The NewsHour with Jim Lehrer; February 26, 2007

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Good evening, I'm Jim Lehrer. On the NewsHour tonight, the news of this Monday, then a look at the resurgence of al-Qaeda in Pakistan. The big Texas electricity buyout, as reported by Andrew Ross Sorkin of The New York Times, a NewsHour report on the failings of the road home effort in Louisiana, and the latest on the Justice Department firings of U.S. attorneys around the country. Major funding for the NewsHour with Jim Lehrer is provided by

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Thank you. The U.S. stepped up pressure on Pakistan today to fight al-Qaeda. Vice President Cheney made an unannounced stop on his way home from Asia. He met with President Musharraf, whose office issued a statement on the session. It said the Vice President expressed U.S. apprehension of al-Qaeda regrouping in the tribal areas along the border with Afghanistan. The New York Times reported the U.S. has told Musharraf that Congress may cut aid to his country unless he does more. But in Washington, White House spokesman Tony Snow would not confirm that warning. I'll let others answer questions about what they think the political atmosphere here is in the United States. But obviously, there's a lot more to do on this front. We have not been saying it's a tough message. What we're saying is we're having it. The Vice President is meeting with President Musharraf because we do understand the importance of making even greater progress against al-Qaeda against the Taliban.

The Musharraf statement today said he told Vice President Cheney that Pakistan has done the maximum in fighting terror. We'll have more on this story right after the news summary. Britain announced today it will send 1,400 more troops to southern Afghanistan that would raise the total number of British forces in the country to about 7,700. Last week, Prime Minister Blair announced a major withdrawal from Iraq. The violence in Iraq nearly claimed the life of the Shiite Vice President today. He was speaking in the man's sword district of Baghdad when a bomb exploded. He was cut and bruised, at least 10 others were killed. To the west, a suicide bomber blew up his car in Ramadi, at least 14 people were killed in that blast. Amid the attacks, Iraq's other Vice President, A Sunni, said the security crackdown in Baghdad failed to catch its targets off guard. I was hoping that the security plan should start along with all the requirements for success.

One of those requirements for success is the element of surprise. The plan should start without advance notice so that justice can reach militia leaders, terrorists, death squads, and those involved in organized crime. This very regretfully did not happen. The Sunni official also complained the crackdown has not treated all groups equally. But a spokesman for Shiite cleric Mutata Al-Sauter said the operation is not doing enough. He said U.S. forces have too large a role. Still, the U.S. military said today sectarian killings in Baghdad have fallen to the lowest level in almost a year. U.S. officials also presented new evidence today of Iranian-made arms in Iraq, U.S. and Iraqi troops found them near Bukuba on Saturday. And a raid on a major weapons arsenal. Today, officials displayed the munitions for reporters. They said the material included parts for armor-piercing bombs believed to come from Iran.

The UN's top court cleared Serbia today of genocide in Bosnia. In 1995, Bosnian Serbs killed nearly 8,000 Muslims in Srebrenica. The Bosnian's charge Serbia was responsible. We have a report on the ruling at the International Court of Justice narrated by Bill Nealey of independent television news. The graves stretch across Srebrenica today, and Bosni is bereaved still mourned the worst massacre in Europe in 50 years. 12 years ago, the Bosnian Serbs General Radko Maladich surrounded the town and reassured the population of the UN safe area they'd be okay. They weren't. Most of the men and boys in this picture were murdered. Ladich said he'd give Srebrenica as a gift to the Serbian people. The UN and its troops failed to stop the massacre. Today its highest court said that the atrocity constituted genocide, that Serbia had

the power to foresee it and to prevent it, but that Serbia was not guilty. By 13 votes to 2, finds that Serbia has not committed genocide through its organs or persons. Bosnian Muslims outside the court were livid. The protester yelling that her whole family was killed. Srebrenica itself filled with widows, watched the verdict in disbelief. These are their sons and relatives, teenagers, being led to their deaths, the cameraman telling the Serbs to hurry up because his battery is running low. The court found that a little Serbia supported and equipped the killers, it did not have effective control of them. This man certainly had control in Serbia, but ex-president Malosovitch died last year before charges of genocide its rebrinates who could be proved against him.

Malosovitch certainly had control in Srebrenica, but he's been on the run for a decade, almost certainly in Serbia. But Serbia says the court is not guilty, so the bereaved cannot claim compensation. They are still rebaring the dead there, but only half the 8,000 killed have ever been found. They're still searching for the rest. The president of Serbia, welcome today's ruling, but he said his country must do more to find and hand over the top suspects. The judge in the CIA leaked trial dismissed a member of the jury today in Washington. The others resumed deliberating the case against Louis Scooter Libby, the vice president's former chief of staff. He's accused of perjury and obstruction. The judge said the dismissed juror had seen or read something about the case that disqualified her. The cost of mailing a letter may rise by two cents.

The Postal Regulatory Commission made that recommendation today. A first-class stamp would cost 41 cents under the plan. Postcards would rise two cents as well to 26 cents apiece. And a new forever stamp would sell at the current first-class price, but cover any future increase without additional postage. The changes go to the Postal Service Governor's for final approval. The largest power company in Texas, TXU Corporation, agreed today to the largest private buyout in U.S. history. A collection of companies will pay about $32 billion for the utility under the deal TXU agreed not to build eight coal-fired power plants to satisfy environmental groups. The buyout needs approval by shareholders and state and federal regulators. We'll have more on this story later in the program tonight. On Wall Street today, the Dow Jones Industrial Average lost 15 points to close at 12,632. The Nasdaq fell nearly 11 points to close at 25.04.

And that's it for the news summary tonight. Now, al Qaeda is still there. The huge energy deal wears the money in New Orleans and clearing out some federal prosecutors. Pakistan and al Qaeda, Gwen Eiffel, has our story. Last fall, President Bush invited two key allies, the leaders of Pakistan and Afghanistan to the White House, the goal to seek cooperation against common enemies, the resurgent Taliban and the terrorist group al Qaeda. The two mutually suspicious presidents, Pervais Musharov and Hamid Karzai, have been at odds over how to assert control over the lawless, was Ziristan region along their shared border. Within weeks, the president was offering this optimistic assessment. Similarly, we're winning, al Qaeda is on the run, but that optimism has since faded

as U.S. intelligence estimates of al Qaeda's strength have changed. John Necroponte, then the director of National Intelligence, told Congress last month, a resilient al Qaeda remains the greatest threat to the United States. They are cultivating stronger operational connections and relationships that radiate outward from their leaders' secure hideout in Pakistan to affiliates throughout the Middle East, North Africa, and Europe. 2006 proved to be the deadliest year yet in Afghanistan, where U.S. and coalition troops have been fighting since 2001. Military and intelligence officials believe Taliban and al Qaeda fighters routinely disappear into the mountains and caves along the 1500-mile border with Pakistan. Taliban and al Qaeda fighters do hide in remote regions of Pakistan. This is wild country.

This is wilder than the wild west. And these folks hide and recruit and launch attacks. This footage provided by a private counterintelligence firm purportedly shows al Qaeda militants striking U.S. forces in southern Afghanistan during a 45-minute firefight. It surfaced 10 days ago and also contained a message from al Qaeda's number two. I'm in Al-Zawahiri. In the tapes, our hearing threatens future attacks and says al Qaeda still has a safe haven in Afghanistan. Secretary of State Condoleezza Rice confirmed the administration's concerns about a research in al Qaeda yesterday on ABC's This Week. I don't doubt that al Qaeda has tried to regenerate some of its leadership, I don't doubt that. I don't think that anybody would claim that this is the same organization or the same kind of organization that operated out of Afghanistan.

But we have to be vigilant. A series of administration officials, including White House counter-terrorism, advisory of France's towns and defense secretary Robert Gates, have visited the region recently for private meetings. We talked about the importance of seizing the offensive this spring to deal with the Taliban and al Qaeda, a strategic setback. And today, Vice President Cheney arrived in Pakistan for an unannounced four-hour visit. Official said he arrived with a strong message for Musharraf. STEM cross-border attacks in Afghanistan or face a possible decrease in U.S. aid. The Vice President also planned to meet today in Kabul with President Karzai, but that meeting was canceled due to the weather. Now for more on U.S. worries about al Qaeda in Pakistan, we turn to John Brennan, former director of the CIA's National Counter-terrorism Center. He retired in 2005 after 25 years at the agency. And Stephen Simon, a former National Security Council to counter-terrorism official during

the Clinton administration, he is co-author of The Next Attack and a Senior Fellow at the Council on Foreign Relations. Stephen Simon, how do we know that this is indeed true, that al Qaeda is as resilient as we have been hearing all these officials say? What's the evidence? Well, some of it is inference, but there is evidence partly in the form of links that have been uncovered between attackers and plotters, mostly in Britain, but also elsewhere since September 11th, who were thought originally to have been operating on their own, who as it turns out, were linked quite specifically and indubitably to al Qaeda players in Pakistan. There's also overhead imagery, there's photography of camps that are being reconstructed in that area, as well as reporting both open source and intelligent circles about recruiting that al Qaeda is doing, particularly of young British South Asian origin males, a whom

al Qaeda would like to move back to Britain as sleeper cells. So John Brennan, if all of this is so, then what does this say about what the US effort has been the success so far of the US effort or the Pakistani effort or the Afghan effort so far to root this out? Well, I think there has been quite a bit of progress over the past several years as far as uprooting the traditional al Qaeda core from Afghan and Pakistan area, but al Qaeda is very adaptable and they basically have banded together now with the Taliban remnants and they are basically engaged in insurgency in that area against the Pakistani forces as well as against Afghan and coalition forces. So I think what we're seeing now is their ability over the past several years to regroup and to then find areas where they can operate from and it is a worrisome development as the Secretary said. So what's the point of having Vice President Cheney there, how significant is it to have someone at high level go for a beating in Pakistan and then to try to get to Afghanistan as well?

Well, the US can't do it alone. These things are happening apparently on Pakistani soil, so it's going to require the cooperation of the Pakistani government to do anything about it and Pervez Musharraf runs the Pakistani government. Has he done all he can? Well, you know, he's what some people call a minimal satisfying. I mean, he's not just an instrument of US counter-terrorism policy. He is also the leader of Pakistan and he has Pakistani constituencies. He needs to satisfy not least of which is his army of the institution on which his rule depends. So he's going to do as much as he can to make the US happy without alienating the people on, you know, on whose support he relies. The reports out of the speeding today said that President Musharraf said to the Vice President, we are doing all we can. Has the United States begun to lose confidence in him? It's not a question losing confidence. It's the intention of the Vice President's trip is to maintain pressure on Musharraf. I think everybody knows that Musharraf has tried to do what he can do.

But I think what Washington wants to do is to push him a little bit more because he has to maintain constant pressure on the al-Qaeda elements. But also in the tribes, the agreement that was reached between Musharraf and the tribal leaders last September, I think has really demonstrated that the tribal elders are not going to put that type of pressure on the al-Qaeda elements that we would like. And so this is a message clearly to Musharraf. You need to take control of that area and you need to put pressure on the tribal elders and you need to put your forces in that area to make sure that the al-Qaeda is pushed back. Which means what practically? What it is that the United States would like to see that Musharraf is doing to demonstrate he truly is doing all he can. I think the United States would like to do two things, first see a sharp reduction in the amount of cross-border movement between Pakistan and Afghanistan and that's something that the tribes can control at least to some extent. And secondly, they'd like to have some information on the whereabouts of bin Laden and his war council and it's presumed that the tribal leaders know something about where he is. Is this something that Karzai also has a role in?

Very much so. Karzai continues to point fingers over at the Afghan capital in President Karzai, saying that the Afghans need to do more. And so it really requires the involvement of both the Afghans, the Pakistanis as well as our coalition forces up there. But clearly the Afghans have to play in an aggressive role in this other area. And the U.S. has to be the glue in every case. Does it have the leverage to make this happen in the United States? Well the United States is trying to again keep the pressure on it but I think we have to continue with the security and military intelligence cooperation with the Afghan pack government. But in addition, I think we have to take a new look at what type of reconstruction assistance needs to be increased because what we want to do is to try to improve the situation for the Afghan and pack people along that border, which means more road construction, more infrastructure development paid for it by the United States. Well underwritten by the United States, yes, we're putting so much in for security and military support. I think what we need to do is to make sure that economic assistance is there too because that's the longer term solution that we need to go after. Now what the point does the Sharaf asking the United States for that kind of assistance

become what we'll do what you want but we need more money become kind of a quid pro quo in that sense? Well, it's already becoming difficult because Congress which supplies the money for the Pakistani government, there's a significant amount of aid both on the economic and military side. Congress is getting rest of and this is I'm sure one of the things that the Vice President was telling President Musharraf, you know, look, we the White House and the administration would like to continue supporting you despite your not entirely satisfactory cooperation but, you know, Congress may well force our hand. Can the United States afford to lose Pakistan as an ally if they were finally to put their foot down and say you do this or else? Absolutely not. We need to maintain our very close relationship with the Pakistan government and President Musharraf. Because it's so critical to ensure the continued pressure on al Qaeda and the Taliban in that area but Musharraf doesn't have another option. He cannot just tell the United States no I'm not going to cooperate with you on the

counterterrorism front because the al Qaeda and Taliban elements pose a threat to his government, to his stability and to Musharraf personally. But can he do just enough but not enough in order to keep the United States dangling? Well, I think he's going to continue to do as much as he feels he's able to do and I think our role is going to be to continue to guide and push him in the direction of doing more. That's what that can Pakistan afford to lose the United States as an ally? Not really. You know, for Pakistan the United States is a critical counterbalance to India and you can't forget the Indian angle here. The Pakistani government is dealing with an insurgency, a protoinsurgency for lack of a better term in Baluchistan, you know, that's a problem for them. The Indians are meddling there. There's a nuclear confrontation potentially between Pakistan and India. They're both nuclear arm powers. The Pakistanis need an outside powerful backer and the United States is that country. So no, I don't think that they can easily shed us.

On the other hand, Musharraf doesn't have quite the flexibility he needs as John Brennan was saying to do everything we want him to do and at the end of the day, we are going to have to take what we can get. At the same time that we've been hearing about this research in al-Qaeda, we've also been hearing about a research in Taliban, is there a way to measure which one is the bigger threat or whether they are in any way linked? It's almost impossible now to distinguish between them. I think the Taliban and al-Qaeda have basically joined forces and so what you're seeing now across the border is the Taliban and al-Qaeda forces who have come together against the Pakistanis, against the Afghans, against coalition forces there. So in fact, al-Qaeda has been bolstered by those Taliban elements and the extremist sentiment in that area is providing them ready recruits to conduct whether it's insurgency operations in that area or possibly to participate in terrorist operations abroad. I understand there's a geographic issue here, but what stops the United States from just taking this on themselves, conducting unilateral airstrikes or whatever it takes to root

out this combined force, why does it require Pakistan's cooperation or Afghanistan's cooperation? If the United States were to completely dismiss issues of Pakistani sovereignty and just go in there and try to do the job themselves, it would dangerously weaken Musharraf's position because he would be accused at home of either being complicit with what the United States has done or powerless to prevent what the United States has done. Either way, he will look weak and his position will be endangered and the United States doesn't know what will happen after Musharraf. So Musharraf, it's important for the United States as for the United States, Musharraf remains where he is, at least at least a very least of bad choices. Absolutely. Pakistan's stability is very much in our interests. Musharraf, whatever Ms. Gibbons we might have about some of his politics and his inability to go further against the terrorism target, he has demonstrated that he's been the glue

that will hold Pakistan together because if Pakistan were to devolve into instability and chaos, we would really have a problem in South Asia. Sean Brennan, Stephen Simon, thank you both very much. Thank you, thanks. A record buyout of a Texas utility, Margaret Warner, has that story. The proposed acquisition of TXU, the largest electricity producer in Texas, is notable not just because it's the largest private buyout ever, but because two leading environmental groups were involved in negotiations over the deal. As part of the transaction, the private equity firms buying the company, led by Colbert Cravitz Roberts and Texas Pacific, committed TXU to becoming a greener company by adopting more environment-friendly policies. In return, two groups who've been a thorn in the side of TXU, environmental defense, and the Natural Resources Defense Council publicly endorsed the deal.

Specifically, the new owners have committed to cancel plans to build eight new coal-fired plants, though three others will be built, spend $400 million over five years to promote energy efficiency and reduce demand, and join other companies in support of mandatory national caps on carbon emissions linked to global warming. For more on the unusual circumstances of this buyout and its potential impact, we turn to New York Times business reporter Andrew Ross Sorkin. He also edits the paper's financial news blog, DealBook. Andrew, welcome back to the program. Tell us the story here. How did two environmental groups get involved in a private equity buyout? Well, you know, it really is a very interesting story because TXU, which had been the whipping boy of the environmental world, in part because they had proposed building 11 coal-fired plants, which as we all know, are the most pollutive of really any type of energy that's

being built today. They had been the whipping boy, and here comes Texas Pacific and KKR, Colbert-Cravas Roberts, which was looking to buy this company, and as they were negotiating with TXU, they were saying to themselves, you know, we may get a lot of pushback. We may get, we may become the enemy combatants of this world. And as private equity firms, which historically, as we know, have wanted to stay very private, they said, how do we counter this? How do we get ahead of this? And so they went to these environmental groups before announcing their transaction to bring them on board. And in the end, the environmental groups at some level held them hostage to getting what they wanted before this deal was announced today. And they had a personal connection. Did they not? Through some of the senior people on each side? They did. And it's very interesting. Texas Pacific is run by a fellow, was founded by a fellow named David Bonderman, who is on the World of Wildlife Foundation Fund.

And he is also works with a guy named Bill Riley, who used to work for the EPA under George Bush. And so they decided we needed to reach out to the environmentalists. At the same time, Goldman Sachs, the Wall Street Investment Bank, which was advising and investing in the deal, was also heavily involved. They are one of the most aggressive firms when it comes to climate control and going green, if you will. Hank Paulson, who is now the Secretary of the Treasury, but was the CEO of the company had been the chairman of the Nature Conservancy, an activist environmental group. And if you can believe this, the bankers at Goldman Sachs go home at night in hybrid limousines. So to them, it was very important that this deal was environmentally clean. In fact, they had told Texas Pacific and KKR that they would not get involved with this transaction unless they change their ways. Explain to us why these high-flying Wall Street firms, private equity firms, would be interested in acquiring, we always think of utilities as being kind of old-timey, boring investments.

You know, it's funny, what private equity is looking for is stable cash flow businesses. And as we all know, a utility, electric company is like the toll booth. You and I have to go through it every month. And so this is a business that, at least in all likelihood, for the next five or ten years, which is really how long these private equity firms will likely hold this company at the most. You know, it looks like a great asset because they can take the cash from these businesses in a monthly basis and effectively pay off the mortgage. Because what they do is they lever these companies up. They buy them with a small amount of cash and add on a lot of debt. And so they need a kind of steady stable of cash to pay for this deal. Now the new owners to be, if this deal goes through of TXU, have committed, we just outlined some of the steps they've committed to taking, including not building eight of the 11 plants.

But they're still building the three, as I understand it, dirtiest, quote unquote, plants. They are. They are. Why did the environmental groups agree to this in the first place? And how much will the way TXU does business change as a result of some of the commitments they've made? Well, that's actually a very interesting question because one of the things that has not really come out yet is that even though they have committed to going from 11 effectively to three, and by the way, the three had already started. So there is already money in the ground. They are building those plants as we speak. And that's in fact one of the major reasons why the environmental groups have to claim this as a victory because it was very hard to go back and they weren't going to stop building these things. But there's also a bit of window dressing on this deal because privately at TXU, even though they had proposed building 11 of these plants, privately they had been planning actually to roll their plan back to six or five plants. So in fact, it's not clear that the private equity guys have created such a win for these environmentalists after all, and in some ways are using this as a way to buy goodwill with

the public. And how much goodwill have they bought with the state legislature, regulators, the political powers that be all the hurdles that they'll have to jump over, one to get the deal approved, and then two to be able to go forward in the way they want to business-wise. Right. I think that they've started clearly on a good foot. This is an unregulated utility for the most part. There are not so many layers that they have to, they're not so many hurdles they have to jump through. And so we will see how this goes as for a business, you know, these plants that they were building, it's unclear that they were going to generate huge amounts of profits for the company, at least initially, and in fact from a business perspective, and let's remind everyone, part of this is about business. These guys are trying to make money, and by not building these additional late plants, that is a lot of cash that's not going into the ground that can be going to help finance this deal, and in the end can be going right into their pocket.

So there are lots of economies, if you will, that are making this deal work, they're economics, that are making this deal work as much as environmental concerns. So they figure they can do well by doing good as the saying goes. Step back, do you see, is there a broader trend here? Do you see climate change or other environmental concerns affecting decisions by Wall Street firms like this? Absolutely. You know, I was just in Davos, came back two and a half weeks ago, where I have to tell you the only issue on the table was the issue of climate change, going green. It was on everybody's list of things to really be paying attention to, and not so much just to be good to the environment, because these people were really trying to figure out how going green movements can really help business and how there's money to be made. And I do think that this is the first step in a series of steps that we're going to see over the next several years, where you see businesses really try to change their ways in part to help the environment, but in part because there's a good business logic behind

it. Andrew Ross Sorkin of The New York Times, thank you. Thank you, Margaret. Now frustrations in New Orleans over money that has not materialized 18 months since Katrina. NewsHour correspondent Betty Ann Bowser has our report. You don't need a roof of starters. Thirty-year-old Michael Malone has sent his family to Georgia until he can get enough money to repair the flooded family homestead. This is our empty lot that used to contain. Casey King and his wife have been living for more than a year in a cramped RV beside the levee that broke and destroyed their house. Much step. This is some of the stuff I was able to salvage. And music producer Mark Samuels has begun work on his house, but he's run out of funds. So like the other two New Orleans homeowners, he's stuck until money from the state-run

road home program comes through. And the road home program sounded like it was the right idea and the right thing and get money into people's hands so they could rebuild. The road home was set up with $7.5 billion in federal money to provide up to $150,000 grants to homeowners to rebuild the state's devastated housing stock. But 18 months after the flooding, only 1,300 homeowners have received a cent out of the 109,000 to reply. Thank you all for coming. Frank Sylvester, co-chair of the Citizens Road Home Action Team, a watchdog organization. This city can't move forward until those people are given their grants. At this point, after the storm, it's abysmal. The road home has ignited controversy all the way to Washington. Last week, California Congresswoman Maxine Waters brought her housing subcommittee to New

Orleans with some blistering criticism of the program. And though the program could use up to $150,000 per applicant, that it appears that the rules are such that nobody has received $150,000. The first witness was Governor Kathleen Blanco. Waters wanted to know why so few awards, why so many problems. This is unacceptable. It's maddening. I am on the phone every day pushing for solutions. The company promises us that by the end of this month, we will see a rapid increase. I will be satisfied when I see the results. It was the governor's office that hired a private contractor, ICF International, to run the road home program last June for $756 million. Since then, there have been thousands of complaints, because only 1% of the applicants have

received money. Waters asked company official Isabelle Reif, what ICF is doing to speed things up. Given all of the criticism about the program, what do you recommend can be done to implement this program faster? Why don't I start by telling you some of the things that we have done? No, no, no, no, no, just tell me what you will do to straighten out the program. How do you move the numbers? We are calling everyone who has had an application. You can hire more people. We are calling every individual. Did you hire more people? Excuse me. Did you increase your personnel in order to do this? Yes, of course we did. Elected officials are not the only ones frustrated. And just thank you. I used to call this home. One or Michael Malone was told seven months ago, he would get $42,000 to fix his house. But there's been no check in the mail and no answer to his many phone calls. It's been a very fatiguing process, you know, not hearing back, not receiving, you know,

phone calls or getting any feedback from anyone. You can never get a person on the phone. No ma'am. What do you get? It's a voice recording and you're instructed to leave a brief detail message and someone would be contacting you within 24 to 48 hours. And what happened? And nothing happened? No ma'am. Are sort of let-of-a-let tolerance to that is zero. Michael Byrne is senior vice president for ICF International based in Fairfax, Virginia. He says the company recently hired and trained more people to handle phone calls. Seeing or leaving voicemail messages, something that we unfortunately did have to do some of some weeks ago, that's not happening today, that we've hired more people. We've trained the people we've hired to be able to provide more information. But Malone says he's still getting voicemail and still has no money.

Casey King has a different gripe. He thought the road home would give him at least $100,000 to rebuild. So when his letter came last year, he was stunned. They said they were very sorry, but there was no grant available to help me restore my home. Yeah. King says officials miscalculated his award. I'm evicted of incompetence and I'm working through each step in the process to get it right. Is that number right? No. They were wrong there. No. They were wrong there. Okay. And then the estimated damage to your home, is that number right? That's wrong by multiples. Senior Manager Burns says the road home has made some mistakes. I think we had a period of time in October and November where we were seeing that our databases weren't lining up and we weren't getting good information and we did make some errors, you know, and some of them were significant. Now Burns says the road home is correcting those mistakes using better data.

We were approving those capabilities to have more accurate numbers and I think we're out of place right now where the errors that were made and the mistakes and the numbers that were made early on are we're seeing less and less of those. But King says he is still arguing with the company and claims they still don't have all the numbers straight. Mark Samuels is also fighting with the company for more money. I've got the letter now but it said that, you know, congratulations but that the award is only $43,000 and I was really expecting between $120,000 and $150,000 in the maximum. I was really expecting that much. What could you do with $43,000? I've already spent $43,000 and you can see my house is not even, I've already spent that. Here Laje is an official with the Louisiana Recovery Authority that sets policy for the road home program.

Laje says one of the stumbling blocks is federal bureaucracy. The money that they send is wrapped in red tape and it's got strings that lead back to Washington and to spend the monies they send us, we've got to meet federal red tape. But Laje has also been critical of the contractor and has been pushing them to improve their record. The point I've made to honestly have many times is we need to be more like federal express. We have to get every package delivered. We can't make one mistake and we have to ten every single one. ICF says so far. The average award calculated to homeowners has been about $80,000. But when the state designed the program it figured the average award would be closer to $58,000, which raises the question. But the program run out of money. If the average award remained at $58,000 then they would have enough money for the whole program. So you're looking at this is correct. At $80,000 at this junction point in time of what we know that it would not be sufficient

funds. At the hearing New Orleans Mayor Ray Nagan said he wants to take over the entire program from the state. The road home program in his current format will not work. I don't care what they do with that program right now. It's overwhelmed, underman, and technically flawed. Let's take New Orleans, all the people who have registered for the road home program would ever stage their end and let us administer the program with the banking institutions and I think we can get it done for you pretty quickly. ICF has promised to meet its goal of 2,300 awards by Wednesday. If you do not get it, would you be willing to try and back out of that contract and find another way by which to implement the program? If this cannot happen or does not happen, we are certainly going to take measures to put in a new operation.

Meanwhile, Waters has promised Louisiana officials she will do all she can to eliminate federal red tape. In the hopes that that will get more money into the hands of homeowners who want to move more quickly down the road home. And finally tonight, purging federal prosecutors, Ray Suarez, has that story. Margaret Kiara, the U.S. Attorney for Western Michigan, suddenly announced a resignation on Friday after five years in the post. Although Kiara herself wouldn't comment, several news accounts report she was forced out by Justice Department officials over differences of views on capital punishment among other things. Kiara is the eighth U.S. Attorney to resign since December. The government's request, the others, but Cummins from Arkansas, Paul Charlton of Arizona, Daniel Bogdan, Nevada, David Iglesias, New Mexico, John McKay, Seattle, Kevin Ryan,

San Francisco, and Carol Lam in San Diego. Lam recently had won praise for indicting the number three official at the CIA on corruption charges. And for successfully prosecuting former Congressman Randy Duke Cunningham, who took $2 million in bribes from defense contractors. In fact, in recent years, all had received positive job evaluations. However, Attorney General Alberto Gonzalez has insisted that the prosecutors were replaced because they performed inadequately. At a Senate hearing last month, California Democrat Diane Feinstein took issue with that assertion. He's pushing to repeal the law, allowing the Attorney General to replace sitting U.S. attorneys with temporary replacements indefinitely and without Senate approval. I'm very concerned. I've had two of them asked to resign in my state from major jurisdictions with major cases ongoing, with substantially good records as prosecutors.

I would never, ever make a change in a United States attorney position for political reasons or if it would in any way jeopardize an ongoing serious investigation. I just would not do it. But in the case of Bud Cummins in Arkansas, the Justice Department did admit he was removed to make way for a former aide to White House political adviser Karl Rove. For more, we're joined by Stuart Gerson. He served as assistant attorney general during the first Bush administration and as acting attorney general under President Clinton, he's now in private practice in Washington. General Orie Levinson, she spent eight years as an assistant U.S. attorney in Los Angeles. She's now a professor of criminal law at Loyola Law School in Los Angeles. Both guests testified on this issue before the Senate Judiciary Committee earlier this month in Professor Levinson. There are more than 90 federal districts around the country served by U.S. attorneys. Why should the firing of eight attract so much attention? Because it's quite unusual, although it's not unusual to have the president put

in his own appointees. At this stage of the game, mid-term with interim's going in in their place, that is not business as usual, especially when all the sudden we're hearing its performance related and yet the documentation indicates that it may not be. Big red flags are going on as to whether they're politicizing these U.S. attorneys' offices or trying to centralize power back in Washington. It's just a question mark because it's so different from what's been done before. Mr. Gerson, not business as usual? Well, it's unusual, but I think the starting point needs to be when you're looking at a process that's inherently political and you're looking at individuals who all of whom have served more than four years. The real question that you need to be asking is, is there any impedance of ongoing investigations or other initiatives so that the public isn't getting effective law enforcement? And I don't see any evidence of that being the case. In several cases, Mr. Gerson, these people were told they were doing a good job. In the way that political appointees are told by performance reviews and the first time

they heard anything negative was when they read it in the newspapers as an explanation for there being forced down. Well, I don't doubt that that's the way that this news was transmitted and if that's so, perhaps the process was clumsier than it needed to be. But in the case of at least one of those individuals who clearly got a favorable report, at least 19 members of Congress felt otherwise with respect to the level of enforcement of the immigration laws. Now, one can discuss that, but clearly some of the critics of the administration, including Senator Feinstein, wrote letters to the department which apparently had influence. I just don't see any evidence that any case, any investigative initiative has been impaired in any way. Moreover, as I visit U.S. Attorney's offices around the country and I do it in connection with my work, sometimes they're my adversaries. I really don't see any great fall off. Of course, there are probably some people in some places who are concerned.

That's understandable. It's almost always the case. But generally, it's business as usual. The career people who run 95 plus percent of what's going on are working assiduously at what they do. They're not avoiding corruption cases. They're not avoiding the hard cases. They're doing their job. And the public is being well-served. Professor Levinson, what's your concern then? My concern is, frankly, that the offices aren't taking it this way. That if there is a significant morale issue that's going on here, because for the troops and they are a political, for most part, who are trying to do the right job, they have big question marks. Why are there leaders being dismissed? Likewise for the judges in those districts, especially for example, up in Seattle, where John McKay was dismissed, they don't understand it all. Why somebody who has an office that's working well with the courts is being very successful as all of a sudden being dismissed. So I think there is the question about if there are these new priorities that all the sudden the Justice Department has to put in, what are they?

Are they going to be compatible with what the district needs are? And frankly, if this isn't political, why is it happening now? Why is it happening after the new Patriot Act that allowed the Justice Department to put in interim appointments without having to go through the regular confirmation process? Why is it happening now? And has the change in the way replacements are appointed sort of broad attention to these fireings? Well, clearly it's broad attention to it and it's had an effect that the administration has pledged that there will be no permanent appointment that takes place without consultation with the home state senators, that is the usual process. This Patriot Act change that Professor Levinson cites is clearly something that members on both sides of the aisle didn't pay sufficient attention to, but the initial reaction of the Feinstein proposal to take this away from the Justice Department and have it reside completely in the judiciary, a bad idea that's constitutionally inconsistent with the judicial

function is now a bill that's been withdrawn and we're going to return to the old system that worked well enough. But let's be clear on what the Patriot Act amendment said. This little change in the reauthorization allows the attorney general to appoint replacements without Senate review, correct? Well, indeed, that has always been the case. Originally for 120 days, now it was argued that the administration was somehow trying to get around Congress and appoint interim people who would stay there forever. Well, I think you need to put that in perspective. First, we're dealing with relatively few United States attorneys. It's no more than eight out of 93. So we begin with that. There's no massive effort. Nor is any of these in a place where there's some critical matter going on that somehow is going to be interrupted. Almost all of the people who've been appointed interims are the same kind of people who've always been appointed interims. The administration has pledged itself to seek the advice and consent of the Senate on

every single permanent appointment and to consult with the senators of that state. We'll see if that happens. But that's the pledge. It's certainly being done in a way that should be transparent. Professor, you noted that the administration can now make those replacement appointments in perpetuity. But as Mr. Gerson mentioned, the attorney general says he is going to go to the Senate. Does that satisfy you? It doesn't really satisfy me because the proof is in the pudding and you get worried when things like what happened in Arkansas occur. When you have bad comments who even the Justice Department of Medicine was doing a very good job, he's replaced all of a sudden with somebody who has comparatively little experience at this stage in his career, somebody who worked for Carl Rove, and then realizing that if they have to put him up permanently, he's not going to fly. They withdraw him, makes you wonder why was he the interim? Ordinarily, I agree with Stewart Gerson that the interim, it would be somebody out of the

same office who's familiar with the operations of the office. But for example, in San Francisco, Washington sending out somebody from Maine Justice from the Washington D.C. office of the executive office, not somebody from within the office who knows the office's operations. Wasn't the tradition, Mr. Gerson, to take a great deal of advice from the home state? It understands local conditions? Absolutely, Ray. But what Professor Levinson just cited is an interesting case because the current director of the FBI, Bob Mueller, was at one point in his career, sent from Washington to be the United States attorney in San Francisco to put an office that lacked sufficient direction in the view of the Maine Justice Department, get it going in a stronger, more vigorous way. And my understanding is that's the intention this time as well with respect to San Francisco. And there have not been great criticisms that have been leveled, at least with respect to that particular office.

San Diego has been a little bit noisier situation, but again, it doesn't appear that it's reflective of anything other than, in that case, succumbing to criticism from the outside. Professor Levinson does cite one case where Paul McNulty agreed that it was a political motivation. The fellow who was made the interim United States attorney was somebody who I think was considered to be a political future who they wanted to give a little exposure to. We had certainly more experience starting out than the incumbent had when he started out. And the process and the dispute of this probably has caused that gentleman any real shot at a permanent position. So it's politics, I don't know that it's healthy or unhealthy politics. This is something that's committed to the executive branch. It is a political decision, it can be debated. And I think when you really get down to it, that's the season that we're in with the

new congressional majority. They're certainly entitled to take a look at this. They're ought to be oversight, there will be, but I can guarantee you this is not going to be an issue come election time. Professor, what would you be looking out for in these various federal districts as these attorneys' offices change hands to know whether this is malign or benign. If you're worst fears of being realized? That's a great question. I think a couple of things. One is that there are some of these offices who have some high visibility political corruption cases. And whether those continue or whether those are downplayed under a new administration is a big question. The second thing is whether the Justice Department holds true to its word, whether they put up people who are ready to put through the confirmation process, and also whether they pause to ask, well, maybe we should start that process rather than just going the interim route. Maybe we should see if we can get our priorities in place without taking people who have a well operating office, removing them, and creating these questions among the AUSA's who

work for them. Professor Levinson, Stuart Gerson, thank you both. Thank you. And again, the major developments of this day, the United States stepped up pressure on Pakistan to fight al-Qaeda, Vice President Cheney made an unannounced visit to the Pakistani capital. One of Iraq's vice presidents was nearly killed by a bomb blast as he gave a speech in Baghdad and the U.S. Postal Regulatory Commission recommended raising the cost of mailing a letter by two cents to 41 cents. A reminder, you can download audio versions of our reports and listen to them on your computer, iPod, or other MP3 player to do so, just visit the online news hour at pbs.org. We'll see you online and again here.

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appraisals from Tucson, Arizona. It is hot outside, but our appraisers are keeping cool heads in the convention center and there's so much to see. So let's get started. Well, it belonged to my late husband. It was given to him on his 16th birthday. He played small violins till then. This was his going up to the big one. He was a beautiful musician. He died about 25 years ago and it was left to me. I knew it was old. He thought it was quite old. He ensured it for quite a bit. After my husband died, I took it to a violin teacher and he kind of appraised it a little bit, but he told me that it was a Paul Bailey. He found a date inside this at 1883. Well, you're absolutely spot on. The maker is Paul Baye and of the 19th century school of French and specifically Parisian makers, he's one of the becker. Paul Baye trained in Mircourt leaves Mircourt, goes to Paris.