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President Obama Turns Up the Heat on Senate for Stimulus Package; Presidential Office of Faith-Based Initiatives Remains, Expands to Include Secular Groups; Outrage Over SEC Inaction on Madoff Scam; Michael Phelps in Hot Water

Aired February 5, 2009 - 23:00   ET



ANDERSON COOPER, CNN ANCHOR: Tonight your money, my money, our future hangs in the balance. On Capitol Hill, the Senate has been working to try to come up with a stimulus bill that would get enough votes to pass. There has been talk the vote might occur tonight. But that is not going to happen.

We have breaking news just a short time ago: President Obama turning up the heat, giving a fiery speech, the kind we used to hear on the campaign trail.

The president took full aim at his critics. Mr. Obama blasting the idea that more tax cuts belong in his stimulus package. We're going to play you a lot from his speech tonight and cover all the drama happening now on Capitol Hill.

Ed Henry and Dana Bash have the latest from the White House and from the senate. Ed, let's start with you.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well Anderson, this was a fired-up president who perhaps realizes he has lost control of the message a bit. So he tried to seize that megaphone right back by reviving as you said, the intensity of the campaign with his speech tonight.

The story behind the story is that originally the White House was going to close this to TV cameras. It's just a private pep talk with House Democrats in Williamsburg, Virginia. But instead, in the last 24 hours they opened it up to TV cameras so they wanted him to reach beyond just Democrats, go to a wider audience and try to sell the stimulus plan.

He took the gloves off and that carries some political risk. Because he dropped a lot of the bipartisan talk and instead really ripped into Republicans in his push back. But White House advisers have made the calculation that the president has already reached out to Republicans. It hasn't exactly worked and now his signature first initiative out of the gate is in deep trouble.

So he decided to really as you say turn up the heat and try to put some pressure on Republicans. And add some urgency to the situation by saying without dramatic action and drastic action this crisis could become a catastrophe. (BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: First of all, I found this deficit when I showed up, number one. I found this national debt doubled, wrapped in a big bow waiting for me as I stepped into the Oval Office.

If we do not move swiftly to sign the American Recovery and Reinvestment Act into law, an economy that is already in crisis will be faced with catastrophe.

This is not my assessment. This is not Nancy Pelosi's assessment. This is the assessment of the best economists in the country. This is the assessment of some of the former advisers of some of the same folks who are making these criticisms right now.

Millions more Americans will lose their jobs. Homes will be lost. Families will go without health care. Our crippling dependence on foreign oil will continue. That is the price of inaction. This isn't some abstract debate.

Last week we learned that many of America's largest corporations already laid-off thousands and are planning to lay off tens of thousands of more workers.

Today, we learned that in the previous week the number of new unemployment claims jumped to 626,000. Tomorrow, we're expecting another dismal jobs report on top of the half a million jobs that were lost last month on top of the half million jobs that were lost the month before that, on top of the 2.6 million jobs that were lost last year.

Now, for you, these aren't just statistics. This is not a game. This is not a contest for who is in power and who is up and who is down. These are your constituents. These are families you know and you care about. And I believe that it is important for us to set aside some of the gamesmanship in this town and get something done.

Now I believe, I just want to repeat because I don't want any confusion here. I believe that legislation of this enormous magnitude, that by necessity we are moving quickly. We are not moving quickly because we are trying to jam something down people's throats, we're moving quickly because we're told that if we don't move quickly that the economy is going to keep on getting worse. We'll have another two or three or four million jobs lost this year.

I'd love to be leisurely about this. My staff is worn out working around the clock. So is David Obey's staff, so is Nancy Pelosi's staff. We are not doing this because we think this is a lark. We're doing this because people are counting on us.

So legislation of this magnitude deserves the scrutiny that it has received. And all of you will get another chance to vote for this bill in the days to come. But I urge all of us not to make the perfect the enemy of the absolutely necessary.


HENRY: And now you heard the president right there say that this can get a lot worse. And in fact CNN has learned that on Monday the Treasury Secretary Timothy Geithner is going to unveil a whole second package separate from the stimulus bill, it's basically going to be called a Financial Stability Program.

Some senior officials are calling it a complete overhaul of the existing TARP Federal Bailout Program that was supposed to solve all these problems last fall. It's going to deal with the foreclosure crisis it may be involving buying up troubled assets for banks, also trying to add more transparency, accountability to the existing TARP Program.

The bottom line is there could be a lot of sticker shock. This could cost hundreds of billions of dollars more buying up these assets trying to keep people in their existing homes. It's a sign, as the president has talked again and again, that, as he puts it there is more than one leg to this stool. The stimulus is just the first part.

Now there is a whole separate financial rescue package coming as early as Monday, Anderson.

COOPER: Wow, talking about more hundreds of billions of dollars. We'll talk about more of that tonight. Ed Henry with the breaking news; thanks, Ed.

President Obama's speech capped a day that came and went without a Senate vote. The Senate had been locked in battle for four days now with the stimulus bill. Majority Leader Harry Reid is running out of patience. He gave his colleagues strict marching orders tonight to return tomorrow morning with a bill they are ready to pass.

Now this, after a day of rising partisan tensions behind the scenes and on the floor. Dana Bash joins me from Capitol Hill. Dana, an hour or so ago we were being told they are going to work through the night. Maybe even vote tonight. Why did Reid change his mind and send them home?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It was really fascinating, Anderson. I was in the Senate chamber watching the Senators huddled together on the Senate floor and bracing for an all- nighter.

And Harry Reid left the Senate floor. He came back maybe, five, ten minutes later. And it turns out we know now that he was talking to the White House. And it was then that he announced, "You know what I am going to give that group of about 20 Senators, bipartisan group of Senators, a little bit more time to forge a compromise."

And so, even as Mr. Obama was saying, publicly at the very same time he was saying the time for talk is over. Privately the White House was telling the Democrats in the Senate, give it a little bit more time. And the reason is very simple, Anderson.

Right now, as we speak, the votes simply are not there in the Senate for President Obama's number one issue and number one priority. And that is this economic stimulus bill.

So what's going to happen now? Well, that group of Senators. They are back at it. They are trying to forge compromise as they have been trying to do all day long. Specifically they are looking to cut about $100 billion in spending out of the $900 billion bill.

But in talking to Senators all day long, Anderson, I can tell you it is not going to be easy for them to do that. It is very, very tough to figure out the right balance of spending and cuts here in order to get these votes.

COOPER: Yes, this thing is just fascinating and it's not ending any time soon. Dana Bash thanks.

To help him press his case, President Obama pointed to new numbers from the Labor Department. I have got to tell them to you.

The agency reported that new unemployment claims rose to 626,000; that's more than expected. Highest since October 1982 and nearly five million Americans are now receiving unemployment benefits. The most since records began in 1967; more than 11 million people out of work.

Let's talk strategy and a lot of strategy to talk about with senior political analyst, David Gergen, John King, and Joe Johns.

So last night, David, we were being told the president basically had this thing in the bag, tonight not so much. What do you think is happening?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, usually in the Senate, you get some seesawing back and forth. The surprise tonight was the speech he gave. It was surprisingly partisan; I'm sure Democrats loved it. But for Republicans it was a case of conflicting signals. You say you want bipartisan compromise, you give this partisan speech.

I think it puts very much at risk in trying to get more Republicans on that compromise bill tomorrow morning in the Senate.

COOPER: John, were you surprised by the speech? I mean, all that talk of bipartisanship, as David said, that seemed to go out the window in this speech at least?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, that's an interesting strategy. The president is making clear that he believes he has the support of the American people. And he personalized the fight tonight. And he had a difficult choice, Anderson.

Going in to speak to House Democrats, as Ed Henry noted, that was supposed to be closed. They decided to invite in the cameras. Every politician would like to expand his base. And as Dana noted, he's going to need to compromise and get some Republican votes.

But the one thing any politician cannot afford is to lose his base. So President Obama not only needs them in the stimulus fight, he needs them -- the TARP, the bailout funds are so unpopular back home. He needs the Democrats to vote for that. He needs them in health care debates and climate change debates down the road.

So he went in and publicly embraced the Democrats tonight and essentially said to the Republicans, "Try me." So this president is making clear he is going to try to flex his muscle and do so early.

COOPER: We're going to have more from all our panelists, Joe Johns, in just a moment. But I want to play you more of the president's fiery speech in a moment.

And I want to know if you think Congress is moving too fast or too slow on the stimulus bill. Join the chat happening now at on line all throughout the program.

Also, of course, Erica Hill's live web cast during the break.

When we come back, David, John King, Joe Johns will rejoin us in a moment and we'll talk more about the speech. And we're going to let you hear more of the speech tonight in Virginia pulling out all the stops pressing Congress to put a bill on the desk before things get worse.

Plus, tonight, for the first time we're hearing the cockpit recordings from that US Air flight that landed in the Hudson River. Listen.


UNIDENTIFIED MALE: Cactus 1529 turn right 2-8-0. You can land Runway 1 at Teterboro.


UNIDENTIFIED MALE: OK, which runway would you like at Teterboro?

CAPT. CHESLEY SULLENBERGER, PILOT: We're going to be in the Hudson.


COOPER: Calm before the crash. We'll take you inside the cockpit as the drama unfolded.

And a dramatic day for Michael Phelps, a bad day, he went in front of the camera for the first time since pictures surfaced of him smoking pot. A major sponsor dropped him today. We'll tell you which one did that and now late word he has been suspended from swimming. We'll tell you how long. And why he says he may not even compete in the next Olympics.



OBAMA: Then you give the argument, well this is not a stimulus bill this is a spending bill.

What do you think a stimulus is?

That's the whole point.


COOPER: A pumped up President Obama earlier tonight speaking at a retreat in Virginia for House Democrats. He sounded a lot like the candidate Obama we heard on the campaign trail. Sounded confident, even electrified some might say.

He has been aggressively lobbying lawmakers to pass a stimulus bill soon. And in the last two days he's turned up the heat on his critics.

Joining me again to talk strategy: David Gergen, John King, Joe Johns.

Joe, what do you think is the strategy at this point? I mean, it seemed like last week or even earlier this week it was about bipartisanship, not being too critical of Republicans, and certainly not being critical of House Democrats in public.

Tonight it seems as -- John King was saying, he embraced House Democrats and really turned on Republicans?

JOE JOHNS, CNN CORRESPONDENT: Well, I mean, if you look at the way the power flows between Pennsylvania Avenue and the Congress, the truth is, this is the plain old negotiating tactic. You got a bunch of Democrats and some Republicans in a room on Capitol Hill trying to figure out how they're going to pare down $100 billion out of this bill.

And then you've got the president at the other end of Pennsylvania Avenue, he is going to go out and say "look, either work with those people in the room, get some kind of deal, get me some votes, get this bill passed, or else you have to deal with, you know, big papa."

It straight out of law school negotiation class what's going on here. Tough guy versus nice guys. You be the judge, Republicans, you work with our guys or else you're going to have to deal with me. And I'm going to be tough.

That's what's going on to me.

COOPER: David, I want to play for our viewers just another excerpt right here.


OBAMA: But what I have also said is, don't come to the table with the same tired arguments and worn ideas that helped to create this crisis.

All of us are imperfect, and everything we do and everything I do is subject to improvement. Michelle reminds me every day how imperfect I am. So I welcome this debate.

But come on, we're not -- we are not going to get relief by turning back to the very same policies that for the last eight years doubled the national debt and threw our economy into a tailspin.


COOPER: David, it's interesting, I was comparing this speech to a speech he made. I can't remember if it was yesterday or even this morning. Time is -- it's just gone by very quickly here. Where he was reading, clearly he is on a teleprompter here. But there is this impassioned sense that we haven't seen from him lately.

GERGEN: It's absolutely true, Anderson. And I guess it is the old-fashioned view that if he can't make them see the light, make them feel the heat. And that's what he is doing. And I have to tell you these are very bright guys. Listen, they won the election they're very bright.

But this is high risk. Because this has every possibility of driving a lot of Republicans away from a compromise and digging in against a president who is now trying to muscle them.

So, to me the other alternative would be to say, you know what the White House, Barack Obama, really like this compromise. I hope you get it passed. Let's get together and get this done.

COOPER: I want to play one more bite where he talks about bipartisanship right here.


OBAMA: And we will keep working to build bipartisanship support for action. I promise you that my door is always open. And my administration will consult closely with each and every one of you, the people's representatives, as we take on these pressing priorities. Already, you have made a difference.

Nancy mentioned -- I'm so proud of that day that we signed Lily Ledbetter Fair Pay Act to see Lily Ledbetter on the state, representing the American people, representing all the women out there who want their daughters to have the same opportunities as our sons.

And then we signed children's health insurance to provide coverage for 11 million and make a down payment on comprehensive health care reform. And it wasn't easy. You worked hard to make it happen which means we can work hard to make sure that we've got jobs all across America and energy independence all across America.

And we will not stop until we deliver for our constituents. That's what the Democratic Party is all about. That's what this caucus is all about. That's what my presidency is all about.


COOPER: And John King, it is amazing, we really have not heard him like this since he was a candidate.

How much bipartisanship or attempts have there really been? I mean, clearly, we saw President Obama go to the Hill. We saw President Obama inviting Republicans in.

But, behind the scenes do we really know?

KING: Well, there was not much in the House side, that we can say without question, which is one of the reasons all the House Republicans voted no. The president has met individually in some cases with Senate Republicans.

And he knows again, he doesn't have the votes right now. So he has to do some compromising there. The question is, how will he define bipartisanship. Remember we're still learning so much about this president. Does bipartisanship to Barack Obama mean four or five Republican votes in the Senate or does it mean eight or ten in the Senate and then another 10 or 12 in the House? We're going to find that out.

But Anderson in the clip you've just played. Barack Obama was making a very big point. The Lily Ledbetter Equal Pay Act couldn't pass when George Bush was president. The children's Health Insurance Program couldn't pass when George Bush was president.

Barack Obama is saying on the one hand I want to work with you, Republicans. But he is all saying look what we have done in the just two weeks. I can do this without you. So if you want to work with me, you better work with me.

COOPER: And it's definitely a change in tactic than we've seen from last week. And certainly we're going to have more with Joe Johns, and David Gergen and John King ahead.

Much more of the speech that President Obama made tonight; it's an important speech, a lot of important events happening right now. We're going to bring them to you.

Plus this, take a look.


REP. GARY ACKERMAN (D), NEW YORK: You have totally and thoroughly failed in your mission. Don't you get it?


COOPER: Part of the tongue lashing that lawmakers gave SEC officials in the House hearing. Remember the SEC? They're supposed to be protecting us from some of this abuse going on, on Wall Street. It was a smack down taking them to task for ignoring the whistle blower who tried to warn them about Bernie Madoff's huge Ponzi scheme ten years ago.

We're "Keeping them Honest" tonight. Plus, the mother of the California octuplets out of the hospital talking for the first time. Why she decided to have so many children with six already at home. Now, we've got some of the first photos of her as well tonight on "360."


COOPER: So, just a quick recap of our breaking story: a rousing speech to House Democrats tonight, President Obama, turning up the heat on his critics, on the critics of the stimulus bill who want more tax cuts and less spending.

So take a look.


OBAMA: As we meet here tonight we know that there is more work to be done. The Senate is still active. And after it has its final vote, we still need to resolve the differences between the House and Senate bills.

So we're going to still have to work and I am going to urge you to complete that work without delay. I know that Nancy and Steny and all the rest of the leadership is committed to making that happen.

Now, I just want to say this. I value the constructive criticism and the healthy debate that has taken place around this package because that's the essence, the foundation of American democracy. That's how the founders set it up.

They set it up to make big change hard. It wasn't supposed to be easy. That's part of the reason why we have such a stable government is because, no one party, no one individual, can simply dictate the terms of the debate.

I don't think any of us here have cornered the market on wisdom or -- or that -- do I believe that good ideas are the province of any party.


COOPER: Tensions running high, patience wearing thin so is any real hope of real bipartisanship. While we are about to go to our panel, I just want to tell you what you are seeing on the right-hand side of your screen, this is Air Force One landing at Andrews Air Force Base bringing President Obama back to Washington, D.C.

We're going to keep that picture up as we continue with our panel. I just want to give you a sense of -- we don't anticipate the president making any comments as he gets off the plane. But you never know. We'll certainly be bringing it to you live.

Let's bring back in, David Gergen, and Joe Johns and John King.

Joe Johns, when you think about the fact that the president originally wanted this bill on his desk ready to sign on Inauguration Day and now we have this mess at the 11th hour. Was President Obama naive in the kind of support he was expecting to have or naive in his administration's abilities to make it happen?

JOHNS: Well, certainly a lot of people knew that he was going to have to push the button at some time. Maybe that sound bite you just played about change and all that. He was sort of insulating himself there, saying change is going to come slowly, I know I campaigned on change. But the government doesn't change that fast, OK.

So the fact of the matter is, yes it looks very much like Barack Obama has hit the hold button on change at least for now. But also, you have to realize, they are very high stakes and he has to just go ahead and do whatever he's got to do and be a little bit pragmatic about it. Because if this bill, number one, doesn't go through and number two, doesn't stimulate the economy it's going to be hung around the guy's neck for probably the entire rest of his term.

So naive? Perhaps. But the bottom line, the stakes right now are extremely high for Barack Obama and his administration.

COOPER: David Gergen, Ed Henry reporting at the top of the hour, about this new financial stability plan that Tim Geithner is supposed to unveil on Monday.

Clearly they want to get this stimulus bill done, at least the part in the Senate done by tomorrow, so that it doesn't collide with the new cycle this thing on Monday.

I think a lot -- this is going to probably come as a fair amount of surprise even though they've said, "Look, there are several legs to this stool." This is a big leg coming on Monday that a lot of people maybe haven't been paying attention to.

GERGEN: It sure is. And behind the scenes they've been working furiously on this revised version of the TARP bill. I am surprised they put a date of Monday on it. It seems to me they would have left that up in the air to see it. And announce it when they announce it next week because it does put pressure on tomorrow.

I do not think the stimulus bill is out of reach for him, Anderson. I do think he can get a stimulus bill passed tomorrow in the Senate. I think what he needs to do, is people need to do coming home tonight is make some calls. See how that speech played.

If it's holding Republicans, he is OK. But if it's not holding Republicans he needs to reach out to some Republicans and they ought to consider putting out a statement tomorrow morning before the Senate vote saying they support this compromise to strip about $100 billion out of a bill that has grown quite large in the Senate.

COOPER: John, for people who haven't been following this as closely as possible, can you try to explain this thing on Monday? How is that in relation to the second part of the TARP money that the Obama administration has to dole out? I mean what are the different legs of this stool at this point? KING: Well, in terms of the TARP money, the bailout money they have $350 billion. The second half of the bailout plan passed in the final days of the Bush presidency. And guess what? The American people don't like it. Most members of Congress don't like it.

One of the reasons he needs to keep the Democrats on his side is because many of their constituents don't like it. And not only is he going to spend the $350 billion as Ed noted, he's probably going to have to ask for tens and perhaps hundreds of billions more. It is very unpopular.

And so the president is trying to keep his coalition and keep Democrats supporting this because he knows most Republicans even though they supported it in the final days of the Bush administration are going to vote no because that program is incredibly unpopular with the American people right now, Anderson.

COOPER: All right, we're going to leave it there. John King, Joe Johns, David Gergen. Thank you. Good conversation.

And as always, we're going to continue to watch the president's arrival. We're going to take a short break.

Up next, keeping the faith: President Obama, announcing his own faith-based initiative; expanding on President Bush's. Does it cross the line between church and state? What do you think? We've got the "Raw Politics" ahead.

Plus, inside the cockpit of the US Airways plane that crashed into the Hudson River. Newly released audio tapes just today the first time we are hearing this. We'll play them for you.

And also a bad day for Michael Phelps; he spoke out for the first time today. Today he got suspended from swimming. We'll tell you how long. He's also lost a major endorsement deal. We'll tell you who that -- who dropped him today. And why he is talking about maybe not even competing in the Olympics in 2012.

The latest developments coming up.


COOPER: We are just getting these pictures in now; these are live images. Air Force One arriving at Andrews Air Force Base. It looks like they're bringing up the ladder to let the president off the plane.

It has been a day of headline grabbing announcements. A short time ago the president gave a speech. That's what he is returning to now. We've been talking a lot about the speech tonight.

Also, we had anticipated the senate remaining in session to possibly even vote on the stimulus package tonight. That is earlier the word we had gotten from Harry Reid from his office; but clearly that there was a change in mind. I think it was Ed Henry reporting that -- actually it was Dana Bash reporting that Harry Reid had talked to the president. They decided to send folks home with the senate. And come back in the morning. Try to get this thing voted on tomorrow.

On Monday we are told Tim Geithner is going to be unveiling another plan for financial markets.

There is the president now leaving Air Force One. This is the first time the president has ridden on Air Force One as president. We showed you a couple days ago some video from National Geographic Television of his ride on Air Force One when he was still President- elect Obama. That was the first time he was on this.

And actually one of the things he said tonight in his speech is that he wanted to thank the group for having him so it allowed him to ride on Air Force One. I think he said it was a pretty cool flight, pretty cool plane.

So, there the president leaving. Heading towards Marine One, no doubt, heading back to the White House.

It's been a day, as I said, of headline grabbing announcements. Among them, the president's new office for faith-based initiatives. It sort of got missed in all the coverage of the stimulus plan. But it's a controversial office or it was controversial under former President Bush among some quarters in the population.

Mr. Obama is now expanding its mission to include both religious and secular groups. The goal -- more help for hard-hit communities. But critics are raising questions; should religion have any role in politics? Based on Mr. Obama's political past the answer he seems to be giving is a resounding yes.

Candy Crowley has all the "Raw Politics."


CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): Democrats have been squeamish about the intersection of politics and faith, but not the president who grew up without religion.

OBAMA: I had a father who was born a Muslim but became an atheist and grandparents who were non-practicing Methodists and Baptists. And a mother who was skeptical of organized religion.

CROWLEY: At Washington's Annual Prayer Breakfast, President Barack Obama said he will continue and enhance the Bush era program to help faith-based and community organizations gain access to social services and federal money.

President Obama's affinity for the initiative is seeded in the streets of Chicago where his work as community organizer crossed paths with other people's faiths.

OBAMA: Because I spent month after month working with church folks who simply wanted to help neighbors who were down on their luck, no matter what they looked like or where they came from or who they prayed to. It was on those streets in those neighborhoods that I first heard God's spirit beckon me. It was there that I felt called to a higher purpose.

CROWLEY: As a candidate, Barack Obama always understood the power of faith in the voting booth. The majority of voters who self- identify as regular churchgoers vote Republican. The Obama campaign's outreach to religious voters was the most extensive of any Democrat in recent memory and it dovetailed with his "everyone aboard" theme.

OBAMA: If we could just get past the divisions of race and religion and region; if we could come together, black, white, Hispanic, Asian, Native American, rich, young, old, poor -- then there is nothing we could not do. No destiny we could not fulfill.

CROWLEY: But part of his courtship of religious voters was necessity. There were meetings with Jewish voters to dispel uneasiness over his views on the Middle East.

OBAMA: The journey has been long and in the journey ahead we will have a lot of bumps. But America must stand shoulder to shoulder with our ally Israel.

REV. JEREMIAH WRIGHT, OBAMA'S FORMER PASTOR: Within the past few weeks --

CROWLEY: The controversy over his former pastor, the Reverend Jeremiah Wright was so politically toxic the Obamas quit their church. And Internet fueled rumors that he was a Muslim popped up regularly in town hall meetings.

OBAMA: I have been baptized. Believe Jesus Christ is my Savior. Never been a Muslim. Nothing wrong with being Muslim, we have wonderful Muslim-Americans. But the point is, the point is, don't lie about my religion.

CROWLEY: For better or worse, you cannot take politics out of religion or religion out of politics. Critics complained former President Bush used his faith-based initiative to further his agenda and his political reach in the conservative Christian community.

The man who will oversee this administration's effort is a 26- year-old Pentecostal minister who served as the Obama campaign's point man targeting religious voters.

Candy Crowley, CNN, Washington.


COOPER: We'll have more the president coming up throughout this hour.

We'll also have a lot on the dramatic plane landing in the Hudson and the pilot's call for help. (BEGIN AUDIO CLIP)

UNIDENTIFIED MALE: Cactus 1529 turn right 2-8-0. You can land Runway 1 at Teterboro.

SULLENBERGER: We can't do it.

UNIDENTIFIED MALE: OK, which runway would you like at Teterboro?

SULLENBERGER: We're going to be in the Hudson.


COOPER: "We're going to be in the Hudson," that's what he said. They couldn't believe it at the control room there. This is the first time we're hearing the tapes. You will hear the chilling moments before impact from inside the cockpit.

Also tonight: Michael Phelps speaking out for the first time. The Olympic swimmer is punished for smoking pot. Suspended from swimming, we'll tell you how long. That's not all. He's been dropped by a major sponsor. There's also new developments coming up. We'll tell you about it.


COOPER: Tonight we know much more about the moments just before US Airways Flight 1549 crash landed in the middle of the Hudson River last month. The pilot, Chesley Sullenberger told Katie Couric on tonight's "CBS Evening News" about his moment of horror when he realized that a flock of birds had knocked out both of the plane's engines.


SULLENBERGER: It was the worst, sickening, pit of your stomach falling through the floor feeling I've ever felt in my life. I knew immediately it was very bad.

KATIE COURIC, ANCHOR, CBS EVENING NEWS: Did you think, how are we going to get ourselves out of this?

SULLENBERGER: No. My initial reaction was one of disbelief.


COOPER: Now, for the first time we can take you inside the cockpit. Newly-released audio recordings reveal just how close the crippled flight came to disaster.

David Mattingly has the "360 Follow".


DAVID MATTINGLY, CNN NATIONAL CORRESPONDENT (voice-over): US Airways flight 1549 had just begun to climb out of New York LaGuardia when FAA tapes capture the moment the flight took a fateful turn.

SULLENBERGER: This is Cactus 1549. Hit birds. Lost thrust in both engines. I'm turning back towards LaGuardia.

MATTINGLY: And just like that, behind a cool steady voice, "Sully" Sullenberger's jet is powerless and headed down.

In the heat of the moment everyone seems to get the flight number wrong. And listen as air traffic control seems stunned by the emergency.

UNIDENTIFIED MALE: It's Flight 1529. Bird strike. He lost all engine. Lost the thrust in the engines. He is returning immediately.

UNIDENTIFIED MALE: Check. It's 1529, which engines?

UNIDENTIFIED MALE: He lost thrust in both engines, he said.


MATTINGLY: Next there's a scramble to find him a safe place to land.

UNIDENTIFIED MALE: If we can get it for you, do you want to try to land Runway 1-3?

SULLENBERGER: We're unable. We may end up in the Hudson.

UNIDENTIFIED MALE: All right Cactus 1549. It's going to be left traffic to Runway 3-1.


UNIDENTIFIED MALE: OK, what do you need to land?

Cactus 1549 Runway 4 is available if you want to make left traffic to Runway 4.

SULLENBERGER: I'm not sure if we can make any runway. What's over to our right? Anything in New Jersey? Maybe Teterboro?

UNIDENTIFIED MALE: OK, off to your right side is Teterboro airport.

MATTINGLY: It takes just 30 seconds to clear a runway in New Jersey. But by then there is no chance for a dry landing.

UNIDENTIFIED MALE: Cactus 1529, turn right 280. You can land Runway 1 at Teterboro.

SULLENBERGER: We can't do it.

UNIDENTIFIED MALE: OK, which runway would you like at Teterboro?

SULLENBERGER: We're going to be in the Hudson.

UNIDENTIFIED MALE: I'm sorry, say again, Cactus?

MATTINGLY (on camera): But this time there was no reply. The conversation lasted less than two minutes. And it was the last time air traffic control would hear from Captain Sullenberger. All anyone knew was that Flight 1549 had disappeared from radar.

UNIDENTIFIED MALE: Cactus? Cactus 1549, radar contact is lost. You also have Newark airport off your 2:00 and about seven miles.

UNIDENTIFIED MALE: 2-1-0. 47-18. I don't know -- I think he said he was going in the Hudson.

UNIDENTIFIED MALE: Cactus 1549, you still on?

MATTINGLY (voice-over): as they continue to try to help, no one could see Sullenberger's masterful splash down in the river. And it would be long agonizing minutes until they would hear that a miracle on the Hudson had taken place. All 155 aboard were rescued alive.

David Mattingly, CNN, Atlanta.


COOPER: Incredible how calm and cool he was.

Quick program note: For most of the day we've been telling you about CNN's plan to talk with the pilot and crew on Monday. But President Obama will hold a news conference that night. So instead, watch the interview with the US Airways flight crew next Tuesday, February 10th on "LARRY KING LIVE."

Coming up next: a verbal lashing from a lawmaker over the Bernie Madoff scheme. This is just an unbelievable exchange. Did the SEC drop the ball and ignore a whistle-blower? We're "Keeping Them Honest."

And Supreme Court Justice Ruth Bader Ginsburg in the hospital battling cancer. Could changes be coming soon to the Supreme Court? We'll talk it over with Jeffrey Toobin.

And the mother of octuplets speaking out for the first time; we've got some of the first photos of her. Hear what led her to have so many kids.



HARRY MARKOPOLOS, FINANCIAL FRAUD INVESTIGATOR: I gift-wrapped and delivered the largest Ponzi scheme in history to them, and somehow they couldn't be bothered to conduct a thorough and proper investigation because they were too busy on matters of higher priority. If a $50 billion Ponzi scheme doesn't make the SEC's priority list I want to know who sets their priorities.

(END VIDEO CLIP) COOPER: That was Harry Markopolos, the whistle-blower, who says his warnings about the alleged multibillion dollar Ponzi scheme of Bernie Madoff were ignored by the SEC for more than a decade.

In a special hearing on Capitol Hill, a remarkable hearing, the SEC representatives were asked by lawmakers to explain how they completely missed Madoff's alleged fraud though they had been alerted by this whistle blower. The questioning by Congressman Gary Ackerman of New York was remarkable to witness. Take a look as he blasted the SEC witnesses.


ACKERMAN: What the heck went on? Your mission, you said, was to -- was to protect investors and detect fraud quickly. How did that work out? What went wrong?

It seems to me a private -- with all of your investigators and all of your agency and everything that you all described, one guy with a few friends and helpers discovered this thing nearly a decade ago, led you to this pile of dung that is Bernie Madoff and stuck your nose in it and you couldn't figure it out. You couldn't find your backside with two hands if the lights were on. Could you explain yourselves?

You have single-handedly defused the American public of any sense of confidence in our financial markets if you are the watchdogs. You have totally and thoroughly failed in your mission. Don't you get it?

And now other people are investigating what you should have found out and you're hiding behind, "Well, maybe we can't talk because someone else is looking at it." Well you've forfeited your right to investigate by not doing it, certainly not doing it properly or adequately. Now you are trying to tell us that because other people are looking at it, you are not going to tell us what's going on. Like hell you won't. What happened here?

That's a question. Do we start with hear no evil, see no evil, or do no evil. Take your pick?


COOPER: It did not end there. The bashing continued and Congressman Ackerman asked Andrew Vollmer, SEC acting general counsel, to respond to the accusations.

Now watch what happens when he gets all lawyerly. Watch.


ACKERMAN: The commission has voted the position that you will cite executive privilege and not testify before this committee in answering its questions.

ANDREW VOLLMER, ACTING GENERAL COUNSEL, SEC: I couldn't say that to you honestly because that specific reason --

ACKERMAN: Obviously.

VOLLMER: -- discussed and given by the commission, but the basis is --

ACKERMAN: Your value to us is useless. Your value to the American people is worthless. Your contribution to this proceeding is zero.

VOLLMER: Take into account the concerns that have been well settled over many years. We would ask you to take those into account.

ACKERMAN: Our economy is in crisis, Mr. Vollmer. We thought the enemy was Mr. Madoff. I think it's you.


COOPER: Brutal day for the SEC, possibly more to come. Whistle- blower Markopolos says he has uncovered another billion-dollar Ponzi scheme. He reportedly shared details with Congress today.

Coming up, we'll have more on Michael Phelps and the bong hit seen around the world. Tonight, new fallout: his punishment from USA Swimming in a moment.

But first Erica Hill joins us with the "360 News and Business Bulletin" -- Erica.

ERICA HILL, CNN CORRESPONDENT: Anderson, the Pentagon today dropping all charges against the alleged suspect in the terrorist bombing of the "USS Cole." Now that prevents a judge from arraigning the suspect, Abd al-Rahim Al-Nashiri, on Monday. He is accused of planning the October 2000 attack that killed 17 American sailors. Those charges though can be reinstated once President Obama's four- month ban on all court proceedings at Guantanamo Bay expires.

Forget the first dog, how about the first raccoon. A number of them have invaded the White House garden. National Park Service officials are on the case although they haven't captured the masked ones yet. But when they do we're told the critters will be released unharmed into the wild.

Optimism on Wall Street today: the DOW up 106 points; the Nasdaq gaining 31; while S&P added nearly 14 points -- Anderson.

COOPER: All right, Erica.

Tonight, a health scare in the Supreme Court. Justice Ruth Bader Ginsburg underwent surgery earlier today for pancreatic cancer. While the cancer was apparently early stages, concerns for her health are sparking questions about the future of the court as always happens. Of course, if Ginsburg steps down it's up to Obama to pick her successor.

Jeffrey Toobin joins us now. He's the author of the best selling book "The Nine" about the Supreme Court.

Clearly, we don't know much about the details at this stage. They rarely release much information.

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: They don't. But we all know how serious pancreatic cancer is. She's 75 years old. She had colon cancer 10 years ago. I think this is a very serious health problem and, frankly, I think it is unlikely she'll be on the court much longer, though, of course, we all hope she gets better soon.

COOPER: What do we know about what President Obama would do in the event she left the court?

TOOBIN: Well, Ruth Ginsburg is the only woman on the court. So I think it's safe to assume he would appoint a woman. The court's very evenly divided now. There are four conservatives, four liberals. Ginsburg is one of them. Anthony Kennedy in the middle.

So he would probably replace her with another liberal, perhaps Sonia Sotomayor would be the first Hispanic justice on the court. She's a judge here in the Appeals Court in New York.

But I don't think the balance on the court would be changed by Ginsburg leaving and Obama making a replacement. But there have only been 110 Supreme Court justices in history. So any change is a big deal.

COOPER: I heard that Attorney General Alberto Gonzales is looking for work.

TOOBIN: He is looking for work, and he shouldn't hold his breath.

COOPER: What do you think her legacy will be?

TOOBIN: You know, she and Thurgood Marshall are the only justices in recent years who would be famous even if they never served on the Supreme Court.

She was a great pioneer in representing women before the Supreme Court, long before she was a justice on the court. She really was a pioneer for women's rights.

She's been in the minority a lot during the Supreme Court. She's been a liberal in conservative times. She's had a couple of important opinions. But it's really the totality of her career that I think historians will look at.

COOPER: Well, we certainly wish her and her family well.

TOOBIN: Indeed.

COOPER: All right. Coming up, Michael Phelps speaking out after getting caught smoking pot.


UNIDENTIFIED FEMALE: What were you thinking? MICHAEL PHELPS, OLYMPIC GOLD MEDALIST: Obviously not much. And you know, it's -- I mean, like I said. A bad judgment and, you know, and I can learn from it.


COOPER: This thing is just going on and on. It's unbelievable. Tonight we learn he's been suspended from swimming. And a big endorsement deal will not be renewed. We'll tell you details ahead.

Plus the infamous mother of octuplets. She's out of the hospital and talking. Hear why she says her own upbringing led to her wanting to have so many kids.


COOPER: Just when the smoke cleared from the picture of a bong hit seen around the country, Michael Phelps is paying for his mistakes. Tonight, the Olympic champion learned he cannot compete in any swimming events for the next three months, that punishment coming from USA Swimming, which is also stopping its financial support for the next 90 days.

And a big endorsement deal is also slipping away. Kellogg's dropped their association with him. They'd put him on the Wheaties box, of course.

So how is the man who won eight gold medals in the last Olympics dealing with all of this? Today he spoke out for the first time. Gary Tuchman reports.


GARY TUCHMAN, CNN CORRESPONDENT (voice-over): For the first time since he admitted he was wrong for smoking from a bong, we hear directly from Michael Phelps.

UNIDENTIFIED FEMALE: Michael Phelps, what were you thinking?

PHELPS: Obviously not much. And you know, it's I mean, like I said, a bad judgment. And you know, I can learn from it. And try to make my life better than it has been in the past. Like I said I've made mistakes. And I have to learn with -- I have to live with every mistake that I've learned.

TUCHMAN: The Olympic champion was interviewed by a reporter from CNN affiliate WBAL in Baltimore following a swimming workout. But it was before USA Swimming, the sport's national governing body, suspended Phelps for three months.

PHELPS: I think it is hard to really -- you know, to be ready for any of this. You know, to understand anything that's going to happen, I think, is -- it's impossible for anybody to really know the definite answer.

But, you know I've actually -- I've been able to talk to a lot of people and a lot of people that have been in my shoes in other sports. And I've been able to get their perspective and just talk to them a little bit. And I think that's been helpful over the last few days.

TUCHMAN: "The Baltimore Sun" newspaper also interviewed Phelps and reports he claims he's not a regular pot smoker. But it's nevertheless still too much for one of his many sponsors.

Kellogg's says it will let its deal expire with Phelps at the end of February. "Michael's most recent behavior is not consistent with the image of Kellogg's," says the company.

Meanwhile, Phelps faces the possibility of legal action from the sheriff of the South Carolina County where he was partying with the pipe.

SHERIFF LEON LOTT, RICHLAND COUNTY, S.C.: Just don't think you can have something like this done and publicized and say, "I'm sorry," and then we're supposed to forget about it. He broke the law.

TUCHMAN: Phelps, who pleaded guilty to driving under the influence, getting 18 months probation four years ago, hasn't publicly commented about the potential new legal trouble. But he was asked about whether he'll swim in this summer's World Championships and the next summer Olympiad.

UNIDENTIFIED FEMALE: Has this made you rethink Rome this summer and maybe London in 2012?

PHELPS: You know, like I said, I was just -- swimming makes me happy. It's been part of -- been my life for so many years now. And, you know, I just feel it's good to be -- good to get back in the water. I'm not going to make any decisions yet. But, you know, we'll see what happens.

You know, I'm going to do everything I can, you know, in the pool. And I'm already back in the water training, still deciding a lot of things. But I'm happy to be back in the water. And that's a place where I feel at home and feel comfortable.

TUCHMAN: Michael Phelps is a swimming legend but now finds himself in an unexpected place: hot water.

Gary Tuchman, CNN Atlanta.


COOPER: Well, coming up, the octuplet mother breaks her silence, probably not for the first time. We'll have more on that ahead. Or not for the last time, I should say. It was the first time.


COOPER: The southern California woman who delivered octuplets last week is talking for the first time. Thirty-three-year-old Nadya Suleman says it was always her dream to have a huge family. Suleman already had six kids before she gave birth to eight more. The mother of 14 kids told "Today" show's Ann Curry that her desire to have a large family stems from her own dysfunctional childhood. Suleman left the hospital this morning.

Erica, she was saying, basically, that she felt she had no control. She felt powerless as a child. And so I'm not sure why that led her to want to have 14 kids. I'm not sure how powerful they will feel.

HILL: I'm not sure. And at one point she apparently said that she didn't have a functional childhood, that it was pretty dysfunctional but then went on to say, whose isn't? And yet, she felt that that was one of the reasons that she needs to have a large number of children.

COOPER: All right. We'll no doubt be hearing more about her.

That does it for 360. Thanks for watching.

"LARRY KING" starts now.

I'll see you tomorrow night.