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Deepwater Horizon Report; Fuel Shortage "Emergency" In Michigan; L.A. Council Bans Pot Shops; "Modern Family" Cast Sues Over Contracts; Team USA Blows Out Spain; Turkey Closing Its Border; Revelation From Syrian Official; Syria's Chemical Threat; The Trouble With TARP; Looking Good On The Hill; Christian Bale Visits Mourners in Colorado; Negative Rates for Presidential Candidates Up; U.S. Stock Market Sputtering; Man Kicked out of Disneyworld for Looking Like Santa Claus

Aired July 25, 2012 - 07:00   ET


SOLEDAD O'BRIEN, CNN ANCHOR: Welcome, everybody. Our STARTING POINT this morning, some new developments to tell you about in the Aurora movie theater massacre. There will be no cameras allowed in the courtroom when the accused shooter faces formal charges today. The judge granted a defense request that keeps the cameras out, this after so much was made out of the way the defendant looked when he appeared dazed and sleepy. Jim Spellman is live for us this morning in Aurora with the latest. Hey, Jim, good morning.

JIM SPELLMAN, CNN CORRESPONDENT: Good morning to you, Soledad. The defense actually placed that motion in that same hearing where we first saw him but clearly his appearance was something they must have known was going to be shocking to people. Judge granted that and also granted a motion for a gag order. So the police authorities in this case are no longer able to speak publicly about any of this. The information we've been getting is going to slow to more of a trickle as the hearings go on for months.

People here got a bit of a surprise when Christian bale, the actor who plays Batman showed up here. It was a surprise to just about everybody when he visited patients in the hospital at the bedside. After that he came to this make shift memorial here and joined a prayer circle and prayed with people. It was all unannounced. They had no cameras with him and didn't want media coverage. Our affiliate happened to be there and caught him. And it exploded on Twitter and Facebook, people pretty excited he took the time to come and visit, Soledad.

O'BRIEN: I'll bet that helped folks trying to recoup rate in the hospital. Thanks, Jim.

For the rest of the day's top stories, let's get right to Christine Romans. Good morning.

CHRISTINE ROMANS, CNN ANCHOR: Good morning, Soledad. Syrian forces stepping up attacks to regain control of Aleppo, government helicopters and fighter jets targeting rebel strongholds in Syria's largest city overnight. There are reports thousands of fresh troops are being sent in as reinforcements. Violent clashes across Syria claiming at least 133 lives yesterday, 21 of them in Aleppo.

And there are concerns in U.S. and Iraq about Al Qaeda's growing influence in Syria. An Al Qaeda video warns the group is forming suicide cells to make jihad in the region.

Apple stock is down five percent this morning after earnings missed estimates yesterday, a rare earnings missed for Apple. And iPhone rumor mill is churning once again. The latest, the iPhone 5 will come out in September instead of October. iPhone sales were a disappointment in the second quarter, people have been holding out buying their phones, waiting for the new version this fall.

Ontario's special investigation unit looking into the death of a man who went over the wall and fell into Niagara Falls. A police officer was chasing a man when both fell 100 feet in the gorge. The officer was rescued and recovering from a broken leg. The man he was chasing didn't make it out alive. Cops are not offering any other details about that incident this morning.

Life and then some, a Chicago judge sentencing Jennifer Hudson's former brother William Balfour to three life terms plus 120 years for the murders of her mother, brother and nephew. Balfour was convicted in May. In delivering the sentence, the judge said Balfour's soul was, quote, "as barren as dark space."

The Senate preparing a vote this afternoon on competing plans to extend the Bush era tax cuts. The Democratic plan would extend the cuts for couples making less than $250,000 a year and individual making under $200,000. Republicans want to extend the tax cuts for all taxpayers, including the wealthiest Americans. Neither proposal is expected to pass.

He was George Jefferson -- actor Sherman Hemsley rose to fame with "The Jeffersons", a spin-off of "All in the Family." Hemsley died at this home in El Paso, Texas. No word on the cause of death. He was 74 years old. Too young, Soledad.

O'BRIEN: Really young. He had a couple of successful sitcoms. Remember "Amen"?

ROMANS: Yes, just a funny guy.

O'BRIEN: Yes, Christine, thanks.

A new high is new low for President Obama and Mitt Romney -- that's a way to put them together. Save a little time. President Obama and Mitt Romney is what I'm trying to say, the new CNN poll of polls shows president Obama with a lead over Mitt Romney, voters prefer him 47 percent to Mitt Romney's 43 percent. But the negative tone of the presidential campaign seems to be taking a toll on both candidates. A new poll from NBC News - "Wall Street Journal" shows 43 percent of the voters polled now have an unfavorable view of the president, that's up 38 percent in June, and 40 percent have a negative view of Mitt Romney up one point. When they are asked which candidate is conducting a more negative campaign, 22 percent say President Obama, 34 percent say both sides are equally running negative campaigns.

That brings us to Congressman Dutch Ruppersberger, a Democrat from Maryland. Nice to see you sir, good morning to you.


O'BRIEN: The polls show that the tone and the nastiness seems to be hurting both candidates. We saw President Obama gaining five points when it comes to the negative view. Both are winning when it comes to campaigns perceived as negative. That would be a bad thing. A pollster who was interviewed said this is the kind of thing you expect come October, not in July. Do you see a major downside to both campaigns in this?

RUPPERSBERGER: Sure. I think the public are tired of the partisan politics and want to know where each candidate stands on the issues that are important to them and their families, the issues of creating jobs, looking at their issue of national security. I know an issue know that has come up because of the recent storms that people are concerned about how are we handling energy as far as losing power, what's happening with respect to the weather, that type of thing.

Hopefully we're going to move forward with respect to the issues important to the country and I just hope that people will vote on what they think is the best candidate. I support President Obama and I think that he has done a good job and I think he's doing the best he can to attempt to create the jobs necessary to get us out of this serious financial problem we have.

O'BRIEN: The basic wisdom is people will vote based on what's important to them and that we know from polling is jobs, jobs, jobs. When you look at this NBC news wall street journal poll, they said when asked, better ideas to improve the economy, whose got those ideas? Mitt Romney leads the way, 43 percent to the president's 36 percent. When it comes to better overall in dealing with the economy, Mitt Romney leads the way, 43 percent to Obama's 37 percent. Those polled numbers are actually quite close. Again, if everybody is thinking jobs, jobs, jobs, that's how they are going to vote, doesn't this spell big problems for your candidate, the president?

RUPPERSBERGER: I think it is an issue but you look, they both have records, if you look at Mitt Romney's record in Massachusetts, I can't say that has been as positive as it should be. But in the end it's about the two candidates will debate. People will make hopefully the right decision. We are moving ahead, moving ahead slowly. Remember, President Obama inherited a lot of these issues, he's attempting to do the best we can.

My concern is Congress. Congress has to stop the partisan politics and we have got to come together and a lot of what happens with the market and business is consistency and people want to know that we are working together in Congress. And I hope we can do that. I think if we do that together and deal with those issues that will then allow two candidates to debate and people will decide. And at this point, if I was a betting person, I would bet the president would win in a close race. O'BRIEN: You say as a man who supports the president. I'm not sure anyone will take that bet from you, sir. Let me ask you about leaking, and this is a conversation Mitt Romney brought up yesterday in Reno, Nevada. Here's what he said about leaks.


MITT ROMNEY, (R) PRESIDENTIAL CANDIDATE: More top secret operations were leaked, even some involving covert action going on in Iran. This isn't a partisan issue. It's a national security crisis, just yesterday Democrat Senator Dianne Feinstein, who is chairman of the Senate intelligence committee, said, and I quote, "I think the White House has to understand that some of this is coming from their ranks," end of quote. This conduct is contemptible.


O'BRIEN: He says this conduct is contemptible, a national security crisis. Is the White House doing enough to control the leaks? Even if they are not the leakers, it has to come from somewhere near the inner circle. Are they doing enough to control the leaks?

RUPPERSBERGER: First, the leaks are serious and undermine our country. Senator Feinstein and Senator Chambliss are the two leadership in the House, the Congressman Mike Rogers and I are the leadership of the intelligence committee in the House, they are the Senate. We are focusing in the oversight capacity to make we make a determination where the leaks are coming from. It seems to have started -- the leaks have gotten more aggressive since 9/11. But these leaks can cost lives and hurt us internationally, the ability to get money.

Now, as far as what Romney said about the White House, you know, I was a former prosecutor and did investigations and one of the things you have to do is you have to get the facts and follow the facts. And in this country we do not find somebody guilty because issues are in the media. I think it's very important that we move forward with the investigation. You have some of the best FBI agent investigators working on it. You have two prosecutors, one Republican and one Democrat, focusing on the leaks.

And I can say this, Senator Feinstein and Chambliss and Congressman Mike Rogers and I are focusing on this investigation and we need to find the leaks. The problem though is the culture of the leaks. We will eventually find who leaked this and they will be brought to justice. But the bottom line is we need to stop the leaks today and we have to make sure that we focus on all of our intelligence agencies and make sure that we can stop these leaks because they are hurting our country and hurting our national security.

Senator Feinstein said this in a statement. She said "I'm disappointed by the statements made by Mr. Romney today regarding a question I was asked yesterday at the world affairs council. I stated that I did not believe the president leaked classified information. I shouldn't have speculated beyond that because the fact of the matter is I don't know the source of the leaks." You just mentioned the culture of leaks. What do you mean by that?

RUPPERSBERGER: I mean we've had serious leaks since 9/11. I'm concerned about the information that has come out with respect to Iran as an example. We have really dedicated people working hard to gain intelligence and analyze intelligence and get it back so we can use it to protect ourselves and our citizens.

Not only can it cost lives but hurts the ability to recruit people to give us information, that's very, very serious. And it also costs us money. I mean, we're getting information and our sources and methods are out there and getting to the enemy because of the fact that somebody decides to give information to the media. That's wrong, we have to stop it and we're going to aggressively pursue it.

Believe me, I have a lot of respect for Senator Feinstein and Mike Rogers, the chairman of the Intel committee. We're working hard to coordinate with the FBI and administration to find out where the leaks are and they have to stop today.

O'BRIEN: Congressman Ruppersberger, thanks for your time.


O'BRIEN: Coming in our next hour we're going to get reaction from the other side when we talk to Congressman and Romney campaign surrogate Randy Forbes from Virginia.

Ahead on STARTING POINT this morning, stocks taking a plunge, a fiscal cliff is approaching, and Congress needs to do a little bit more than they are doing. Is another recession looming? Christine Romans will join me to break it all down. That's coming up next.

And this man told to leave Disney because he looks like our favorite jolly old elf. That's our get real this morning.

Look, Trey Songs is on my playlist this morning, "Bottoms Up." You're watching STARTING POINT.


O'BRIEN: Welcome back, everybody. U.S. markets in the red for three days. Christine Romans following all of this bad news.

ROMANS: It feels a lot like it did last summer, quite frankly.

O'BRIEN: It does, doesn't it?

ROMANS: It really does. Futures look a little better this morning quite frankly, but how long that will last, I don't know. If you look at the Dow over the past year, it's up a tiny bit year to date. But, you know, it's down about a half a percent over the past 52 weeks. So look all the way to the left of that screen, you can see what happened last summer. See how it was ugly into the fall and spent a whole year trying to crawl back out. Now here we are again worried about the same thing, deja vu. We saw Ford earnings and you can see Europe's problems hitting the international. Now we're worried about the fiscal cliff and debt ceiling again later this year, high unemployment, and slow economic growth. We'll get a GDP number on Friday and it could be one and a half percent growth in the you U.S. economy, not enough.

O'BRIEN: I think in some ways you could argue worse, or is it stabilized?

ROMANS: I think it's been a whole year now and we're still fighting these fires in now Spain, Greece, still uncertain whether it will stay in the Eurozone. It's uncertainty that is the enemy of your 401(k) quite frankly. There were comments overnight by European officials saying that they were hoping they could boost the fire power of their rescue, their bailout fund. I think you'll see markets recover today a little bit. After three down days that's not a hard call to make. Lots of uncertainties.

And one thing, Soledad, that I think is interesting, we've been talking about Europe, something that other people are doing to us that is a problem for the U.S., U.S. companies that are seeing it in the slow European sales, there's also what we can do to ourselves, and that's the fiscal cliff and uncertainty in Washington.

O'BRIEN: If you're talking about an election year, add to the uncertainty, I don't know there is a political will or there's a sort of energy to really tackle tough things, it may not help you in an election year.

ROMANS: This is the "kick the can" Washington and they keep kicking it and what have we done since we lost our AAA credit rating? Nothing to get it back, nothing. Now we have the fiscal cliff looming. Those are big tax increases and big spending cuts that go in together starting at the end of the year. That would be a real jolt to the system. There are conservatives telling me, we need a jolt to the system. But the Congressional Budget Office says it will cause a recession.

O'BRIEN: We're watching -- or more accurately you're watching and will tell us what happens.

Still ahead this morning on STARTING POINT, it may be the happiest place on earth but it is saying no to this man. Why? Because he looks like Santa. It's our get real up next. We're back in a moment.

And our STARTING POINT team is heading in, arguing in the corner. I said heading in, that's the cue. Margaret Hoover, Will Cain, Roland Martin will join us in just one moment. We'll play the theme song from "The Jeffersons" as we remember Sherman Hemsley. Let's listen.


ROMANS: Welcome back to STARTING POINT. Some quick headlines. a new agreement to overhaul the scandal ridden New Orleans police department. The justice department has announced hundreds of new policies on the use of force, searches and seizures, arrests, and interrogations. Coming up next hour Soledad talks to New Orleans police chief Ronal Serpas.

And 50 airlines worldwide collected $22.6 billion in fees from passengers to check their bags and upgrade their seats and get their reservations and change the reservations to pay for food and drinks. This is according to a new study. Recently merged United-Continental airlines collected the most at $5.2 billion.

Take the clothes and leave the baby -- surveillance video from a Wal-Mart parking lot in Florida shows a 19-year-old woman on the run after she was allegedly caught shoplifting. Police say she ditched her baby in a shopping cart before she took off. They found the woman and her sister partying in a nightclub the next night. The baby was taken in by authorities and police say the woman denied he was her son. Soledad?

O'BRIEN: That's a lot going on in that story. What? Baby she says isn't hers but happened to be in the shopping cart, left the baby to try to get away, was shoplifting allegedly, because she hasn't gone to trial yet.

ROMANS: Don't forget the nightclub.

O'BRIEN: Yes, all ended up at a nightclub as many do at the end of the day.

WILL CAIN, CNN CONTRIBUTOR: But the common thread throughout the entire story with all of the details is classy.


O'BRIEN: I think it's sad. Really, I do. Christine, thank you.

Today's team, Margaret Hoover joins us, don't laugh at his terrible jobs -- Will Cain --

MARGARET HOOVER, CNN CONTRIBUTOR: Strolling in late, look who's here?

O'BRIEN: Nice to see you.

Will Cain, as I mentioned, Roland Martin, who I haven't seen in a lifetime --


O'BRIEN: How have you been?

MARTIN: I'm just chilling.

O'BRIEN: Every time you get time with Roland, I'm in Ohio, I'm in Texas today.

MARTIN: San Francisco, New Orleans. Yes, glad to be here. O'BRIEN: Our "Get Real" this morning, this is such a great story. It may be my favorite of the day. Walt Disneyworld, happiest place on earth. Pays people to dress like cartoon characters and spread cheer. One guest looked a little too much like Santa who is not a Disney character. According to WKMG in Florida, they asked a guest, Thomas Tolbert who looks just like this, this is his picture, he looks exactly like Santa Claus. They said, please be less Santa- ish because he was becoming a distraction at the park. Apparently kids saw him and they assumed it was Santa on summer vacation and were asking for autographs and pictures, something that he's used to because apparently he's an actor and does a Santa impersonation.

But he was told by park officials, tell the kids no. He was supposed to say this, "You need to say, I'm sorry, I'm not who you think I am," and this, "I'm on vacation and you need to leave me alone." Imagine if you thought Santa said that to you, listen, I'm on vacation, you need to leave me alone.

That is the get real, he's not a Disney character so it puts the park in a rough place.

CAIN: Don't stop them from handing out scripts.

MARTIN: If this was a Hollywood star who was going to Disneyworld would they actually tell them, don't take photos and dough autographs for fans.

HOOVER: They need -- the kid goes to Disney land and they see Disney characteristics and Santa Claus.

MARTIN: He says he's not in costume and anybody who spent more than ten seconds at Disney understands it's all about costume and kind of controlling the message of how the park runs. Walt Disney was very specific about how he wanted those parks to run. They are really careful about that.

MARTIN: Someone is coming up to him, so be it. He's a customer.

HOOVER: But it fits into the narrative too, it's summertime and off season for Christmas, Santa is on vacation, not in the North Pole and building toys.

O'BRIEN: My kids would die of joy if they happened to run into Santa in jeans at Disney, it would he be done and done, as we say.

MARTIN: You know what's going to be the story tomorrow? Universal will say please come over here, we'll glad you come to our facilities.

O'BRIEN: Santa, we would love to have you.

HOOVER: I love you're wearing pink, the color of the Web site of the 22-year-old running for Congress.

O'BRIEN: I'm supporting her candidacy.

CAIN: Tomorrow you're going to dress like Santa.

MARTIN: Pink and green today.

O'BRIEN: Oh, my goodness, still ahead this morning, banged heads at the White House over TARP funds and how they are used. The special inspector general for TARP says the White House is more interested in protecting Wall Street than Americans on Main Street. He has a new book called "Bailout." We'll talk to him about his new book straight ahead this morning.

Plus, Syrian rebels gearing up for a fight in the biggest city. A former Syrian general will join us to talk about what they are up against. All that ahead. You're watching STARTING POINT. We're back in a moment.


O'BRIEN: Welcome back to STARTING POINT. We start with Christine Romans for an update on the day's top stories. Hi, Christine.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Good morning, Soledad. A new federal report says BP and drilling rig owner, Trans Ocean, failed to learn critical lessons from two near disasters before the 2010 deep water horizon explosion in the Gulf of Mexico.

The government's Chemical Safety Board says the companies focused more on reducing worker injuries rather than preventing disastrous well blowout. Even though BP vowed to implement new safety systems after 15 of their workers were killed in a refinery explosion in Texas in 2005.

Michigan's governor declaring a state emergency over a fuel shortage. The shutdown of a pipeline in Wisconsin left Michigan's Upper Peninsula in short supply of gas and diesel fuel.

The west shore pipeline, which carries 70,000 barrels per day of refined fuel was shut for several days after a gasoline leak was found on July 17th. They restarted the pipeline Saturday night.

Can't beat them, ban them. The L.A. City Council voted 14-0 to ban pot shops in the city. The move comes after the city gave up trying to reign in hundreds of medical marijuana dispensaries.

They operate in violation of federal law, but it's legal in California, the first state to allow the drug for medical use. The fight likely headed to the State Supreme Court.

A contract dispute threatening to delay the start of "Modern Family's" fourth season. Sophia Vergara and four of her cast mates want their contract voided in an effort to renegotiate for bigger salaries. The dispute forced the cancellation of yesterday's first table read for the season opening episode.

The U.S. Men's basketball team blowing out a tough Spain team, 100-78 in their final Olympics tune-up. It was rematch of the 2008 gold medal game. Lebron James scored 25, Kevin Durant had 13 and the game was played in Barcelona where the dream team won gold in 1992 -- Soledad.

O'BRIEN: I'll have a chance to sit down with Carmelo Anthony and Chris Paul, all playing in the Olympics this year. We're going to run that interview obviously because of the shooting in Colorado we pushed that back. I think it's going to run tomorrow, great interview with them, talking about what they are looking forward to in the Olympics. So Christine, thank you.

The violence escalating in Syria this morning. Rebel fighters are preparing to face government troops in Aleppo as the situation is deteriorating.

Turkey is now closing its borders with that country coming to us via state-run TV. International concerns have also increased after Syria's foreign ministry spokesman said the country has chemical weapons and there's fear that they could be used against other countries. Listen.


JIHAD MAKDISSI, FOREIGN MINISTRY SPOKESMAN: Any stocks of WMD or any unconventional weapon that the Syria army possessed would never be used against civilian or against the Syrian people during this crisis. These weapons are meant to be used only and strictly in the event of exterior aggression against the Syrian Arab Republic.


O'BRIEN: Akil Hashem is a retired brigadier general who served with the Syrian military for 27 years. It's nice to have you back, sir. Thanks for talking with us.

Is he right, the Syrian foreign ministry spokesperson, I think in a way was trying to allay fears about using chemical weapons against civilians.

And at the same time, opened up a big can of worms by one admitting there were chemical weapons and basically threatening the neighbors around Syria saying we're willing to use them on anybody who would attack us.

AKIL HASHEM, RETIRED SYRIAN BRIGADIER GENERAL: First of all, on the aspect of using these chemical weapons as retaliation for the international and military intervention, this is a big bluff from a military point of view, big bluff. But the regime can use these chemical weapons anywhere against the Syrian people.

O'BIEN: Well, let's start with the big bluff part first.

HASHEM: The chemicals weapons are two things, component and then carriers. So if you have components in barrels and storage, you need carriers.

O'BRIEN: A delivery system on a missile or something.

HASHEM: Long range artillery, missiles and airplanes. Of the longer range activity can't do anything, 27 kilometers. It's like coming from the Gulf or from the Red Sea or from the Mediterranean, what can he do?

For the airplanes, it's very difficult because Syria does not have any supremacy in the air according to what's around it. The only way he can use it in the missiles he have. He has two types of missiles, scud missiles.

The first one which is 300 kilometers range and the other one was enhanced developed to have like 700 kilometers. The intervention if it happened and wish it happened and we urge the international community to have this international happen in Syria right away. This intervention will start with a Tomahawk missile strike, which is the range of that 2,000 miles.

O'BRIEN: So you're basically saying a scud or even the enhanced scud wouldn't possibly be far enough to do any kind damage to the neighbors because it's a combination of the weapon itself and then the delivery system?


O'BRIEN: But clearly even though that spokesperson was saying we would not use it on civilians, are you saying they would?

HASHEM: Yes. Because everything anybody from the serial regime does say, this is completely something they cannot hold for. They lied and lied and lied for more than a year and a half in every aspect in everything.

Including this myth about the al Qaeda working in Syria, which I have confirmed information that there is not any existence to al Qaeda and Syria unless it is like few individual people came from here or there, that's it, but as an organization, nothing.

MARTIN: General, why won't Assad leave? We're used to leaders just taking off, used to them packing up taking off. Why is he still there?

HASHEM: First, because he's stupid. Second --


HASHEM: Because he have no authority to make this huge decision because it's not up to him. As I said before, so many times, he has the utmost power in Syria. He can do anything except this. He cannot leave because this is not about him or his family.

It's about a huge corrupted establishment of the regime, which is the composed from wealth and power together. It's tens of thousands of high rank officials in the armed forces, in the intelligence forces and in everybody in the economy sector and media sector everywhere, this is huge.

So this is huge and all of these establishments was involved in the killing and everything has been in Syria during more than 40 years, including the era of the father, including the corruption which made the Syrian people very poor while they accumulated billions of billions of dollars. They cannot leave altogether.

CAIN: General, you said do not trust the regime, that they could potentially use the chemical weapons against their own people. Why after 18 months have they not used them yet?

HASHEM: First of all, they already used some kind of light chemical weapons, it is in the middle -- I'm talking about effective, it's in the middle between tear gas and conventional chemical weapons.

It makes like a very effective harmful result on the skin on the eyes, not like tear gas. I've been subjected to tear gas when I was a young guy.

You wash your eyes thoroughly and it goes. They already used something like that. But as a desperate measure, these people can do anything you can imagine.

CAIN: He's not gotten desperate enough yet?

HASHEM: Not desperate enough yet. This is like an Arabic who would call it, means a sword with two edges.

CAIN: Double edged sword?

HASHEM: Exactly. Because this -- if he used it as Saddam Hussein used it in North Iraq, if he does this such a thing, then this will attract the military intervention. We heard President Obama saying that he threatened the regime not to think of using that.

O'BRIEN: Akil Hashem is a brigadier general, retired who served in the Syrian military for 27 years. That's very tough. Thank you for talking with us. It's nice to have you back.

HASHEM: You're welcome.

O'BRIEN: We got to take a short break, but ahead on STARTING POINT, the former inspector general for TARP, which bailed out dozens of companies say the program was a big failure and the problems haven't stopped. We're going to talk with Neil Barofsky up next.

Plus, Capitol Hill's hottest, we'll tell you who made the new list of the most beautiful on Capitol Hill.

You're watching STARTING POINT. We're back in just a moment.


O'BRIEN: Welcome back, everybody. Hundreds of bailed out banks are still struggling to repay taxpayers that's according to a new report that's out this morning from the Office of the Special Inspector General for TARP.

More than 700 banks received taxpayer dollars from the Troubled Asset Relief Program. Only about half have repaid the Treasury. There's a new book out. It's by Neil Barofsky, the man who was charged with overseeing TARP.

And he says the program was not a success as this, the sadly predictable consequences resulting from the government's disparate treatment of Wall Street and Main Street have only become worse as the banks amass even more size and power.

Main Street continues to get pummeled. The book is called "Bailout." Neil Barofsky is the author and he's also the former special inspector general for TARP. It's nice to see you, thanks for talking with us.


O'BRIEN: Wow, this book, you have no love lost for the people you were working with. TARP was a failure, no silver lining, just an out and out failure.

BAROFSKY: Well, there is a silver lining. Look, I don't have anything against the people personally. They're just part of a system that when I got down to Washington, I was really shocked to see how much the interest of Wall Street, how much power a handful of Wall Street banks have over our government and how much control they had over --

O'BRIEN: How much power do they have?

BAROFSKY: They dictated the terms of their own bailout. So TARP, there were some successes for TARP. In fact, TARP did help prevent along with other programs a complete collapse of our financial system.

That is a good thing, but it's all of those other goals of TARP that Congress insisted upon when they gave the money and what Treasury promised that were unfulfilled.

You know, it's not extraordinary. You throw enough money at the couple of institutions they are not going to collapse. That's why the program was supposed to help reinvigorate the economy. It was suppose to restore lending.

When they got this money, they're actually supposed to put it back into the economy so we don't have the sluggish recovery we have today. Most importantly, it was supposed to help struggling homeowners, this was part and parcel of why the Democrats voted for TARP, the promise to help foreclosure relief for so many struggling homeowners.

O'BRIEN: There was some foreclosure relief for people. A million home I think is the number.

BAROFSKY: I think the current number now is around 800,000, which is one fifth of what the goal was supposed to be. The amount of money spent was supposed to be $50 billion. You know, it's around 3.5, 4, what one of the credit card companies got.

CAIN: Neil, give us specific. Tell us what Congress dictated through the TARP fund that banks dictated the specifics? Tell us the mechanics of how that happened.

BAROFSKY: One example, Congress has says you have to preserve homeownership, that's something the Treasury needed to do with the TARP funds. That was the original idea behind TARP. They're going to buy these mortgages and it got written into the bill that Treasury would then modify those mortgages.

Well, Treasury didn't do that. They just piled money into the banks. So that was out there. Then we have a program, a Mortgage Modification program that Secretary Geithner himself told us back in '09 was more about in his words foaming the runway for the banks.

In other words helping to extend out the foreclosure crisis for the benefit of the banks that he feared could still go under, not about helping homeowners. So the program is a series of choices that were very favorable for the banks, but bad for the homeowners.

And when the banks really abusing homeowners, violating the rules and really just pummeling the homeowners and squeezing the last few dollars out of struggling homeowners, rather than do something about it, Treasury looked the other way.

They complained to us that they were actually afraid that if they got tough with the banks, the banks might walk away from the program, which shows you the level of where the level power lies between the banks and Washington.

O'BRIEN: You really, really hate Timothy Geithner?

BAROFSKY: No, it's not true.

O'BRIEN: No. Yes, it's true.

MARTIN: Strong dislike.

BAROFSKY: It's not personal. I hate what's happened to this country. I hate how he put the interest of the banks over homeowners and Main Street at every juncture.

I hate how he's preserved the status that we have. I hate his role in making the too big to fail banks even bigger and more dangerous. And I hate the fact we're on the verge of another financial crisis if we don't address these things in the coming years.

I hate all of those things. Personally, I really don't know Tim Geithner. I only had a handful of interactions with him.

MARTIN: They don't realize that there's only one department that shares along with the White House, Treasury. So if you want to understand this relationship between money and power. It's right there visibly based upon the simple location Treasury and the White House.

BAROFSKY: Those interests, those Wall Street interests create a level of deference that we saw consistently. But part of the problem with Washington, when you talk about power, it's incentives that are baked into the system.

For example, I was told very point blank in 2010 by a vet senior Treasury official that he was critical of my tone, said I was too harsh of the White House, the administration and of Wall Street.

If I didn't change my tone I was going to do real harm to myself, my ability to get a job in Washington or Wall Street. If I changed my tone and pulled my punches and played ball more, good things to happen, maybe even a judgeship in the White House.

That sort of captures the problem of our regulators in Washington. All faced with the same choice. Do your job and be tough you'll cause harm to yourself and your family or play ball and a big pot of gold at the end of the Wall Street rainbow.

O'BRIEN: Tim Geithner was on "Charlie Rose" the other day and here's what he said about the criticism you have in your book of him.


UNIDENTIFIED MALE: He raises this question with Tim Geithner too friendly to the banks because he knew them from his --

TIMOTHY GEITHNER, TREASURY SECRETARY: I'm deeply offended by that. I find that deeply offensive. It's the result of the urban myth. A lot of people including my critics said we went out and gave and lost trillions of taxpayer dollars, deeply misleading.


O'BRIEN: Is that wrong? Is it deeply misleading and terribly damaging. He seems like he really, really, hates you back.

BAROFSKY: That might be true. Look, if it were true -- what Secretary Geithner did in this interview and it's really kind of funny.

One of the things that I talk about in the book because I lay clear and expose how the Treasury Department and White House, how Washington works and how things, misrepresentation, lies are floated in the media to try to discredit.

And this is actually the same lie that the Treasury floated back in 2009 against me. And I write about it in the book on page 163. I took a peak out of it after I heard that. I never said that TARP was going to cost people trillions of dollars.

That was then twisting a different report that I did where I said when I talked about the total commitment to the financial system. But that whole speech was sort of right out of the book, the faux outrage.

I talk about how often Treasury officials told me how deeply offended they were at various things. This is just politics right out of the playbook.

And it's a shame because it detracts from what are the very real issues and challenges that face the economy. I wish they would get serious and talk about the issues instead of trying to mislead the American people even more.

O'BRIEN: It's very rare that a book about TARP is a page turner, but this is really, really fascinating and it's also very depressing to understand how it all works. You wish it weren't like that.

BAROFSKY: But unless we get that out there, people are not going to have -- this gives people the ammunition to demand change. And we have to have change to take our country back.

O'BRIEN: Neil Barofsky joining us this morning, former special inspector general in charge of oversight of TARP. Nice to have you. We have to take a break.

Ahead on STARTING POINT, we'll tell you who made this -- speaking of Capitol Hill, let's talk about who is the most beautiful. We name some names coming up next.

And here is Roland's playlist. Calvin Richardson, "I've got to move." We're back in a moment.


O'BRIEN: Welcome back to STARTING POINT. New list out this morning on what really, really matters on Capitol Hill. Who's the most beautiful? Congressional web site, the Hill ranks the top 50.

Finishes number 12 on the list is Senator Kelly Ayotte of New Hampshire. The Hill says she is a classic beauty, has the chops to handle being Romney's number two and potentially America's sweetheart.

Tenth place, Minnesota Congresswoman Michele Bachmann, she is described as almost president, almost Swiss. In second place, Carolyn Amirpashale, she's a special assistant to Congressman Randy Forbes. We're talking to him a little earlier. They call her a dead ringer for a Kardashian.

MARTIN: She's probably not ticked.

O'BRIEN: Well --

MARTIN: That's a compliment.

O'BRIEN: Well, yes, they are very beautiful girls.

MARTIN: They are.

O'BRIEN: And the most beautiful person on Capitol Hill is Max Angling, he is a staff assistant for House Administration Committee, happens to be a former model. And here is how the breathy description of Max goes.

Forget the loaded potato skins. Max Angling was surely the best thing to come out of an Indianapolis TGI Friday's where he was waiting tables when a diner with ties to the modeling industry discovered him.

HOOVER: This is news? And let me tell you, the first thing that happened to me just to put this in perspective, if you haven't worked in Washington.

When I showed up as a junior staffer on the Hill I was told, you're going to love it here. I was 23 years old. You're going to love it here, Margaret. It's just like college.

And you know what? This Hill list of beautiful is exactly like college. It's ridiculous. The functioning of the mechanics of our capital should not be run on list of who's beautiful and who's not beautiful. It's ridiculous.

O'BRIEN: Somebody's mad. She's not on the list.

HOOVER: Ridiculous.

O'BRIEN: Somebody's mad she didn't make the list when she was 25. No, I'm teasing you.

HOOVER: I'm really not concerned about it.

O'BRIEN: Still ahead this morning -- I hear you, sister. I agree.

A new ad slamming Mitt Romney for his time heading up the Olympics. Have you seen this ad? Calling him an outsourcing pioneer, a Romney supporter Randy Forbes is back with us today to talk about that at the top of the hour.

Plus, the federal government moves in to wipe out decades of corruption within the New Orleans Police Department. Is the plan going to work? We're going to talk to the head of the city's police force. Also ahead this morning. We're back in a moment.