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ERIN BURNETT OUTFRONT
More Bank Regulation Needed; Stories about Mitt Romney; John Travolta Lawsuits; New Al Qaeda Safe Haven?
Aired May 11, 2012 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ERIN BURNETT, HOST: OUTFRONT next a worldwide shock wave from JPMorgan's massive trading debacle. What the man at the helm of America's biggest bank got so very wrong.
Details of the last moments of the manhunt as the FBI closed in on the fugitive wanted for two murders and two kidnappings.
And well you've probably seen her on the cover of "TIME" magazine breastfeeding her 3-year-old son. Tonight, she comes OUTFRONT.
Well good evening, everyone. I'm Erin Burnett. OUTFRONT tonight, warning signs ignored. The fallout swept around the world today from America's biggest banks, multibillion dollar loss on risky trades. In Washington, Senator Carl Levin held a conference call with reporters about JPMorgan's shocking trading losses which could be up to $3 billion and the credit rating agency Fitch slapped JPMorgan win a drown grade citing reputational risk.
JPMorgan shares plunged taking other banks down, but the problems that the company's boss, America's most well-known banker by surprise. Here's Jamie Dimon just one month ago responding in his typical blunt way to investor questions about bad trades and his risk management unit.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: It's is a complete tempest in a teapot. Sophisticated, with obviously complex things, but at the end of the day that's our job, to invest that portfolio wise (ph) and intelligently to over a long period of time to earn income and to offset other exposures we have.
(END VIDEO CLIP)
BURNETT: Well, here he is last night when it turned out that tempest was anything but.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: These were grievous mistakes. They were self- inflicted. We're accountable and what happened violates our own standards and principles by how we want to operate the company. This is not how we want to run a business.
(END VIDEO CLIP) BURNETT: The total about-face scared investors because here's the bottom line, Jamie Dimon is known as a street fighter who doesn't B.S., he swears a lot, he yells. He's known for calling it like it is and in no small part because of that his bank the only American bank to emerge from the financial crisis stronger than before. According to investment firm FBR (ph), assets have grown 45 percent at JPMorgan from their pre-crisis levels. That's right. The bank is 45 percent bigger, $2.3 trillion.
"Newsweek" called him the banker who saved Wall Street in September 2009. "The New York Times" magazine cover of December 2010 was, "Jamie Dimon, America's least hated banker". I remember a conversation at the heat of the crisis with Jamie Dimon when he told me quote "the pedestal is a terrible place to be", but he was on one which makes the current trading debacle all the more noticeable and a real black eye. So could JPMorgan lose more?
Could other banks? The answer is, yes. How did JPMorgan get it so wrong? To use a NASCAR analogy, if the Tony Stewart of Wall Street can't keep his car from crashing then maybe the engine is too souped up. Joining me now is Andy Serwer, manage editor of "Fortune" magazine and Stephen Moore of "The Wall Street Journal" editorial board. Good to have both of you with us.
Andy, this is a -- I mean just hearing -- that was one month ago Jamie Dimon saying what are you guys talking about? Get out of my face. There's no problem. And here we are.
ANDY SERWER, MANAGING EDITOR, FORTUNE MAGAZINE: It's a real comeuppance for Jamie and I think it points to two things. Number one, no man, no human being is smarter than the markets. Even if you're Jamie Dimon, even if you're that respected, that's number one. And number two there are an awful lot of people Erin in Washington, D.C. right now chortling, Tim Geithner and people like him, who Jamie was beating up on saying we don't need more regulation. Get off my back. Get off my back. We understand the markets. We understand the capital markets. Not so much.
BURNETT: Steve Moore, talk about chortling (ph), what's going on there?
STEPHEN MOORE, THE WALL STREET JOURNAL: Yes, well I think the truest thing that you said Erin is when you quoted him saying you don't want to be on that pedestal because he certainly has fallen off the pedestal. Look, he had a great run, as you know. You've interviewed him many times. He's been a great banker. But this was -- some of these trades were just unforgivable and as you said, the losses could reach two to $3 billion.
But here's where I think I disagree with the two of you, Erin. I think this rush to more regulation of the banks and U.S. financial services is kind of the wrong remedy. I mean U.S. financial services are the most overregulated industry not just in the United States but in the world. And when you talk about a bank like JPMorgan it is regulated as you know by the FCC, by the Federal Reserve, by the Treasury Department, by the FDIC. We have multiple -- SERWER: Wait a minute.
SERWER: I'm not sure either one of us was calling for more regulation Steve and I think that, you know it -- I think less regulation doesn't make any sense. You've got people like Lloyd Blankfein asking for better regulation. And I think that's maybe what Jamie Dimon is saying. Better regulation would make sense. But I think better risk management internally is probably what's really needed here.
MOORE: Oh, well I think we agree on that, but look, let's look at who are the losers here. Thank goodness the losers, Erin, are not the taxpayers, because it doesn't look like JPMorgan is going to get a bailout --
MOORE: -- thank goodness, and actually the losers were not the depositors. The losers were the shareholders.
MOORE: And that's the way it should be, when a bank makes bad decisions, just like any business, the people that should lose money are the shareholders.
BURNETT: OK. That's true. By the way, a lot of those shareholders are regular people that have JPMorgan --
UNIDENTIFIED MALE: Of course --
BURNETT: -- in their 401(k) --
UNIDENTIFIED MALE: That's right.
BURNETT: But here's what I don't get. When people make this argument about don't regulate. I mean, if that made sense to normal people, this wouldn't have happened. I mean, the CEO of this bank said a month ago this was all hogwash and then he lost $3 billion. I mean, couldn't it have been 30? Could it have been more? I mean Steve, could 2008 happen again?
MOORE: Well, it possibly could. By the way, you know my point is we have these multiple tier of regulations already and they haven't prevented these kinds of meltdowns in terms of the finances of these banks. Look, I'm just worried that we just passed as you know what was it, about a year or two ago, the Dodd-Frank bill, which was supposed to stop this kind of behavior. And Dodd-Frank has imposed a lot of new costs on these financial institutions --
BURNETT: -- on Dodd-Frank because Jamie Dimon --
(CROSSTALK) BURNETT: -- is down there in Washington fighting against it.
UNIDENTIFIED MALE: Right.
SERWER: And you also need to have the right regulation. We need to streamline all these different entities in Washington, put them all together and have one mass regulator and I don't think that's more regulation. The other point I'd like to make --
MOORE: OK, you know what? I agree with you --
MOORE: I agree with you on that one.
SERWER: The least regulated country, Steve, are the ones that have gotten the deepest suit (ph) going back to the financial wipeout, which is to say the United States, the U.K. and Iceland, so less regulation is riskier.
BURNETT: I love an Iceland mention and they're back, by the way.
UNIDENTIFIED MALE: I'm not going to defend Iceland --
MOORE: -- when you've got so many regulators looking at these banks --
SERWER: We agree there.
MOORE: -- transactions and these kinds of things continue, I mean, look, the one thing we have to make sure we don't do is continue to bail out banks when they make bad decisions because I think --
BURNETT: OK, so Steve Moore --
MOORE: -- that's the ultimate safety net and hammock for bad decisions.
BURNETT: OK, let me just put this at you, then.
MOORE: Yes. All right.
BURNETT: What we had here in the introduction. JPMorgan is 45 percent bigger than it was before the crisis.
UNIDENTIFIED MALE: Right.
BURNETT: If it was too big to fail then, then we sure as hell would --
BURNETT: -- have to bail it out now. Right, Steve?
MOORE: No. Look, I don't believe --
MOORE: -- it's too big to fail. I don't believe there's -- that big is necessarily bad. The only reason big is bad when it comes to banking is because the impulse is to, is to bail them out when they get this big, but, look, are we going to bail out every "Fortune 500" company if it makes losses?
MOORE: I mean this is the kind of mentality in Washington.
SERWER: -- "Fortune 500" mention. But what about bailing -- what about breaking up the banks? What do you think about that? I mean what do you think about breaking up the big four?
MOORE: Well I'm opposed to it.
SERWER: What's that?
MOORE: I'm opposed to it because I don't --
SERWER: Government intervention.
MOORE: I don't think big is necessarily bad. Look as you know, 10, 15 years ago the United States -- the top 10 banks of the world were not U.S. banks. We were losing competitiveness as a result of that.
SERWER: Well I don't know about the fact that they're not so big makes us being less competitive. I mean, I've never really followed that argument, but I don't -- you know, and then we've got these zombie banks like Citi and bank of America, I mean you know but breaking them up. Does that make them better? I don't think anyone really knows the answer to that, right?
MOORE: Look do you want to break up Walmart because it's successful? I mean why do banks --
SERWER: I don't.
SERWER: I don't know if "The Wall Street Journal" might want to break up Walmart. I don't want to break up Walmart.
BURNETT: Walmart doesn't --
SERWER: It doesn't sound like what "The Wall Street Journal" --
SERWER: -- wants to do usually.
BURNETT: Walmart doesn't control so many American people savings, so I think that's the difference in why this --
MOORE: This is my point, Erin --
MOORE: Erin, these -- that's a very good point --
BURNETT: Quick, final word, yes.
MOORE: -- but don't forget people with savings, that is depositors who put their money in the banks they are not at risk when these --
BURNETT: And then you have to bail out, right.
SERWER: Risk, systemic risk --
BURNETT: And here we are back --
BURNETT: -- chicken and egg though, so everyone please let us know what you think and thanks very much to both of you, Steve and Andy.
And next, we've got new details about Mitt Romney and the accusations that he attacked a gay classmate in high school and while we're a week away from that Facebook thing going on, you know the IPO, could you actually get into Facebook, though? And the wild ride that's now a wild record.
BURNETT: Our second story OUTFRONT dueling stories about Mitt Romney's high school years. The conservative Web site Breitbart.com (ph) is raising questions about the timing and the accuracy of "The Washington Post" story that says Romney led a gang of boys in attacking a classmate who was gay and cutting off his hair. The article quoted five other students who witnessed the attack or took part in it. They said it still haunts them today, but Breitbart (ph) points to this month's automobile magazine, which writes about Romney's childhood in Detroit.
It quotes one of the same students who calls Romney's attack on the gay student vicious but an "Automobile Magazine" Phillip Maxwell says quote "I'm a Democrat, so I won't vote for him, but he'd probably make a pretty good president. He's very smart, very principled." John Avlon is here, Republican strategist Leslie Sanchez, Democratic strategist Tim Punke in Washington. John Avlon it -- pretty interesting quote there. It does seem to fly in the face of "The Washington Post" story in that one individual's case.
JOHN AVLON, CNN CONTRIBUTOR: That's right and in that one individual incident. And I think that's what is significant. It's not --
AVLON: Obviously his overall impression of Mitt Romney may be very different than Mitt Romney's worst moment in high school. None of us are the sum total of our worst moments. But what's fascinating is why this story is rippling so much.
AVLON: It's because Romney still doesn't have a character narrative about his development into a young -- into a man and this sticks because it seems to pull back the curtain a bit in a way that seems horrifically revealing. Not that this is indicative of his values now, but if it's true --
BURNETT: People are starving for Mitt Romney the man.
AVLON: And we all do stupid things in high school, but we don't all do stupid things of this nature, pinning down a kid and cutting off his hair because he's different. And that's why this is resonating right now.
BURNETT: I'm curious, Leslie, "The Washington Post" article did come out obviously the day after the president's announcement that he supports same-sex marriage. And that reporter says, look, I worked on this for two weeks, so I did all my own reporting, and it's absolutely unfair to say that there was anything political in the rollout of the story. What do you think?
LESLIE SANCHEZ, REPUBLICAN STRATEGIST: I think that there is a genuine idea and a belief that there is a political motivation behind this. And I think if you even look to the response that the family has had, the family of John Lowber (ph), I hope I'm saying his name correctly. You know the sisters came out and said they had no knowledge of this that it was factually incorrect.
But more importantly that this seems like people are tap-dancing on the grave of their brother and that's in extraordinarily poor taste to move a political agenda. I think that's how a lot of people are going to perceive this. There's a sense -- why the timing? It's very suspicious about the timing. Suspicious about the sources and then you had the family kind of saying, really, enough is enough. I think all of those elements together make it look quite suspicious.
BURNETT: Well John, before I bring in Tim, I mean it could be that there was a timing link and that all of a sudden the president comes out for gay marriage. "The Washington Post" says oh this is relevant. There's high interest.
AVLON: Move toward the story --
BURNETT: That's not politically -- that's not politically motivated. It's trying to time for reader interest --
AVLON: That's exactly right.
BURNETT: -- different.
AVLON: And that's not a subtle difference. That's a significant difference and of course, what Leslie is saying is exactly the way Republicans want to present this.
AVLON: But I don't think it adds up. You've got five witnesses including one that's been independently reached out to by CNN who said, you know, I do remember that and it was horrific. It would be -- match the definition of assault --
AVLON: -- and the candidate himself is apologizing even though he says he doesn't remember that specific incident.
BURNETT: Tim, so I'm curious how much of an affect you think that might this have? According to Karl Rove, when Democrats leaked the story about George W. Bush being arrested for drunk driving as a young man, Karl Rove said it cost the president, then president four million votes. Four million votes sound about right on this or do you think it won't have enough staying power?
TIM PUNKE, DEMOCRATIC STRATEGIST: Well if it's four million votes, then I think Mitt Romney is in a lot of trouble. Look I think when you look at the exit polling from November 6th that nobody is going to talk about this issue as being the issue that tipped them towards one candidate or the other. But the bigger issue here is that I think it goes to this, this, look, both campaigns right now are fighting over this really small sliver of undecided and Independent voters.
And for those voters, those voters base their decisions a lot on likeability. Do I like this guy? Is this a guy who can relate to my life? And that likeability factor is exactly why you see folks like Mitt Romney or the president go on "Saturday Night Live" or "David Letterman". They want to be liked. They want to tell stories about their childhood, usually it's them telling their stories about (INAUDIBLE) challenges they overcame or obstacles they overcame. So this has been a really big challenge for Mitt Romney and it's obviously this story isn't helpful and they're going to want to move on from it very quickly.
BURNETT: John Avlon what can he do though? I mean he's tried very hard to have people see the real Mitt Romney. His wife has been out there more. He's done all these things and it has not seemed to connect. I mean I know you can't always choose what people zone in on, but --
AVLON: You can't, but I mean nature and politics abhor a vacuum and that's part of what's going on here. I mean he really does. The campaign is going to have to set up a narrative in the same way that John McCain's real-life story was so inspirational because he was a POW. George W. Bush --
AVLON: -- was that he was a young man who triumphed over alcoholism and found God. You know that DUI story on George W. Bush made an impact because it came out the weekend before the election. This isn't going to be anything like that.
AVLON: But it does speak to how much Mitt Romney does need to fill out his own narrative --
BURNETT: Leslie, is that a bit of a problem though that people don't see the adversity that he had to overcome?
SANCHEZ: Well it's a little bit about getting to know the candidate. I agree with John there. That's exactly right. Independent voters particularly are not really focused on this and are not going to do so in really a high demand until you get to those conventions when he's going to introduce, same thing Barack Obama did, same thing any candidate does who they are, their introduction to what the solution is when everyone is paying attention. That's why I think there's a lot of stories about Mitt Romney's character that are going to come out, for example, when he helped find a missing teenage daughter of a partner at Bain Capital. There's a lot of exemplary narrative so to speak to put together that's going to define who he is as a candidate.
BURNETT: All right, well thanks very much to all three of you. And ahead OUTFRONT there are now three men accusing actor John Travolta of sexual assault. Could the allegations bring him financial ruin?
And a shocking cover of "TIME" magazine, the mother breastfeeding her 3-year-old son. Why? You'll get the answer because she's OUTFRONT.
BURNETT: Our third story OUTFRONT John Travolta one of the wealthiest actors in Hollywood. His net worth is -- get this -- about $200 million and he lives a good life. He's a licensed pilot. He owns his own Boeing 707 and a Gulfstream jet that he keeps parked at a sprawling 10,000 square foot Florida estate. He flies that plane to Australia, New York. He flies around the world on his own. But the A-list actor is now facing accusations of sexual assault.
Fabian Zonzee (ph), the third man pointing the finger at Travolta saying the mega star accosted him aboard a cruise ship in 2009. Two other unnamed men each filed $2 million lawsuits against Travolta, claiming he groped them while he was on their massage table. Travolta's lawyer says there is no truth to any of this. He has plans to slap the anonymous claimants with a countersuit.
The question is how significant will these lawsuits be to Travolta's career and his net worth. OUTFRONT on this case tonight CNN legal analyst Paul Callan and A.J. Hammer, host of HLN and CNN "SHOWBIZ TONIGHT". All right great to have both of you with us. Paul, Travolta's lawyer said I'm going to file a malicious counter, a prosecution case. This is just a complete load of hogwash but more and more people keep coming out of the woodwork.
PAUL CALLAN, CNN LEGAL ANALYST: Well, he's filing a countersuit because with celebrities you've got to worry about two things. One, the reputation gets destroyed in a suit like this and secondly, if Travolta's making a movie and he's got to do a deposition or appear in court on this case, they have got to close down the set. It costs an awful lot of money. So Marty Singer (ph), his attorney is saying, you sue him frivolously and we're coming after you because he's afraid of copycat lawsuits.
CALLAN: So I think Singer's (ph) got a good strategy here and if he doesn't pursue it aggressively there will be other suits against Travolta, more even than these three.
BURNETT: A.J., you've been covering this. Has it done damage to him -- will it do damage to him?
A.J. HAMMER, HOST, "SHOWBIZ TONIGHT": No. I think in the short term no not at all and I think they're doing the right thing by making a loud and bold statement. Look sometimes celebrities want to let these things kind of settle themselves and work themselves out. But sometimes, because there is such a risk of other people glomming on and jumping on the bandwagon --
HAMMER: -- you've got to send a loud and clear message like Marty Singer (ph) is doing in this case. I think in the short term no, I think if there was a monocome (ph) of truth to this they wouldn't be coming out so aggressively. And I think the problem could wind up being in the long term if this thing is left to go on and on it's going to dog Travolta because people will always want to ask him about it and in a way it can follow him --
HAMMER: -- and perhaps hurt his reputation, but not right now.
BURNETT: Not right now and Paul how many -- we talk about copycats and talking about Travolta's legal team is coming out aggressively against it. Do you think that will that stop copycats? I would imagine it's really this press cycle of covering it every day that they really don't want.
CALLAN: The reason I think the threat of countersuits will stop copycats is because if you're afraid that not only are you going to get sued but your lawyer is going to get sued if you bring a frivolous case you may think twice about doing it. And by the way, the allegations in at least the first suit, that suit that involved the Beverly Hills hotel is -- you know that Travolta touched the guy's leg, so he's suing for $2 million.
CALLAN: I mean it's just patently (ph) ridiculous on its face. Of course, Marty Singer (ph), the attorney, says it didn't even happen.
BURNETT: It's just getting a lot of publicity, A.J., but how often does it happen? I mean I'm thinking of Justin Bieber and -- what turned out to be a false paternity claim by a woman --
HAMMER: Yes. It goes on all the time. It really does happen all the time and you don't always know about it and look it raised eyebrows when Justin Bieber decided to speak out after a woman claimed that he had fathered her child because everybody thought oh it's just bringing more attention to it, but again it sets a precedent really. It doesn't squash the copycats, but you have to believe and you never know how many, but you have to believe it sort of tamps them down.
BURNETT: Paul, how much money does it end up costing celebrities though at times, because I would imagine sometimes you end up paying even though you didn't do it. You settle, because you want to have these things go away.
CALLAN: There's a very substantial cost to the celebrities because they're running up legal fees to do an aggressive defense of the case and frankly a lot of the cases result in very quiet, very secret confidential settlements to make the plaintiff go away, even when there's no truth to the allegations. So they do cost money to the celebrities and time --
BURNETT: How much could they cost Travolta?
CALLAN: Well it's, you know in terms of --
CALLAN: In terms of this, you have three lawsuits now. Easily he could be up at over $100,000 in legal fees, if these are aggressively litigated. I'm betting, though, because I've read a couple of these complaints, these are really bogus complaints --
CALLAN: -- and I think they may be thrown out of court very early on, so it might not be that bad.
HAMMER: The price of celebrity.
BURNETT: Yes, well $100,000 is a lot of money. Although, as we said, $200 million for Travolta --
BURNETT: At least it's not the money that he cares about. It's the reputation. Thanks so much to both of you. Well in the second half of OUTFRONT we're learning just how FBI agents tracked downed and cornered a fugitive wanted for a murder/kidnapping, and Facebook stock, it's about to start trading. Can you get your hands on it?
BURNETT: Welcome back to the second half of OUTRONT. We start the second half of our show with stories we care about, where we focus on our own reporting from the front lines.
First, JPMorgan's big loss up to $3 billion is causing Washington to question whether there's a need for more regulation for banks. The unit that caused the losses was actually supposed to help the bank hedge its risk. It was its risk management division. Instead it created a black eye for the CEO Jamie Dimon, who was one of the nation's most respected bankers.
Here's what he said on the conference call.
(BEGIN AUDIO CLIP)
JAMIE DIMON, CEO, JPMORGAN CHASE: These were grievous mistake. It was self-inflicted. We were accountable. And we happened to violate our own standards and principles by how we want to operate the company. This is not how we want to run a business.
(END VIDEO CLIP)
BURNETT: The courtroom outburst disrupted the trial of the Norwegian mass killer, Ander Behring Breivik. A brother of one of the victims shouted, "You killed my brother, go to hell,' and then threw a shoe at Breivik. It missed and it hit one of his defense attorneys. Breivik has admitted to killing 69 people at a youth summer camp and eight others in a separate bomb attack last July. The court is trying to determine if the 33-year-old is sane.
Well, the libertarian party nominated former New Mexico Governor Gary Johnson as its candidate for president. He supports the woman's right to choose, same-sex marriage and legalization of marijuana. He told me he thinks he can convince voters to abandon traditional parties for his campaign.
(BEGIN VIDEO CLIP)
BURNETT: There's a lot of Republicans in this country who would define themselves as socially liberal and fiscally conservative.
GARY JOHNSON, FORMER NEW MEXICO GOVERNOR: I think the majority in this country define themselves that way. And I think that's the libertarian party, the notion of fiscally responsible, socially tolerant. I think -- well, I fall into that category. I think the majority of Americans.
Now, it's one thing to fall in that category, it's another to actually have a resume to suggest you can do the job. Meaning, it's one thing to point out the problems the country's facing. It's another thing to point out the solutions. I think you can be homeless and potentially do that. But do you have to have a resume to run for the president of the United States and I think I have that resume.
(END VIDEO CLIP)
BURNETT: You can watch my full interview with Governor Gary Johnson. Please visit CNN.com/OutFront.
A 44-year-old surfer has officially caught the ride of a lifetime. In November, George McNamara caught this 78-foot wave. Oh my gosh! Are you kidding? Seventy-eight-foot wave off the coast of Portugal.
And today, Guinness World Records certified it is indeed the biggest wave that's even been surfed. I'm glad we have it on a loop, I'm going slow here. It beat the previous record in 2008 by just a foot. In addition to the record, McNamara was awarded $15,000 for the ride at the Big Wave Award in California last week.
It gives everybody, you know, when you're out there, how can I do the one and two-foot thing on vacation. I mean, wow. That was glorious.
All right. It's been 281 days since this country lost its top credit rating. What are we doing to get it back?
Well, there is some good news today. Consumer sentiment rose to its highest level since January of 2008.
All right. Should you buy Facebook? Some analysis and advice coming up, because we are in the countdown for that everybody.
But now the fourth story OUTFRON: the week-long manhunt for murder and kidnapping suspect Adam Mayes is over. And today, we have some new details of what led authorities to him. Also, some new arrests tonight. Three people in custody in connection with the kidnappings and murder of Jo Ann Bain and her oldest daughter Adrienne.
Mayes has been on the run with Alexandra Bain and her sister Kyliyah who were found in the woods with Mayes last night. They're safe. They were released from hospital in Memphis earlier today.
Our Martin Savidge has been tracking the story and, Martin, what is the latest?
MARTIN SAVIDGE, CNN CORRESPONDENT: Well, first of all, it's the arrest. It shows that even after the death of the alleged suspect here that the investigation is continuing. Three people now apparently pulled in for aiding and abetting Adam Mayes in some way, shape or form. One of them apparently giving false and misleading statements to police. The other apparently providing the weapon, that in the end Adam Mayes would use to take his own life.
So, where we're standing right here in his small town in Alpine, Mississippi, is where this ordeal came to an end, actually about maybe 100 yards down the road and just off down a very wooded trail. This is where the FBI was led by a tip last night. And when they went down that trail with a SWAT team of about 31 people, they came across one of the girls laying on the ground. And the short distance away, they saw Adam Mayes. They asked Mayes to put his hands in the air. Instead, he reached for a gun, pulled it out and shot himself in the head.
And, of course, it only shows you that even by being at their moment of rescue, those girls still had to witness one more tragedy.
BURNETT: Martin, did the police have any sense at this point as to a motive?
SAVIDGE: You know, it's difficult to say and, of course, that's still being investigated. But what people locally when you talk to them about why this happened, they say that apparently Adam Mayes felt that he was really close to these two young girls. Some have said that he thought he was there biological father. That's never been proven.
But this family was getting ready to move to Arizona. Apparently, he couldn't stand that kind separation. Many believe that's why he acted when he did. Also, why he killed their mother and older sister, because he was fixated on the two young girls that were 12 and 8.
BURNETT: And do you know anything more, Martin, about their condition? Obviously, we're aware that they were released. Do we know too whom and what condition they're in? Or --
SAVIDGE: Right. They're released to close family. We understand actually their father was at the hospital when they were handed over. And as you point out that physically, they must be doing OK.
We do understand that, of course, they suffered from being exposed. Dehydration was a problem. Hunger. Insect bites and poison ivy.
But physically they seem to be OK, because they were released in manner of hours. Mentally, that's going to be another question. We won't know that for a long time.
But for many folks here, they do believe it's a miracle, that prayers answered, although no one's saying they wanted to see Adam Mayes die. They wanted to see him in court.
BURNETT: Right, right. Well, certainly, a miracle that those girls are alive. Thanks to Martin Savidge.
And now, the Facebook IPO. It is a monster. The stock is expected to begin trading next Friday May 18th. The company is selling about 337 million shares. Once it goes public, the market value of the company could be about $100 billion. Yes. That's why I said, monster.
The initial price range could be between $28 and $30 to buy a single share.
Now, over the past months the one question people have asked me randomly, when I see them on the street, they go -- should I buy Facebook? Well, that's sort of a tough one because Facebook's doing a traditional IPO. And what I mean when I say is that most of the shares are going to big institutions.
Now, they may have your 401(k), that they're investing as well, but these are the big guys. Usually about 85 percent of the shares would go to those big investors and sources close to the IPO tell me that Facebook did consider another option. I don't know if you remember the online option that Google tried to try to set a price. But Facebook decided not to go that way.
So, a traditional IPO means regular small investors really can't get share, unless your broker is a favorite hot shot at a lead investment managers like Morgan Stanley. So, those shares are likely gone at this point. Or are they?
But before you get fruit traded and angry, it may not add up. Here's why Facebook might not be all it's cracked up to be which we're going to look at some of the other hot tech IPOs recently. These are all names you know.
Groupon on its first day last November closed at $26 a share. It went up to $31. And now, it's at $9.
LinkedIn closed its first day at $94 a share. It went up to $122. And its now at about $111. So, above the offer price, but still far from the high.
So, Facebook likely -- likely -- I mean, not clairvoyant here, but it's probably going to be priced to go up on its first day soar, but will it then drop down to earth, just as regular small investors finally get a chance to buy it? So, you're left catching the proverbial falling knife.
Peter Kenny joins me tonight from Knight Capital.
Peter, so, Facebook has an incredible energy and focus on it, right? I mean, you know, movies, we all deal with in our daily life. One of the most high-interest IPOs of all-time?
PETER KENNY, MANAGING DIRECTOR, KNIGHT CAPITAL: Oh, there's no question about it. It's also one of the largest of all-time. The hype is unrivaled. I mean, in recent memory I can't remember. I mean, you mentioned Groupon, LinkedIn -- not in the same league, in terms of capital raised or just in terms of people's consciousness of what the brand represents.
BURNETT: Right. So it's really hard to get the stock right now, obviously. If you're a regular investor, is it impossible?
KENNY: It's not impossible, but as with most IPOs, as you accurately pointed out, all, or in most cases, most shares go to the investment bankers and to who they represent. So, oftentimes individual investors can't get in or have a very, very, very difficult time getting in -- which there's a reason for that. Very often times in an IPO, if institutions are the primary holders initially, what will happen is, if the retail book can't get involved in an IPO, you have a bid for the stock.
BURNETT: Right. So the big guys buy it. Tend to not sell it right away.
BURNETT: So, it kind of stabilizes and everyone else can come in.
BURNETT: But what about the fear we see often in tech IPOs where they surge on the first day, and all the people lucky to be insiders, they get back big pop. And then everybody else buys and loses money.
KENNY: Well, and that's why it's so important to be unattached to it on an emotional level. What special about Facebook is that so many billions of users around the world know how to use it, they understand it, they connect with it. There's something very personal about that experience with Facebook. Some people are attached to it want to own it.
But it's important not to be emotional about it, because --
KENNY: -- really, what's going to drive the direction of the price of the stock is going to be earnings. Yes, and anticipated earnings, earnings growth. But it's going to be earnings. It's going to be a numerically based value.
BURNETT: So, it's not your passion about your site.
One, so, I guess what's the bottom line? Putting yourself on the spot here. But would you try to get shares if you didn't have one right now?
KENNY: I -- I would not. Why?
BURNETT: Yes, why.
KENNY: I would rather see a stock opened. See how it behaves. Take some of the early volatility out of it and make a prudent decision based on earnings, projected earnings, rate of growth, user experience.
I want data when I make an investment. I don't make -- you know, investment decisions based on emotion.
BURNETT: Maybe than will maybe somebody feel better. People have been saying they want to buy it. Well, you can't get it. But you know what? Peter said, it's good riddance. Wait. Wait. Maybe that will be good.
All right. Well, it's going to be a big week as we count down Facebook, which we'll be doing right here OUTFRONT.
Up next, the mother, though, who is still breastfeeding her 3-year-old son. You probably have seen her. I have it here. Hold on. I have it here. Yes. Cover of "TIME" magazine. You see her? Jamie Lynne Grumet. Well, guess what? She's OUTFRONT next.
BURNETT: And we're back with tonight's "Outer Circle" where we reach out to our sources around the world.
And tonight, we focus on Mali. In the past two months, this West African country has seen a coup overthrow of the government and a separatist rebellion take control of the north of the country.
Rebel groups have been linked to al Qaeda and since the coup, they stepped up their activity, including kidnapping seven diplomats.
Yeah Samake is a presidential candidate in elections that were supposed to take place two weeks ago, but now who knows when they're going to happen. He's here in the U.S. though, meeting with potential donors. And I asked how his country is dealing with the threat of al Qaeda.
YEAH SAMAKE, MALI PRESIDENTIAL CANDIDATE: It's a big challenge. It's a big challenge for a country like Mali. Mali alone right now will not be able to kick al Qaeda out of Mali. We need support from our regional ally, including Nigeria or Kenya. But they're rising because Mali is such a big territory in the north and they're finding safe haven.
But this is happening because of the collaboration right now of the people living in the north, including the Tuareg rebels. They're working together, making an alliance and making sure that they strengthen each other in this region.
BURNETT: A lot of people try to understand, you know, an organization like al Qaeda. I mean, it used to be obviously be -- it was in Afghanistan. We were talking about Pakistan. Now, you talk about Yemen and the Arabian Peninsula and North Africa.
Is this becoming a more center for it as the world tries to understand what's happening to al Qaeda, is Mali an important part of that?
SAMAKE: Well, al Qaeda in the Islamic Maghreb is a branch of al Qaeda in generally. They are in Mali, but really it's because they are finding a safe haven. They have not committed, per se, crime in Mali, but they're eroding freedoms in Mali.
If we let them breathe in Mali, they are going to take over our freedom, and that is very scary for Malian people. We need to regain that. We need to make sure that Mali participates in the effort of kicking al Qaeda out of the country. We need regional support, but we also need the support of all those that stand against Islamic movement, like the extremist Islamic movement.
(END VIDEOTAPE) BURNETT: Our fifth OUTFRONT story tonight -- this -- the cover of "TIME" magazine. That's 26-year-old mom Jamie Lynne Grumet with her 3-year-old son. Now, the cover story looks at 20 years since Dr. William Sears wrote "The Baby Book." It lays out his attachment parenting theory.
Now, attachment parenting includes breastfeeding sometimes into toddlerhood, sleeping with the baby in the mother's bed. Baby wearing, which means literally attaching a baby to the mother, you may have seen mothers wearing slings. And not allowing an infant to cry.
OUTFRONT tonight is Jamie Lynne Grumet. Her son Aaron, of course, is in the cover. And "TIME" magazine's Jeffrey Kluger is also with us as well, the editor of the story.
Great to have you with us.
JAMIE LYNNE GRUMET, MOTHER WHO PRACTICES ATTACHMENT PARENTING: Thank you.
BURNETT: And, Jamie, let me just start with you. I don't know when you made the decision to do this. Did you know you would be on the cover or did all of a sudden you wake up and say, whoa?
GRUMET: No. I mean, definitely "TIME" contacted me. And it was basically going to be possibly just for the article heading, and not for the cover story. So I didn't know basically until the day before. And I didn't know the photo until everybody else saw it for the first time too. So I didn't know which one would be selected.
BURNETT: So are you happy, not sure? Angry? How do you feel?
GRUMET: I know. I'm definitely -- I understand why "TIME" chose the photo they did, but I have seen a lot of backlash in, you know, breastfeeding advocates saying it doesn't represent how real extended breast feeding is really perceived and it's true. That's not how we breastfeed at home.
BURNETT: Is he really breast feeding in the picture?
GRUMET: Yes. He's really breast feeding in the picture, but I think they just wanted to try out artistic poses and give kind of -- just a really literally and artistic view of extended breastfeeding, obviously, to start, you know, to make it controversial and start a dialogue, which I think they did.
BURNETT: I mean, you're an editor. You want controversy.
JEFFREY KLUGER, TIME MAGAZINE SENIOR EDITOR: Right.
BURNETT: You got it.
KLUGER: We got controversy. But I think it's important to remember, as Jamie mentions, that the point of generating controversy is so that people will read the story. So that people will talk about the story.
KLUGER: Attachment parenting can be very controversial. It does have issues associated with it. There are parents who say this is simply not what I am temperamentally equipped to do. It's not what my job will permit me to do. Does this somehow make me a deficient parent?
Other parents committed to it say this is exhausting and a whole third group say this is the greatest thing I ever could have imagined for my child.
We want to present those sides. And the only way to get that into, to get people to do that is to get them to read the story, which was written by one of our writers, Kate Pickert who didn't an exhaustive look into this, and really got down into what the pros and cons of all of it are.
BURNETT: So, Jamie, what are your thoughts of attachment parenting? I mean, are you doing all parts of it? I mean, do you think it's fair to represent you that way?
GRUMET: Doing most of it. Definitely I think we do it to fit our lifestyle. And every parent is different, every child is different. And I think that that's the most important thing is that it should -- my hope for doing this is to create the dialogue and perhaps take the stigma away from attachment parenting that, you know, it's clearly mothers are feeling stressed from all of the attacks that they're getting from it.
So that's what I'm hoping, is that this will create enough dialogue to maybe educate people on why this is biologically normal and not socially normally.
BURNETT: Now, it is interesting, there has been obviously incredible conversation on Twitter. Some have defended you.
Deborah Guerrero said, "All I have to say is a mother knows what's best. No problem with the cover at all. I'm supporting you."
Paula rick Bickford wrote this, though, "When he's 15, ask him if he likes this picture."
GRUMET: I think that is a really -- it is a great thing to talk about, you know, the repercussions of what this will do to my child when he's older. But I was breastfed by my mother until I was 6 years. I'm breastfeeding advocate and really public about it.
BURNETT: It is part of your childhood. Do you remember it?
GRUMET: Yes, I do. She had public photos, never made it a dirty or secret act for me. By doing that and she stood up for what she believed in, caught a lot of flack in the '80s when she was doing this and I'm proud of her. And I'm doing it myself.
So, you know, I think our family is, you know, out of all families, we can handle this and we knew it was coming. So I understand and I appreciate the concern from other people, but our family is now a little bit -- a little bit different than the average family and we're going to --
BURNETT: Very gracious in the way you address it, which is a very important point to make.
KLUGER: May I ad one thing to that. We heard that issue as well and we have seen it on our Facebook posts and on Twitter responses.
And my response is how will it affect the child? Well, I don't know. And the people asking the question don't know.
BURNETT: That's right.
KLUGER: But there is no human in the world who knows that boy better than his mama. And she would not let something bad happen to him.
So my assumption is that she would not -- Jamie would not have posed for this picture if she weren't confident there would be no negative repercussions.
GRUMET: I mean, we weren't doing it for publicity because we knew the majority of it would be negative and nobody really wants to put that on their family. We were really doing this to hopefully educate people on how this should be -- I mean, other parenting practices should be accepted as well, but this one should be and there is no reason that people should be saying the things that they are and it is complete ignorance.
BURNETT: And how long -- you talked about being breastfed until your 6. Is that what you plan to do with your children as well? Because I know you have two children, right?
GRUMET: Right, I do. My adopted son is basically weaned himself. It's very natural process. My 3-year-old has started the process of self-weaning. I don't think we'll go past the fourth year with him.
I self-weaned when I was 6 with my mother, and I don't necessarily remember weaning. So it was a very natural --
BURNETT: Just happened.
GRUMET: Just happened, yeah. And then there is a great resources like Dr. Katherine Dettwyler talks about the normal age of human weaning and that's a great resource for people to look at, to see why it is biologically normal.
BURNETT: Another question a lot of people had, and obviously these are personal questions, but obviously a highly personal topic, but people say does it affect your intimacy, your personal life with your husband?
GRUMET: No. I think it is funny that people say that about -- especially about co-sleeping, you know? It's funny --
BURNETT: The baby in the bed. GRUMET: Right. It is like, well, I mean, this is a personal thing to say, but, I mean, if that's the only place you're doing it, then I feel sorry for the people that are assuming that's -- you know, that that's only place that that can happen. So not at all.
And I think intimacy is extremely important in a marriage. And I think a strong marriage is going to be a great foundation to show your children how to be raised confident and happy and I had that with my family too. So my parents were great role models for me and that's why I'm confident in doing this.
BURNETT: It's an amazing story. I have to say, it is courageous to put it on the cover, because you're right, you get a lot more hate than you get like. I mean, there's no question about it. And I'm sure you knew that going in as it sounds like you did, but you do certainly have a topic out there.
So thanks so much to both of you. We appreciate it. So nice to meet you.
GRUMET: Nice to meet you. Thank you.
KLUGER: Thanks for having us.
BURNETT: And Russian President Vladimir Putin flew off the G-8 summit. But we found out hat he's doing instead of meeting with the president. We'll tell you about it next.
BURNETT: So the White House has confirmed that Russian President Vladimir Putin will not attend the G-8 meeting this month in Chicago. Putin says he's too busy to attend the summit and go to Camp David. And he'll be sending Prime Minister Dmitry Medvedev in his place.
Now, first we wondered what could be more important than, you know, the G-8. Then we figured it out. Hockey. Putin is crazy about it.
He picked the game up last year and since then it has become his latest obsession. According to the "AFP," Putin is coached by top ex- players and when the first protests against his rule broke out in December, he was playing ice hockey. That's right.
Instead of dealing with civil unrest, Putin was playing hockey and he's so into it that earlier this week he rented the Moscow Megasport stadium for a game of shinny between him, his friends and some of the greatest Russian hockey players of all time. He even invited his long time friend Silvio Berlusconi to the game, who, yes, you see that, he brought along a blonde translator, we're told.
Putin didn't disappoint. During the shootout, he scored the game winning goal to lead his team of amateurs over the Russian legends. Now, he skates a heck of a lot better than I do, but still I don't think that that would be kind of, you know, the kind of skating that would get the puck past the best goalie in the world. But it did. And do you really think he would want to talk policy with a bunch of stiffs at Camp David when he can be doing that. It will take the promise of hockey to get Putin there.
Look, we know our president plays basketball, he's made that loud and clear. But it's important to get the G-8 in one room. Maybe it is time for President Obama to show Putin he's a hockey fan too.
How about going to game, Mr. President? The Washington Capitals play game seven tomorrow. You could be there. I'm sure you could get seats.
And guess what? The captain of the Washington Capitals is a Russian, that's right. He is a Russian. I believe he's a very popular jersey. At least my nephew thinks so.
Thanks so much for joining us. We're back Monday at 7:00.
"A.C. 360" starts right now.