his own, or if he had help in duping so many wealthy investors.
CHERNOFF (voice-over): Since the arrest of Bernard Madoff, the list of high-profile victims continues to grow, U.S. Senator Frank Lautenberg, Fred Wilpon, owner of the New York Mets. And Mort Zuckerman, owner of "U.S. News & World Report," had a charitable trust invested with Madoff. Some victims had entrusted their life savings.
BRAD FRIEDMAN, PARTNER, MILBERG LAW FIRM: For most people, this was 100 percent of their liquid assets. They're now wiped out, penniless. They need money to live on. They're having to put their homes on market in this depressed economy, where you can't even sell a home.
CHERNOFF: In Palm Beach, some panicked victims are now looking to unload homes at the exclusive Breakers Resort, foundations organized by Steven Spielberg and Elie Wiesel were reportedly were invested with Madoff.
And, across the globe, major investment houses have announced losses, including Spain's Banco Santander, Japan's Nomura Holdings, and the Royal Bank of Scotland. Madoff offices in London and New York are shuttered, as Justice Department and SEC investigators pore through company records, trying to determine who, if anyone, was helping Bernard Madoff execute his fraud.
LINDA THOMSEN, DIVISION OF ENFORCEMENT DIRECTOR, SECURITIES AND EXCHANGE COMMISSION: We are acutely focused, with our -- with our colleagues in the Southern District of New York and the FBI, to -- to figure out exactly what's gone on, to pursue the cast that we have got, to preserve assets, to the extent we're able, and to bring everyone who was responsible for the conduct at the Madoff firm to justice.
CHERNOFF: The SEC concluded an investigation of the Madoff firm only last year, and found nothing. One source speculated that the investment operations probably were totally off the book, entirely separate from Mr. Madoff's trading operations, which would have made it very difficult for the SEC to uncover anything.
Now, Mr. Madoff, according to the civil and criminal complaint, did admit that he committed a fraud. But his attorney has said that Mr. Madoff will fight to get through this unfortunate set of events -- Wolf.
BLITZER: Allan Chernoff is going to stay on top of this story for us, as well. Thank you.
That list keeps growing and growing.
Let's get back to one of our top stories right now. We're awaiting the president-elect, Barack Obama's news conference. He's expected to nominate team members concerning two issues you care deeply about, energy and the environment. One person he's expected to nominate is very respected in his field.
Let's go to CNN's Dan Simon. He's in San Francisco looking at the story for us.
We're talking about the expected secretary of the -- of -- of energy, Dan.
What are we learning?
DAN SIMON, CNN CORRESPONDENT: Well, hi, Wolf.
Steven Chu, he is considered a leading voice when it comes to alternative energy. That's why many people believe he is exactly the right choice to lead the Energy Department in a whole new direction. Take a look.
SIMON (voice-over): A Nobel Prize-winning physicist, Steven Chu is a major supporter of developing alternative energy. His Berkeley lab is considered one of the leading research centers for biofuels and solar energy.
This month, while helping to dedicate a new Department of Energy lab, Chu said this about the government agency.
STEVEN CHU, DIRECTOR, LAWRENCE BERKELEY NATIONAL LABORATORY: The Department of Energy has a glorious future ahead of it, because of -- it will provide many of the solutions that the world will need.
SIMON: At the time, it wasn't clear if Chu knew he had the job, but his selection indicates that Obama plans to move forward with an agenda to promote alternative energy and reduce America's dependence on foreign oil and fossil fuels.
For environmentalists, Chu's appointment would be seen as a victory. Putting a scientist at the Energy Department, instead of, say, a politician, is regarded as a significant step in putting the country on a green energy path.
Profess Michael Haniman works with Chu at Berkeley.
UNIDENTIFIED MALE: He's not a politician. His great asset is that he's an incredibly creative guy. There are many brilliant Nobel Prize winners, but Steve stands out for his creativity and for his personal passion to apply science and technology to solve what is the greatest societal problem facing us.
BOLDUAN: The 60-year-old Chu lives in Oakland and has run the Berkeley lab for the past four years. He previously worked as a physics professor at Stanford.
Chu, the son of Chinese immigrants, becomes the second Asian- American selected for a Cabinet position in the Obama administration.
SIMON: And, Wolf, that other Asian-American is Eric Shinseki. He of course was tapped to be the secretary of veterans affairs.
And, when you talk about Steven Chu, everybody says he possesses this great administrative skill, on top of being a great scientist, Wolf, and Obama expected to name him shortly -- back to you.
BLITZER: That's a pretty powerful combination. All right, we will stand by for the news conference. That is coming up in a few moments -- Dan Simon out in San Francisco for us.
Caroline Kennedy makes a major decision. She's getting ready to fight to try to win that Senate seat being vacated by Hillary Clinton. We will discuss her political ambitions and a lot more. That's coming up in the "Strategy Session."
Plus, Joe Biden, he apparently wants to reduce the role of the vice president. The question is this: Why? What power would he have in an Obama administration?
Stay with us. You're in THE SITUATION ROOM.
BLITZER: There you see live pictures, the American flags, the podium. Barack Obama, he is getting ready to hold a news conference at the Drake Hotel in Chicago, expected to name names of new Cabinet members, also to answer reporters' questions.
Stay with us. We will be right back.
BLITZER: Caroline Kennedy says she's going after Hillary Clinton's Senate seat. So, what are her political ambitions, after all? Does she have what it takes?
Let's discuss this and more with Hilary Rosen -- she's editor at large for TheHuffingtonPost.com and a CNN contributor -- and Republican strategist John Feehery. He's president of the Feehery Group.
What do you think? Because it's not just filling out, you know, two years or whatever. It's running in 2010 and then running again in 2012, given the nature of the way this breaks up...
HILARY ROSEN, CNN POLITICAL CONTRIBUTOR: Yes.
BLITZER: ... assuming Hillary Clinton becomes secretary of state.
ROSEN: Well, in, you know, the first vote, there's only one voter. And that's Governor David Paterson. And, so, staging this sort of big public campaign, I think, is striking some people as odd.
I checked on "The Huffington Post" before I came over here, and I was surprised. There was an equal amount of liberals for her as against her. You know, but she's a woman clearly I admire very much, and she would bring a lot to the table. But I'm not sure this is such a sure thing.
BLITZER: That -- it's up to David Paterson.
ROSEN: It's up to Governor Paterson.
BLITZER: He's the governor of New York. He can pick her or he could pick anyone else.
JOHN FEEHERY, REPUBLICAN STRATEGIST: I would say that we heard it here first from Wolf Blitzer, when you said Caroline Kennedy first, which we have to give you credit.
You know, I'm not one of these people that reflexively hates the Kennedys. I like the Kennedys. I have a lot of respect for them. But she's never run for dogcatcher. The idea that she's going to get appointed to this seat kind of points, you know, you usually you have to run for something before you...
BLITZER: Hillary Clinton never ran for anything, did she?
FEEHERY: Well, she was first lady. She ran...
BLITZER: But she didn't -- she didn't...
FEEHERY: Well, that's a good point. But she -- she was first lady. That's a big job. Caroline Kennedy...
ROSEN: Well, she ran the first time.
FEEHERY: And she ran...
BLITZER: She ran -- well, she ran for...
BLITZER: When she decided she wanted to be a senator from New York, I remember very vividly...
BLITZER: ... back, what, in 2000, or whatever. She went on a listening tour.
BLITZER: She went to Syracuse and to Buffalo and Albany. She went all over the state listening to folks. And they said, yes, we would like to you be a senator from New York, even though she didn't live in...
ROSEN: You know, many voters, not just one voter.
Look, I'm not one of those people who thinks that you're only call to leadership is that you have been in elective office. I think there are plenty of ways to get experience and plenty of ways to demonstrate you're a leader. And I think she has some of that.
But this is a crowded field. And Governor Paterson, you know, strikes me as somebody who is -- he is not going to be dictated to by a president, by another senator, by a family dynasty. He's kind of quixotic that way. I will think he will make his own decision.
BLITZER: But there's nothing wrong with her telling folks, you know what, it's up to the governor, but I really would like this. This is now my passion. Even though I have had -- been out of the limelight over these many years, right now, this is something I would like to do.
FEEHERY: And I'm going to tell Governor Blagojevich right now that I want to be senator from Illinois.
I mean, that's nice to say that, but I think you have to have some experience in elective office, and it helps to actually have run before. No one Really knows where she is on some of the big issues. New York is a tough state. And for New York Democrats, can she beat Rudy Giuliani in two years, or Peter King? I mean, those are the big questions. And I think a lot of the Democratic political...
BLITZER: She could raise a lot of money. We know that.
FEEHERY: She can.
ROSEN: She can. But key for Governor Paterson is going to be, you know, he's going to be on the ticket with her in 2010. He wants to run with someone who's going to help that ticket.
BLITZER: That's a good point.
ROSEN: All politics is local. So, I think that's going to be a big consideration.
BLITZER: That's -- that's why you are an excellent political strategist...
BLITZER: ... because you understand that kind of stuff.
Joe Biden, we're told -- we have been reading these stories, he's going to lower the profile, the involvement of the vice president, compared to Cheney. What are you hearing?
ROSEN: Well, I think that this is -- is much more symbolic than it is meaningful.
I think Joe Biden's power will come from one person, and that's President Obama. And if he includes him in the meetings and if he includes him in the decision-making, he will be as powerful a vice president as we have seen. And, so far, indications are that president-elect Obama is -- is committed to that.
BLITZER: By all indications, he's relying on him for a lot of information. They seem to have developed a pretty close relationship.
FEEHERY: I think Biden is going to be very important to Barack Obama as he goes through.
The question, of course, is he trying to just react against Dick Cheney? Because that's kind of silly. I mean, Al Gore also had a huge symbolic role in the vice presidency. You know, for Joe Biden, I think there's also -- make sure to get him out of the limelight, so he doesn't mess up, because he's a guy -- he's kind of one of these guys that has a lot of -- he's very verbose and says a lot of things that he had to retract during the campaign. So, keeping him in the background probably is not a bad idea...
BLITZER: But he's -- he's more than been willing to accept that. You know, normally, he would like to go on all the TV shows and talk. But he's been pretty discreet over these past several months.
ROSEN: It's a -- it's a lovely and charming discipline that he has engaged in over the last couple of weeks
(LAUGHTER) ROSEN: But, you know, I know he's in those meetings, and I know that president-elect Obama is consulting with him.
And, you know, this notion of, well, he's giving up caucusing with the senators, you know, the -- the Senate Republican Caucus didn't give Dick Cheney too many votes. So, I'm not sure that matters so much. It's -- it's going to be the policy...
BLITZER: The only vote a vice president has is if there's a tie. And then the vice president has to break the tie.
But we will see if there are ties in this new lopsided U.S. Senate. We will see how that unfolds.
FEEHERY: I hope so.
BLITZER: All right, guys, thanks very much.
The president of the United States has a word with his dog.
(BEGIN VIDEO CLIP)
G. BUSH: Barney, you would better wake up, fellow. There's a lot of work to do around here. We're sprinting to the finish, not napping to the finish.
(END VIDEO CLIP)
BLITZER: It appears Barney wants to celebrate the holiday his way. Wait until you see his very last video from inside the White House.
And many politicians say they're honored when they're spoofed on "Saturday Night Live," but not necessarily New York's governor. He's apparently insulted. Did the "Saturday Night Live" skit cross the line into insulting people with disabilities?
And what might Barack Obama say about the governor of Illinois possibly being impeached? We're standing by for a live news conference. There you see those pictures, Barack Obama getting ready to answer reporters' questions in Chicago. You will see it live right here in THE SITUATION ROOM.
BLITZER: In today's "Political Ticker": Senator John Kerry will become the chairman of the Senate Foreign Relations Committee for the next Congress. Kerry says he's honored. This comes 37 years after Kerry's testimony before that committee as a young soldier back from Vietnam. That subsequently caused some controversy, as all of us recall. And, when you watch our next story, you may think the White House is going to the dogs. Not exactly. But it is an important occasion for the first family's dog, Barney.
(BEGIN VIDEO CLIP)
G. BUSH: It's really great to have the whole family together like this.
LAURA BUSH, FIRST LADY: It really is special.
BARBARA BUSH, DAUGHTER OF PRESIDENT BUSH: In fact, Willard (ph), I think these are the memories we're going to cherish most about our time in the White House.
JENNA BUSH, DAUGHTER OF PRESIDENT BUSH: Well, that, Willard, and when Barney decorates the whole house for the holidays.
MICHAEL PHELPS, OLYMPIC GOLD MEDALIST: Hey, Barney, I'm glad the decorations are finally coming together, and you're using my favorite colors, gold.
(END VIDEO CLIP)
BLITZER: A little cute video from the White House, Barney. We have gotten used to seeing that every year.
Let's go back to Jack Cafferty right now. He's got "The Cafferty File" -- Jack.
CAFFERTY: A little slow, is it, today?
CAFFERTY: The question this hour: What does it say about our image when a foreign reporter throws his shoes at President Bush?
Gus in California: "It looks bad, but there is a silver lining. I don't think that this journalist would still be alive if he had thrown his shoes at an American president or dignitary while standing next to Saddam Hussein. So, I guess that is progress."
Al in California: "It means Bush has no soul, and someone decided to loan him theirs."
J.S., West Indies: "The last thing I want to see happen is George Bush leaves office with a chorus of sympathy from protocol buffs like myself. So, I want to condemn the shoe-throwing incident. The reporter squandered a good opportunity to register his objection to Bush's presence and the last eight years by doing what journalists do best: Ask cutting-edge questions."
Wayne writes: "President Bush was just being greeted as a liberator."
Beverley in Virginia: "The journalist who threw the shoe stated it was for the widows and the people who have been killed. I have never heard our president speak about them. I have no doubt Saddam was a ruthless dictator and he killed his own citizens, but he never killed as many as Bush and the neocons in their pursuit of liberating Iraq."
Tommy in Texas: "If the reporter's feelings are representative of most Iraqis -- and I think they are -- then it is time to bring our troops home."
Ed in Savannah writes: "As they Say, A picture is worth a thousand words, or, in this case, 500 pairs of shoes. I have a hunch the reporter did what a lot of Iraqis would like to do. What I would like to know is, can we get that reporter into the White House Press corps? The press conferences might then get the TV ratings of, say, 'American Idol.'"
And Jack writes: Watching a lame duck duck really quacked me up."
CAFFERTY: That's just awful.
If you didn't see your e-mail here, you can go to my blog at CNN.com/caffertyfile and look for yours there, among hundreds of others.
"Quacked me up" -- Wolf.
BLITZER: Jack Cafferty, stand by.
To our viewers, you're in THE SITUATION ROOM.
Happening now: A live news conference by the president-elect, Barack Obama, it's due to start in about a minute-and-a-half, as he announces key appointments overseeing two of his signature issues, energy and the environment. He will also be answering questions from reporters.
But the question on everyone's mind seems to pertain to that scandal swirling around the Illinois governor, possibly facing impeachment. Now the Obama team has finished reviewing its contacts with him. What did they find?
And has "Saturday Night Live" crossed the line from political satire to flat-out offense? New York's legally blind governor thinks so, along with many others. The skit, they say, went simply too far.
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
New appointments to key posts, his first meeting with his entire national security team, there's certainly lots for Barack Obama to talk about in his news conference that's expected to begin in a few seconds.