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Americans Held Hostage in Algeria; Manti Was Perfect Mark; Armstrong Stripped of Olympic Medal; Threats to U.S. Security; BOFA & Citigroup Earnings Sluggish

Aired January 17, 2013 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


BROOKE BALDWIN, CNN ANCHOR: Brand-new developments in the terrorist attacks involving those American hostages. What really happened in the chaotic moments on the ground?

I'm Brooke Baldwin. The news is now.

It's bizarre, it's surreal, it's a mystery without answers. Notre Dame investigating the fake girlfriend of one of its players.

Plus, an underworld boss known as "granddad" is killed by a sniper's bullet.

And, coming soon, Pacino as Paterno. But will the movie include the scandal that took down the Penn State legend?

I'm Brooke Baldwin on this Thursday here. You're watching CNN. And let's begin with the unfolding crisis in the North African nation of Algeria. Americans are among those being held by Islamic extremists at this oil field. There are reports now that some of the hostages here have been freed in this operation by the Algerian army.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: It is our understand that there are Americans involved, but I would say a couple of things. One, we condemn in the strongest terms a terrorist attack on BP personnel and facilities in Algeria and we are closely monitoring the situation. We are in contact with Algerian authorities and our international partners, as well as with BP's security office in London. Unfortunately, the best information we have at this time, as I said, indicates that U.S. citizens are among the hostages. But we don't have, at this point, more details to provide to you. We're certainly concerned about reports of loss of life and are seeking clarity from the government of Algeria.

(END VIDEO CLIP)

BALDWIN: We are also learning more today. Let me tell you that the State Department also telling us these terrorists are armed with AK- 47s. Some are wearing explosive laid (ph) vests. These are suicide vests. They have also reportedly been put on some of the hostages there.

For more on this we go to our go-to veteran, international journalist Jim Clancy.

So many moving parts, so many details coming out from this story today. Just tell me, right now, what do we know? What's happening?

JIM CLANCY, CNN CORRESPONDENT: A lot more questions than answers.

BALDWIN: OK.

CLANCY: And I wish there were some good news. But it's really a very uncertain situation. The Algerian Press Service is telling us that two Britons, a Kenyan, and a French man have been freed.

BALDWIN: OK.

CLANCY: They were freed in this Algerian operation. An Irishman also, we know, has been freed. Talked to his parents. But other than that, the details are very sketchy.

Now, what appears to have happened here is that the man in charge of this operation, the gunman on the ground, attempted to move their hostages. They didn't want to be caught inside that oil facility, that gas facility. So they tried to move the hostages perhaps south to Mali. And they were in a convoy trying to get out. They came under attack by Algerian forces. And there are widespread reports that some of the hostages have been killed. How many, we don't know. I don't want to raise hopes and I don't want to dash them either.

BALDWIN: OK. Let me -- back to this leader, if you will. His nickname is Mr. Marlboro. Once affiliated with al Qaeda. The reason for the nickname is --

CLANCY: He's a smuggler. His name is Moktar Belmoktar. And he fought as a teenager in Afghanistan against the Soviets. U.S. backed efforts. He received al Qaeda training there. He returned then to the Sahara region. He has intermarried into some of the tribes there. So he has good, fluid movements inside Mali. But he is a very, very nasty character. Somebody who's determined and very wily (ph). Mr. Marlboro because he smuggled Marlboro cigarettes.

BALDWIN: Smuggled cigarettes.

CLANCY: He would smuggle anything. People, arms. He was known to be in Libya trying to gather up arms. Now, he would sell some of those for profit. He's in it for the money. This is a criminality crossing over with Islamic extremism.

BALDWIN: So when you talk about how he's in it for the money, I mean the obvious question is why. Why this BP facility? And the only reason -- or one of the reasons I could come up with is because you know there are a lot of foreign workers there, i.e. western workers, right? So wouldn't that then translate to potential money if you're holding hostages?

CLANCY: Absolutely.

BALDWIN: Yes. CLANCY: And, you know, nobody's worth money like these western hostages would be worth money.

But his motives here, they're really not clear. He says -- or his group claims that they went in there because of the French activity, the French intervention inside Mali.

BALDWIN: In Mali. The next door neighbor to Algeria.

CLANCY: That makes sense too. You could have had duel reasons here. Some way that he could arrive at being the hero, if you will. His name means the chosen one and he's given himself that name. That's, you know, Moktar Belmoktar, not his real name. But this is a man who needs to be the center of attention. He had a falling out with some of his fellow al Qaeda operatives. He's gone on to form his own group.

BALDWIN: So he's gone rogue?

CLANCY: Oh, he's gone -- right. He was rogue. He was a loose cannon for this organization all along.

BALDWIN: Huh.

CLANCY: That only makes him more dangerous, Brooke.

BALDWIN: Wow.

CLANCY: This is -- you know, I don't have a good feeling about this one at all. I can only imagine what these hostages are going through at this hour and their families as well.

BALDWIN: I hope your gut is wrong, Jim Clancy. As soon as you learn anything more, we'll put you back on and get the update, of course, on these hostages in Algeria. Thank you for that.

Also, just a couple of months ago, football fans, they praised Notre Dame player Manti Te'o. today, many of them are pitying (ph) him after the school says he was catfished. This is this new word, "catfishing." That basically means that a person -- in this case an athlete -- was the victim of someone online posing to be his girlfriend. The girlfriend who supposedly died of leukemia in the same week his own grandmother passed away. So this story, this captivated the entire nation, when it turned out the Fighting Irish would be going all the way to that BCS championship game. I want you to listen to Te'o, who was the runner up for the Heisman trophy. He was gushing over this woman we now know is not real.

(BEGIN VIDEO CLIP)

MANTI TE'O, NOTRE DAME LINEBACKER: My girlfriend is a God-fearing woman. She put the Heavenly Father first. And if there's anything that I learned from her is that -- that she loved her Heavenly Father more than anything. And I was just very blessed to be part of that and to share that with her. To sleep on the phone with her every night and to hear her say before -- through all the pain of chemo, to say, baby, can we say a prayer. (END VIDEO CLIP)

BALDWIN: Notre Dame's athletic director said Te'o never met this young woman in person. He says Te'o got a call back in December, December 6th, that shattered his world.

(BEGIN VIDEO CLIP)

JACK SWARBRICK, ATHLETIC DIRECTOR, UNIVERSITY OF NOTRE DAME: He received a phone call from a number he recognized as having been that he associated with Lennay Kekua. When he answered it, it was a person whose voice sounded like the same voice he had talked to, who told him that she was, in fact, not dead.

(END VIDEO CLIP)

BALDWIN: So, again, that night, that Manti Te'o got this phone call, that was December 6th. But this is what Te'o told our TV affiliate two days later.

(BEGIN VIDEO CLIP)

TE'O: I really got, you know, hit with cancer. I mean, I don't like cancer at all. You know, cancer -- I lost both my grandparents and my girlfriend to cancer.

(END VIDEO CLIP)

BALDWIN: Joining me now is "Chicago Tribune" reporter Brian Hamilton.

Brian Hamilton, I know your beat has been Notre Dame. You have interviewed Manti Te'o multiple times. Tell me, when you're sitting in front of him face to face, what's he like?

BRIAN HAMILTON, COLLEGE SPORTS REPORTER, "CHICAGO TRIBUNE" (via telephone): Well, I've always said for the four years that I covered Manti, you know, from start to finish at Notre Dame, that he seemed to be a what you see is what you get guy. I like to think my cynicism detector or my cynicism is pretty high on these things. I don't think you can ever really know anybody. And after yesterday, I'm officially going to say you can never really know anybody.

I'm not saying he's complicit in this. I'm not saying he's not. I don't think anybody can make any statements at all one way or another with where we're at in this story. There are so many questions that need to be answered and need to be answered by Manti, that potentially need to be answered by the people who perpetrated this alleged hoax, and maybe then we'll get somewhere near a clear picture of what happened. But I'm not necessarily even counting on that.

BALDWIN: Brian, I'm -- really? You even say once some of these people start coming forward, we may not even really know the full truth.

Let me just -- let me read what Manti Te'o says. This is his statement. Let me share this with our viewers. "To realize that I was the victim of what was apparently someone's sick joke and constant lies was, and is, painful and humiliating. I am enormously grateful for the support of my family, friends and Notre Dame fans throughout the year. To think that I shared with them my happiness about my relationship and details that I thought to be true about her just makes me sick. I hope that people can understand how trying and confusing this whole experience has been."

Brian, you know, just from what I've read, he's from this small Hawaiian town, incredibly religious, close with his family. And, again, you brought this up, all kinds of questions now arising over whether he was complicit in this whole hoax. Let me play some sound. This is from Timothy Burke. He broke this story on Deadspin. Here he was.

(BEGIN VIDEO CLIP)

TIMOTHY BURKE, EDITOR, DEADSPIN.COM: Te'o's story that he's a complete -- completely innocent in this doesn't really shake through with us for a few reasons. First, we have a lot of stories about how they met. That, you know, she was a student at Stanford and they met after the 2009 football game. And we know that didn't happen.

(END VIDEO CLIP)

BALDWIN: What does your gut, Brian, tell you?

HAMILTON: Well, I don't think there's any doubt that there have been lies told, or at least falsities told from one person to another to frame this relationship one way or the other. I mean Jack Swarbrick basically confirmed last night that things that have been put out, antidotes that have been out there about this 2009 meeting at Stanford is just completely false. I mean the premises of what we thought we knew about this is just -- it's a house of cards that fell yesterday.

So, yes, I mean there's a lot of questions to answer. My gut tells me that this is a really problematic situation for a star player who didn't know how to handle it. As it snowballed in early December one way or the other. Again, the question is, did he not know how to handle something of his own doing or did he not know how to handle something that was being done to him? And I don't think we can answer that definitively right now.

BALDWIN: Yes, listening to the AD at Notre Dame, it just also sounds like the definition of met is very nebulous right now. Brian Hamilton, thank you. We'll be looking for your reporting in the "Chicago Trib."

Also, we will be talking a little later on to Notre Dame's student body president here on the reaction on campus to Manti Te'o's fake girlfriend. That's at the half hour. We'll see if the students are standing behind him.

America loves a good comeback story, but will Lance Armstrong be able to bounce back after his confession? My next guest is a sports agent, knows the business of restoring people's images after a sporting scandal, knows the world of cycling very well. He is Doug Eldridge. We'll talk to him about what Armstrong's next life here will be looking like. (COMMERCIAL BREAK)

BALDWIN: For more than a decade, we have watched Lance Armstrong tell us time and time again, "I never doped."

(BEGIN VIDEO CLIP)

LANCE ARMSTRONG: Everybody wants to know what I'm on. What am I on? I'm on my bike.

Regardless of whether or not people accuse Lance Armstrong of doing something, regardless of whether or not they're questioning a relationship with a doctor, we have to look at the facts. We have to.

The questions have continued, the suspicion has continued. But the only other thing that's really continued, and I think is the most alarming thing, is the performance. I've not gone away.

The cynics and the skeptics, I'm sorry for you. I'm sorry you can't dream big and I'm sorry you don't believe in miracles.

I've said it for longer than seven years, I have never doped.

UNIDENTIFIED MALE: How could that have happened?

ARMSTRONG: That was my point.

UNIDENTIFIED MALE: You're not -- it's not as simple as you don't recall? Just --

ARMSTRONG: How many times do I have to say it?

UNIDENTIFIED MALE: I'm just trying to make sure your testimony's clear.

ARMSTRONG: Well, it can't be any clearer that I've never taken drugs.

(END VIDEO CLIP)

BALDWIN: Lance Armstrong's interview with Oprah Winfrey airs tonight. We are expecting to hear different words from Armstrong. We are expecting to hear a confession.

But his road to redemption is paved with punishment. Today we're hearing Armstrong is about to lose his bronze medal from the 2000 Olympics. The International Olympic Committee asking him to return it. Can he ever fight his way back?

Sports agent Doug Eldridge joins me now live from Washington.

Doug, welcome.

You are certainly in the business. You started your own business here making sports stars making it big. You represent half a dozen cyclists. When you talk to your cyclists -- and also just in the public, do you think the world can ever forgive Lance Armstrong? DOUG ELDRIDGE, SPORTS AGENT: Well, I think the question, Brooke, is, how do we really define forgive? Are we talking about absolving him of his past sins, or are we talking about wiping the slate clean and making peace with transgressions. And I think a lot of that is obviously going to hinge on what we hear this evening with Oprah.

BALDWIN: What about the timing? Because there are potentially a number of suits. Civil suits. Defamation. He had sued a newspaper. He had sued a group in Texas. But it's the federal government, right? There's a whistle-blowing lawsuit in which he could end up paying out big.

ELDRIDGE: The timing's crucial here. Floyd Landis, Lance's former teammate, filed a whistle blower lawsuit. And basically that falls into the false claim act which enables a private citizen to file suit on behalf of the government. Now typically these never pick up steam unless and until the federal government joins the suit.

Now, it's our understanding that today is, in fact, the deadline for the Department of Justice to recommend that the U.S. government joins that suit. Now the impact of that is tremendous. We're talking about not only a nine-figure fine and penalty, but also --

BALDWIN: Nine-figure fine and penalty.

ELDRIDGE: Nine-figure. But also, obviously --

BALDWIN: I just want to say that more time.

ELDRIDGE: Almost Monopoly money, you know, when you start to see that many zeros and commas. But also the potential of jail time and the like. So when we talk about the timing, that's really what we're considering. All of the ancillary civil suits like SCA (ph) promotions for about $7.5 million, or "The Times of London," all of that pales in comparison to the whistle blower suit.

BALDWIN: Do you think, in the end, that -- I was talking to a former teammate a couple of days ago who said, really, in the end, they just all want an apology. This is very personal, I know, for a lot of people in the community. But at least this apology -- and a lot of people want the story to go away. But the apology, would you say this is just the beginning?

ELDRIDGE: You know, a lot of people are refer to this as Lance being the rehab process. But I would disagree. I would say we're still in the middle of surgery. This is still the most technical and the most painful part. The rehab will come in the days and weeks following Oprah and following any type of agreement made between Lance's team and between the Department of Justice and the relevant government bodies.

Now in so far as whether Lance will ever be forgiven, I think we have to really dissect the two groups here. Not only do you have the cycling community and the corporate sponsors and the like, but you also have the cancer community. And those are two very different questions. I don't think cancer victims and those valiantly battling the illness will ever have a problem forgiving Mr. Armstrong. I myself have been in those wards. I've seen the children. I've seen my own father holding the chemo tower and I know the hope that he can inspire.

Now, I distinguish those two because that's very different between the sporting Lance Armstrong, between the professional athlete, the seven- time -- now former seven-time Tour winner, Olympic medalist and the like. Those are two very different questions. And in so doing, you need to take a different approach.

BALDWIN: Doug Eldridge, the DLE Sports Agency out of Washington. Doug, thank you.

ELDRIDGE: Thanks, Brooke.

BALDWIN: As the world watches Armstrong's fall from grace, next hour we are asking this question, why do we cheat? The science, the psychology, the emotions behind it. We are talking to doctors, psychiatrists, even a human lie detector. How can you spot a lie? That's 3:00 p.m. Eastern. Don't miss the "Why We Cheat" special.

Sure, President Obama faces a lot of challenges in his second term. But one of them centers around America's security. We'll look at some of those threats next.

(COMMERCIAL BREAK)

BALDWIN: The hostage crisis in Algeria. French troops fighting an al Qaeda linked militant in Mali. Possible cyber attacks on strategic U.S. computer systems. Those are just some of the potential threats against our national security as President Obama begins his second term in office. Pentagon correspondent Chris Lawrence reports.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT (voice-over): Terrorists are mobilizing in Mali, which could become the next launching pad for plots against America, a new challenge for national security. Keep us safe. Sounds simple. But over the next four years, America's security could be tested in complex ways. Forget the Cold War. There's not even a centralized al Qaeda in one country.

JOHN BRENNAN, HOMELAND SECURITY & COUNTERTERRORISM ADVISER: There are still terrorists in hard to reach places who are actively planning attacks against us.

LAWRENCE: The U.S. is trying to make sure Yemen, Mali or Somalia don't turn into the kind of safe havens al Qaeda had. But outside Afghanistan, the Obama administration has been hesitant to put more boots on the ground. So they'll continue to rely heavily on drones.

MICHAEL VICKERS, UNDER SECRETARY OF DEFENSE FOR INTELLIGENCE: Predators and reapers are the signature weapon of the war against al Qaeda.

LAWRENCE: President Bush launched the first wave of drone strikes, mostly targeting al Qaeda leaders in Pakistan. Then, President Obama took office and increased the number of targets. He expanded the program into Yemen, where al Qaeda was planning attacks on the U.S. and into lawless Somalia.

The Pentagon and CIA have been working together in those areas. And over the next four year, officials want to specifically grow the partnership between intel and special operations forces.

VICKERS: It is central to our ability to solve our most pressing national security challenges.

LAWRENCE: Perhaps the most pressing, a cyber attack that disrupts communication, transportation and vital services across multiple states.

LEON PANETTA, DEFENSE SECRETARY: These kinds of attacks could be a cyber Pearl Harbor. An attack that would cause physical destruction and the loss of life.

LAWRENCE: It may not even be physical destruction, but fiscal. Computers crashing, files erased, bank accounts cleaned out. Experts say the Obama administration needs to do more work with the private sector to defend vulnerable American companies.

JAMES LEWIS, CENTER FOR STRATEGIC & INTL. STUDIES: What we need to worry about are either the terrorist suddenly becoming interested, because it's not that hard, or some of the nation states that are less responsible, like Iran, deciding it's time to play a little more aggressively.

LAWRENCE: The president's former national security adviser says right now there's no real punishment for cyber attacks.

GEN. JAMES JONES, FORMER NATIONAL SECURITY ADVISER: But ultimately we're going to have to have some sanctions that are effective and some consequences that are meaningful, and some ways, ultimately, to counter those technologies.

LAWRENCE (on camera): Well, in fact, the U.S. government took the first step down that road when Defense Secretary Leon Panetta indicated that the U.S. military would have the right to launch a pre- emptive military strike if it detected that a major cyber attack was imminent.

Chris Lawrence, CNN, the Pentagon.

(END VIDEOTAPE)

BALDWIN: Chris, thank you.

Coming up, it's underworld boss known as "granddad" is killed by a sniper's bullet.

(COMMERCIAL BREAK)

BALDWIN: Wall Street traders soured this morning on two of the big banks. Alison Kosik is with me now from the New York Stock Exchange.

Alison, what banks are we talking about here?

ALISON KOSIK, CNN CORRESPONDENT: Bank of America and Citigroup. The issue with them is that their report cards, Brooke, they're not as upbeat as the others banks, like Goldman and JP Morgan, that have reported. It's all about stuff related to the financial crisis that are still making Bank of America's numbers look bad, including the almost $12 billion settlement with Fannie Mae over charge that it sold Fannie some bad mortgages. And more charges are on the way in the current quarter as well. The good news is, its mortgage business is up more than 40 percent. It's a lot of what we've seen with the other banks reporting because more people are buying homes with lower interest rates.

As for Citi, hard to find the good news there. The first big bank is Citi to miss Wall Street estimates this season. It had over $2 billion in one-time charges related to layoffs and lawsuits. The bank's CEO pointed to a challenging environment. Challenging, yes, because Citi is in the process of restructuring and cutting jobs.

We are seeing those two stocks down quite a bit. Three and 4 percent. The broader market, though, it's rallying. The Dow's up over 100 points on some good economic news. New construction numbers jumped in December.

Brooke.

BALDWIN: Alison, let me ask you about one other thing, because you were tweeting away about these ATMs and how they're becoming more customer-friendly. And I'm thinking, hallelujah, it's about time.

KOSIK: Right. Me too.

BALDWIN: Well, how do you mean?

KOSIK: Well, that's why I was excited because banks like Chase and PNC, they're having these ATMs, this rollout of these ATMs that will hand out -- or not had out but give you $5 and $1 bills. Maybe even coins at some point. You know, in addition to larger bills like $50 bills and $100 bills. Chase has really made a big push for this. It's already rolled out 400 of these ATMs. That number could double by the end of the year. PNC, once again, doing this as well.

A couple reasons why. The more the ATM can do, the less you need an actual human bank teller to do for you. Also, it help out with a lot of customers who have low bank balances. They can't always afford to withdraw $60 when maybe all they need is like $47.50. So it gives you a little bit more -- a little bit more variation on what amounts you take out.

Brooke.

BALDWIN: I thought you were about to tell me that we'll never have to pay fees ever, ever again at these (INAUDIBLE) ATMs.

KOSIK: No, I don't think that will ever happen.

BALDWIN: Alison Kosik, thank you.