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Freddie Mac Ties; Interview with Senator Rand Paul; GPS Tracking

Aired January 23, 2012 - 19:00   ET



Well panic on a cruise ship. New video tonight from on board that Italian cruise ship showing a frantic evacuation. We have that for you and a TSA showdown. Senator Rand Paul blocked from boarding a flight after refusing a pat-down today. He comes OUTFRONT.

And breaking news on Newt Gingrich's work for Freddie Mac, a taxpayer subsidized mortgage giant. We have the contract just released moments ago.

Let's go OUTFRONT.

Well good evening. I'm Erin Burnett and OUTFRONT tonight breaking news, the truth behind Newt Gingrich's ties to Freddie Mac. Literally, within the past eight minutes, the former speaker released records explaining his connection to the taxpayer subsidized mortgage giant, which was at the center of the housing bust.

Now I'm looking at it right now. I've been reading through it literally over the past couple of minutes, it's a 15-page contract and this is a contract for just one year, 2006. Now, the speaker worked for Freddie Mac for several years, so 2006 is the only year that I have in my hands and here's what I can tell you it says.

It says that the Gingrich Group had a $25,000 monthly retainer fee from Freddie Mac. He said that obviously adds up to $300,000 a year, which is the maximum for the year 2006. Again I want to emphasize this contract is one out of the six that he worked for Freddie Mac. Now, he was a consultant and he released this to make that point, to try to continue to make the distinction between consultant and quote, unquote "lobbyist". Gingrich has defended his work with Freddie Mac and said he even warned them about the looming housing crisis.


NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I have never done any lobbying. I said to them at the time, this is a bubble. This is insane. This is impossible. It turned out unfortunately, I was right.


BURNETT: OK, but when he was working at Freddie Mac from 1999 to 2002 and again from 2006 to 2008, Gingrich sang a much different tune, extolling the benefits of Freddie. In an interview posted on Freddie Mac's own Web site in 2007, this is my favorite quote. The former speaker said quote, "I'm convinced that if NASA were a government sponsored enterprise, we probably would be on Mars today. We have a much more liquid and stable housing finance system than we would have without the GSEs."

That acronym of course refers to Freddie Mac. Stable? Housing prices are down 24 percent from their peak in this country and the facts are that no matter what you believe about Freddie's contribution to helping people buy homes in this country, the fact is, is that America's home ownership rate today is about 66 percent, almost identical to Canada's 68 percent and Canada has no taxpayer subsidized institution like Freddie.

And more outrage for U.S. taxpayers. Freddie still owes $56 billion to taxpayers. That's part of the 71-billion-bailout they were handed during the crisis. That is more money than any bank in this country ever got, so just how much will Gingrich's ties to Freddie Mac hurt him in all across the country but especially in Florida? In Florida, 44 percent of homeowners at this moment are under water on their mortgages.

The average home in Florida worth half what it was when Newt Gingrich worked for Freddie Mac. Douglas Holtz-Eakin is a former economic adviser to the 2008 McCain campaign. John Avlon is a CNN contributor. Mr. Holtz-Eakin, Doug, good to talk to you -- what do you make of this?


BURNETT: You know he's putting out one year to say yes, I know, consultant sounds like lobbyist, but it's not technically that, so don't get mad at me. Is that going to be enough?

DOUG HOLTZ-EAKIN, FORMER DIR., CONGRESSIONAL BUDGET OFFICE: I don't think so. I mean people are going to be interesting ultimately, both Republican primary voters, who want to know whether their candidates (INAUDIBLE) November and the American public in general the nature of his activities. Mr. Gingrich is a long time Washington insider. Freddie Mac was one of the people he worked for. I'm sure there are many more, and people are going to want a full disclosure of the nature of his activities. And it doesn't matter whether he's technically a lobbyist or not. He was in the business of influencing public policy and the broad opinions toward those public policies and I think people want to know the nature of those activities.

BURNETT: I think that that's true and John Avlon, look people -- there were a lot of people who missed this, OK, so that's not necessarily the point. But when you are receiving money from a company that now owes still $51 billion to U.S. taxpayers and you said I'm convinced if NASA were run like Freddie Mac we'd be on Mars, you look not so good.

JOHN AVLON, CNN CONTRIBUTOR: Yes. No, this is not a crystal ball that looks real good right now. The point that Doug was making is right. This is an academic distinction being a lobbyist versus a consultant --


AVLON: -- because people know that historians don't get paid $1.6 million. Otherwise, there would be a lot more of them. But more importantly --


BURNETT: -- the whole PhD process, right --

UNIDENTIFIED MALE: I'm in the business --

AVLON: Really, we're going to readjust the entire thing. But (INAUDIBLE) seriously you raise the point. I mean if someone's consulting and giving advice and giving their analysis and they're that far wrong, that can become an issue and it should be an issue.

BURNETT: And Doug Holtz-Eakin how does this play out because obviously as I said, a lot of people got this whole situation pretty wrong, but you have Newt Gingrich coming out and saying Barack Obama should give back the money he got in campaign donations from Freddie Mac. Should he be giving back the money that he got in consulting fees as the company was crashing?

HOLTZ-EAKIN: Well I think there are two different issues here. Number one is whether you got the housing bubble right or wrong and many people got that wrong --


HOLTZ-EAKIN: -- and I will be on the list of people who's called the bottom three times -- been wrong many times. There's a second issue which is --


HOLTZ-EAKIN: -- no kidding.


HOLTZ-EAKIN: I'm going to become a historian -- anyway -- Fannie Mae and Freddie Mac were GSEs and there was always a concern going back 2000, 2001, 2002 about the taxpayers exposure if things went bad and there were many who consistently warned about the problem who were worried about the structure of the GSEs, who felt the business model was outmoded (ph) and the Congressional Budget Office under my direction wrote about this. The real question is how consistent were his views and he seems as if he once said this is fine, and then said no, they should never have been that way.


HOLTZ-EAKIN: That's the issue.

AVLON: Let's root (ph) this back in the fight in Florida, because that's why it's relevant. We're eight days away from the Florida primary. This ain't no trip to Disney Land, both campaigns biting hard releasing a lot of negative --

BURNETT: Freddie not the most popular name --

AVLON: No --

BURNETT: Matter of fact I bet there weren't many kids named Freddie the past couple of --

AVLON: We'll check that out demographically. But look, what's important here is you've got a huge number of -- number of under water mortgages. Nearly 200,000 foreclosures each year --


AVLON: Ten percent unemployment rate, so the economic game (ph), the economic pain that Floridians are feeling will translate to their votes and both campaigns can make arguments about how the other guy is out of touch and they will.

BURNETT: Right. You know Doug Holtz-Eakin this also lends itself though to the broader conversation that Newt Gingrich is it seems going to have to have with potential voters, which is do you believe that the government is who should be helping you get a home, encouraging home ownership or is this something the government should not be involved in. I mean at this time, he was promoting the government.

HOLTZ-EAKIN: There is no question about it. There is now and will be over the next several years, an ongoing policy discussion about what is the appropriate role of the federal government in house purchases and housing finance. And certainly he owes the American people an explanation on that front as the other policy issues. I think the biggest issue he's going to face is you know he is trying to portray himself as a product of the Tea Party and he is no more a product of the Tea Party than I'm a product of the Seattle liberals. I mean he has been in Washington for all of the time I've been in Washington, deeply involved in the intricacies and the efforts in this town and so the sort of authenticity of his campaign of whether it will survive I really think is the issue tonight.

AVLON: From a policy perspective Newt is a government reformer. He thinks there is a role for government, but Romney's going to have a problem here and in Nevada as well where also there's a lot of under water mortgages when he told that Las Vegas Editorial Board that he thought the process should play out and should hit bottom that could rub a lot of people who are under water and being foreclosed on really the wrong way.

BURNETT: That's right. It's going to be an interesting point. All right, well thanks very much to both of you and by the way, emphasizing again, I only have one contract here that was just released eight minutes ago. Well I guess now it's 16 minutes ago, but doing the math, assuming that Newt Gingrich was paid $25,000 a month over the entire six year time that he worked at Freddie Mac that would be $1.8 million that he received from Freddie. But again that's just based off of the one-year rate that I have in my hands.

All right, well things get ugly on the campaign trial. Mitt Romney and Newt Gingrich trading shots in Florida and then, Senator Rand Paul, something happened to him that may have happened to you, but he fought back. He refused a pat-down, got banned from a flight. He's OUTFRONT tonight.

And police using GPS and phones, cars and watches to track you and until today they didn't need a warrant.


BURNETT: Senator Rand Paul's long running battle with big government and the TSA got personal today when the outspoken libertarian leaning Republican refused a pat-down at the Nashville airport. An alarm went off when Paul went through a scanner. That happens to me all the time. I usually take the pat-down, but Paul did not want to take a pat-down. But he wanted to go through the body scan again. And you know we know that they don't like it when you do that. So he wasn't allowed to get on his flight, but he laughed it off later. This is a very serious issue though for the senator. He's been fighting the TSA for a long time and Senator Paul comes out tonight. All right let me ask you, Senator Paul Rand (ph), what really happened today?

SEN. RAND PAUL (R), KENTUCKY: Well you know I did offer also to show them my leg. I showed them my leg. I pulled my sock down, but they really weren't interested in looking at my leg. They wanted to do the pat-down and I said well I'm happy to walk back through the screener, which I've done at other airports before, been re-screened, and they weren't willing to do it. But you know the one thing I learned out of all of this is I had two TSA agents admit to me that the screener isn't always going off because it sees something. It also goes off because it's part of a random screening process --


PAUL: -- and I think most airport passengers don't know this and we're sort of made to believe oh, it's OK to do the pat-down because they're looking for something.


PAUL: It's actually a random pat-down.

BURNETT: It happened to me the other day and I -- they admitted that it kind of random. I don't if that's random there's one in every 20 or one in every 50, whatever it is. But let me ask you because I know you're frustrated with them and you don't like them and that's your fair point of view, but you know was there any theatrics or you know --

PAUL: Well I wouldn't -- I wouldn't put it that way --

BURNETT: Rand Paul acting out a little bit? PAUL: No, but I wouldn't really put it that way. I wouldn't say that I don't like TSA. In fact there is a need for security at our airports. Most of the TSA agents that I see at the Nashville airport every day are good. Many of them are politically supportive and pat me on the back, so I don't want to say anything bad about them, but they're stuck with rules that don't allow them to have any kind of consideration. I want the manager on the floor to be able to have some discretion to say we don't have to do a pat-down here. We don't have to do a pat-down there. I want them to have a trusted traveler program where business travelers can flow seamlessly through the airport without being harassed and overly examined.

BURNETT: Right. No, I mean I hear you on some of that point, but when you look at the TSA, right, 708 million people go through those scanners so it's hard to base things on judgment because just what if, God forbid, they thought someone looked normal and didn't submit them to the extra check, right, and then that's the person who blows up a plane?

PAUL: Yes, there's always the what if but what I would say is that if you had a frequent traveler program, you would sign up, you would give some background information voluntarily and then you would be able to flow through it. You would still go through an x-ray machine. Your luggage would still go through, but in all likelihood you wouldn't take your shoes off, your belt, and all the other things, but in all likelihood you also wouldn't have to go through a pat-down search.

And I really think we've gone overboard. We've had 88-year-old women having an adult diaper taken off, an 8-month-old child, the same thing, a 6-year-old girl from my town in Bowling Green (ph), Kentucky, had an agent putting her hands inside her pants. We've gone too far and we're not using our brain or common sense to say who attacked us, why did they attack us and where did they come from? Let's use some common sense in trying to figure out who are the people who want to attack us.

BURNETT: How did you -- how did you finally get on the plane?

PAUL: Well, I was detained for a while and then when they got tired of detaining me, they then injected (ph) me and sent me outside under sort of duress. Then they came back --

BURNETT: Oh, ejected you. I thought you said injected and I'm thinking wow --


PAUL: Not in a hospital, not injected, but I was detained for a while and every time I would try to leave the cubicle, I was told to get back in the cubicle even to talk to another TSA agent, but then they got tired of me because I made some phone calls and they said if you use your phone, you'll get the full body pat-down and I was like oh I don't want that and so --

BURNETT: That's the crevice (ph) search or something, but they say they didn't detain you --

PAUL: Yes.

BURNETT: So is it just -- maybe --

PAUL: Well it depends. I mean if you're told to get back in the cubicle when you try to leave, is that being detained? I kind of think that's being detained, but then they got tired of me on my phone and they knew that they were created more problems than we needed to have in the airport, so then they forcefully ejected me from the airport and then they came back later and you know what they did in the end?


PAUL: They said if you'll go through the screener again, we'll just pretend like it didn't happen. I said that's fine with me. That's all I've ever wanted was to walk through the screener again and then you know what, the screener didn't pick up anything. So either the screeners aren't working very well or I was being subjected to a random pat-down, which I don't think is helping any of our safety.

BURNETT: I'll go -- I'll go with that. I want to do one final question for you, sir. I spoke to Newt Gingrich the day before the South Carolina primary. And I asked him about your dad and he had a lot of praise for him. Here's what he said.


NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: It's a fact of life Ron Paul's going to get a significant vote and it's a fact of life that you want to find something that would give him a strong reason not to consider a third party and so you've got to say OK, under what circumstance, he has a legitimate role. And he's earned that role by running a very formidable (ph) campaign and you want to find something that we're adequately compatible on that you could actually find something to do.


BURNETT: Is there something?

PAUL: Well, you know I think one thing that Ron Paul has brought to the Republican Party is he's been a long time Republican, but you know when you poll him against President Obama, he's beating President Obama by seven points among Independents. He's bringing young people and Independents to the party, so I think Newt is right. They need to embrace Ron Paul and say we want you to be a part of our party. We want all these new, young people to be active. But in some ways they have to embrace some of Ron Paul's message, because it's not about Ron Paul as a personal figure.


PAUL: It's about my father's message that brings the young people. I think there is room for him in the Republican Party. There's room for me. We're not all the same, but most of us do believe in much smaller government than President Obama does, much less taxes and much less debt than the president does.

BURNETT: All right, well Rand Paul, thank you very much, apologies for the snafu with your name at the top. You were gracious. Thanks very much. Have a good one.

Tonight, "Under Surveillance", how the government is watching us and we're talking tonight about GPS. It's in cell phones, cars, boats, planes. You can actually even get it now in a wristwatch for as little as $100, but it's also used by police to track suspects. And until now, they didn't even need a search warrant, but today the Supreme Court ruled that the police have to have a warrant in order to monitor a suspect with the GPS device. Paul Callan is a former New York City prosecutor. He's an expert in search and seizure law. He's OUTFRONT tonight and we are talking the case today was a suspected drug dealer. I guess the police snuck in and stuck a GPS tracking thing under his car. He didn't know about it, tracked him for 28 days. Should they be allowed to do that?

PAUL CALLAN, FORMER NEW YORK CITY PROSECUTOR: Well, there's a big disagreement about that. I mean those who support law enforcement officials and by the way, including the Obama administration, who you know people think it's a liberal administration. The Justice Department said law enforcement did nothing wrong in this case. They attached a GPS. A search warrant expired after 11 days so they had no search warrant and they tracked the guy for 28 days, nailed him, and then he got sentenced to life in prison and the Justice Department says that's OK.


CALLAN: Opponents say no, illegal search and seizure.

BURNETT: Interesting the Obama administration supported the position that no warrant was required by the police.

CALLAN: That's exactly true and I think people would be shocked by that --


CALLAN: -- because civil libertarians of course say hey they should have had a warrant. You can't have this sort of unrestrained surveillance by police forces in the United States.

BURNETT: So -- how -- what's the reaction to this going to be? What's really going to change?

CALLAN: Well people were hoping for a monumental decision about these new digital surveillance techniques. I mean GPS actually is kind of an old one. And they were hoping the court would hand down some kind of a big decision in this area, but it was a very confused decision. It was unanimous. The only thing they agreed on is that they physically trespassed on somebody's property when they attached the GPS. BURNETT: Oh yes.

CALLAN: But they avoided the bigger question --

BURNETT: The actual issue of --

CALLAN: -- can you follow somebody for 28 days and as a result of knowing where they go, then you arrest them for criminal activity. People thought this would -- we'd get a look at infrared, we'd get a look at face recognition, all of these up and coming law enforcement techniques. But we did get a hint that a lot of the Supreme Court justices think we need new laws in this area. That Americans' privacy is being violated by these new digital, big brother type surveillance techniques.


CALLAN: So I think it is going to be looked at as a very, very important surveillance decision.

BURNETT: Remember, everyone, to turn it off. You know, you can turn off your GPS thing. I don't even believe when it's turned off it's turned off, by the way. I think that they're always watching --

CALLAN: Well you know --

BURNETT: All right. We've got to go.



BURNETT: All right next, where is Michelle Parker? There is new video showing the missing mother just hours before she was last seen. It's a story we've been following and we're going to talk to her sister tonight and the end of the line for one of your favorite television characters. The Shat goes splat in tonight's "Number".


BURNETT: Sad news today. William Shatner is dead. Well, not really, but one of his characters is. In a new television ad, Shatner's Priceline negotiator is seen helping passengers off a bus moments before it falls off a bridge and explodes. It's part of the company's plan to stop its name your own price option that Shatner has promoted successfully for 14 years, but don't worry, the Shat is still -- see, there it goes down -- the Shat is still under contract with Priceline, which brings me to tonight's number, 46.

That's how many seconds it took for to tell me they were unable to find flights that matched my (INAUDIBLE) criteria. So this morning I went on Priceline and searched for a flight, Karachi, Pakistan to Dubai, a flight I've taken, so it seemed fair. I entered January 24th as my departure date, the 28th as the return, and I waited and I waited and I waited and I waited. And while I waited I saw William Shatner doing karate, flashing money, fighting his evil twin and posing with someone that looked like a gigantic pimp, even though the show's producer, Will Serad (ph), says that's just a heavy -- you saw that guy -- and then Priceline said they don't even have any flights from Karachi to Dubai. Forty- six seconds is a very long time.

It's kind of dial-up time and a lot of Shatner and the heavy pimp, so I tried another site, Kayak (ph), and in a tenth of a second and with zero photos of Shatner Kayak (ph) found me more than 20 flights. With numbers like that maybe Shatner got out of the negotiator time -- game at the right time. What's your favorite travel site? Let us know.

Still "OUTFRONT," the "OutFront 5", hanging by a thread --

UNIDENTIFIED FEMALE: I grabbed him by the hand and we just -- I don't know --

BURNETT: Legacy versus lawsuits.

UNIDENTIFIED MALE: No matter what anybody else said it wasn't Joe's fault.

BURNETT: All this OUTFRONT in our second half.


BURNETT: All right. We start the second half of our show with stories we care about, where we focus on our own reporting, do the work and find the OUTFRONT five.

And tonight, we begin with two people dying, 100 injured. There's been severe weather, including tornadoes, in the Southeast earlier today. One of the hardest hit areas was Jackson County, Alabama. Officials there are telling us the storm destroyed more than 200 homes and damaged another 200. We're told that number will rise.

Alabama Governor Robert Bentley has declared a state of emergency in all 67 counties.

Number two: the U.S. has imposed sanctions on Iran's biggest bank for its involvement in the country's nuclear weapon effort.

The European Union also put pressure on Iran, saying they would ban oil imports and freeze Iranian bank assets.

But the truth is, the U.S. and Europe frankly are not able to stop Iran from getting the money it needs to build nukes. A Middle East analyst told us one-third of Iranian transactions go through Dubai. The analyst added that nearly 15 percent of the expat population in Dubai is Iranian and for long time has been used as a way for Iran to conduct back channel trades.

Number three: Gabrielle Giffords, who will resign from Congress this week met today with some of the people who were there the day she nearly lost her life. Daniel Hernandez, seen here hugging the congresswoman, is credited with saving her life after a gunman opened fire at a Congress on Your Corner event January 8th, 2011.

Well, we talked to Daniel Hernandez after today's event and he told OUTFRONT that Gabby Giffords has talked to his mother and said, quote, "Gabby has always been a fan of my mother's cakes and today, she mentioned my mother, which was a really sweet moment." Hernandez told us he plans to bring Giffords the next time he sees her.

Well, number four, the new CEO of RIM, which is the maker of the "precious," said today that better marketing and product rollout are key to keeping the smartphone alive. Thorsten Heins takes over as BlackBerry's market share has dropped below 10 percent. Analysts say they like him and they need a change at the top. However, our experts believe changing marketing with the same product will not be enough to turn around BlackBerry.

Well, it has been 171 days since America lost its top credit rating. What are we doing to get it back?

Well, we are hopeful Congress to going to pack up and more do this year. Only 90 public laws were passed in the Senate in 2011. That is the lowest number since 1995, with 88 laws were passed.

Well, forget positive campaigning. Mitt Romney and Newt Gingrich are going after each other today in Florida, the state with the next primary in eight days.


NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: If you've been campaigning for six years, and you begin to see it slip away, you get desperate. And when you get desperate, you say almost anything.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: You look at the speaker's record over time, it's been highly erratic. And in the case of the speaker, he's got some records which could represent an October surprise. We can see an October a day from Newt Gingrich.


BURNETT: All right. Plus, breaking news tonight: Newt Gingrich releasing his 2006 contract with mortgage giant Freddie Mac. And that's what we've been looking through here today. It happened just a couple of moments before our program begin.

Fifteen pages and we're going to get a little more information now. Gingrich's Florida state director Jose Mallea is with us, along with Adam Goodman, a Republican media consultant who supports Mitt Romney.

Oh, I love that you guys have to stand side by side.


BURNETT: That way you can't be too nasty to each other. But let message start with you. I'm reading through this contract and this is just one year, 2006. Newt Gingrich's contract with Freddie Mac, $25,000 a month. But I just am looking at one sentence in here. The consultant will supply copies of any disclosures or reports required to file by law such as reports filed under the Lobbying Disclosure Act. It would seem that this contract does not prohibit lobbying.

JOSE MALLEA, FLORIDA STATE DIRECTOR, NEWT GINGRICH CAMPAIGN: In fairness, I actually haven't seen the contract. I just heard of this news from you.


MALLEA: I've been focused here on Florida and getting our team organized and running an election in the state. So I defer that to some of the smarter folks that know exactly what's in that contract.

BURNETT: All right. Well, let may ask you, Adam, just in terms is this enough that Newt Gingrich has put out the year 2006 for his relationship with Freddie Mac? One of six years. Is that enough for your campaign?

ADAM GOODMAN, REPUBLICAN MEDIA CONSULTANT: Well, you know, here in Florida and welcome to Florida, by the way. Here in Florida, home foreclosures have been a very, very big deal. You talk about an economic hot button. That is about as hot as it gets.

Miami-Dade for instance, Jose knows, led the nation I think. It was three times the national average in terms of foreclosures. It's gotten worse, not better. And so, the whole issue about someone getting millions of dollars from Fannie Mae and Freddie Mac, that really bothers people, I think more here perhaps than other states around the country. I think actually that is a huge issue regardless of what the contractual terms say in a state that's really kind of take it on the chin for a while and they need someone who not only understands that but didn't profit from it.

BURNETT: Jose, what's your point? Go ahead.

MALLEA: Erin, if I could jump in? Yes. Absolutely. So, here's the deal -- at the end of the day, what we're seeing here is a candidate who really has no substance -- the campaign also. Therefore, what they're doing is they're attacking the speaker and trying to draw some sort of distinction with him.

The speaker at the end of the day is the only true conservative in this race. The only Reagan conservative that can do the things that need to be done, to change the course and the direction that our country is headed in. This is just another attempt by the Romney campaign to try to distract voters not to talk about the issues. To talk about things that while they seem important, they don't want to get down to the core and actually be able to debate Newt Gingrich on the actual issues that are important to the voters in Florida.

BURNETT: Adam, let me ask you. GOODMAN: This is what we expect, Erin.

BURNETT: I know. This is politics, OK? What we're hearing is politics.

But, Adam, let me ask you a question. Mitt Romney says he's going to be releasing his tax returns tomorrow. Now, this is really important. People are going to look at these. Can you tell us what we're going to see?

GOODMAN: And like Jose, I haven't really reviewed those documents at all, actually. I think it's going show a guy who's got a big heart and also someone, last night, actually, we were in Daytona Beach, right very close to the speedway, which Jose knows very well.

MALLEA: That's right.

GOODMAN: And I found Mitt Romney coming out of South Carolina as someone who has great substance, a great heart. There was a crowd of over 2,000 people that were going nuts for him.

I think this race is starting to move in the direction I think the Romney team expected in the very beginning, which is someone that has solidity, this is the tremendous track record, a wonderful family guy.


GOODMAN: I think in Florida, it's going to be a very strong campaign.

BURNETT: All right. Well, thanks to both of you. We appreciate it.

We going to keep going through the Freddie contract and we are going to comb through those tax returns tomorrow.

OK. Thanks to both of you.

And now, let's check in with Anderson.

Anderson, what's coming up on "A.C. 360"?

ANDERSON COOPER, HOST, "A.C. 360": We're going to have the latest on the news you're reporting on, Newt Gingrich's -- the news out of Newt Gingrich's camp. After a lot of pressure, they have released part of Gingrich's consulting contract with Freddie Mac. Within the fine print, the bigger story appears to be what isn't in the contract. No specifics on exactly what the mortgage giant paid Gingrich to do. We're keeping them honest tonight.

Plus, more on the severe weather in the Southeast that left two dead, hundreds injured. The pictures, it's unbelievable. Take a look at that. Hundreds of homes destroyed or damages. Reynolds Wolf joins us live from Clay, Alabama, for the very latest from there. Plus, we go up close tonight. It has been just over a year since Congresswoman Gabby Giffords was gunned down at a political event. She's going to announce -- she has announced that she's going to step down to focus on her rehab. We're going to talk with Dr. Gupta who's been following her progress closely. He joins me live.

Those stories and, of course, tonight's "Ridiculist," Erin, at the top of the hour.

BURNETT: All right. Thank you very much, Anderson. We're looking forward to that.

And up next, we're going to take you inside that Italian cruise ship. We have video that came in today on board the ship literally as it was sinking. We're going to show that to you.

And new clues into the disappearance of Michelle Parker, the missing mom we have been telling you about from Florida. Her sister with us, next.


BURNETT: We do this at the same time every night, our "Outer Circle," where we reach out to our sources around the world.

Let me begin tonight in Italy with a cruise ship disaster. Tonight, we have newly released video of the moments just after the Costa Concordia ran aground off the coast of Giglio Island, Italy. Honeymooners Denise and David Saba (ph) were among the first passengers to evacuate and David captured moments of sheer panic on his camera.

Now, as the rescue mission continues, officials announce that two more bodies were recovered in the area near the ship's Internet cafe. That brings the number of confirmed deaths to 15. The search efforts continue, but a new phase of the operation began today.

CNN's Dan Rivers has been in Giglio, covering the story, and I asked him about it.


DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: It's been a watershed day here on Giglio Island. Finally, they have now formally started the salvage operation to empty the fuel off the wreck of this liner. They're starting with one of the 13 fuel tanks, with some 270 cubic meters of fuel, 2,500 tons need to be removed, along with lots of other chemicals. And all could take more than a month.


BURNETT: And next, in Nigeria, where blasts in the nation's second largest city killed at least 157 people and left police headquarters and government buildings in ruins. Nigeria is the most populous country in Africa, split between Muslims and Christians. Islamist group Boko Haram claimed responsibility for the blast, according to a Nigerian newspaper. The group has been blamed for months of widespread bloodshed.

Philippe de Pontet is the head of Eurasia Group's Africa practice and we asked him the strategy behind Boko Haram's attacks.


PHILIPPE DE PONTET, HEAD OF EURASIA GROUP'S AFRICA PRACTICE: Boko Haram seem to have multiple targets depending on the particular attack at hand. But at its root, I think they're looking to delegitimize the Jonathan administration, make him look weak and powerless, and also tap into the sense particularly among northern Muslims that this group is in some ways illegitimate.


BURNETT: Goodluck Jonathan is the president of Nigeria.

And now to Afghanistan and the development in the Taliban talk negotiations. In meetings between the U.S. special envoy to Afghanistan and Pakistan, Karzai's government signaled that it is willing to join with an American peace led effort. Support from Afghan officials has been crucial to the discussion. Karzai's government though indicated it would not stand in the way of the U.S. releasing prisoners from Guantanamo Bay as a Taliban demand.

However, Ambassador Grossman said no decisions have been made about releasing detainees.

Ambassador Karl "Rick" Inderfurth is a senior adviser at the Center for Strategic and International Studies and we said what needs to happen before official talks with the Taliban can start.


AMBASSADOR KARL "RICK" INDERFURTH, SENIOR ADVISER, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: First and foremost, we need to find out if the Taliban are serious. They haven't been in previous talks.

Second, we need to keep President Karzai on board. There is concern by Afghans that there will be a secret U.S.-Taliban deal.

And thirdly, Pakistan has to be a part of this. There will be no long-term political settlement for Afghanistan unless the Pakistanis are involved.


BURNETT: All right. He was the winningest coach in Division I college football history. But Joe Paterno's legacy is still in limbo. The 85-year-old former Penn State football coach died Sunday from lung cancer. The State College campus is honoring the coaching legend, but there are so many questions surrounding the Penn State program.

Paterno's former assistant coach, of course, is Jerry Sandusky. He was charged in November with sexually abusing at least 10 boys. Several more alleged victims have also come forward since.

Before he died, Paterno said he wished he had done more in light of the allegations against Sandusky.

Sara Ganim has covered the story from the beginning and she is in State College tonight.

Sara, good to see you. And let me ask you this. I know you spoke to Scott Paterno, Joe Paterno's son. What did he say?

SARA GANIM, CNN CONTRIBUTOR: Erin, he told me that his father died in a way that he wishes he has the courage to die that way when his time comes. He said he was completely at peace with his life. He told his children: just take care of your mother. He kept saying that over and over again. Please take care of your mother.

Scott pressed that, you know, everything that Joe Paterno has accomplished in his life, he has done with his wife -- in his life, he has done by his side. And really moving forward, they're focused on their mom. They're concerned about her, but they're really looking forward to celebrating Joe Paterno's life and his legacy in the coming days at a campus memorial service on Thursday.

BURNETT: Is there any indication, Sara, from your reporting on this that -- as to whether Joe Paterno's death will impact the case against Sandusky since obviously he was the one that Mike McQueary told that he saw Jerry Sandusky abusing the boy in the shower?

GANIM: It's a good question. A lot of people are asking that now. And, you know, what legal experts are telling me is that Joe Paterno's statements would have been a dramatic moment in court for sure. That people would have wanted to hear what he said. There's going to be some unanswered questions because he now can't take the stand.

However, as far as it being crucial to either of the two cases, the perjury case or the molestation case against Jerry Sandusky, it probably wasn't going to be crucial or key and the reason is because he really was just a piece in a timeline. The key people here are eyewitnesses and victims. And in the perjury case, the key people are the two defendants and the people they talked to directly.

So, you know, of course, people wanted to hear from Joe Paterno, but is it going make a huge difference in the prosecution or defense? People are speculating that the answer is no.

BURNETT: All right. Well, Sara, thank you very much. As we said, Sara has been breaking all the news on this story since the very beginning.

Well, it has been nine weeks since Michelle Parker disappeared in Orlando, Florida. On Friday, she turned 34 and police have released new video of her from the day of her disappearance.

Now, this is significant. We've been covering this story, there had not been any video. This is video of her at a fast food restaurant about three hours before she vanished without a trace. As you can see, that is zooming in on our face there.

Michelle was last seen dropping off the children with her ex- fiance, Dale Smith, who remains the only suspect in the case. He also has, of course, custody of their children. Parker and Smith had a tumultuous relationship which ended in a fight over an engagement ring on the television show, "The People's Court," at episode that aired the same day that Michelle Parker went missing.

Lauren Erickson is Michelle Parker's sister. Matt Morgan is the family attorney. Both are OUTFRONT tonight.

I wish that you all weren't here because I wish that this story had ended and ended well, but you are.

So, Lauren, let me ask you, the new video released of your sister coming through the fast food, it helps police obviously with the timeline of what happened to her and where she was. Have they learned anything from this video that you were aware of?

LAUREN ERICKSON, MICHELLE PARKER'S SISTER: The video itself, I mean, it just shows her going through the drive thru, getting lunch that day. I mean, if anything, it just shows it was a normal day. She was just going to grab lunch. She was actually on her way out to a beauty supply store that day to pick up color for her salon.

But as far as anything significant other than adding to the timeline itself, it doesn't really show too much.

BURNETT: Let me ask you, my understanding is and tell me if I'm wrong here, Lauren, that there was a decal on the back of her car, which apparently was not there when they actually got the car. Is there any, in your view, significance of that? Or what did it say? What's your belief and what are you hearing from police?

ERICKSON: That's correct that when the vehicle was found the next day, that Friday, the stickers were off of it. I mean, in the video, when she drove, 2:30 that day in the salon. I remember watching her leave and I know the stickers were on it then. So, sometime between the time she was last seen and when the vehicle was found is when the stickers were taken off.

BURNETT: Matt, what's your understanding on whether there could be significance to that or as to whether this video might help significantly with the timeline of what happened to Michelle?

MATT MORGAN: Well, I think what it shows is that OPD is doing a great job and they've been, you know, searching through every single tip that comes in and they actually have got it narrowed down to her driving through a fast-food restaurant. I think the significance of the decals is, like Lauren said, it shows that they were on there before and later on, you know, in the timeline, those decals were gone.

It show us, A, that the police are doing a great job and, B, that, you know, the decals were removed and we don't know why.

BURNETT: Lauren, how are the children doing now? Obviously, they're still with Dale, right?

ERICKSON: The twins are with their dad and, Austin, the oldest, he's back in school and he's doing all right. I haven't seen the kids recently, though. But, you know, as far as their well-being goes, I'm sure that they're fine.

BURNETT: And I know that you are still searching for your sister. How often are you going out at this point? Do you feel that there's still stones left unturned?

ERICKSON: I feel, until my feet have crossed over every inch of the state of Florida or until she's found, that there will be stones unturned. There will never be a stone unturned until the day that I see her again or that this family has closure one way or another and that justice is served.

BURNETT: Matt, what else do you think is needed? I know you've always talked and said that the Orlando police department has done a great job. But you had said before, you wanted more assistance and more help. Do you still think you need more assistance to find out what really happened?

MORGAN: Well, Erin, at this point, we're actually regrouping, in that sense this week. What we need at this point is a more organized effort, I think. We're going to be assisting OPD and the surrounding law enforcement agencies with that effort. We're going to be gathering our support group to kind of -- to work with them in furtherance of finding Michelle.

So, essentially, what will happen is they'll say this is a high probability area, we believe that she could be here and we'll get our people together and join forces with OPD and hopefully, bring Michelle home.

BURNETT: And -- all right. Thank you very much to both of you. I appreciate your taking the time. And we still -- all the viewers who have been involved with your story are all hoping there will be a miracle and a nice outcome. So, thanks to both of you. Good to see you again.

MORGAN: Thank you, Erin.

ERICKSON: Thank you.

BURNETT: All right. Well, a strange thing happened in South Carolina when we were there. We spent a yarn about vodka and country music. We partook a book.


BURNETT: While we were in South Carolina covering the primary runoff last week, we made a stop at a company called firefly vodka, way out on a barrier island in the middle of nowhere. You might have seen a story on the show we did.

And while we were there, in between drinks, the man behind the company told us about an amazing thing that Firefly vodka does for independent music acts.


UNIDENTIFIED MALE: We do lot of promotions through indy bands. We offer our R.V. and e pay for gas when they're on the road and we offer our studio for use for grata.

UNIDENTIFIED MALE: It's a wonderful thing. We appreciate it.

UNIDENTIFIED MALE: You're welcome.


BURNETT: That's right. The company gives the bands a free tour bus. They can drive around the country, play shows and it doesn't cost them anything, not even gas. Literally, all they have to do is park the R.V., a giant billboard, really, I mean, see? It says Firefly. They have to park it in front of the venue and mention Firefly vodka when they're on stage.

So, it's a great promotion for Firefly and incredible get for the band. Sort of, you know, capitalism meets entrepreneurialism, meets American freedom all in one. Well, the band we met is a New York- based called, a group called Yarn. And it's using the R.V. to play in shows in South Carolina, North Carolina, Georgia and Florida.

And when we met Blake Christiana (ph), that's singer you saw talking a moment ago, he asked where we were from. We said New York. He said, we're from New York, too. It was a long drive, huh? We stopped in our tracks and made us realize, I mean, someone thought we would have driven. How amazing that would have been.

We thought how amazing that would have been and how scheduled our lives are and how freeing a road trip really is. We just stood there talking about how amazing it would be to be young and in a band.

OK. We're not either one of those things, but we did a road trip. We drove from Charleston, South Carolina, to Atlanta for election coverage, plus, flea markets, all kinds of small stores and even some porn shops.

The bottom line is Yarn is doing what they want to do, how they want to do it. They stop when they have to stop. They go where they want to go. So, we thought we'd play a little bit of Yarn.

By the way, it's an amazing band. They have a great song that you're going to listen to here. I'm waiting for like the key line. But playing good music and living the real American Dream, it's pretty amazing.

"Schenectady." Hold on.


BURNETT: Schenectady. I've been waiting so long for you to comfort me -- I even know all the words. We think Yarn is going to make it big. But just one little warning to you, Yarn, you make it big, you're going to end up having to fly and you're going to miss the good old days of the R.V.

All right. Thanks so much for watching. The State of the Union is tomorrow. We are excited for that.

And "ANDERSON COOPER" starts right now.