Return to Transcripts main page


Stocks on Wall Street Down; Rutgers Assistant Coach Resigns; Jobs Report Drags Down Stocks; Morning After Pill Available to All; Off-Duty Cop Rescues TSA Agent; Obama Takes Heat for Compliment

Aired April 5, 2013 - 13:00   ET


SUZANNE MALVEAUX, CNN ANCHOR: More fallout from the basketball scandal at Rutgers University. We are waiting for a news conference from the school this hour.

And stocks on Wall Street are down this hour. It is reaction to this morning's job report. We're going to get a live report from the New York Stock Exchange.

And a federal judge rules the morning after pill can now be sold to women and girls of any age without a prescription.

This CNN NEWSROOM, and I'm Suzanne Malveaux. Up first here, more trouble for the men's basketball program, this is Rutgers University. Assistant coach Jimmy Martelli has resigned, stepping down after ESPN aired video of head coach Mike Rice throwing balls at players heads and shouting homophobic slurs. Well, Rice was fired. Any minute now, a news conference held by the university president and the chair of the Board of Governors is set to begin at the school. We're going to go live as soon as it starts.

(INAUDIBLE.) And, Pamela, first of all, what do we expect out of the news conference? Do we think there's going to be more fallout?

PAMELA BROWN, CNN CORRESPONDENT: Well, I think we're going to learn more about the future of athletic director Tim Pernetti here Rutgers University. In fact, Suzanne, we just, moments ago, received the resignation letter from Tim Pernetti addressed to the university president, Dr. Robert Barchi.

And in that letter, Pernetti says, I write in confirmation of our conversation earlier today during which we agree that it was in the best interests of Rutgers University that I step down from my position as director of intercollegiate athletics. I do so reluctantly because I always have and always will love Rutgers. I want to thank the people who have supported me throughout my years as a student athlete and athletic director and help them understand my reasoning and this situation. He goes onto say, my continued tenure as athletic director is no longer sustainable for the university which I attended and where a piece of me will always remain.

So, of course, we hope to learn more about this decision when this press conference begins here, Suzanne, in just about 15 minutes from now. But, of course, this is at least the third casualty after the release of the video showing head basketball coach Mike Rice hitting, grabbing, kicking his players and using gay slurs. If that happened -- that video was released Tuesday. Wednesday, less than 24 hours later, we find out that Mike Rice was fired. And also, as you mentioned, that the assistant basketball coach resigned.

And now. we are learning, Suzanne, it appears that athletic director Tim Pernetti is resigning. Pernetti has been with the university since 2009 as the athletic director. He is an alumna of Rutgers. And he is credited with being instrumental in moving Rutgers from the big east to the big ten. This happened -- those negotiations happened during the same time that he was made aware of the video showing Mike Rice's behavior and made that decision in December that Rice would be suspended and not fired. Some sports analysts believe that perhaps the negotiations may have played a factor in that decision. Of course, we hope to learn more in just a few moments from now and we'll bring you the very latest.

MALVEAUX: Pamela, real quick, is there anybody else who could get caught up in all of this? Anybody else who might lose their job over this scandal?

BROWN: Well, we hope to find out at today's press conference, Suzanne, if more people have been fired or resigned that we don't even know about. There is mounting pressure on the university president, Dr. Robert Barchi, to step down. In fact, the -- at least 50 faculty members here at Rutgers have sent a letter to the Board of Governors asking for Dr. Barchi's his resignation. So, of course, Dr. Barchi will be here today. And that is a big question that looms, will more heads roll? We will let you know.

MALVEAUX: All right. Pamela, we're going to get right back to you as soon as that starts, that news conference set to start live sometime in the hour, we'll get right to you.

We are also following this. This is really -- it's a disappointing jobs report and is driving stocks down today. Right now, the Dow Jones at 14,495 points or so, down about 110 points. The labor Department saying hiring slowed to a crawl in March. The economy added just 88,000 jobs, just 88,000.

I want to bring in Alison Kosik at the New York Stock Exchange. It's certainly -- I mean, what were people expecting? Was it anything close to what economists were expecting?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: And that's why you're seeing the selloff right now, the Dow down 109 points, because it was so far from what expectations were. The expectation was it would have been 100,000 more jobs than that. The actual number was 190,000. So obviously, it fell very short of those expectations. And what it says is that the job market and the economy, Suzanne, could be headed for a spring slump. In fact, fed chief Ben Bernanke, he cautioned that this is possible and which actually tends to happen in the labor market anyway, especially after all those temporary holiday jobs are cleared off the payrolls.

But here's the reason we're so worried about this report today. It's because while, yes, we have been expecting a possible slump in the spring, it's happening before the full impact of the government's forced budget cuts have trickled down. We haven't yet fully felt those spending cuts yet. And you can see that in the number of government jobs that were lost in March. I say only lightly but only 7,000. You compare that to government job losses in February that was 14,000. And 9,000 job losses in the government sector in January. So, this just may be scratching the tip of the iceberg as far as, you know, what we could expect to see going forward knowing that the spending cuts have yet to really go into effect -- Suzanne.

MALVEAUX: And, Alison, explain to us about the unemployment rate here because it did fall to 7.6 percent, but that is not -- doesn't necessarily indicate that that is good news this go-round.

KOSIK: Exactly. Because the unemployment rate went down for the wrong reason. Over 600,000 people actually left the labor force. They just threw up their hands and said I'm not looking for work anymore. They gave up looking for work altogether. So, they're not included when the number of people in the labor pool are counted. They're not counted in that number. So, that unemployment rate that you see dip from 7.7 to 7.6, it's actually reflective of a smaller group of people in the mix. And that has the labor force participation rate at its lowest level since the late 1970s.

Here's what's also discouraging, the number of long-term unemployed, that number refuses to go down. 4.6 million people, they've been out of work for six months or longer. And the problem with that is the longer you're out of work, the harder it is to get a job. You know, that means fewer people spending money going shopping, buying a house, buying a car, that hits spending, and that, of course, hits the broader economy. So, you see how the jobs picture -- how those job numbers really affect the broader economy -- Suzanne.

MALVEAUX: All right. Alison, thank you. Appreciate it. The White House, of course, is trying to put a positive spin on the weak jobs report. It's not surprising there. The administration pointing to 37 straight months of job growth and 6.5 million jobs that are added during that time. Well, officials they do admit, however, there's still a lot of work that's got to be done here on the economy. The White House is now saying the recovery was gaining traction before those forced spending cuts went into effect and Congress should replace the cuts with the balanced deficit reduction.

Well, a startling health care decision now from a federal judge, this is in Brooklyn. He's ordered that the FDA make the morning-after pill available over the counter to people of any age. So, this move reverses an Obama administration decision requiring girls under 17 to get a prescription for the pill.

I want to bring in our Elizabeth Cohen. And, Elizabeth, explain to us first of all remind us what the morning after pill does. Why is this so controversial?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: It's so controversial because this is a very popular medicine. It is used as you would expect the morning after. So, you have unprotected intercourse Friday night. You wake up and say, oh, my goodness. You take the pill, preferably that day or it's best that day, although it does work for several days. And what happened was the Obama administration said a couple years ago, if you're under 17, you need a prescription. And what this judge is saying is, no, there is no reason for that. It's just as safe and works just as well for younger girls. They should be able to get it, too.

MALVEAUX: So, why did this judge overturn this? Because it seems like it is a very significant move.

COHEN: It is a very significant move. He said, look, the FDA is supposed to look at this from a medical point of view. Is this drug safe and is it effective? So, it's safe and effective for girls under the age of 17. The same way that it's safe and effective for older girls and women. You he said, you don't get to -- you don't get to play morality police here. You don't get to say, well, we don't like the fact that 12 year olds are having sex. We don't want them to get this drug. No, that's not what the FDA does. The FDA can only look at the medical aspects. And that's why this judge, he was scathing in this decision. He said that the Obama administration has been arbitrary, capricious and unreasonable when it kept this drug away from over-the-counter use for younger girls.

MALVEAUX: Are there any medical risks here for younger girls? Because there are people who are concerned about that.

COHEN: No more so, many of the doctors say, than for older girls. It can cause headaches, it can cause nausea, it can cause other side effects like that, but that would be true of a 16 year old, 26 year old, 36 year old. And that's why this judge said, you got to make it available to everybody over the counter. You got to make it available to older women over the counter. You got to make it available to younger women. And it's interesting because the Obama administration said, you know, they didn't argue with that. But they did say, can younger girls understand the label? Will they know how to use this? And the judge said, look, we make drugs available to people of any age. And so, if the 10 year old can go in and buy an aspirin, she should be able to go in and buy this, too.

MALVEAUX: Wow. And when will this actually take effect?

COHEN: It's supposed to --

MALVEAUX: Is it something that will happen fairly soon?

COHEN: It's supposed to take effect very soon, in 30 days. So, just in a month from now. But there's always the possibility that the federal government is going to ask for a stay or appeal this in some way and that would prolong it.

MALVEAUX: All right. Elizabeth, thank you. Fascinating story. And, of course, the question whether or not the judge's ruling what does it mean for the Obama administration? Earlier, we talked to our Legal Analyst Jeffrey Toobin who says the judge certainly not happy with the White House.

(BEGIN AUDIO CLIP) JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: This is a 59-page opinion by Judge Edward Korman in Brooklyn federal court. It is so scathing. It is such an attack on the Health and Human Services Department for bowing to the pressure of conservatives. This isn't bowing to the pressure of liberals. This is bowing to the pressure of conservatives to limit access to plan B.


MALVEAUX: American College of Obstetricians and Gynecologists recommended last year that all oral contraceptives be sold over the counter.

Take a look at this, surveillance video, this is from the Honolulu Airport in Hawaii. A woman barging into a security checkpoint area and attacks a TSA agent. Well, an agent now in trouble until a California police officer jumps the barrier, body slams the attacker. The hero cop, Justin Rogers, was waiting to go through the body scanner on his way back from vacation when he heard all the commotion. Here's how he responded.


JUSTIN ROGERS, POLICE OFFICER, PINOLE, CALIFORNIA: A police officer or not, the woman was being assaulted. She was defenseless, had her arms up, trying to defend herself. And somebody really needed to help her and luckily I was close enough to be able to help her out.


MALVEAUX: Here's what the TSA has to say about what Rogers did. He says his actions coupled with the quick response by airport security ensured the integrity of the airport's sterile area was maintained minimizing disruptions to the traveling public.

Here's also what we're working on for this hour. President Obama taking some heat for a remark he made about California's attorney general.

And Final Four in Atlanta this weekend right next door to CNN. But basketball's not the only entertainment on tap. We're going to bring you all of it, up next.


MALVEAUX: First Lady Michelle Obama, misspoke about her role as a mom. It happened in an interview at a television station in Burlington, Vermont. Take a listen.


MICHELE OBAMA, FIRST LADY OF THE UNITED STATES: -- me, as a busy single mother, or I shouldn't say single, as a busy mother, sometimes it -- you know, when you've got a husband who's president, it can feel single. But he's there. But as a busy working mom, and before coming to the White House, I was in that position, you know, as well. (END VIDEO CLIP)

MALVEAUX: Always a busy working mom.

Social media abuzz over some comments the president made. He was at a fundraiser in California yesterday when he complimented State Attorney General Kamala Harris. He called her dedicated, tough, brilliant and by far the best looking attorney general in the country. The president's taking some heat for that remark. One blogger suggesting he needs gender sensitivity training. Earlier today our own political contributors Ana Navarro and Donna Brazile weighed in.


DONNA BRAZILE, CNN CONTRIBUTOR: I think it was a slow news day and the White House released a transcript and they found one little line in a statement he made. He was joking. He knows Kamala very well. They are long-Time friends. She is someone that I'm sure is under consideration at some point if she decides to leave her job as attorney general for the state of California to work in Washington, D.C.

ANA NAVARRO, CNN CONTRIBUTOR: Terrible double standard. I can tell you something. If Mitt Romney had ever said about for example my A.G. employed (INAUDIVLE) the finest looking A.G. there ever was, I think a lot of hell would have broken loose. I think a lot of these liberal women who cry sexism when other things happen are giving President Obama a free pass.


MALVEAUX: Yes. The president and Kamala Harris know each other well and are good family friends and professional as well. We'll see where this controversy actually goes.

Just ahead in NEWSROOM, KFC bringing a big change to the menu, one that might make you wonder what would the colonel would say.


MALVEAUX: Okay. Here's a twist for you, everybody likes KFC chicken, right? The company now rolling out boneless chicken. Zain Asher taking us to the real deal on the chicken out of New York. Zain, I don't know if you know this about me but everybody knows this about me, I love fried chicken. So what is KFC --


MALVEAUX: I love fried chicken. So give me the skinny. What's happening with the chicken?

ASHER: Well, yes, it's going to be happening April 14th. And it's huge. They're going to boneless. I spoke to spokespeople from KFC. They said this might be one of the biggest branding decisions the company has made since it started in 1952. Basically what they want to do, Suzanne, is to appeal to younger people. They want convenience, they want the option of eating on the move, eating on the go in their car. You have to remember as well that KFC has been struggling just slightly, right? The profit of its parent company Yum Brands was down 12 percent at the end of last year. Other fast food companies like Popeye and Chick-Fil-A eating into their market. This is a serious attempt to revamp itself. Earlier did speak to a brand expert, Julie Cottineau who said that this is an evolution, not a revolution.


JULIE COTTINEAU, BRANDTWIST FOUNDER AND CEO: I think it makes a lot of sense for them. And I don't think it's the first Time that they've, you know, revamped their brand to be more in line with consumer trends. They actually started as Kentucky Fried Chicken, if you remember in 1991 they changed their name to KFC. So for me it's very much a brand move that's really just trying to be in line with the Times.


ASHER: So, you know, all about being in line with Times. I also want to mention they've also started selling recently grilled chicken. The whole idea is to expand. They want to use boneless chicken to appeal to younger consumers, Suzanne.

MALVEAUX: Zain, the secret recipe, it's not the same, right? Without the bone and everything and fried, I mean, really?

ASHER: I know. But they are going to be offering chicken on the bone as well. You don't have to worry about that disappearing. And they do particularly well in that area. KFC has 38 percent market share among fast food chains that do offer chicken on the bone. They're not going to get rid of that. They want to expand it into boneless. You'll get the best of both worlds basically.

MALVEAUX: All right. I'll keep going. Zain, thank you very much. Appreciate it.

Former Enron CEO could be getting out of prison early actually. You might recall he was convicted in the biggest corporate fraud case in U.S. history. Skilling isn't scheduled to be released for another 15 years, but the justice department is considering a new sentencing agreement with him. That is because an appeals court decided that his original sentence was done under improper guidelines. Skilling got a 24-year sentence, that was back in 2006. He was convicted of fraud, conspiracy, insider trading and lying to auditors.

So, could this woman be the next chairman of the federal reserve? The 100-year-old fed, while it's never been led by a woman. The word on the street is Janet Yellin is a front runner for Ben Bernanke's job. She currently is the vice chairman of the federal reserve. And Bernanke has not said one way or another whether or not he is stepping down. But after eight years on the job he is widely expected to call it quits when the second term ends in January. President Obama may be ready to make a deal. He is unveiling his budget, that's going to happen next week. And some of the proposed cuts might make some of the Republicans happy. We have a live report from the White House up ahead.


MALVEAUX: Want to go directly to Rutgers university. This is the president of the college, Dr. Robert Barchi speaking after the scandal, of course the tape that came out that really snarled the athletic director as well as the coach of the basketball team after abuse that was found on that videotape against some of the basketball players. Let's listen in.


DR. ROBERT BARCHI, PRESIDENT, RUTGERS UNIVERSITY: -- that I had the opportunity to witness personally for the first Time what Tim had seen last fall.

I was deeply disturbed by the behavior the video revealed, which was much more abusive and pervasive than I had understood it to be. As Tim acknowledged Wednesday, his decision to rehabilitate rather than fire Coach Rice was wrong. While I applaud Tim for his frank self- assessment, it is clear to me and to everyone who has seen this video recently just how egregious the offenses were and how out of keeping with the Rutgers community's values they were.

At the time, the legal team advising Tim and me agreed that the decision we made was within the bounds of reasonableness. I should add here today that as of yesterday interim Senior Vice President and General Council John Wolf has resigned from his leadership position.

Tim Pernetti is a sincere and honest man. He's a skilled athletic director with many strengths. He has had and made a number of decisions that have positioned Rutgers athletics well, and played a leading role in the negotiations that have brought Rutgers into the Big Ten. I believe he always had the good of Rutgers and its student athletes in mind in every decision he's made including his decision today. As I said, this mutual decision is in the best interest of Rutgers. And we will learn from this situation going forward.

I respect and accept Tim's decision to step down, and I sincerely wish him well. I will be moving to appoint an interim athletic director in the coming days. That concludes my statement.

I am now going to read to you at Tim's request the letter that he has posted to the community that's recently gone up on the Scarlet Knights website. It will be available to you all. What I'm reading now are Tim's words. This is his letter of resignation to me.

"I write in confirmation of our conversation earlier today during which we agreed that it was in the best interest of Rutgers University that I step down from my position as director of intercollegiate athletics. I do so reluctantly because I always have and always will love Rutgers. I want to thank the people who have supported me throughout my years as a student athlete and an athletic director and help them understand my reasoning in this situation.

My continued tenure as athletic director is no longer sustainable for the university which I attended and where a piece of me will always remain. In connection with the incidents involving former basketball coach Mike Rice, as was the case with all other matters which I've handled on behalf of the university, I always tried to do my best to do what was right.

I have spent a great deal of time reflecting on the events which led to today. As you know, my first instincts when I saw the videotape of Coach Rice's behavior was to fire him immediately. However, Rutgers decided to follow a process involving university lawyers, human resource personnel and professionals and outside council. Following review of the independent investigative report, the consensus was that university policy would not justify dismissal.

I have admitted my role in and my regret for that decision. And I wish that I had the opportunity to go back and override it for the sake of everyone involved.

I trust that my tenure at Rutgers will not be judged by this one incident. I am proud of my efforts to lead Rutgers into the big 10, and of all the accomplishments of our student athletes in the classroom and on the field of play.

I want to thank our great fans, the hardest working staff in collegiate athletics, and every one of our fine athlete students. It has been my great pleasure to serve my alma mater."

And it's signed Tim Pernetti, class of 1993.

As you know, I serve at the pleasure of the board. I do not have a contract with any term.

MALVEAUX: The fallout continues there at Rutgers. That is three people who are now out because of that videotape that surfaced showing the head coach abusing some of the players there. So far, the president of the university, saying that three people now are out because of that tape. We will continue to follow this story and see if there's anymore fallout from this controversy.