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New York City Building Linked to WMD; Governor's Lawyer Pushing Back; Charities Suffer from Madoff Ponzi Scheme; Chaos Over Shoe- Thrower

Aired December 17, 2008 - 17:00   ET


A 36-story New York City office building allegedly linked to weapons of mass destruction. Now, the Feds are moving to seize parts of the building's ownership, alleging a connection to Iran.

Let's to go CNN's Brian Todd.

He's working the story for us -- Brian, what is this alleged connection?

BRIAN TODD, CNN CORRESPONDENT: Wolf, U.S. officials believe part of that building's ownership is a front for a large Iranian-owned bank. And they say that bank set up a scheme to channel money to Iran's nuclear program and its military.


TODD (voice-over): Blending into the landscape in Manhattan this office tower, with only an address as its public face, becomes a financial target for U.S. officials. They're saying 40 percent of the ownership in (ph) this company, saying it's part of an elaborate scheme to funnel money to Iran for its nuclear program.

STUART LEVEY, TREASURY UNDER SECRETARY: The Iranian government has been engaged in a pattern of deceptive practices to fund its support for terrorism and to pursue its nuclear and missile programs.

TODD: The company getting some of the rental money for this building is called the Assa Corporation. U.S. officials say Assa is a front for Bank Melli -- Iran's largest state-owned financial entity. U.S. and European Union officials designated Bank Melli last year as a proliferator for supporting Iran's nuclear and ballistic missile programs and funneling money to the Revolutionary Guard and Quds Force -- considered terrorist groups by the U.S.

An Iranian official at the U.N. had no immediate comment on the latest moves against the property in New York, but last year, Bank Melli issued a statement denying involvement in any deceptive banking practices.

How much money generated at this address might have gone to support Iran's military programs? LEVEY: I am not in a position to give that kind of a figure, other than to say I think that sort of intuitively, obviously, this is a large commercial property on Fifth Avenue.

TODD: One conservative analyst applauds the move against the property assets, but says more can be done to pressure Tehran over its nuclear program.


TODD: And specifically, that analyst says that Iran buys gasoline from outside Iran -- from at least five European and Indian- based companies. And he says that those companies also have assets in the United States. He says the U.S. government could pressure them to stop doing business in Iran. But Stewart Levy at the Treasury Department says for now, they're going to focus on entities that support what he calls more illicit activities -- Wolf.

BLITZER: That's a huge building, Brian. What about the tenants in that building? Could they be kicked out? What do we know about -- what about this part of the story?

TODD: They don't seem be implicated at all right now. Stuart Levey at the Treasury Department says those tenants have done nothing wrong and they have no reason to worry. The only thing that will change, he says, is that 40 percent of the interest of the Assa Corporation in that building has now been blocked. But the money that it generates -- that rental income, essentially -- is now directed into a blocked account.

BLITZER: Brian Todd, thanks for that story.

The lawyer for the embattled is Illinois governor pushing back this afternoon, calling hearings on possible impeachment "unfair and illegal." The attorney for Rod Blagojevich was at the statehouse today and blasting representatives there.

Our CNN national correspondent, Gary Tuchman, has been working the story for us -- Gary, what is the latest?

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: Well, Governor Rod Blagojevich, Wolf, may eventually resign some day, but it's not going to be imminent. His lawyer telling us today they plan to fight. And remember, the lawyer telling us that this Friday he may make the governor available to talk to reporters for the first time since his arrest.

Inside this building behind me, the state capital of Illinois, impeachment hearings going on. And that's why Ed Genson, the lawyer, was here. And he's angry. He says he hasn't heard these audiotapes and he can't defend his client.

But he gave us a germ -- and I emphasize a germ of a possible defense for criminal proceedings. He basically said, hey, the words on this tape, they're dumb, they're inappropriate, they're jabbering, but nothing happened. He says illegal actions actually didn't take place. (BEGIN VIDEO CLIP)

ED GENSON, BLAGOJEVICH'S ATTORNEY: We also haven't seen the wiretap. We haven't seen how many you conversations there were. We haven't seen whether these were taken out of context. We haven't seen if they were accurately described. We haven't seen whether, in fact, there were conversations that show a withdrawal of the statements that were made. We haven't seen any of this.


TUCHMAN: So Genson is saying he has a tough time defending his client.

But under Illinois law, a crime does not have to be proven to impeach and convict someone. It's just basically if you're a sleaze, they can kick you out.

Now, he was asked -- the lawyer -- if the governor will come here and testify. He says he hasn't decided yes or no. And, Wolf, this guy Genson, a really interesting character -- a very well-known an attorney for 44 years. And I never heard this before. Some people produce his name "Jenson." Some say "Genson" (INAUDIBLE) gee, I asked him, what's your name?

He goes, well, my real name is "Genson," but everyone calls me "Jenson," so call me whatever the heck you want.


BLITZER: I've heard that from people in the past.

All right, Gary, keep working the story. Thank you.

Meanwhile, we're getting a clearer picture right now of the staggering losses from that pyramid scheme allegedly run by a former Wall Street player named Bernard Madoff. And it's not only personal fortunes that have been wiped out -- many charities, especially Jewish organizations, have been financially crushed.

Let's go to CNN's Ted Rowlands. He's working this part of the story in Los Angeles for us. A huge impact on some of these charities out there, isn't there -- Ted?

TED ROWLANDS, CNN CORRESPONDENT: Yes, Wolf. In excess of 30 Jewish charities probably hit by this. They're still really trying to sort all of this out. But what Madoff allegedly was able to pull off has had a dire effect on Jewish charities in Southern California. People are upset this happened in the first place. They're also upset that a Jewish man could do this to Jewish charities.


ROWLANDS (voice-over): Movie mogul Steven Spielberg and Jeffrey Katzenberg's charity lost millions, according to "The Wall Street Journal," to Madoff. No comment so far from Spielberg, a giant in the Los Angeles Jewish community, whose list of mega hits, of course, includes the Academy Award winning "Schindler's List."

Another victim, the Jewish Federation of Los Angeles, a charitable organization that lost $6.4 million to Madoff. The Federation invests through the Los Angeles Jewish Foundation, which manages several Jewish charities' assets. They lost about $18 million total. Federation Board Chairman Stanley Gold says Madoff's alleged ability to deceive notwithstanding, he still wants some answers as to how this could happen.

STANLEY P. GOLD, JEWISH FEDERATION OF GREATER LOS ANGELES: He clearly was a pretty good con artist to accumulate this amount of money from this many people. You h to acknowledge that there was a big con going on.

But the question is not whether how many and who else. The question is, did the people who invested the money do the appropriate amount of due diligence?

ROWLANDS: The part of the story that's hard for many to comprehend is the fact that Madoff, who is Jewish, appears to have openly stolen from Jewish charities.

GOLD: Unfortunately there's bad guys in all kinds of religions. And, unfortunately, he was Jewish. And, unfortunately, he did defraud a fair amount of Jewish charities. It's sad, is all I can really say.


ROWLANDS: And, Wolf, a lot of people, quite frankly, are just in shock over this still and the ramifications of it. They're going through to find out exactly how he was allegedly able to pull them off -- pull this all off.

We should note, of course, that Madoff has cooperated with investigators, according to federal authorities. His lawyer says that he will be fighting all and any charges very vigorously -- Wolf.

BLITZER: And it's not just Jewish charities in Southern California. In Florida, right here in Washington, and in New York -- all over the country, a lot of these charities are in real, real trouble. Some of them have already shut their doors as a result of this.

Ted, thanks very much for that report.

Let's go to Jack. He's got "The Cafferty File" -- it's amazing, Jack, what's going on here.

JACK CAFFERTY, CNN ANCHOR: I have just a quick question before I get to my question. You know, if the New York City Police Department arrested a drug dealer, you know, with some crack/cocaine in his pocket, they'd take him out to Rikers Island and throw him in a cell with a couple of hundred people and let him rot there until it's time for his trial.

This clown is accused of stealing $50 billion from people, he is placed under house arrest in his $7 million Park Avenue apartment in New York City.

Can you explain that to me?

BLITZER: I can't. But he's out on $10 million bail, which apparently he could post.

CAFFERTY: All right. It's amazing.

All right. The vice president -- I have other questions. Vice President Dick Cheney gave an interview to ABC's Jonathan Karl in which he defended the administration's decision to invade Iraq, the war on terror, waterboarding, GITMO and much more. Yesterday, you'll recall, President Bush gave a similar interview to our Candy Crowley.

There's only 34 days left now for the administration and both men are reflecting on the past eight years and, perhaps, thinking about their legacy and how they might be remembered. It's a time to talk up their accomplishments in the hopes that critics' attention will be diverted from the other stuff.

Bush and Cheney are leaving Washington in the middle of two wars and the worst economic downturn since the Great Depression. There is certainly no shortage of memories of our 43rd president -- everything from speaking at ground zero following the 9/11 attacks -- perhaps his finest moment -- to the time he choked on a pretzel and fainted while watching Sunday night football.

And then there's the vice president. He has redefined the role of the nation's second in command. He will long be remembered for that. But he'll also be remembered for shooting his quail hunting companion in the face in 2006.

So here's the question: Who will history be kindest to, President Bush or Vice President Cheney? Go to and you can post a comment on my blog -- Wolf.

BLITZER: We'll see. History is unique. We'll see what history can do.

All right, Jack. Thanks very much.

The secretary of State weighs in on the infamous shoe throwing incident in Baghdad. Condoleezza Rice says we -- meaning the news media -- we got it all wrong, she says. Plus, her big regret from the past eight years -- her one-on-one interview with Zain Verjee. That's coming up.

Plus, Barack Obama has promised transparency and now says he's frustrated because of something he can't release to the American public -- at least not yet. You're going to hear about it in his own words. That's coming up.

And new tactics will now be allowed to battle those pirates. Could the U.S. military be involved?


BLITZER: Iraq's parliament descended into chaos today over how to deal with a man who hurled his shoes as President Bush. Several lawmakers angrily insisted the Iraqi journalist be set free. But sources tell CNN he's likely to face trial.

Our foreign affairs correspondent, Jill Dougherty, is in Baghdad -- Jill?

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Wolf, the debate over that Iraqi journalist who threw his shoes at President Bush has helped to throw the Iraqi parliament into an emotional uproar. There was a heated discussion over that subject and also another one over that draft legislation that the parliament has passed that concerns the withdrawal of troops from other countries -- than the United States -- from Iraq.

It was so heated at one point that the speaker of the parliament actually said that he would resign. But he later did not follow through on that threat.

Now, what has been happening to the shoe thrower?

Well, a spokesman for the Higher Judicial Council says the journalist has been held in detention. And on Tuesday night, he gave a statement to an investigative judge. At that session also was a court- appointed lawyer and the prosecutor.

And we are told that that journalist described what happened in the incident. He will be referred to trial. It's not clear exactly when that will happen, but it could be very soon. And the charge will be assaulting a head of state from another country.

It's up to the courts how long a sentence he potentially could get.

Now, there has been a great criticism coming from the family of that journalist. In fact, the brother of the journalist alleging that he was beaten -- that the journalist was beaten. In fact, he says, his arm and his rib were broken. He, however, is offering no proof.

And the spokesman for the Judicial Council says that, no, that did not happen, that actually he was in good health at that session with the judge and that he did not press charges against anyone or say that he wanted to press charges against anyone -- Wolf.

BLITZER: All right, Jill. Thank you. Jill Dougherty in Baghdad.

The secretary of State, Condoleezza Rice, here in Washington speaking out about that now infamous incident in which that Iraqi reporter threw his shoes at President Bush.

Condoleezza Rice spoke about that and more in a one-on-one interview with our own Zain Verjee.

Zain is here in THE SITUATION ROOM. You're back in the State Department. Give us the headlines. What did she have to say?

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Well, we chatted for about 30 minutes. And the secretary was pretty reflective. She says among her best moments in the past eight years in the Bush administration were the liberation of Afghanistan, as well as her historic trip to Libya this year. And we did also talk about the shoe throwing incident in Iraq.

And here's what she had to say.


VERJEE: The shoe throwing incident...


VERJEE: It was really a symbol, in so many ways, in the Arab world, of utter contempt for Bush...

RICE: Yes. And it was one journalist among several who were sitting there respectfully. And I hope it isn't allowed, over time, to obscure the fact that this was the president of the United States standing in Baghdad next to the democratically elected Shia prime minister of a multiconfessional Iraq that has just signed agreements of friendship and cooperation with the United States for the long- term.

VERJEE: But the man who may have been one journalist, but he was viewed throughout much of the Arab world...

RICE: Oh, I...

VERJEE: question is...

RICE: I have heard so many people...

VERJEE: My question for you is...

RICE: Yes?

VERJEE: does it bother you that with all the diplomacy that you've done, President Bush's policies, the policies that you've carried out...

RICE: Zain...

VERJEE: ...that the U.S. is so low (INAUDIBLE)?

RICE: Zain, the United States is not loathed. The policies of the United States are sometimes not liked. People don't like that we've had to say hard things and do hard things about terrorism. People don't like that we've spoken fiercely for the right of Israel to defend itself at the same time that we've advocated for a Palestinian state.

But I have to go back. So many people in -- in and around when that incident happened told me how embarrassed they were by the fact that that had happened. But the focus...

VERJEE: Did it upset you?

RICE: No. No. Only that the focus of those who are supposed to be reporting for history didn't focus on the historical moment, which is that this was the president of the United States in Baghdad, for goodness sakes, with a freely elected prime minister in a show of friendship.

VERJEE: The worst breach of national security in the history of the United States came under your watch.

RICE: Absolutely.

VERJEE: Did you ever consider resigning?

RICE: I believe that this was this was...

VERJEE: Do you (INAUDIBLE) responsibility?

RICE: I do take responsibility. But this was a systemic failure. The United States of America had experienced terrorist attacks in 1993, in 1998 in our embassies abroad, in 2000 against the Cole, and then finally in September of 2001. But the fact of the matter is that we had not thought of this -- we -- the administrations before us had not thought of this as the kind of war against the terrorists that were going to have to wage.

And, by the way, some of the things that people have been most critical of have given us, really, the capacity to respond -- the ability to surveil terrorists through the Terrorist Surveillance Act, so that there isn't a gap between what terrorists are saying when they are abroad and what terrorists are saying when they're in the United States. These are tools that simply didn't exist prior to September 11th.

VERJEE: Let me tell you what secretary -- the former secretary of State, Powell, said just a few days ago on CNN. He said that he was disappointed -- and I'm quoting -- "Frankly, the National Security Council system didn't function in a way that I thought it should have functioned. We didn't always vet everything in front of the president." RICE: Well, I...

VERJEE: You were running the show.

RICE: Well, I -- Secretary Powell and I are very good friends and we remain so. Any principal who ever wished to say something to the president, I facilitated it within hours -- not within days, within hours. And the president sat with his national security team and everybody had an opportunity to speak their mind. And so if people didn't tell the president something, it wasn't because they didn't have the opportunity to do so.

(END VIDEOTAPE) VERJEE: I also asked Secretary Rice, based on her experience, what did she think about this "team of rivals" idea in the next cabinet?

She says different ideas are fine, differences are OK. But the president needs to know how to sort them out and make the right decisions.

BLITZER: And I know you're going to have more of this interview coming up in our next hour, Zain. And I know, specifically, you asked her if she voted for Barack Obama or John McCain. And she gives you answer. And we'll let our viewers listen in the next hour, to hear what she has to say.

Zain, thanks very much for that.

He's been in thousands and thousands of photos, but coming up, you'll see a side of Barack Obama that's been hidden -- at least until now. The so-called lost pictures uncovered. That's coming up.

And he was an American who trained with the Taliban. Now, the emotional plea.

Should he be freed?

The plea coming from his father.

Stay with us.



BLITZER: There's an important story coming into THE SITUATION ROOM right now.

I want to go back to Zain. She's working the story and it involves one of the big three U.S. automakers -- Zain.

VERJEE: Yes, Wolf. It's just coming in here to us. The Associated Press is now reporting that Chrysler will close all 30 of its manufacturing plants for a month starting this Friday. The automaker, of course, is in dire financial straits. It's hoping for billions of dollars in loans from the government -- a move Congress has rejected and the White House is now working on.

Tighter credit markets are keeping would-be buyers away from their showrooms. Chrysler says that dealers are unable to close sales for buyers due to a lack of financing and estimate that 20 to 25 percent of their volume has been lost because of the credit situation.

In other news, Wolf, NASA scientists warn that about two trillion tons of ice have melted around the world since 2003. That's enough water to fill the Chesapeake Bay 21 times over. The scientists blame the meltdown on global warning. They say the extra water is contributing to a dramatic increase in sea levels. Motorola the latest company to make a painful cut. The cell phone manufacturer says it will permanently freeze employee pension plans starting in March. While the company will continue to invest cash into its pension plans, individual pensions will no longer reflect salary increases. Motorola will also no longer match 401(k) contributions. Company officials blame the economic downturn.

The losing day on Wall Street -- after gaining ground yesterday, the Dow Jones Industrial Average fell about 100 points today, closing at 8824.

Is that Baghdad shoe thrower inspiring would-be copycats?

Well, the "New York Daily News" says a man was protesting a proposed bus and subway fare hike at a transit board meeting. He railed against the transit chief and then reportedly made a move as if to throw his shoes. And he was just hauled away by police. The protester's apparent inspiration, Wolf, the angry Iraqi journalist who threw his shoes at President Bush on Sunday.

BLITZER: I guess that's copycat stuff. That's what's going on, probably.

All right, Zain thank you. Zain Verjee standing by.

President-Elect Barack Obama says he's frustrated over the scandal involving the Illinois governor and he's making a promise to the public.

Also, clearing the way for military strikes against Somali pirates as they seize more ships and their crews. Will the U.S. military get directly involved?

And the first face transplant operation right here in the United States -- why the patient -- what the patient has to say. We're getting new details.

Stay with us. You're in THE SITUATION ROOM.


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

Happening now, Barack Obama's transition team -- just what were those contacts with the embattled Illinois governor, Rod Blagojevich?

The president-elect would like to tell all of us, but he can't. Hunting down pirates -- just how far should an international crackdown go?

A new United Nations resolution could lead to military action in Somalia. We're going to have a live report from the Pentagon.

And the new photos of Barack Obama as a young man published for the first time -- the president-elect as you've never seen him.

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: But we're getting a new story. Breaking news coming into THE SITUATION ROOM right now.

I want to go to our senior White House correspondent, Ed Henry. He's working the story for us. And we've learned of a major announcement expected from the president-elect and it's got some major political ramifications.

ED HENRY, CNN CORRESPONDENT: That's right, Wolf. The second Republican in the Obama cabinet. You know, he's been talking about doing that before. He's been questioned about why he hasn't picked any other Republicans, beyond Robert Gates, as Defense secretary, staying on.

CNN has now learned from two Democratic officials that retiring Republican Congressman Ray LaHood of Illinois will be named Transportation secretary as soon as tomorrow, when another press conference with the president-elect is scheduled.

What's interesting is that this is yet another Illinois politician being brought into the team. You remember yesterday, his Education secretary, the Chicago schools chancellor, brought in. And my colleague, our national political correspondent, Jessica Yellin, has been working this story, as well. She's just gotten some quick reaction from Congressman Tim Johnson, a Republican of Illinois, saying: "I think Ray has the ability to work both sides of the aisle well. He's an extraordinarily talented legislator from Illinois. So from a provincial standpoint, that meet our needs, as well."

Obviously, people in the Illinois delegation will be happy.

But I think, also, when Tim Johnson mentions there the bipartisanship, you'll remember, Ray LaHood really came to fame one time really in the limelight during the impeachment drama with Bill Clinton. Because of his fairness, his bipartisanship, Ray LaHood was selected by House leaders to preside over the House impeachment debate. You see his face there. He was a very familiar face you'll remember from covering that, Wolf, and now a very bipartisan figure being brought into the cabinet as transportation secretary.

BLITZER: I don't remember how he voted on the impeachment resolution in the house. We'll check that. I'm sure you don't remember either, do you?

HENRY: It's been a few years. I honestly can't remember.

BLITZER: I'm going to try to find out. We'll get the answer to that, how he voted on the impeachment of Bill Clinton back in 1998 when that resolution in the house was approved. It went to the Senate where there was a trial. He was acquitted and didn't -- wasn't forced to leave the presidency. All right. But this does set the stage for an effort on the part of the president-elect right now the to show that he's trying to reach out and not only bring in a lot of Democrats more moderate Democrats and liberal Democrats but also bringing in some Republicans. I think that's a powerful message he's trying to send out.

HENRY: It certainly is. He's trying to show he's going to have a bipartisan team. He's gotten pressure to follow through on that. After Robert Gates, this is only the second one. As you've been noting during the show, he's running out of spots. The only other spot after this will be labor secretary and we obviously do not expect that that will be a Republican. It's going to be a liberal Democrat almost for sure.

And then secondly, you've also been talking about how the intelligence posts are still out there, not cabinet level but the director of national intelligence, CIA director. They're important posts. We'll see if he reaches across the aisle there.

BLITZER: All right. Thanks very much, Ed Henry with the news.

Let's talk about this and more with CNN political contributor, the Democratic strategist Donna Brazile and Republican strategist John Feehery. You once worked for Ray LaHood back in your days of the House of Representatives.

JOHN FEEHERY, REPUBLICAN STRATEGIST: He gave me my first raise on the hill. That's why I love Ray. I'm glad he got a job. He's been looking for one. He's a terrific choice for Barack Obama. He understands transportation issues. He's bipartisan. He led all the bipartisan retreats. He did oversee impeachment but did it in a fair manner.

BLITZER: How did he vote?

FEHHERY: I think he voted for it. He was very fair. He's got strong connections on both sides of the aisle. A terrific choice for Barack Obama.

BLITZER: Donna, what do you think?

DONNA BRAZILE, DEMOCRATIC STRATEGIST: I think he's a great choice. I remember him from my tenure on Capitol Hill. He's a fair player. I think President-Elect Obama was wise in choosing him.

BLITZER: He's also had a good relationship with Rahm Emanuel, soon to be the former Congressman from Illinois. Presumably, that didn't hurt his chances. It does send out a message from the president-elect. You know what? He realizes that he was elected, he got more than 50 percent of the vote but the Republicans I think John McCain, he got about 47 percent of the vote and so if he wants the country to unite, he's got to do more than just talk about it.

BRAZILE: As you recall on election night, he extended an olive branch to those who did not vote for him. He said I will listen to you. Clearly he's continuing that effort.

BLITZER: He keeps saying, Barack Obama, the president-elect, he's frustrated he can't release all this information because the U.S. attorney, Patrick Fitzgerald has asked him hold off, next week you can do it. But I need this time. How does that sound to you?

FEEHERY: As someone who used to be a press secretary, it gets so frustrating when the lawyers wouldn't let us say something. It's a horrible PR for Barack Obama. But if the lawyers say don't say anything, you have no choice. I feel for him. It's really kind of hurt his early transition although this choice I think helps. As someone who cares about PR, it's bad for PR but it's the right legal choice.

BLITZER: A lot of people will understand if a U.S. attorney who's got a major case involving the embattled governor of Illinois and he says to the president elect, hold off, can you just wait a week? I know it will cause you a little grief with anxious reporters out there. It sort of makes a lot of sense.

BRAZILE: Looks like everybody's ready to go on vacation so they're telling President-Elect Barack Obama hurry up, we want to go on vacation but the truth is the U.S. attorney has also issued some statement to the lawmakers in Illinois to hold off on calling witnesses. I'm confident President-Elect Obama will give us all of the information, lay out all the details so that we can enjoy our holiday season.

BLITZER: There was an interesting article in the "Washington Post" by Congressman Emmanuel Clever, II, an African-American Congressman from Missouri, Democrat, and he writes this to his fellow African-Americans in part. He says, "I think every African-American supporter of Obama can safely assume that Obama will do everything within his power to create a level playing field for all Americans by ensuring that they have a government that is just and fair, but it is important to note that Obama will not be the nation's highest profile civil rights leader. He will be leader of the free world." He's trying to reassure African-Americans out there, you know what? He's not going to do whatever you want because he has a responsibility as president of the United States.

BRAZILE: Wolf, I was in Milwaukee last week and I found myself doing the same thing in talking to a predominantly black audience. That is, I wasn't down playing expectations. I said look. African- Americans want what all Americans want. We want good paying jobs. We want an economy that's stabilized. But at the same time, he's not the black president. He's our president, the president of the United States. I think African-Americans understand that. Look, I would love to have 40 acres and a mule. I think my family was waiting for that too but I am going to put this aside and just want a good government.

BLITZER: What do you think, John?

FEEHERY: I think managing expectations is important for any president. Cleaver has done a really good job of managing and helping President Barack Obama manage those expectations. Things are not going to change overnight in this country. And some people don't want to have change overnight. I think for him, it's very good idea to try to help manage those expectations.

BLITZER: It will calm down. We'll see what happens. Not going to change the world in 24, 48 hours.

BRAZILE: And look already George Bush is dancing. He's so happy to be leaving Washington, D.C. So we might already have our black president up there. We don't know.

BLITZER: All right, Donna. Thanks very much. John, thank you.

A plea for mercy by the parents of the man known as the Taliban American. We're going to tell you what they're asking of President Bush right now.

And looking for a great seat to watch the inauguration? How about tickets to a ball. It's available but will cost a mere $50,000.

And Hollywood celebrities are ready to pay it.

Stay with us. You're in THE SITUATION ROOM.


BLITZER: You may know his name but his nickname is notorious, the Taliban American. Now his family is hoping the holiday spirit may help him get out of prison. Let's go to CNN's Jeanne Meserve. She is working the story for us.

What's going on here, Jeanne?

JEANNE MESERVE, CNN CORRESPONDENT: For the fifth time, the family of John Walker Lindh is asking President Bush to commute his sentence.


MESERVE (voice-over): John Walker Lindh was an American citizen fighting for an American enemy. But his family says he has served in prison long enough.

MARILYN WALKER, MOTHER OF JOHN WALKER LINDH: This is the Christmas season. And it is a time for mercy. John has been incarcerated now for seven years. We hope the President Bush will recognize that justice will be served by commuting John's prison sentence.

MESERVE: John Walker Lindh was captured in Afghanistan fighting for the Taliban in 2001. The father of CIA officer Johnny Spann has blamed Lindh for the death of his son in Afghanistan. But Lindh was not charged in Spann's death and terrorism charges were dropped as part of a plea deal. Lindh did admit to providing services to the Taliban and carrying weapons and received a sentence of 20 years. His family says that is disproportionate when compared to sentences in other terror-related cases.

FRANK LINDH, FATHER: All he did was join the army in Afghanistan. That's all he did. These other people end up with less sentences. We think it's conspicuously unjust for John at this point to continue to serve prison time. MESERVE: But a former prosecutor says the sentence was appropriate given Lindh's own admissions.

DAVID LAUFMAN, FORMER FEDERAL PROSECUTOR: He went to the Alpha Ruk, al Qaeda training camp which was in essence of the varsity training camp for al Qaeda recruits where he received the full course of military training. He admitted that he pledged loyalty to jihad. He admitted that he continued serving with the Taliban until November of 2001 two months after the 9/11 attacks.

MESERVE: President Bush has granted only eight commutations in eight years in office. Most experts say the odds he'll granted this one are slim. Despite the pleas from Lindh's family.

LINDH: Please, Mr. President, show mercy for our son and for our family.


MESERVE: Lindh is now in his late 20s and his father says he is bearing up well in prison. He has 13 years left on his sentence -- Wolf?

BLITZER: Thank you.

The danger is growing off the coast of Somalia right now with more and more pirate attacks and the United Nations is now paving the way for military action. Let's go it our Pentagon correspondent Barbara Starr looking at the story for us.

The ramifications are significant potentially for the United States military, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Absolutely, Wolf. The U.S. military left Somalia the last time in the mid-1990s amongst the infamy of a mission gone wrong. Now there is unbelievable talk about them going back.


STARR (voice-over): Pirates seized four more vessels off the coast of Somalia Tuesday. Maritime officials estimate 18 hijacked cargo ships and over 350 crew members are now being held. Trying to exert control over the chaos, the United Nations passed a U.S.- sponsored resolution authorizing all necessary measures to stop pirates. That could lead to air and land attacks against targets inside Somalia.

BAN KI-MOON, U.N. SECRETARY-GENERAL: This lawlessness constitutes a serious threat to regional stability and to international peace and security.

STARR: There are dozens of warships already patrolling the warships the waters off Somalia including U.S. naval ships but the U.S. military is concerned about escalating the action. Vice Admiral William Gortny the senior naval commander in the region recently told reporters "the collateral damage concerns cannot be overestimated." Air strikes risk killing innocent civilians, committing ground troops in Somalia, senior are pentagon officials tell CNN if the Bush White House orders up a plan, the pentagon will provide one but there's no enthusiasm for it. Even so, secretary of state Condoleezza Rice tried to make the case.

CONDOLEEZZA RICE, SECRETARY OF STATE: I would not be here seeking authorization to go ashore if the United States government perhaps most importantly the president of the United States were not behind this resolution.


STARR: You know, the U.S. military would really like to see some other steps taken first. Most specifically new legal arrangements so pirates that are captured would actually stand trial. Right now, there's nowhere to send them if the U.S. navy gets a hold of them. Sometimes they give them food, water, and medical attention and then they have to release them -- Wolf?

BLITZER: Barbara Starr working the pirate story. Thank you very much. As I said, potentially serious ramifications for the U.S. military.

A doctor describes an incredible medical break through. Details of what was a near full facial transplant done on a female patient at an Ohio hospital in the United States.

Look at this, much younger and looking cool. Never seen before photographs of the president-elect. How did these candid shots of Barack Obama come to light? We'll tell you right here in THE SITUATION ROOM.


BLITZER: Want to get more on the breaking news story we're following involving Chrysler. Our CNN money correspondent Poppy Harlow is working the story for us. Chrysler saying they're going to close what, 30 plants for a month. That's all their manufacturing it plants, right, Poppy?

POPPY HARLOW, CNN CORRESPONDENT: Yes, that's all of Chrysler's manufacturing. This press release just coming to CNN and CNN Money from Chrysler saying they're going to idle all those manufacturing plants between December 19th and January 19th of this year. This really all comes down to the excess inventory sitting at those automakers, also sitting on the lots of dealerships across the country.

Let's talk about what this means for the workers and especially for all those workers in Detroit. If you're a union worker under the terms of the contract, you will still get paid. The way that Chrysler is saving money is that they're cutting all that cost in terms of material, the energy to keep the plants on.

I just talked to Alex Taylor, the junior writer at "Fortune" magazine. He covers all of this and has been covering autos for years and years. He said this also comes down to the fact that Chrysler Financial, that financial services arm of the company that gives a lot of auto loans for dealers to buy the cars to put on the lots and for Americans to buy the cars are having such a hard time getting credit, that's that is driving this. He said he would not be surprised to see General Motors and Ford follow suit. We're seeing reports coming in that we may see Ford doing that, as well. We'll bring that to you when we have it. A really interesting development.

BLITZER: There had been a report that GM was going to shut down 21 of its manufacturing plants for the month of January, as well. The workers if their union members they will get paid. They won't have to work for that month.

HARLOW: That's exactly right. Let's touch the workers will get paid if they're union workers. In terms of General Motors that you were mentioning, we know in the first quarter of next year, of 2009, GM is scaling down production by 50 percent. So major cut there. But this latest news coming out from Chrysler. Is Chrysler sales this year are the hardest hit of all the big three. They make dodge and jeep. They're the hardest hit so far. Not a big surprise to get this news. The union workers should get compensated for that month.

BLITZER: Well, Poppy, thank you for that. We will stay on top of the story.

Another important story we are following is historic here in the United States. Doctors in Cleveland are performing cutting edge face plant surgery on a badly disfigured woman. Let's go to our senior medical correspondent Elizabeth Cohen who has more on this amazing, amazing procedure.

What do we know, Elizabeth?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Well, what doctors told journalists this afternoon is that she was disfigured for many years and people would make fun of the way she looked and they hope that now that will all change.



COHEN (voice-over): Her doctors call it the first surgery of its kind. A near total face transplant performed less than two weeks ago at the Cleveland clinic.

SIEMIONOW: I must tell you how happy she was when with both of her hands she could go over her face and feel that she has a nose, that she has a jaw, and she has full face in front of her.

COHEN: In a breakthrough 22-hour surgery, surgeons transplanted 80 percent of her face from a cadaver came skin and facial muscles and nerves and lower eye lids and cheek bones, upper jaw, blood vessels and arteries. SIEMIONOW: The patient will never look like him or herself and never look like the donor or the recipient.

COHEN: The identity of the patient is keeping a secret but we do know she suffered severe trauma several years ago and as a result, she is blind in the right eye. She could not smell or taste and had trouble speaking. Her sibling says in a statement, we never thought for a moment that our sister would ever have a chance at a normal life again after the trauma she endured.

In the coming weeks she will have intense physical therapy. Doctors say it will take three to six months before the nerves regenerate and the face will feel and work like her own.


COHEN: Isabel Dinwa the French woman who was to receive a face plant a few years ago has done well, but she has had a few bumps in the road. Her body at certain points has tried to reject the face, and at one point she went into kidney failure, but we are told now she is doing well -- Wolf?

BLITZER: Well, Elizabeth Cohen, a remarkable story. Thank you.

And you have probably already guessed who "Time" magazine's person of the year is. That would be President-Elect Barack Obama, and there is a picture of him courtesy of "Time" magazine, a picture taken almost 30 years ago when he was a freshman at Occidental College in California. Zain Verjee is here.

Let's talk about it, Zain, because Lisa Jack who is a young photographer and a classmate of Barack Obama's at Occidental had these pictures and black and white photos in the new issue of "Time" magazine, but she had not developed them and kept them in storage in the basement and all of the sudden, she got them developed and shared them with "Time" and "Time" is sharing them with us.

VERJEE: And she had no idea that she had this entire roll of film of the president-elect looking so young looking cool and cute in these photographs and she said they sat in a binder for 30 years, and then after the election pulled them out, and this is the result.

BLITZER: Yes, he has the hat, and you know, he writes in his own book, "Dreams of My Father" how he was still finding himself at Occidental and remember he transferred from there to Columbia. There is one of the pictures and he smoked cigarettes and he still sneaks one in apparently.

VERJEE: That is a rolled cigarette and not a joint apparently.

BLITZER: OK. Let's get that picture up, because Zain knows a lot about this kind of stuff and she will explain to the viewers, that is a cigarette, right?

VERJEE: Right. You know what the most compelling thing is here is that these photographs are the result of a chance encounter that the photograph said she ran into Barack Obama at a college cafe and said, hey, I'm going to take these black and white photos and will you do it? And she said the only thing she remembered at the time was that he was really cute.

BLITZER: And you agree.

VERJEE: I do. I do. She said she hopes that the photographs reveal the sense of fun and his spirit in the thoughtfulness and the charisma.

BLITZER: They do. Thank you, Zain.

Wiped out by a massive scam and now the victims of Bernard Madoff are not only furious with him, but the U.S. government, the regulators as well, and did they ignore warnings over ten years ago?

And she's open admirer of Barack Obama, but did secretary of state Condoleezza Rice vote for him? CNN's Zain Verjee had an exclusive interview one-on-one with Secretary Rice today and she posed that question. Get ready for the answer right here in THE SITUATION ROOM.


BLITZER: Let's check back with Jack Cafferty for "The Cafferty File" -- Jack?

CAFFERTY: The question is: Who will history be kindest to, President Bush or Vice President Cheney?

Philip in Toronto: "Kinder to Bush. He was just a dupe and a slow thinker propelled from failure to failure by his father's political and financial connections. Cheney on the other hand is evil and self-absorbed and more than likely an undiagnosed sociopath, a power mad Rasputin unrestrained in his own lies and deceits. He feels no one's suffering but his own."

Maria in Ontario: "History will be more kind to Bush because he is widely regarded as a buffoon and need of adult supervision and totally only under the influence of Cheney and other extremists. On the other hand, Cheney is viewed more as a very evil sinister figure that operated in the shadows to gain favor for himself and his corporate buddies."

Judy in California writes: "It seems Bush is taking the lead here. The White House has given its priority to cleaning up the images of both men so we can all look upon them with great admiration in the future. I wonder how long it will take for the families of the fallen soldiers and those of the dead and maimed Iraqis to change their minds?"

Marie says: "Bush, people tend to forgive incompetence before malice."

Maurice in New Jersey: "I deeply hope when my kids are studying this period in history class, Cheney and Bush will appear as nothing more than a blip, a long forgotten memory of a dark period in our country's history."

And Allan in Buxton, Maine: "Historians are the best fiction writers ever. Bush is just stupid, but Cheney is evil so they will have to use their imaginations to re-write the last eight years to make either of them look human."

If you didn't see your email here, you can go to my blog, and look for yours there among hundreds of others; not a lot of kind words for either of them.

BLITZER: I can see. Jack, thank you.

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

Happening now, breaking news, Chrysler announcing just moments ago a temporary shutdown of all of its manufacturing plants. Let me repeat, all of its manufacturing plants. This hour, the stunning response to the auto industry crisis and why a bailout may be needed now more than ever.