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"New Chapter" in Mideast Diplomacy; Motivated by Bin Laden's Death; U.S. Hits Debt Ceiling; Stunning Sex Charges Against IMF Chief; Sex Assault Suspect Lived Good Life; GOP's Gingrich: "I Made A Mistake"; Schwarzenegger Sex Scanda

Aired May 21, 2011 - 18:00   ET


WOLF BLITZER, CNN ANCHOR: The now former head of the International Monetary Fund gets bail, even as he faces a new sexual assault indictment.

Plus, what's next for Arnold Schwarzenegger after admitting he had a child out of wedlock, a child he kept secret for years from his wife?

And President Obama says the U.S. must seize this moment of opportunity in the Middle East. This hour, his vision for the region and the controversial way he's pushing the Israelis and the Palestinians to make peace.

We want to welcome our viewers in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

The financial power broker who bailed out countries is being bailed out himself as he awaits trial on charges he sexually assaulted a hotel maid. Dominique Strauss-Kahn denies the allegations that many people find shocking. But the former head of the International Monetary Fund has been tied to previous allegations of sexual misconduct.

Our Brian Todd has been looking into that.

BRIAN TODD, CNN CORRESPONDENT: Wolf, we've learned about one serious allegation that Strauss-Kahn wasn't even publicly linked to until his arrest in New York, and about another incident in his past where, at the very least, his character and judgment came into serious question.


TODD (voice-over): His attorney and his wife vigorously defend Dominique Strauss-Kahn, saying the IMF's managing director is innocent of the charges. Prosecutors suggest there may be a pattern to his alleged behavior.

JOHN MCCONNELL, N.Y. ASST. DISTRICT ATTORNEY: Some of this information includes reports that he has in fact engaged in conduct similar to the conduct alleged in this complaint on at least one other occasion.

TODD: He could be referring to an alleged incident that Strauss- Kahn's been linked to only since his arrest on Saturday. French journalist Tristane Banon says Strauss-Kahn tried to rape her nine years ago in a Paris apartment.

Strauss-Kahn's attorneys in the U.S. and France didn't respond to our inquiries on the allegation, and one of them only mentioned it briefly in court.

BENJAMIN BRAFMAN, DOMINIQUE STRAUSS-KAHN'S ATTORNEY: This is an individual with no criminal record. I can't respond to allegations that were made in a foreign country that did not result in any criminal prosecution.

TODD: Tristane Banon did not report the alleged incident to French police at the time. Why not? Her mother told a French TV station what she told her daughter at the time.

ANNE MANSOURET, MOTHER OF TRISTANE BANON (through translator): There wasn't a rape, strictly speaking. There was an attack. For the rest of your life, you would have on your resume, you know, Tristane Banon. That's the girl who, well -

TODD: French TV reporter Apolline de Malherbe, who wrote a profile of Dominique Strauss-Kahn in "The Washingtonian" magazine, says this about Strauss-Kahn's wife, a popular TV figure in France, American- born Anne Sinclair.

APOLLINE DE MALHERBE, CORRESPONDENT, BFM TV: She is always beside him. She's really taking his arm wherever he goes. So, yes, there have been probably some ups and downs, but she has been by her - by his side.

TODD: Even during an affair he had a few years ago.

TODD (on camera): Shortly after joining the IMF, Strauss-Kahn was investigated for what he later acknowledged was an improper relationship with a female employee. An independent investigation found that the relationship was consensual and there was no harassment, favoritism or any other abuse of power by him. But Strauss-Kahn did later apologize to the IMF, to his family and to the employee.

TODD (voice-over): I asked harassment attorney Debra Katz about that case.

TODD (on camera): Does that particular case have any relevance here?

DEBRA KATZ, SEXUAL HARASSMENT ATTORNEY: It's a different kind of standard, a civil standard. The fact that he engaged in an improper relationship with someone at work shows his character and poor judgment, but it may not be relevant legally to this issue of sexual assault.


TODD: But Strauss-Kahn may have other legal problems in France. The attorney for that young woman, Tristane Banon, now says he's preparing documents against Strauss-Kahn - Wolf.

BLITZER: Brian Todd, thanks very much.

Let's dig deeper right now with our senior legal analyst, Jeffrey Toobin. Jeff, he's going to be living under house arrest in New York City. So what's next legally in the case?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, the most important thing that's next is the investigation has to proceed. There is a lot that needs to be looked at here, especially in terms of scientific forensic evidence.

Was there DNA left at the crime scene? Are - is there hair and fiber at the crime scene? What do the - what the - the videos, the surveillance videos, in that area show? What about the timecards of when people went in and out of that hotel room?

All of that has to be looked at, and in - experts from both sides have to have the opportunity to look at the evidence. It could take a long time.

BLITZER: Will his own attorneys be looking for a speedy trial, rushing to trial, or do they want this to drag on?

TOOBIN: Delay, delay, delay, especially in a case like this, where passions are high, there's a lot of attention.

And that's also why this bail decision is so important, because if he had been in Rikers Island for the months prior to trial, he would be telling his attorneys I can't stand this. Get me to trial. Now, he's going to be in a relatively comfortable apartment, which will certainly be cramped and - and frustrating to him because he can't live his normal life, but he'll be eating normal food, he'll be sleeping in a normal bed, he'll be able to see people. He will not be pressing his lawyers to - to go as fast as he would be if he were in Rikers Island.

BLITZER: And he does have some excellent attorneys. Benjamin Brafman, for example, he's very well-known in New York. You know him.

TOOBIN: Absolutely. I mean, if you were to ask people in the know in New York City, who's the best trial lawyer in New York City, I think Ben Brafman would get more votes than anyone else.

Now, it - it is still true that he is not undefeated. He is not more important in a case than the evidence is, but certainly he's going to have the best defense that Strauss-Kahn could have - could have found anywhere.

BLITZER: But I think it's fair to say those New York prosecutors are pretty good, as well.

TOOBIN: Very good. And - and this case will get a lot of attention.

This is the first really big case that is Cyrus Vance Junior has had as the new - relatively new Manhattan District Attorney. He knows that his reputation is going to rise and fall, at least initially, based on this case. So those prosecutors are going to have all the resources they need.

BLITZER: He's the son of the former secretary of state, Cyrus Vance.

TOOBIN: Yes, indeed.

BLITZER: He's got the same name.

Here's a question. It goes to trial - let's say it goes to trial six months from now, a year from now, whenever it goes to trial in New York City. Can he get a fair trial in New York, a jury trial, given all the publicities out there, the tabloids in New York, some of whom have already convicted him, for all practical purposes? What's the argument in terms of keeping the trial in New York or moving it to another location?

TOOBIN: Well, you know, we in the news media, I think, we always have this question. Everybody's following this so closely. How can he get a fair trial? When you actually get to jury selection, I think I am always surprised at how much people are not following a big case, and I think that will be particularly true in a case like this.

If you were to ask most people in Manhattan two weeks ago, "Who is Dominique Strauss-Kahn?" I think you would get 99 out of 100 saying they never heard of him. Now, it would be less - I mean, more people would have heard of him, but I still don't think this is a big obsession here in New York, so I don't think picking a jury in this case will be all that difficult, and I don't think this trial is going to be moved.

BLITZER: All right. We're going to watch it together with you, Jeffrey. Thanks very much. Jeffrey Toobin's our senior legal analyst.

Dominique Strauss-Kahn is used to the good life. CNN's Ivan Watson takes us to the Paris neighborhood where he lived.


IVAN WATSON, CNN CORRESPONDENT: This is one of the most elite, expensive neighborhoods in Paris, Place des Vosges, a centuries-old planned square in the heart of the city where the French author Victor Hugo once lived. It's also where Dominique Strauss-Kahn maintained a Paris residence, right here in Number 13 Place des Vosges.

Now, this expensive neighborhood couldn't offer more of a stark contrast to the Bronx apartment building where the alleged victim of the assault in that New York hotel lives.

Dominique Strauss-Kahn had come under some criticism in the past. He's a leading member of the Socialist Party, but he was photographed getting into an expensive Porsche here in this neighborhood once, leading some to criticize him, calling him a "caviar Socialist."

The neighbors here, the owners of the boutiques and galleries around here, are very camera shy, but some of them tell CNN they would periodically see Strauss-Kahn and his wife, Anne Sinclair, getting in and out of chauffeured vehicles here, but say they were always polite, always said, "Hi. How do you do?"

A New York judge has released Strauss-Kahn on $1 million in bail. He'll now live in a New York rented apartment under near constant surveillance, wearing an electronic tracking device. It's likely to be many long months before he ever sees him home here in Paris ever again.

Ivan Watson, CNN, Paris.


BLITZER: A top contender for the Republican presidential nomination stumbles right out of the gate. Can Newt Gingrich recover from a very bad week?

And speaking of bad weeks, more details are coming out about Arnold Schwarzenegger's extra marital affair and secret child.

Plus, President Obama delivers a major speech on the Middle East and U.S. relations with the Arab world. We'll talk about it. How it's being received.

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


BLITZER: Just days after launching his presidential campaign, Newt Gingrich was forced to apologize for slamming a key Republican budget plan. Gingrich stumbled so badly coming out of the starting gate that many question whether he can even recover.

CNN's Joe Johns is here. He's following this uproar for us. What's the latest?

JOE JOHNS, CNN CORRESPONDENT: Wolf, the first few days and weeks are sensitive for campaigns. Any candidate would love to get off on the right foot, set the right tone. But in the case of Newt Gingrich, it just has not happened so far.


JOHNS (voice-over): When it rains it pours. Newt Gingrich's first week in the race has been so bad by any measure that when a gay activist known for his political pranks sprinkled glitter on the former speaker and his wife, that old adage came to mind.

UNIDENTIFIED MALE: Mr. Rainbow Newt, stop the hate. Stop anti-gay politics.

JOHNS: But while the left certainly has its beef with Newt Gingrich, the onslaught this week came from the right, and the former speaker had no one to blame but himself and his choice of words. In his 35th appearance on "Meet the Press," one question about a House proposal to turn Medicare into a voucher program and Gingrich's sharply-worded answer made him the center of attention, just like when he was on Capitol Hill. NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I don't think right- wing social engineering is any more desirable than left-wing social engineering. I don't think imposing radical change from right or the left is a very good way for a free society to operate.

JOHNS: One political analyst told CNN Gingrich could have accomplished much the same thing without the edginess by just calling the House Medicare overhaul plan proposed by Republicans a good start that needs improvement. But accusing conservatives of social engineering was seen by some as over the top.

The author of the proposal, House Budget Committee Chairman Paul Ryan, fired back on "The Laura Ingraham Show."

REP. PAUL RYAN (R), WISCONSIN: With allies like that, who needs the left, you know?

JOHNS: So many conservatives recoiled that by mid-week Gingrich had walked back his comments, apologizing.

GINGRICH: I made a mistake, and I called Paul Ryan today, who's a very close personal friend, and I said that.

JOHNS: But if excessive talking is Gingrich's biggest problem, just plain excess also apparently runs in the family. Financial disclosure forms filed with the House of Representatives indicated that, as recently as five years ago, Gingrich carried debt of up to $500,000 with Tiffany & Company of New York, one of the premier jewelers on the planet.

The former speaker declined to answer questions about this on the FOX Television Network Tuesday.

GINGRICH: I'm not commenting on stuff like that. I am perfectly happy to talk about what we need to do for America and what we need to do help Americans. But I frankly don't want to play the gotcha games in Washington.

JOHNS: Given all this out this week, the first week of his campaign, the question is whether Gingrich's candidacy is already done for.

FORD O'CONNELL, CIVIC FORUM PAC: I'd say that his candidacy is on life support. OK. His fund-raising numbers I know were not where he wants them to be. But the key for Gingrich here is while he represents the past is to show why he's relevant to the future political discussion.


JOHNS: The Gingrich people seem to be complaining that the media's piling on here and his Campaign Press Secretary Rick Tyler put out a statement saying Gingrich will not be intimidated by what he calls the political elite. Those are kind of familiar phrases. Things we've heard before.

BLITZER: Yes. We've heard it many times before. Stand by. Gloria Borger is here, our Senior Political Analyst. Gloria, can he get beyond this really bad start?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, he's really trying to. He's been on an apology tour this week. Called up Congressman Ryan. Spoke with Rush Limbaugh.

And, you know, don't forget, people very often have bad starts to their campaign. Remember Joe Biden? Joe Biden had a terrible start to his campaign. First week out of the box, called Barack Obama clean and articulate. Remember that? Caused him a lot of trouble.

BLITZER: Then he (ph) didn't do all that well in the race for the Democratic nomination.

BORGER: Guess what, he's vice president of the United States right now.

BLITZER: Yes. Much later.

BORGER: So he did recover.

JOHNS: Well, and Republicans I've talked to have said also, you know, look at John McCain. And he was pronounced all but dead -

BORGER: Right.

JOHNS: -- in his campaign and he went on to get the nomination. Didn't win the presidency. But, you know, so - so it's probable that Newt Gingrich gets back on his feet.

BORGER: I think the difficulty for Newt Gingrich is, is how he misread the Republican constituency, the Tea Party constituency. You know, he always when he became Speaker of the House in the '90s and engineered the Republican takeover, he always knew where the party regulars were, where the base was. People I talked to this week say what's surprising is that he didn't seem -

JOHNS: Right.

BORGER: -- to know how important this Ryan budget is to the Republican base.

BLITZER: And this notion of blaming the mainstream elite media for his problems.

BORGER: Why not.

BLITZER: You've heard that many times before.

JOHNS: And it works - it works a lot of times. Sarah Palin did it. A bunch of politicians resort to that refrain when they get themselves in trouble. But the question is always in the facts. What was it that you actually said, where did you say it.

When you look at this situation on "Meet The Press," Newt Gingrich had been on that program 35 times previous. He knows the deal. He knows what they do. And it wasn't a setup. It was just a simple straightforward question and Newt Gingrich gave his answer.

BLITZER: And it's all on videotape, too.

JOHNS: Right.

BORGER: But it's also Republicans who were criticizing Newt Gingrich. They saw the show. They knew what they saw. The other Republicans weren't coming out and saying you know what, Newt, somebody played a game of gotcha with him. Let's - it was the Republicans saying no way.

BLITZER: You know, Joe, you pointed out this half a million dollar credit that he had at Tiffany's and he didn't want to talk about it. Well, if you're running for president of the United States, you have to assume that everything in your personal, your financial, your political life is open.

JOHNS: Sure.

BLITZER: You've got to have to talk about it.

JOHNS: No. Yes. Right.

BLITZER: You can't - you can't just say I'm not talking about it.

JOHNS: It's impossible. I mean, the cat's out of the bag. When you're running for president, everything is fair game. He knows that. Because he was really raked over the coals in a lot of ways when he was on Capitol Hill, not necessarily unfairly but people really got into his business. GOPAC is a good example of it.

So Speaker Gingrich knows the deal. A lot of people, though, are asking whether he's trying to play politics in '90s style when we're in, you know, 2011 and when things move so fast with Twitter and Facebook and like that, you have to be really quick on your toes.

BLITZER: We've invited him several times to come here in THE SITUATION ROOM. We hope he'll accept eventually our invitation.

Quickly, Mitch Daniels, is he the hope right now that a lot of the establishment Republicans have as far - as far as a nominee is concerned?

BORGER: A lot of establishment Republicans are reaching out to him. We now know that Tim Pawlenty is going to announce his candidacy on Monday. But Mitch Daniels is one of those fiscal Conservatives who's kind of a wonk. Been in Washington, gets the budget issues. Been a successful governor.

So lots of Republicans are saying, you know, he understands the spending issues better than anyone else. And he might be able to be a good person to go toe to toe with Barack Obama. So you - you have to say -

BLITZER: Haley Barbour I know -

JOHNS: Right.

BLITZER: -- is pushing - pushing.

JOHNS: Absolutely.

BLITZER: He - he was once considered -

BORGER: Right.

BLITZER: -- a possible candidate, the Governor of Mississippi, he dropped out.

JOHNS: Right. Yes. And there's also a little bit of suspicion on the Conservative side about Mitch Daniels particularly because he called -

BORGER: Absolutely.

JOHNS: -- for a truce on social issues so that the country could get its financial matters in order. This is a guy who's going to have to answer questions like that before Conservatives sort of anoint him as the frontrunner.

BLITZER: Joe and Gloria, guys, thanks very much.


BLITZER: We now know the identity, yes, the identity of the woman who Arnold Schwarzenegger secretly fathered a child with. We're going to tell you what we're learning. Stand by.

And President Obama delivers a major speech on U.S. relations with the Arab world, but does it really represent the start of what he calls a new chapter in regional diplomacy?

Lots of news happening right here in THE SITUATION ROOM.


BLITZER: A lawyer for Arnold Schwarzenegger says the former California governor is putting his movie comeback on hold to focus on personal matters. That announcement came as we learned the identity of the woman with whom he fathered a child while married to Maria Shriver.

Let's go straight to Los Angeles. CNN's Thelma Gutierrez is standing by with more - Thelma.

THELMA GUTIERREZ, CNN CORRESPONDENT: Wolf, the woman was first identified by "The New York Times" as 50-year-old Mildred Patricia Baena. She's a native of Guatemala and has worked for the Schwarzeneggers for 20 years as their housekeeper.

Now, she recently moved to Bakersfield, California, and neighbors in the upscale subdivision there told us that she openly talked about working for the family, also about her desire to retire to Bakersfield with her 14-year-old son. Now, since the scandal broke, she has kept a low profile and so has the former governor of California.


GUTIERREZ (voice-over): On the day that Maria Shriver made a grand appearance at taping of one of the final episodes of "Oprah," her high profile husband was laying low trying to stay out of the spotlight and away from reporters.

A source close to former California governor, Arnold Schwarzenegger, told CNN the fallout from the revelation that he fathered a child outside of his marriage has been very hard for him. That he realizes the terrible mistake he made and has a lot of work to do to repair his relationship with his family.

The power couple who were married for 25 years have four children. Since the scandal broke, two of them have posted their feelings on Twitter. Seventeen-year-old Patrick Schwarzenegger, who also goes by Shriver on Facebook and Twitter tweeted, "Some days you feel like expletive. Some days you want to quit and just be normal for a bit. Yet, I love my family till death do us part."

His sister, Catherine, who's 21 followed with her own tweet saying, "This is definitely not easy, but I appreciate your love and support as I begin to heal and move forward in my life. I will always love my family."

Psychologist, Michelle Golland, says coping with infidelity is devastating for children.

MICHELLE GOLLAND, PSYCHOLOGIST: As parents, we are not only modeling to our children what it means to be a mother and a father but a husband and wife.

GUTIERREZ: The source close to Schwarzenegger says the action star talked to his children the night before he publicly admitted he fathered a child and apologized to them. The source says he also talked to Maria and told them that he wants to make sure that his family has everything they need to get through this, even space. According to the source, Schwarzenegger said he would do whatever they want him to do to allow them time to heal.


GUTIERREZ: Now, the scandal has also been difficult on the adult daughter of Mildred Baena. Jacquie Rozo told CNN that her mother, quote, "A great woman and that she's the most caring person you could ever hope to know."

As for the 14-year-old boy, neighbors in Bakersfield told us that he's intelligent, polite and respectful and that their hearts go out to him, too - Wolf.

BLITZER: All right. Thanks very much, Thelma Gutierrez from Los Angeles.

President Obama delivers his most important speech on the Middle East in two years, hoping to use the revolution sweeping the Arab world as a launching pad for new efforts at an Israeli/Palestinian peace process.

Plus, the Taliban is in Pakistan, we should say, is seeking opportunity in the death of Bin Laden.


BLITZER: A major speech by President Obama addressing the changes sweeping the Arab world and announcing a new chapter in Middle East diplomacy.

Our White House correspondent Brianna Keilar is joining us. Brianna, set the scene for us. Tell us what the president said and did.

BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: Wolf, he was trying to explain the events of the Arab spring, give some context and assert that the U.S. supports any move toward democracy.

While also trying to explain the administration's seemingly contradictory responses to different countries where there have been uprisings.

And most importantly he said the region should capitalize on the events in the Arab spring and push for a return to the Israeli- Palestinian peace process.


KEILAR (voice-over): After months of transformational protests in the Middle East and North Africa and much criticism that the U.S. has been harsh with some countries cracking down on protesters while staying silent on others, President Obama tried to make clear the U.S. stands firmly with those calling for democracy.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: We have the chance to show that America values the dignity of the street vendor in Tunisia more than the raw power of the dictator.

KEILAR: The president said the U.S. supports its ally Bahrain, but demanded they allow protesters to assemble peacefully.

PRESIDENT OBAMA: And you can't have a real dialogue when parts of the peaceful opposition are in jail.

KEILAR: And he used his strongest language yet for Syria's president stopping short of calling for Bashar Al Assad to step down.

PRESIDENT OBAMA: He can lead that transition or get out of the way.

KEILAR: The U.S. will try to strengthen Egypt and Tunisia economically and create jobs for young people frustrated with a lack of opportunity. PRESIDENT OBAMA: America's support for democracy will therefore be based on insuring financial stability, promoting reform, and integrating competitive markets with each other and the global economy. We're going to start with Tunisia and Egypt.

KEILAR: The headline came when President Obama said the Arab spring should be a jump off for a renewed Israeli-Palestinian peace process going further than any president before him with this pronouncement.

PRESIDENT OBAMA: We believe the borders of Israel and Palestinian should be based on the 1967 lines with mutually agreed swaps. So that secure and recognized borders are established for both states.

KEILAR: A monumental undertaking explaining the U.S. policy on the Middle East as the region experiences more change than it has in decades and says Erin Miller, a former Middle East peace negotiator, it was a so-so performance.

AARON DAVID MILLER, FORMER MIDEAST NEGOTIATOR: It's not a home run and it's not a bunch of stumble bumbles. It's a serious effort to try to harmonize American values and interests.


KEILAR: And that's because American values are at odds in many of these countries with the short-term interests of the U.S. politically and economically.

And Miller added as this was the president's opportunity to inject some predictability into a policy that has been criticized is a bit whack a mole, his words, Wolf. He thought the president did a decent job considering how difficult the task was.

BLITZER: Tough, tough assignment. All right, Brianna, thank you. Let's go deeper right now, get reaction to the president's speech as well as the fallout from the U.S. raid that killed Osama Bin Laden.

Joining us Republican Congressman Mike Rogers. He's the chairman of the House Intelligence Committee. Congressman, thanks very much for coming in.


BLITZER: Quick reaction to President Obama saying that the negotiations between the Israelis and the Palestinians should begin on the '67 lines in his phrase with mutually agreed swaps. Is he right on that?

ROGERS: Well, that's a complicated thing. It's good that we're starting to put pressure on the Palestinians to give a little bit, for the Israelis to get back into the game of negotiation. Doing it in public I think is a very bad idea.

I saw today that the Israelis reacted saying that is a nonstarter. So we've already locked ourselves out of negotiations. When you get that technical, I argue that's the thing you leave on the table when the doors close and the media steps outside.

So you can have a pretty tough dialogue amongst those parties. When you try to negotiate those tough details in public, I think it spells disaster for getting this thing under way.

BLITZER: Let's talk about U.S/Pakistani relations right now. The cooperation or lack of cooperation between the U.S. and Pakistani intelligence services, is it getting better three weeks after Bin Laden is dead or getting worse?

ROGERS: Well, still lots of challenges. And I think to some degree, the embarrassment has and the bravado has not allowed us to move forward.

You know, they named the CIA case officer who happened to be the chief of state. He's the station chief there. Bad form. They knew it. They did it on purpose.

BLITZER: It's the second time they did that.

ROGERS: That's the second time they've done it. They held a U.S. diplomat for 42 days not that long ago.

BLITZER: A CIA contractor.

ROGERS: A U.S. diplomat for 42 days who had all the rights of immunity. They also interrogated him. So it's the most confusing relationship. They are fair weather friends at best, but we're going to have to work through it.

I know there's lots of calls, Wolf, in Congress, we should cut the funding and be angry at the Pakistanis. Nobody's more angry than I am on most days. But at the same time, they help us with logistics for the effort in the war in Afghanistan.

They have sent troops into the tribal areas and taken thousands of casualties. They have helped us arrest al Qaeda operatives to one degree or another and Taliban operatives in the settled areas of Pakistan.

So it is a real mixed bag. I would walk very slow down the path to cut them off.

BLITZER: I want to get more on that in a moment, but quick question. What's the scariest thing that you've learned from that so-called treasure trove of documents, information taken from Bin Laden's compound?

ROGERS: Well, I think the good news, if there is good news in some of that information, is that there wasn't -- there's no smoking gun there that says this is going to happen, this horrible event well under way, can't stop it. None of that is true.

BLITZER: Have they finished reviewing everything?

ROGERS: No, and it's going to take a while. That's one thing people have to realize. Some of its coded, some of its in Darry and Pashtu and Arabic. So there's a whole series of things that they'll have to do to be able to interpret all of the information.

But from what they've seen it, clearly show that he was conducting operational advantagement of al Qaeda where he could. He was given guidance where there were disagreements among factions. He would try to mediate those.

That was still happening and that was a little different than analysts believed leading up to that.

BLITZER: So he wasn't just sitting there. He was working on a computer sending out thumb drives, sending out instructions and he was deeply involved in this al Qaeda operation?

ROGERS: Absolutely. The one thing that struck me so far is how focused he was on telling al Qaeda elements around the world remember, target America first.

BLITZER: Here's what surprised me. He had no security, really no serious weapons there. Why?

ROGERS: Well, a higher profile would have been a lot more attention. Think about it, he had a family around him that invited other family members' children into play. They didn't see Osama Bin Laden.

They didn't see his family. They didn't see his wife. But they tried to make it as normal as you possibly can having a high security compound in the middle of Abottabad.

BLITZER: Is the U.S. with or without the help of Pakistan any closer to getting Anwar Al Awlaki who's the American-born cleric, who's in Yemen right now, runs al Qaeda in the Arabian Peninsula? I know the U.S. tried to kill him with a drone strike a couple weeks ago, almost got him.

ROGERS: I can't talk of the specific details, but when you look at his threat and why that -- it's a unique threat when it comes to al Qaeda. He has a complete understanding of American culture. He is --

BLITZER: He was born in New Mexico.

ROGERS: Born in New Mexico, he spent some time here, lived in Virginia for a period of time and lived in the south for a period of time. He understands America and has used that to his advantage to try to recruit people who have those blue American passports.

BLITZER: So is the U.S. any closer to finding him, do you think?

ROGERS: Well, he's under a lot of pressure, I will say that.

BLITZER: Legally, the U.S. can kill him from your perspective as chairman of the House Intelligence. He's an American citizen. Would it be okay to kill him as it was okay to kill Bin Laden?

ROGERS: He renounced his citizenship and he has declared war on the United States, his own words. I think we are in the full right of United States to bring him to justice just the way we brought in Bin Laden.

BLITZER: What about -- al Zawahiri, the number two al Qaeda leader, the Egyptian whose obviously been in hiding we believe in Pakistan? Any closer to finding him?

BLITZER: You know, what happens when something like this, we know this through the history of how al Qaeda will respond. When we get other senior leaders or senior logisticians or finance people, they change their security protocols. This was a major impact on them psychologically. He was an inspirational leader and an operational leader.

BLITZER: Bin Laden.

ROGERS: Bin Laden, and so when that happened, they're going to change. So Zawahiri doesn't know if the last note that he was writing had his name and address on it or not.

BLITZER: Do you think the Pakistanis or at least elements of the Pakistani intelligence service or military know where he is?

ROGERS: Well, I would guess that somebody has information that's valuable to us to find Mr. Zawahiri if he's in Pakistan, in Afghanistan, in Yemen, in the Maghreb.

BLITZER: Because the Pakistanis help the U.S. find him that would go a long way in improving that relationship.

ROGERS: It would be I think a big healer in our relationship. And again, I hope we take this opportunity to say it was embarrassing, it was bad. Now this is the time to step up.

More transparency, more access, share more information. Let's move forward and use this as an opportunity to strengthen our relationship, not weaken it.

BLITZER: The al Qaeda organization named another Egyptian like Ayman Al Zawahiri, Saif al Adel to be what they call their interim leader. What do we know about this guy?

ROGERS: Well, all of the folks that they have talked about and this particular gentleman is one of them have some inspirational qualities. They've been out. They've been talking. They've been preaching the message, if you will. Have some operational experience, are completely trusted.

We're not convinced yet that they have solidified on any particular person that is going to assume that role. And we also would not be -- I would be at least suspect of anyone early on knowing that they're going to go through these changes and are they trying to divert people's attention or not.

The good news is our intelligence services have been going after a whole slew of targets all over the world all of at the same time. So the whole apparatus wasn't going after Osama Bin Laden. It was going after all of the senior leaders as we know them all at the same time.

We're close on some, not so close on others. This is an ongoing process.

BLITZER: There are reports now that the Department of Homeland Security and the FBI are warning cities, mid level cities, other cities that al Qaeda may be thinking of attacking what are described as oil and natural gas targets inside the United States. Have you heard about this?

ROGERS: You know, what it is, is there's aspirational events and operational events. Aspirational event is when a group of their leadership would sit around the table and say these are things we think could make an impact, if we could do this kind of terrorist attack, this would move our mission forward.

And so those aren't things that have been turned operational. They haven't said go do this or that. You remember the train information that got out was a little bit blown out of proportion. They had said yes, we would like to do trains and this is one way we could do it, but we have no operational information.

We have known for some time and they have done it in other parts of the world where they have attacked energy sources for, it could be tractor-trailers carrying fuel or actually depots. We know they have an interest in it.

I think what you're seeing is we need to take extra precautions. We know there's still interest in it. Make sure your security is right.

BLITZER: Congressman Rogers, good luck in the all work you're doing.

ROGERS: Thanks, Wolf. Thanks for having me.

BLITZER: Thanks for coming in, Congressman Mike Rogers, Chairman of the House Intelligence Committee.

The Taliban striking with deadly force in Pakistan as militants see a new opportunity with the death of Osama Bin Laden. Plus, why some experts see gold as the answer to the crushing U.S. debt.


BLITZER: The death of Osama Bin Laden has forced al Qaeda to scramble to put a new leadership in place, but it's also seen as an opportunity by Pakistan's Taliban. CNN's Stan Grant has this story from Islamabad.


STAN GRANT, CNN CORRESPONDENT (voice-over): This man is the second most powerful Taliban leader in Pakistan. From his hideout near the Afghan border, he directs a bloody campaign that has killed thousands of Pakistanis.

While he is now speaking for the first time since the death of al Qaeda leader Osama Bin Laden more than two weeks ago. He says, quote, "the great leader is gone, but his fight lives on." We love his mission, which is not dependent on any one man he says. We loved him because he was courageously fighting against America and its allies.

We have to continue because we love his mission even more than the man. He gave this interview just days ago at a secret location in Pakistan's northern tribal region. A gun strategically placed beside him, but no identifying features to giveaway his location.

CNN obtained the video through an intermediary. The Taliban commander says his enemies don't just include the United States and its allies, that anyone who in his words, works for them that includes Pakistan.

In the Koran, God says to fight the infidels until they are finished, he says, not just the infidels but also their lackies. He says America and its allies have not been able to defeat the Taliban in Afghanistan, and he is determined to continue his reign of terror on his side of the border in Pakistan.

If all these countries together could not stand up to our guerrilla war in Afghanistan, I am sure that Pakistan, which is weak and lacking in technology, cannot defeat us, he says. Since Bin Laden's death, the Taliban has struck with lethal force.

Last week it launched a double suicide attack at this military base in northern Pakistan more than 80 recruits were killed. There have been other attacks and shoot-outs since. Pakistan's interior minister says Pakistanis are paying in blood to defeat the Taliban, and he rejects any claim the military is not up to the fight.

UNIDENTIFIED MALE: We are not weak. They know it, but don't go by the statement after enemy.

GRANT (on camera): But the Taliban does sense vulnerability. They know the relationship between the U.S. and Pakistan is at a new low. The strategy right now is to push home any advantage it has and test the resolve of the Pakistani military. Stan Grant, CNN, Islamabad.


BLITZER: The U.S. has hit its debt ceiling. Now some experts are looking to gold and saying it's time to start selling.

Plus, the stroll no one wants to take but everyone wants to see. Jeanne Moos looks at some memorable perp-walks.


BLITZER: The day the Treasury Department has been warning would come has arrived, this week, in fact. The U.S. hit the debt ceiling set by Congress, freezing the government's power to borrow money.

So what should the government do now? Some experts think they have the golden answer. CNN's Mary Snow has more.

(BEGIN VIDEOTAPE) MARY SNOW, CNN CORRESPONDENT (voice-over): As the United States plowed past its debt ceiling of $14.29 trillion, the Treasury secretary maneuvred to allow the government to keep borrowing until August.

Congress is nowhere near an agreement to raise the debt limit. To buy time for lawmakers to negotiate spending cuts, some conservative economists think the U.S. should sell assets, like land in the west, leased for farming and ranching, and the federally-owned Tennessee Valley Authority.

Chris Edwards of the think tank, the CATO Institute, which advocates limited government thinks the U.S. should even sell its nearly $400 billion worth of gold.

CHRIS EDWARDS, CATO INSTITUTE: I think selling gold would be a good message. It would show that Congress and the White House are willing to consider new ideas to pay down the debt. That shows progress and a reformed mindedness, I think, that will calm financial markets.

SNOW: The Treasury Department thinks the opposite would happen. The Treasury Department's assistant secretary for Financial Markets writes on the department's blog, a fire sale of the nation's gold to meet payment obligations would undercut confidence in the United States both here and abroad and would be extremely destabilizing to the world financial system.

Even if the U.S. sold its gold, it would only buy a few months' time since the U.S. borrows about $125 billion a month. And Barry Bosworth, a former economic adviser in the Carter administration says if the U.S. sold gold at any other time to cash in on high gold prices it wouldn't be a big deal. But selling it now would send a bad signal.

BARRY BOSWORTH, BROOKINGS INSTITUTION: If people are going to sell assets to try to finance their consumption, like the ongoing budget deficit we have, then I think it's a terrible idea. Sort of the notion that you can sell off the family jewels to continue to spend the way you are for a while longer.

SNOW (on camera): And the Treasury Department says if the U.S. wanted to sell its gold, there would need to be public input and oversight. And it wouldn't be tied to the debt issue. Mary Snow, CNN, New York.


BLITZER: Hot shots and Jeanne Moos, those are next.


BLITZER: Here's a look at some hot shots. In Libya, a boy's face is painted in the colors of the rebel flag in a children's fair in Benghazi.

In Thailand, monks lead prayers calling for peace in their country. In Ireland, Queen Elizabeth II wears one of her famous hats on a visit to a horse farm.

And in England, check it out, sheep weight to be judged at a spring livestock competition.

Hotshots, pictures coming in from around the world. The perp walk, for many suspects it's a walk of shame. CNN's Jeanne Moos shows us the hall of fame.


JEANNE MOOS, CNN CORRESPONDENT (voice-over): It's a scene, seen by Americans all the time.

UNIDENTIFIED MALE: Nicholas, did you strangle your girlfriend?

UNIDENTIFIED FEMALE: Why did you do it?

UNIDENTIFIED MAELE: I'm innocent. I didn't do it.

MOOS: But you tend not to look innocent, even when no one shouts a single incriminating question. It's what's called.


MOOS: Perp, as in perpetrator. And some in France are outraged over the treatment of the head of the IMF, accused of attempted rape. France's former culture minister called it a lynching that provoked horror and aroused disgust.

(on camera): French law bars the media from showing suspects in handcuffs before they're convicted.

(voice-over): Some say the perp walk goes against the presumption of innocence.

GRAHAM WISNER, LAWYER: It is done probably some would say to humiliate the suspect and they give off an aura of guilt.

MOOS: Though sometimes the aura doesn't fit the alleged crime from the smiling, accused Somali pirate to the JFK terror plot suspect. Others bend down or cover up to conceal their identity.

(on camera): Suspects use anything that's handy and we do mean anything to hide from the cameras during a perp walk.

(voice-over): Amy Fisher, the Long Island used her own hair to keep her face out of sight. The perp walk is a perennial. Always popping up, even as cameramen pedalling backwards or falling down, and suspects are falling forward.

And every once in a while you get an apparent confession.

UNIDENTIFIED MALE: Something came over me.

UNIDENTIFIED FEMALE: Do you regret it?

UNIDENTIFIED MALE: Of course, I do. No matter what he did, you know, you can't justify that.

MOOS: He's been charged with using an ax to murder a man. Sometimes a perp walk leads to perpetual cursing.

UNIDENTIFIED MALE: You (inaudible). You lucky I've got these (inaudible) or I'd smack you (inaudible).

MOOS: And finally there was the armed robbery suspect who managed to escape in mid-perp walk. It happened in Staten Island last year. The suspect took off down the street with police in hot pursuit.

They recaptured him quickly. Check out how he slipped out of a loose handcuff to make his break. If only they could cuff this guy's mouth.

UNIDENTIFIED MALE: I'll kick you in your (inaudible) head. You (inaudible).

MOOS: Jeanne Moos, CNN, New York.


BLITZER: The perp walk. Thanks very much for joining us. I'm Wolf Blitzer. Please join us weekdays in THE SITUATION ROOM from 5:00 to 7:00 Eastern, every Saturday at 6 p.m. Eastern here on CNN and at this time every weekend on CNN International. The news continues next on CNN.