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THE LEAD WITH JAKE TAPPER

Suspected Atlanta School Gunman in Custody; Al Qaeda Courier's Mistake; Interview with Congressman Jason Chaffetz of Utah; Obama Warns of Another Financial Meltdown

Aired August 20, 2013 - 16:00   ET

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


JAKE TAPPER, CNN ANCHOR: He was carrying al Qaeda's legion of doom conference call information.

I'm Jake Tapper and this is THE LEAD.

The world lead. Remember how a courier unwittingly led SEAL Team Six to bin Laden's front door? It seems another al Qaeda courier had a major slip-up recently, though it's not as though they can use FedEx, can they?

Also in world news, back on the job after being forced to go on leave in the aftermath of the Benghazi attacks. But now they're back. What does it actually take to lose a job at the State Department? Apparently dropping the ball ahead of a terrorist attack is not enough.

And the money lead. Sure, about one in five mortgages are still underwater but at least we learned our lesson from the 2008 market meltdown. Right? Didn't we? President Obama doesn't seem to think so. In fact, he seems concerned it could happen again.

Good afternoon, everyone. I'm Jake Tapper. Welcome to the lead.

We will begin with our national lead, terrifying moments at an elementary school in suburban Atlanta today. We're expecting a news conference at any moment from Decatur, Georgia, where one person is in custody after at least one shot was fired near a charter school, forcing frightened kids outside the classroom and anxious parents racing to the scene.

CNN's David Mattingly joins us from Decatur with the latest.

David, what is the story?

DAVID MATTINGLY, CNN CORRESPONDENT: Jake, you might be able to hear a big cheer going up in the parking lot of a shopping center a couple minutes away from the school. This is the staging area where the children are now being brought to be reunited with their parents.

It's been a very tense couple of hours out here, parents very upset, even though they know from authorities everyone is OK. But now finally the school buses are arriving. You can see them behind me. We're going to push in here to get a closer look for you. But those buses are coming directly from the school to reunite the children now with their parents.

What authorities are telling us isn't much right now, other than there was a single male shooter on campus there at the school. We don't know his identity, we don't know his motive. Police aren't ready to tell us yet what kind of weapon he had, how many he had or how many times he fired.

But we have been told here that he gave up to police without any kind of incident. Now, as this was going on, many children were taken out of the school to safety, to a playground. Others were sheltering in place and that's where they stayed even after the man gave himself up and turned himself in to police, as police were able to go through the school, be very meticulous to make sure there was nothing else on that property that might do those children harm.

They're now apparently satisfied with that, the children on the buses. Again, another cheer going up in the distance here. It's going to take some time for these about 870 kids that go to this school to actually be reunited with their parents because they have to make sure that the child now is going back to the proper adult.

So this isn't over for anybody but can you bet a great deal of relief here from the parents that are assembled.

TAPPER: All right, David Mattingly in Decatur, Georgia, thank you so much for the latest on that developing story.

The world lead now is potentially a treasure trove of information from al Qaeda. U.S. and Yemeni authorities have reportedly obtained a recording of a seven-hour Internet conference call between more than 20 al Qaeda leaders from around the globe in what one intelligence official is calling the legion of doom meeting.

The recordings were pulled off a captured al Qaeda courier.

Josh Rogin, senior correspondent for The Daily Beast, broke this story with Eli Lake. He joins me now.

Josh, explain to me the significance of this recording.

JOSH ROGIN, "NEWSWEEK"/DAILY BEAST: Right.

We all wondered why the embassies were shuttered about two weeks ago and what sparked this worldwide threat. Finally, my colleague Eli Lake and I were able to report out exactly what happened.

The significance of the recording were that more than 20 al Qaeda representatives from all over the world had a seven-hour Internet video teleconference, whatever you want to call it, where they discussed a bunch of issue including this imminent yet vague threat on U.S. interests that prompted the worldwide terror alert.

TAPPER: I don't know if this is sources and methods or if you don't know the exact details, but what exactly are we talking about? Is it audio? Is it video? Is it written? What precisely is this conference call? ROGIN: Right. Think of it as like as like a secure sivits (ph) think of it -- some people participated by video. Some people participated by audio.

TAPPER: Sivits is a secure video conference?

ROGIN: Exactly.

TAPPER: For people out there, yes.

ROGIN: Sure. It's an Internet-based environment that al Qaeda set up, as we first reported.

But now we know that some people participated through Internet chat, some people were on audio, some people were video. People could plug in however they wanted. And over the course of this seven-hour conference, people came in and out, including the terrorist leader of al Qaeda, Zawahri, and the new leader of AQAP in Yemen, Wuhayshi.

And they had the big roles and the big messages here and everyone else sort of chimed in when and where they wanted to.

TAPPER: And how did the CIA and the Yemeni authorities hunt this courier down?

ROGIN: Right.

What happened was the conference itself was actually secure. Then they took the conference and gave it to this courier who was then disseminating to less secure places to other people around the al Qaeda community.

When this courier decided to send this out to other people, that's when he made a mistake in his operational security that U.S. intelligence officials seized upon. They caught him sending this to other people, they found him, they picked him up, the Yemenis picked him up with CIA help.

And when they found him, he had the whole video in his pocket, along with a treasure trove of information that U.S. and Yemeni intelligence officials have been poring over ever since.

TAPPER: And a courier is how they were able to find bin Laden ultimately. Will this recording itself prove even more significant than what we know came from it, including all the embassy closures, the warnings about an attack?

ROGIN: Right. Our information is that there's a lot of information on this recording. It tells you about their thinking. On the call it was also announced that Wuhayshi was promoted to general manager of al Qaeda worldwide.

It talks about a new era of attacks that al Qaeda will usher in. There's a ton of stuff on this recording. The imminent yet vague threat that may or may not have passed was only one small portion of this and it has given U.S. officials and Yemeni officials for that matter a lot to pore over. It will probably take weeks or months to sort out.

TAPPER: Great. Josh Rogin, I know you're going to be on "ERIN BURNETT OUTFRONT" later today talking about this and some of the other 15 scoops you have had in the last two days. Congratulations and thanks for being here.

Coming up next, they were placed on leave by Hillary Clinton. Now four State Department employees have their jobs back, thanks to new Secretary of State John Kerry. Does that mean nobody will be held accountable for mistakes made before Benghazi?

And later, we will take a little time to honor the man behind some of the best lines and characters in Hollywood.

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TAPPER: Welcome back to THE LEAD. I'm Jake Tapper.

More on the world lead. With Egypt slowly collapsing into itself, the Obama administration's decision on whether to cut off aid to the country could only be more confusing if Charlie Brown's teacher was the one making the statements.

One official said yesterday the U.S. was withholding some aid. But then a Pentagon spokesperson later said he wasn't aware of any plans to cut off assistance. Throw into the mix a separate statement from Vermont Senator Patrick Leahy's official, which confirmed to CNN that military aid had been stopped.

Now the White House is saying that any reports of aid being cut off are not true. It's exhausting.

A spokesperson said today the administration is still reviewing its next steps. Meanwhile, the situation in Egypt continues to unravel. More than 900 people were killed over the past week in violent clashes stemming from the ouster of former President Mohammed Morsy. On Tuesday, Egyptian security forces arrested a key leader from the Muslim Brotherhood and accused him of inciting violence.

In other word news, apparently, as of today, it's official the Obama administration is holding no one responsible for what happened before the deadly attacks on the U.S. compound in Benghazi, Libya. Last fall, it was only a matter of days after those four Americans were killed in Benghazi before evidence started appearing indicating that State Department officials paid insufficient attention to officials requests from diplomats and security personnel in Libya desperately asking for additional security.

Around that time, then Secretary of State Hillary Clinton put four State Department administrative officials on administrative leave, but as of today those four have been invited back to work.

Secretary of State John Kerry decided the four do not deserve any formal disciplinary action and a State Department official tells me there was no breach of duty for these officials and that they are not returning to their previous positions.

What's notable about this move is that those decisions to not provide additional security personnel and assets in Libya, that's one of the only parts of the Benghazi scandal that Obama officials will acknowledge was a real actual problem.

You can go back and forth on talking points from the White House and whether U.S. military assets were in position to rescue the Americans being attacked, but the continual denials throughout 2011 and 2012 of additional security for Ambassador Chris Stevens and the others there in Libya, that part of the Benghazi controversy no one with any real knowledge or perspective on the tragedy can refute.

How bad was it? Recall the testimony of the former regional security officer in Libya, Eric Nordstrom, who left his post less than two months before the attack. He described for Congress just how State Department officials continually shot down his requests for additional security.

(BEGIN VIDEO CLIP)

ERIC NORDSTROM, FORMER STATE DEPARTMENT OFFICIAL: You know what makes most frustrating about this assignment? It's not the hardships, it's not the gunfire, it's not the threats. It's dealing and fighting against the people, programs and personnel who are supposed to be supporting me.

And I added it by saying for me the Taliban is on the inside of the building.

(END VIDEO CLIP)

TAPPER: You heard that correctly. That's the regional security officer from Libya, the former one, describing State Department officials as the Taliban.

An independent review of what happened in Benghazi noted that security was -- quote -- "grossly inadequate" and faulted systemic failures in leadership and management deficiencies at senior levels, though it was established that no one had been proven to have breached his or her duty.

I want to get some reaction from Republican Congressman Jason Chaffetz of Utah. He serves on the House Oversight Committee.

Congressman, thanks for joining us.

Do you think these four individuals needed to lose their jobs over the events in Benghazi? What would have satisfied you?

REP. JASON CHAFFETZ (R), UTAH: Well, first, we have to capture the terrorists who committed this. Nobody has been captured or killed.

But somebody, somebody at the Department of State has to be held accountable. It was April 6, 2012, we had the first bombing in Benghazi. June 6, 2012, we had a second bombing. Nothing was done after this. Five days after that second bombing at our Benghazi facility, a three-car convoy from the Brits was attacked, an assassination attempt on the ambassador and nothing was done.

This happened less than two kilometers from our Benghazi facility. After those three events, there is not a single thing that was done to protect and fortify that facility. Nor did Secretary Clinton do anything to give them more personnel. And then we had the terrorist attack on September 11.

TAPPER: Should anyone be fired as a result of what happened at Benghazi? The State Department says there was no breach of duty and that this is more about learning lessons than punishing people. What are your thoughts?

CHAFFETZ: Well, look, Hillary Clinton was in charge of the State Department for four years.

This terrorist attack happened, and they set up an accountability review board, which I believe was five members. Within 60 days, they found 29 systemic problems and challenges within the State Department. Now, how is it that they could go in, in 60 days and find 29 systemic problems, where Secretary Hillary Clinton couldn't find it in four years?

She accepted all 29 of those, but not a single person was held accountable. Nobody was fired. They went on this paid leave, but they get their full salary. Nothing changed.

TAPPER: I know that Charlene Lamb, one of the State Department officials in question, has said that cutting funding for the State Department security measures was not part of what happened in Benghazi.

CHAFFETZ: Right. Yes.

TAPPER: But, going forward, where are we, as a government, as a Congress and the White House, on moving forward and having more funding for security at embassies? Has any of those attempts at legislation gone forward?

CHAFFETZ: Well, over the last five years, the State Department as a whole has had nearly a 100 percent increase in their operating budget --

TAPPER: Right, but specifically about securities. Specifically for the security budget. Has there been any advances there?

CHAFFETZ: Well, you have an administration where President Obama is out there saying al Qaeda's on the run, but the first - you know, your whole program has been about al Qaeda so far. So, you're out loud, you're saying al Qaeda's on the run and the terrorists are nonexistent, yet we're closing 19 embassies because of these conference calls. We have a terrorist attack in Benghazi.

You've got to take this seriously and understand that America is under attack. And you've got to take this proactively and make some hard decisions that maybe aren't as politically correct but would create the safety and the environment we need in those embassies and consulates around the world.

TAPPER: Before I let you go, Congressman, on the subject of Egypt, do you think -- what's your understanding in terms of whether or not the U.S. has suspended or cut off aid to Egypt? What's your understanding?

CHAFFETZ: I have no idea.

To reach into American people's pockets and take their money and say we're going to give it to the Egyptians given the chaos that's going on there, that is not something that I can support. I see no coherent policy, nor have I, from the Obama administration, from Secretary Clinton. I don't see it from Secretary Kerry. What is our strategy? What has it been since the fall and the changes there in Egypt? I just don't see it. I don't understand it. I'd love for somebody to try to explain it.

TAPPER: I would as well. Thank you, Congressman Jason Chaffetz, Republican of Utah. Appreciate your time.

CHAFFETZ: Thanks, Jake.

TAPPER: It could be a sign that military leaders are no longer untouchable in Pakistan. Former military dictator Pervez Musharraf is now charged in the assassination of the woman who once challenged his grip on power. Benazir Bhutto, the first one woman to become Pakistan's prime minister was killed at a rally shortly before Pakistan's 2008 elections. Bhutto was an opposition leader and known as a democratic reformer.

Musharraf's government initially blamed the Taliban in Pakistan for her death, but a U.N. commission later ruled that Musharraf hadn't done enough to protect her. Musharraf pleaded not guilty to charges including murder and conspiracy to murder.

Coming up, it was one of the deadliest days in the war in Afghanistan. Amid the madness of the attack on Combat Outpost Keating, Army Staff Sergeant Ty Carter risked his own life time and again to save his fellow soldiers. Carter will soon receive the medal of honor for his actions. And tomorrow night, we're bringing you the in-depth story of his valor.

Watch "An Unlikely Hero", tomorrow night, 10:00 Eastern only on CNN.

Coming up on THE LEAD: the economy has come a long way since 2008. So why is President Obama still worried about it tanking again?

Plus, they didn't just beat the Redskins in the Super Bowl. The 1972 Dolphins wanted to take a victory lap in Washington, too, except President Nixon was not so accommodating.

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TAPPER: Welcome back to THE LEAD. Now, it's time for our money lead. And an urgent, behind-the-scenes warning from President Obama about the need to take action to avoid another potential economic meltdown. He's apparently so worried about it he called his top banking sheriffs into one room, closed the door, and told them to get off their tuchuses.

You remember those days when you can practically leave a Timex at the bank for collateral to get a home land. Then, those toxic mortgages were bundled, sold off, gambled upon until the bottom dropped out and, suddenly, it was on the taxpayers to bail out those too big to fail banks. President Obama signed a comprehensive overhaul of regulations for Wall Street in 2010. In the three years since, very few affective changes have come out of it, critics say. And Republicans say it will only result in a useless maze of regulations anyway.

I want to bring in Rana Foroohar, CNN global economic analyst and assistant managing editor for "TIME" magazine.

And our old friend, Jim Tankersley, economic policy correspondent for "The Washington Post."

Thanks for being here, guys.

Rana, how real is the possibility of another financial downturn like we saw in 2008?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: I'm not worried about a Lehman Brothers style blow up at this point. However, there is, arguably, a bigger problem, which is the sort of slow burn that banks are making record profits, they're back on top, but lending still isn't where it should be.

So, banks are recording some of the top profits that they had in the last several years, but it's from trading, it's from the sort of risky maneuvers that we saw pre-2008, not from lending to real businesses, lending to small businesses, for example, which create the majority of new jobs in this country, is down for the last couple of years.

So, that disconnect, the real economy and finance needs to be fixed. I think that's what the president is getting at here.

TAPPER: And when the president, Jim, talks about -- he brings these sheriffs in here, all these regulators and says, according to the Dodd-Frank bill, the Wall Street reform, you have to write all these regulations, you're not writing them fast enough, what specifically is he most worried about? What does he really want addressed?

JIM TANKERSLEY, ECONOMIC POLICY CORRESPONDENT, WASHINGTON POST: I think what the president is really concerned of about is an asset bubble. Some thing that just doesn't have the fundamentals of the economy.

TAPPER: What is an asset bubble? Explain for us.

TANKERSLEY: So, for example, the housing bubble was an asset bubble, where home prices got way overvalued compared to what we called the fundamentals, what they should be based on historical experience. That's what happened right before the crash and that precipitated along with all the financial engineering around it, the big crisis.

TAPPER: But there isn't a housing bubble now.

TANKERSLEY: The good news right now is, yes, we've got housing prices increasing, but we don't have a housing bubble yet and if you look at it, homes are probably still undervalued, compared to historical experience, than overvalued.

TAPPER: Rana, what does this all mean for homeowners? Should they be worried about the value of their investments?

FOROOHAR: I think that we're going to see home prices continue to tick up but a little more slowly than we have in the past. And again, the real problem is that if you want to buy a house these days, credit is still tight. So, for average people, who need to get a mortgage, credit conditions are as tight as they've been in the last five years. A lot of the recovery in housing is actually being driven by investors and people that can afford to put cash down.

So, you know, when the president talked as he has in the last few weeks about getting the government out of the housing market, that's all well and good. But again, you've got to get those banks lending. And in order for that to happen, you need to have those Dodd-Frank financial regulations written. Only about a third of those have been written so far.

TAPPER: And, Jim, when President Obama calls these people into the Oval Office or wherever the took place, and says you need to get working, you need to start writing these regulations that the bill called for, what specifically is taking them so long? What's the problem?

TANKERSLEY: Well, I think there's two problems. One is it's a really complicated bill. It's one of the two longest bills I think in the history of U.S. legislation for a non-appropriations bill. But, secondly, these regulations are heavily lobbied and you have a lot of people who want to weigh in with all these comments, who want to tell the regulators how they should be writing these to favor one industry or another, and I think that is absolutely slowing down the finalization of these regulations.

TAPPER: Rana, last word. Yes.

FOROOHAR: I'll jump in and say -- absolutely. I'll jump in and say: about 90 percent of the consultation with legislators doing that rule- writing has been taken by the big banks. So, they are really controlling that process and they would like to see it go their way.

TAPPER: All right. Rana Foroohar and Jim Tankersley, thank you so much for helping us understand this complicated, complicated problem.

Let's see what our political panel is up to in the green room.

Michael Scherer, you're the Washington bureau chief for "TIME" magazine. I wonder if you'd be willing to defy your deep, sacrosanct, sense of journalistic, non-biased for one moment and give me your honest, unvarnished, candid opinion of the president's new pooch Sunny.

MICHAEL SCHERER, TIME MAGAZINE: I think it could be a political disaster for him. We don't yet know whether he's renounced his Portuguese citizenship. And it's just a matter of time before Ted Cruz puts out a press release.

TAPPER: And I'd like to say Bo and Sunny right there, you see them frolicking on the lawn?

SCHERER: Yes.

TAPPER: Not married. Unmarried.

Stick around for the politics lead. We will not be talking about the new dog.

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