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Text: ABC'S 'This Week' with Sam Donaldson and Cokie Roberts

Sunday, Sept. 16, 2001

Following is the transcript of ABC's 'This Week' with Sam Donaldson and Cokie Roberts. The guests are: George Will; George Stephanopoulos; Donald Rumsfeld, Secretary of Defense; John Ashcroft, Attorney General; George Pataki, Governor of New York; Sen. Hillary Clinton (D-NY); Sen. Richard Shelby (R-AL); Sen. Bob Graham (D-FL); Gordon Bethune, CEO Continental Airlines; Leo Mullin, CEO Delta Airlines.

DONALDSON: Welcome to our program. On this Sunday the government and the country are slowly turning from the shock and horror of what happened last Tuesday to the grim business of planning the future for terrorist enemies and for American life, Cokie.

ROBERTS: That's right, Sam.

But the emergency work connected with those attacks is still a top priority today. Are there more terrorists still on the loose in this country who must be hunted down before they can strike?

And, of course, the recovery work at the attack sites is continuing. George Stephanopoulos has more on that from New York. George?

STEPHANOPOULOS: It's going around the clock, Cokie.

And makeshift memorials are cropping up in the streets of New York, and a service for the fallen rescue workers is planned to take place later today at St. Patrick's Cathedral. And Wall Street has run a complete systems check and says it's ready to go at the opening bell tomorrow.

We'll have more on all that later in the broadcast, but first we're going to check in on every aspect of this global crisis, starting with the investigation and ABC's John Miller.


DONALDSON: Joining us now to discuss this is the secretary of defense, Donald Rumsfeld, with whom we spoke within the hour.


DONALDSON: Welcome, Mr. Secretary. Good to see you.

RUMSFELD: Thank you very much, Sam.

DONALDSON: Well, how are we going to ``smoke them out,'' as the president says?

RUMSFELD: Well, by taking the battle to them. The terrorist activity that we experienced this week and that others have experienced over the years is something that strikes just directly at our way of life, the way of life of a free people.

And to be realistic we have to recognize that a terrorist can attack in any time and any place using a variety of different techniques. It may be an airplane one day, it may be a ship or a subway or a car. Therefore, the only thing we can do is what the president said. We have to wage a war and it has to be taken to them, where they are. And it will be a broadly based, sustained effort not in a matter of days or weeks but over years.

People think of the wars we've seen lately, the kind of antiseptic wars where a cruise missile is fired off, shown on television landing in some smoke and so forth. That is not what this is about.

DONALDSON: OK, that's not what this is about. As you say, the last time people thought about a war involving the United States in any extent, it was the Gulf War. We saw large armies engage each other. That's not this one, is it?

RUMSFELD: The people we're dealing with have no armies or navies or air forces or battle ships or carriers or capitol cities even, or high-value targets. What they have is a lot of people, in the case of Al Qaeda, the network that is been designated as one of the prime suspects. They may be operating in 50 or 60 countries including the United States. And that means that we will have to use the full weight of the United States government, political, diplomatic, financial, economic, military and unconventional, and I would underline that.

DONALDSON: Let's talk about that, because in 1998, as everyone knows, President Clinton, his administration, lobbed in some cruise missiles. Osama bin Laden didn't get him at some of his bases. I take it we're talking about something more than that.

RUMSFELD: Indeed. This is serious business. We just lost more people than we did at Pearl Harbor. We lost more people than we did all the way up until the Civil War. It is, and it's not over. They are purposeful people. They plan carefully. And we have to be--we have to get back to our lives, but we have to do it with a heightened state of awareness.

DONALDSON: Mr. Secretary, you're not going to tell me, nor should you, anything about military operations and specifics, I understand that. But I think very clearly you've said that this may require ground forces of some type. If bin Laden hides in that hole that the president talked about to smoke him out, that requires men on the ground.

RUMSFELD: Yes, I mean cruise missiles do not get people who are operating in the shadows. We will need to do a host of things.

And I should underline, these people, these terrorists, are clever and they're purposeful and they're well-financed. But they cannot function except with the tolerance of other countries, with countries, real states that do have capitols, that do have armies and navies and do have high-value targets. And it is the fact that countries around the world have been harboring and permitting the terrorist activities and, in some cases, facilitating and, in other cases, tolerating it that has to be dealt with as well.

DONALDSON: We're told that a delegation from Pakistan is going to Afghanistan on Monday to talk to the leadership of Afghanistan, the Taliban, and say to them very directly that if they don't turn over bin Laden and his associates, they themselves will be at risk.

RUMSFELD: They themselves, meaning Pakistan or the Taliban?

DONALDSON: The leadership...


RUMSFELD: Well, my goodness, the Taliban has harbored and fostered and encouraged and assisted the Al Qaeda network. There's no question about that.

DONALDSON: But a cruise missile wouldn't work on them than either. It would also require ground troops.

RUMSFELD: It will take the full force or our government and our friends around the world, political, economic, financial, military and unconventional. I'm not going to suggest what kind of operations we might have to contemplate, but we do know that Afghanistan is a country that has been at war for years. It has, I suppose, a GDP per capita of about $800, about the price of a ticket from Washington to L.A., and there are not a lot of high-value cruise-missile-type targets there either, and...

DONALDSON: I bring up the business about ground troops not just to inflame the situation, but we have already as have other news organizations, perhaps you yourself, received e-mails from people in this country who worry about the loss of American life, meaning the soldiers, sailors and Marines and all of the other service personnel.

What would you say to people who may have to face more losses on this battle front against terrorism?

RUMSFELD: That what this war is about is our way of life, and our way of life is worth losing lives for.

DONALDSON: All right.

RUMSFELD: And the era of antiseptic warfare--planes dropping bombs from 20,000 feet, cruise missiles flying off in the night, no one getting hurt on the United States or the coalition side--that will not work with this enemy, let there be no doubt.

DONALDSON: Let me bring up a couple of things. Let me see if I can dismiss one thing immediately or may be not. There are some people who are saying a tactical nuclear strike would be used. Can we rule out the use of nuclear weapons?

RUMSFELD: You know, that subject--we have an amazing accomplishment that's been achieved on the part of human beings. We've had this unbelievably powerful weapon, nuclear weapons, since what 55 years now plus, and it's not been fired in anger since 1945. That's an amazing accomplishment. I think it reflects a sensitivity on the part of successive presidents that they ought to find as many other ways to deal with problems as is possible.

DONALDSON: I'll have to think about your answer. I don't think the answer was no.

RUMSFELD: The answer was that that we ought to be very proud of the record of humanity that we have not used those weapons for 55 years. And we have to find as many ways possible to deal with this serious problem of terrorism.

And if, Sam, you think of the loss of human life on Tuesday and then put in your head the reality that a number of countries today have other so-called asymmetrical threat capabilities--ballistic missiles, cruise missiles, chemical weapons, biological weapons, cyber warfare--these are the kinds of things that are used in this era the 21st century. And a germ warfare attack anywhere in the world would bring about losses of lives not in the thousands but in the millions.

DONALDSON: Let's talk about the Special Forces, Delta force, the Rangers, the Seals, other special units. About 40,000 have been authorized, but you have to appoint a civilian director of the Special Operations forces. Are you going to do that now?

RUMSFELD: We are going to be addressing the priorities in the department. And interestingly, the review that we've just completed very much focused on homeland defense. It focused on these so-called asymmetrical threats. I've been talking about these problems since I assumed this post at the request of President Bush in January.

We clearly have a number of vacant posts that still haven't been confirmed in the department, but I'm sure that they'll be confirmed promptly.

DONALDSON: I bring it up because General Shelton, the outgoing chairman of the Joint Chiefs, said on the first day, ``Your military is ready.'' But is our military really ready to fight this kind of war? We haven't made the full transition from being postured against a Soviet Union which no longer exists.

RUMSFELD: Indeed, we haven't. And the general is absolutely correct when he says our armed forces are ready if you mean, as he did, that these are volunteer people who are willing to put their lives at risk any day, any place on the globe, and God bless them for that.

In terms of being...

DONALDSON: You've got to have the tools, though.

RUMSFELD: In terms of being ready and transformed to deal with these asymmetrical threats, the short answer is clearly we are not. Clearly, we are still, to some extent, organized and arranged to deal with the kinds of threats that are still there--they're not gone--but not fully arranged to deal with the new set of threats. And that is why we have been focusing on them.

DONALDSON: How quickly can you ramp up? Apparently there's not a lot of time to waste here.

RUMSFELD: No, there isn't. And it is not something that can be done instantaneously, although there is a good deal we can do.

But we will be working with the Congress, and I must say that the support we've received from the Congress on these kinds of things has been very encouraging, as well as the country. And I've got a lot of confidence in the American people.

DONALDSON: Mr. Secretary, a lot of people in Washington in high places have told us recently on background or on the record that they expect more attacks, there could be more attacks. To what extent is the U.S. military today, this very day, specifically, I suppose, the United States Air Force, prepared to meet an attack like the way that came last Tuesday?

RUMSFELD: Sam, you have to be expectant. That's why the president said we should all have a heightened sense of awareness. A terrorist can do any kind of an attack, any place at any time. It is not physically possible to defend every place at every time.

We have a combatant commander for Europe. We have one for the Pacific, we have one for the Persian Gulf. We've never had a combatant commander for the United States. Under our Constitution, under our laws, the United States military's task is to defend against foreign invasion and foreign threats. The threat we saw recently was from a person in our country in one of our airplanes, filled with our citizens. This is a law enforcement job. It is a job for the FBI, it is job for the police.

DONALDSON: Well, sir...

RUMSFELD: Just a minute. And we have a whole set of arrangements and rules that have existed since decades. And what we need to do, and what we are doing, is to review those and ask ourselves how we have to shift our arrangements.

DONALDSON: Well, sir, excuse me for interrupting you, but along with other citizens, I've seen the fighter planes now, high speed jets circling Washington, D.C. They're up there for a purpose...

RUMSFELD: They are.

DONALDSON: And I suppose one of the purposes is that, if God forbid another airliner is hijacked as we're talking, they're going to take action, am I right?

RUMSFELD: They are up selectively in the United States. They have been since this event. We have not had fighter aircraft protecting the United States for ages.

DONALDSON: Do you now, though?

RUMSFELD: Sure we do. We have it in very selected places across the United States. We had (inaudible) take off in 10 to 15 minutes.

But, Sam, what does that do if it's a subway? What does that do if it's a port? What does that do if it's a ship? What does that do if it's a truck bomb? A terrorist can use any of those techniques.

DONALDSON: Your point is well-taken, sir. I understand that that couldn't do anything. But if they tried the same MO again and get on an airplane, despite the increased security at the airports, do you now have standing orders well thought out that could be implemented quickly to prevent a civilian airliner again with all the humanity aboard from striking the White House or the Capitol or the Pentagon once more?

RUMSFELD: We have in the certain parts of the country, including Washington, we have aircraft in the air. In other parts of the country, we have them ready to take off.

The set of decisions that would have to be made as to whether or not a plane was threatening a high-value target in the United States are complicated. But the short answer is, yes, we have people who are prepared to do what might be necessary.

DONALDSON: On Tuesday, I'm told the FAA notified someone in the Pentagon that there was a rogue plane apparently headed toward Washington. But you didn't know it, am I correct, until it hit?

RUMSFELD: Well, I was in the Pentagon and felt the shock of the attack and...

DONALDSON: What did you think it was?

RUMSFELD: A bomb. I had no idea. I looked out the window and raced down the corridors till the smoke was too bad and then went outside and saw the devastation and talked to an eyewitness who told me that he had seen an aircraft plow into the Pentagon between the first and second floor.

DONALDSON: Could you believe it?

RUMSFELD: No. It's just--it was a sight, just amazing.

DONALDSON: But today if the FAA called, you'd know it.

RUMSFELD: Well, yes, but think about it, Sam. If the call came now--let's take that plane. That plane took off from Dulles, I'm told, went west, circled all around Washington. No one knew. They knew it was off the flight path. They had no idea where it was going.

DONALDSON: Two senators from Pennsylvania say they think the target was the Capitol building. Do you know?

RUMSFELD: How do you know what's in the minds? They was a plane that crashed, and I would suspect that one of them was heading for the Pentagon and one may have been heading for the White House or the Capitol. Clearly they all had an assignment, and this one found it and came in and hit the Pentagon.

Knowing it's filled with Americans--American Airlines right on the side of it--filled with our fellow citizens, and without airplanes on alert--I mean, you don't have airplanes in the air day in and day out. You couldn't afford to do that.

DONALDSON: Well, you didn't, but you've just told us selected places in this country you do today.

RUMSFELD: We do, and we have some on strip alert.

But who knows where the next terrorist attack will occur? But one has to assume that it may be different than that one.

DONALDSON: Mr. Secretary, thank you very much for being with us.

RUMSFELD: Thank you.

DONALDSON: Let's all hope that it won't happen, but I think you made the point everyone needs to be on their guard.

RUMSFELD: Indeed. Thank you.


DONALDSON: Secretary of Defense Donald Rumsfeld.


ROBERTS: Well now for so more analysis we turn to ABC's John McQwethy (ph) at the Pentagon.



DONALDSON: Still ahead, the chairmen of Continental Airlines and Delta Airlines.

But first, when we come back, the latest on the investigation from Attorney General John Ashcroft, and a look at the man believed to be responsible for the attack, Osama bin laden.

Plus, Senator Hillary Rodham Clinton and the two top members of the Senate Intelligence Committee, Bob Graham and Richard Shelby.

Do stay with us.


ROBERTS: The man who is suspected of masterminding the events of the last week is Osama bin Laden, who allegedly directs terrorists around the world from his hideout in Afghanistan.

One of the few reporters who's interviewed bin Laden is ABC's John Miller. He joins us now from New York.


ROBERTS: And joining us now is Attorney General John Ashcroft. The attorney general has been meeting with the president at Camp David, and he's near there now.

Thank you for being with us this morning.

ASHCROFT: It's my pleasure.

ROBERTS: Now, you have heard Secretary Rumsfeld say, ``This is not over. These terrorist attacks are not over.'' What can you tell us to expect here, as American citizens?

ASHCROFT: Well, obviously, we know that the terrorists' networks are substantial.

There are thousands of individuals around the world.

This is a turning point in our history when we've had this kind of massive attack inside our own borders. We've launched a major investigation--the most significant investigation in the history of the United States--to develop an awareness of how we can curtail or prevent, otherwise impede, disrupt, disconcert any terrorist effort in the United States. And we're going to make that the focus of our endeavor.

I'll be going to the Hill in the next couple of days with a series of legislative proposals that will strengthen our capacity. There are priorities that have been reflected in law enforcement that haven't included terrorism in the past. And we're going to try and get those priorities realigned, so that we indicate as the number-one national priority of the United States and our laws that we would prevent and curtail terrorism, that we would disrupt its capacity to impair our way of life.

ROBERTS: Well, I want to ask you about those legislative changes in just a minute, General. But first, let me ask you some questions about the ongoing investigation.

You have 25 people that you have taken in for questioning. Do you think those people are participants in the plot? Will they be arrested?

ASHCROFT: Well, we're going to pursue leads. We've got some 40,000 tips that have been given to us over the Internet, over 5,000 on the telephone. I'm not going to comment on each individual case or on individuals.

But our effort is not just to find out who was involved in this plot, but our effort is to detect the scope and extent of the international terrorist networks that are in the United States and disrupt them and to make very difficult any reoccurrences.

ROBERTS: Now, as you know, some critics are saying this is locking the barn door, after the horse gets out. Why hasn't the FBI been all over these terrorist cells if we know they're here in the United States already?

ASHCROFT: Well, there is a terrorism effort in the United States and abroad and a great deal has been done in recent times to disrupt the efforts of terrorists. Obviously, this particular terrorist attack was not disrupted, but others were.

We're going to sort out all the facts about this, but our important effort now is to do what we can to develop measures to prevent further attacks. The president has appropriately said that Americans need to be at work, operating as Americans. But he has also appropriately said that we need to have a heightened awareness of this turning point in our history where the war of terrorism has visited the shores of the United States.

ROBERTS: There are some news reports that quote law enforcement officials saying that there were up to 30 other targets of this particular group of terrorists. Can you confirm that?

ASHCROFT: I'm not in a position to confirm that.

ROBERTS: And that Atlanta was one of the targets.

ASHCROFT: I'm not in a position to confirm that.

ROBERTS: There are those who say that this country is falling into Saddam Hussein's trap. You might have heard George Will referencing that earlier. That Osama bin Laden takes credit for some of these things, but he is really working at Hussein's direction.

Is this investigation putting too much emphasis on Osama bin Laden and not looking at other terrorists in the world?

ASHCROFT: This investigation understands that terrorism is a worldwide threat. It's a variety of networks. It obviously understands that Osama bin Laden is a key part of a number of terrorist organizations and operations.

But we have not, in any way, limited our investigation or our understanding of these difficulties to the Al Qaeda or the Osama bin Laden network or organization. We consider terrorism to be a challenge to our way of life, generally. And while he has been named as a prime suspect, we are not limiting our investigation or excluding other options.

ROBERTS: And before we get to the legislation, one other thing. We have heard from some in law enforcement that there's the possibility that these terrorists--I mean, you heard the secretary raising the possibility that terrorists could use biological, chemical warfare.

Do you have evidence that any of that has been planned, and what are we doing to protect against it?

ASHCROFT: Well, obviously, our effort is to disrupt and to incarcerate, export and deport people who are involved in terrorist activities.

Chemical and biological agents are very dangerous. And we have last week, for example, alerted those responsible for the infrastructure and the components of vital services in the United States to be especially aware and sensitive. We'll take every action to protect our resources. We need to have a heightened sense of awareness.

ROBERTS: Mr. General, you will be the legal authority for any kind of military action we take. You serve on the National Security Council. What is your opinion of this question of whether assassination is legal under these circumstances?

ASHCROFT: Well, the president of the United States has indicated that we are at war and he's very concerned. I'm not going to talk about any particular policies. I just think it's important for us to know that the nation is being led by a president who understands the gravity of these issues and has indicated that he believes that it was an act of war perpetrated on the United States, and we're going to do those things that are necessary to protect the interest of the United States.

ROBERTS: Would you like to see Congress remove the stricture against assassination?

ASHCROFT: I'm not going to comment on those protocols at this time.

ROBERTS: What about--well, let's turn to congressional action. Would you like to see Congress allow for more surveillance and...

ASHCROFT: We do need to have improved surveillance capacity. We need for the laws relating to terrorism to at least give us the same kind of surveillance and search capacity that we have against organized crime. And in some areas, that's disparate. Now it's different; it's easier to investigate someone involved in illegal gambling schemes than it is to investigate someone involved in terrorism.

For phone taps, for example, our law now provides that we have to get a new order every time we go to a new telephone or to a different jurisdiction with a phone. We need for our phone tap legislation to follow an individual, so that no matter where an individual goes, we have the capacity to develop the surveillance, the intelligence information from that kind of phone tap.

And those are the kinds of things we're going to be talking with leadership on the Hill about immediately about helping. Now, the Hill has been very helpful so far. It is to be commended for its response in terms of the resources to fight this scourge of terrorism at this turning point in our history, but we're going to ask them to assist in providing new tools, to upgrade and strengthen those tools we have to fight terrorism.

ROBERTS: As you know, General, there's been some hesitation in Congress up to this point about that because of concerns about privacy, concerns about American civil liberties. Are you saying that we should put those concerns aside for now?

ASHCROFT: Well, take a look at a couple of these things. There's no reason why a terrorist should have greater privacy rights than a person in organized crime. It's simply not a concern about privacy that we're talking about in that setting. It's just the fact that we haven't assigned the priority to terrorism previously in legislation that we need to assign now.

We do need to take the steps necessary. Technology has outpaced the old wiretap laws. It used to be that a telephone was what someone used in his or her own home. Now telephones travel. There are disposable phones, for example. And it's time for us to have a wiretap law that reflects the fact that what we are really interested in is not what a phone is or whose particular phone it is, but in our ability to tap the communications of a specific suspect, individual upon whom we've got no court order to surveil their communication.

ROBERTS: Now, another question along those lines, some terrorism experts say the best way to protect airlines, for instance, is through passenger profiling. You have been against racial profiling in law enforcement. What about passenger profiling for the airlines, which might have stopped some of these people?

ASHCROFT: Well, I'm against using race as a profiling component. We will have a tough airline security system, and we will ask everyone to respond to a more secure, more demanding regime that relates to passengers on airlines. I believe profiling people based on their race is unconstitutional.

We will do everything within the constitution to promote the security of our airlines. And I believe having tough security responsibilities and requirements for airlines generally is the answer in terms of airport security.

ROBERTS: What about putting sky marshals onto airplanes, as the Israelis do?

ASHCROFT: Well, we have done that in the past, and that's certainly one of the options which I believe would be appropriate. And I would say that the Justice Department has already offered that some of our law enforcement officials, whether they be border patrol agents or U.S. marshals, could be made available to the transportation system to elevate our security in this specific time of need.

ROBERTS: And finally, Mr. General, do you expect any more arrests today? Do you expect any further developments in the investigation today?

ASHCROFT: Well, when you have 4,000 agents working and you have interviews being conducted, questioning of individuals who may have information at any time, developments can happen in terms of arrests and arrests as they relate, perhaps, to the criminal and terrorist activity or arrests for purposes of detaining individuals so that they can be maintained as witnesses. And so, it'd be inappropriate for me to signal any in particular.

But when we have this kind of effort, the most massive investigation in the history of the United States, I think we'll be expecting developments.

ROBERTS: Thank you very much. Attorney General John Ashcroft joining us near Camp David.

Now for some analysis, we go to ABC's Pierre Thomas.


ROBERTS: Joining us now is the chairman of the Senate Intelligence Committee, Bob Graham. He joins us from Miami.

Thanks for being with us, Senator Graham.

GRAHAM: Thank you, Cokie.

ROBERTS: Senator Graham, you have been quoted as saying that these incidents are not over, that this set of terrorists incidents are not over. Can you tell us what you mean by that?

GRAHAM: I had a briefing as recently as this morning by the CIA and they indicated the following: One, that the evidence that they had gathered thus far increasingly did focus attention on Sunni extremists and, specifically, the bin Laden group.

Second, that there was also evidence that there might be other groups, including other terrorist groups outside of Afghanistan, that might be involved in this tragic situation.

And that, third, this was not a necessarily a single act on Tuesday but, rather, part of a larger plan. There might be further aspects of that plan yet to be played out, both within the United States and outside.

ROBERTS: Given that, what should this country be doing? Should people be going on airplanes, going back to work, going to ball games?

GRAHAM: We have got to begin to resume a normal life, but normal life is not going to be the same as it was on Monday. There will be substantially greater security. I flew on a plane yesterday and will do so again today, and was impressed with the additional restrictions that were imposed.

But we cannot allow the terrorists to win the ultimate victory of making them like them--making us be a society that gives up its freedom and liberties and begins to act in the cowardly way the terrorists do.

ROBERTS: Of course, the fact that they were able to succeed has been attributed to a massive failure of intelligence. Do you see that as a massive failure of intelligence? And do you think that the CIA Chief George Tenet should resign?

GRAHAM: I do not believe that George Tenet should resign. I believe that he has served this nation well and honorably.

What you don't know in this battle against terrorism are all the victories that have been won, because those are all one in the darkest shadows of confidentiality. This was clearly a failure. Who precisely or what institution or what failure of resources or others was responsible is something that we'll have to know later.

The Senate Intelligence Committee is going to be introducing legislation next week which will deal with some of the issues that we think were probably involved, including the fact that we need to have someone in charge of the U.S. federal government's responsibility for terrorism. We have too much of a...

ROBERTS: So a terrorism czar?

GRAHAM: We need to have a--if you want to use that term. We need to have someone who has the ability to establish a national program, allocate resources and be held accountable for our response against terrorism.

ROBERTS: Now, there are criticism that there were Clinton-era regulations forbidding the employment of certain foreigners to penetrate terrorist organizations. Essentially, they didn't want to do business with bad guys. Do you think those should be lifted?

GRAHAM: Yes. Essentially, what those regulations restricted was the ability of intelligence agencies, particularly the CIA, to employ people who had suspect backgrounds. The fact is, Cokie, if you're going to get someone who has the capability of getting close to one of these terrorist cells, you're not likely to start looking in a monastery to find them. They are going to be people who have had some prior association and probably have had some prior involvement in the activities of those cells.

ROBERTS: So you think that those regulations should be lifted. The other criticism is that the people who actually do have those kinds of human resources in those organizations are the Russians, but that to get the Russians to cooperate with us, they've always asked for a quid pro quo on Chechnya. Is there any way of getting to those Russian assets?

GRAHAM: Well, I was in Pakistan two weeks ago and, prior to that, had some briefings with Russian officials as to their attitude towards Afghanistan. And, frankly, they are very concerned about the Taliban. It not only is a destabilizing force on their southern border, but it also is a major source of drugs, particularly heroine, coming north into Russia.

ROBERTS: So do you think they will now cooperate with us and let us...

GRAHAM: I believe that Russia will assist us in our efforts to eliminate the terrorists in Afghanistan.

ROBERTS: Finally, Senator, do you think that the stricture against assassination should be lifted?

GRAHAM: Yes. In fact, it has largely been lifted.

And let me say, this is not a legislative restriction. This is an executive order that goes back to President Ford and has been renewed by every president since that time.

But if you're going to deal with a terrorist, there is no way to do it preemptorily, other than to be able to use the strongest force to prevent them and eliminate their capability to attack American citizens. And if that means that we have to have the authority to assassinate people before they can assassinate us, yes, we should free that stricture. And the president of the United States can do it at his will.

ROBERTS: Thank you so much, Senator Bob Graham, chairman of the Intelligence Committee.

GRAHAM: Thank you.


DONALDSON: Well, Cokie, all during this program, we've been talking in one way or another about Osama bin Laden, the shadowy figure thought to be in Afghanistan, who is the prime suspect, obviously, behind the attacks this last Tuesday.

Americans do not have to agree with what he did, but it might serve us well to see if we could understand, if we can, why he did what he did. And joining us to discuss that is John Miller in New York, ABC's Pierre Thomas at the FBI and, of course, John McQwethy (ph), our man at the Pentagon.



STEPHANOPOULOS: Mr. Mayor, I know you've been getting by on very little sleep, so thanks very much for taking the time to be with us this morning.

GIULIANI: Thank you, George.

STEPHANOPOULOS: Let me start off. I was down on the site last night with Commissioner Kerik, and they seemed to be making great progress last night in cleaning up that area. What's the latest from your view?

GIULIANI: They are. They are making great progress. I flew over it yesterday coming back from the funerals, and I had flown over it the day before. Just in one day, the progress is enormous.

If you need numbers to sort of visualize it, we've removed about 21,000 tons of debris. We've had about 1,200 truck loads that were taken out over the last several days.

And they've also cleared all the roadways so that you can now do a lot of the recovery activity a lot easier, so it should go even faster now.

And let's hope and pray we can recover some people. That's our real hope.

STEPHANOPOULOS: It's everyone's hope, Mr. Mayor. But no one has been rescued, I think, since Wednesday. I know this is a delicate issue for the families, but when do you make the decision to switch this from a search and rescue operation to a pure recovery effort?

GIULIANI: When I'm told by the experts--police, fire, the FEMA, federal experts and state experts--when I'm told by them that's no longer a realistic possibility.

And they all tell me now that although, obviously, it's very difficult and the possibilities are small, there is still hope. So, as long as there's hope, then we have to proceed in that direction. I don't know the timing of it, George. I think they would know that better.

STEPHANOPOULOS: Any idea how long that will be?

GIULIANI: For as long as it takes. It really isn't for me to assess that. There are people who have done these rescue operations, you know, in the past, and they believe that now and over the next several days there's still hope, particularly given the fact that there are large tunnels under the World Trade Center. We won't know what damage has been done to them until we can remove the rest of this debris. Probably at that point we'll have a better idea.

STEPHANOPOULOS: OK. And I know you're committed also to opening up on Wall Street tomorrow, but there's an awful lot of debris downtown. There's still some very spotty electricity and phone service. Are you worried at all that Wall Street will just be overwhelmed by this influx of 75,000 to 100,000 workers?

GIULIANI: We've done everything that we can to test that. We had dry runs on Saturday. We're going to have them today. We opened the subway lines and sent a lot of people down yesterday to make sure that things will work on Monday. So we're hopeful that it will work.

I mean, it's time to try to get back as much as possible to normal. Not only will the Stock Exchange be open, but the Mercantile Exchange will be open, which is actually just to the west of the hot zone. So we're trying to get commercial activity back to normal. It's important for New York, it's important for the American economy that we do that.

STEPHANOPOULOS: What do you say about security? What do you say to people who are worried that some crazy might take this as an opportunity to launch another strike. What measures have you taken?

GIULANI: Don't let them frighten you. Don't let them stop you.

The last couple of days, when I've had a little time, I've been reading about the Battle of Britain and what the people in England had to go through when they were being bombed every day. And here's what they did: They took security measures that were necessary. They had bomb shelters and they protected each other and they helped each other. And their hospitals operated at full bore. But they went about their normal lives as best as they could because they weren't going to show fear and they weren't going to be fearful.

We do not want these cowardly terrorists to have us in any way alter our American way of life, and I'd like New York to demonstrate that to people.

This may go on for some time. We have to end terrorism. I believe the United States government is committed to that. And it's going to require us here in America to go about our way of life and not have them imperil it. And New York should be an example of that since we seem to be, along with the Pentagon in Washington, the first place in which they've attacked us. And we don't want them to stop us.

STEPHANOPOULOS: You've been so praised for your leadership in this crisis. There's even been some talk of maybe having some sort of write-in campaign or other measure to keep you in office. Is there any way that can happen?

GIULANI: No, no, no. The reality is that there will be a new mayor on January 1, and I will do everything that I can to make certain, whomever that new mayor is, that they're as prepared and as ready and able to go forward with this as I am right now.

And there's nothing fortunate that happened in this situation. But at least it happened at a time in my administration where we've been through a lot of crises, a lot of emergencies. I have a tremendous police department, fire department, emergency services, the commissioners--Commissioner Kerik and Commissioner Von Essen enormously skilled and experienced.

So I think we'll be able to get through this initial part of it, and we'll be able to do a transition that prepares the next administration for what it has to deal with.

STEPHANOPOULOS: Thank you for all your work, Mr. Mayor. Thank you very much.

GIULANI: Thank you, George, and thank you very much.


DONALDSON: When President Bush visited the disaster site in New York City Friday, among the officials who accompanied him was the junior senator from New York, Hillary Rodham Clinton--all traces of partisanship wiped away.

Senator Clinton joins us now from our New York studios.

Welcome, Senator. Good to see you.

CLINTON: Thank you very much, Sam.

DONALDSON: Well, it's true, isn't it? I mean, the Bushes and the Clintons have engaged in healthy, normal, political debate in this country like so many others, and now at the moment that's all behind us, isn't it?

CLINTON: Well, you know, Sam, that's what's so great about our country. Now, in this moment of crisis, we're united, we're behind our president, and we're moving forward together.

I can't say enough about the extraordinary support that New York has received from the president, from my colleagues in Congress on both sides of the aisle. And I know that we're going to have whatever support New York needs in order to rebuild lives and rebuild our city.

DONALDSON: I read a couple of op-ed pieces in a couple of New York newspaper suggesting that President Bush should have come earlier. Do you think he should have come earlier?

CLINTON: Oh, Sam, I don't see any reason to engage in that kind of second-guessing. I was delighted that the president got here as soon as security and other considerations could be taken care of.

We went with him to the site. I'd been there earlier on Wednesday. And when I saw him in the Oval Office on Thursday, both Senator Schumer and I were delighted that he was going and that he was going to see first hand what we saw.

Because, I think as anyone will tell you who has been down there, as good a job as you and all of our colleagues in journalism and especially on television have done describing what happened, you really cannot imagine what it looks like and feels like until you either fly over it or see it as I have.

DONALDSON: And your daughter, Chelsea was, what, 12 blocks away when it happened?

CLINTON: Yes, she was in the area staying with friends. And both Chuck Schumer and I were spending the early moments of this disaster trying to make sure that our daughters were OK. We were lucky; they were. But a lot of people haven't been as fortunate.

And, you know, when I was at the armory yesterday visiting with families who are still hoping that their loved one will be rescued--they have their pictures in hand and the stories that they want to tell--I just couldn't help but feel both grateful for the fact that my daughter was all right, but having a redoubled commitment to doing everything I could to help those families that are going to have to face the reality of having lost a child or a husband or a father or a mother.

DONALDSON: It's terrible.

Let's talk about American life now, though. What happens in the future from the standpoint of the question of security versus relaxation or giving up some of the freedoms that we've enjoyed in this country? How far do we go, for instance, on airline security?

CLINTON: Well, I think everyone recognizes we have to tighten security. We have to do whatever it takes to keep our people safe.

DONALDSON: Including profiling, Senator?

CLINTON: I think we have to do whatever it takes, Sam.

And I believe that, you know, Tuesday changed everything. Tuesday was a day that America has never, ever had to experience. And I hope to heaven that we never have to again. But we are in a war situation, and we're going to have to do things people do in times of war.

I just heard your interview with the mayor, and I think he's right to look at examples in history like the Battle of Britain. Many of us have been studying what others did to carry on. And we know that we have to make tradeoffs in convenience, in our freedom of movement, without undercutting or losing our way of life and our values, which I really want to make America special and great. And we can't ever let anyone undermine that.

DONALDSON: Do we get on airplanes now, and if there are people of Middle East origin, American citizens for all we know, on that airplane, do we have a problem?

CLINTON: You know, Sam, yesterday at the armory when I was talking with the relief workers and the families of missing people, I saw every kind of American. You know, one family came up, you know, holding the pictures of having lost both a son and a daughter-in-law. They were Muslim-Americans. Other families were telling me the story of, you know, their daughter had just gotten married and they thought would never be with them again. Every shade of skin color, every kind of background. This was a blow at New York and at America and all we are, and we cannot...

DONALDSON: That's why I asked you, Senator, about profiling. Because you say do everything it takes...

CLINTON: That's right.

DONALDSON: Does it take profiling?

CLINTON: Well, you know, I think that's going to be up to the law enforcement experts. And I think we have to be cautious. We have to be careful.

But let's not go overboard and start, you know, pointing fingers at Arab-Americans, at Muslim-Americans, who are just as devoted Americans as you or I are.

We have to find the terrorists no matter where they are here at home or abroad. And we have to strike at their sources of funding and support. But we have to do so with the full knowledge that we cannot let anyone anywhere change the character of America.

So, yes, we're going to take every precaution, every security measure that is required. But we're not going to let anyone undermine our way of life. And we're certainly not going to let law-abiding, decent, patriotic Americans, no matter what their religion or their background, be in some way pointed out or harassed.

DONALDSON: Before I let you go, speak to this issue of more deaths in this country, perhaps, for service personnel.

One of the reasons given, and I would like you to respond to this, that your husband when he was in office used cruise missiles against Osama bin Laden and did not try to mount a ground operation was a belief that the American public just wouldn't stand for casualties in our armed forces. Was that one of the reasons? And what about the future when it comes to casualties in the armed forces?

CLINTON: You know, Sam, as I say, I think everything changed on Tuesday. I think the American people have a much greater awareness of the enemy that we face and the sacrifices that will be necessary. I am absolutely confident that the president and his advisers will put together a plan that will take into account the great difficulty that we face.

I have some knowledge of what the terrain in that part of the world is like. I have a little sense of history--the successive attempts to try to conquer or invade or control Afghanistan, the most recent being by the former Soviet Union. This is an extraordinarily difficult undertaking. But we have to use any and all means that we believe will create conditions that will lead to the kind of positive outcome that we want.

Yes, there will be sacrifices and there will be losses, but we have to proceed in a prudent and effective manner.

DONALDSON: So in a word, if we have to take casualties in this war against terrorism, we're just going to have to accept that.

CLINTON: Sam, we just took casualties in New York City. We took maybe 5,000 casualties. We took them at the Pentagon. We have already had men and women, innocent civilians killed in this war and we've lost some of the bravest people you could ever meet. Our firefighters, our police officers, our emergency personnel who went in there--they were the frontline soldiers in this war against terrorism. We've already taken casualties.

Now, we are facing an implacable foe who stands against our way of life and our values. And this is a war that we have to pursue, but we have to do it in an effective and prudent manner, and it's going to take the patience of all of us. And that's why I think everyone has to support our president and all those who are attempting to find the source of this terrorism and stamp it out.

DONALDSON: Thank you very much, Senator Clinton, for being with us today.

CLINTON: Thank you.

DONALDSON: By the way, the official casualty figure has just gone over 5,000--5,097 is the one we're getting now.

Still ahead, the airlines respond to questions about their security and their survival. Continental CEO Gordon Bethune and Delta CEO Leo Mullin will join us.

Plus, a look at how the U.S. financial markets might react when they reopen tomorrow, with Goldman Sachs International's Bob Hormatz right after this.


STEPHANOPOULOS: As we just heard, the number of missing continues to climb, now above 5,000 to 5,097. And the attack and its aftershocks have been devastating to the airline industry. Airline officials are already lobbying for a bailout on Capitol Hill.


And joining us now from Houston is Continental Airlines Chairman and Chief Executive Officer Gordon Bethune; and in Atlanta, Delta Airlines Chairman and CEO Leo Mullin.

Good morning, gentlemen.

BETHUNE: Good morning.

MULLIN: Good morning.

STEPHANOPOULOS: Mr. Bethune, let me start with you. You heard those numbers from Lisa Stark just a minute ago. But so far, the White House has not said that they will support bailout legislation. How can you convince President Bush to support it?

BETHUNE: Well, I think he'll watch this show and hear from the employees that are losing their jobs in an ever-increasing number and ultimately he'll have to do something.

If you want to have an air transportation system in this country that can get the economic engine running again, you're going to have to do something; nothing won't work.

STEPHANOPOULOS: Mr. Mullin, can your airline get through this without further furloughs and without a bailout?

MULLIN: Well, I think that in the immediate term, we will be having cutbacks in capacity of the order that was mentioned--about 20 percent or so--and were this to go on for any extended time, without aid from the federal government, then we would absolutely have to consider employee reductions of that size as an option. Obviously, when that is done, it represents a terrific blow to the capacity of the airlines to serve and to carry out all of the security measures that are being provided.

I think that it's just crucial in dealing with the government, which we have found, by the way, very receptive to these thoughts, is that the airline industry cannot be made the first casualty of this war and we are working with the government, and I think in a very positive way, to ensure that we do maintain our capacity to serve.

STEPHANOPOULOS: What other measures is Congress going to have to take, Mr. Bethune? One suggestion on the table is that American and United Airlines are going to need some shield from the liability for these attacks?

BETHUNE: Well, I think, ultimately, they can get to that. I think the more pressing need is to get the confidence of the traveling public restored, keep us available to be there when they do come back. Right now, they've disappeared. And quite frankly, we need to be there when they come back or, otherwise, we won't have commerce in this country. So that's an issue, but it's not an issue we need to address today.

STEPHANOPOULOS: Mr. Mullin, what do you say to the people who say, listen, we're just too scared to fly?

MULLIN: Well, I think that the security measures that are being taken are very, very positive. As one looks at what happened last week, obviously on Tuesday, we were all consumed with the safety and security of everybody--passengers, employees--in dealing with this terrific challenge that all of us in America did face.

But then, very rapidly on Wednesday we went into an extensive discussion involving the industry and the government. Many, many sessions over the phone, largely, in remaking the security of this country's airline system. And that, I think, has been done in an extraordinarily satisfactory way. I myself do have great confidence in the measures that are being taken. I think they're responsive to the tests that we have ahead of us and I think it should give high confidence in our ability to provide a safe and secure aviation system.

STEPHANOPOULOS: I guess the question is what more are we going to need. And Mr. Bethune, Transportation Secretary Norman Mineta just announced today that he's going to be appointing a task force on security. It's going to be looking at a wide range of measures. In the past, the industry has been reluctant to support very strict security measures. And I want to know, do you think that attitude is changing now and are you prepared to support measures like armed marshals on all planes?

BETHUNE: Well, absolutely. But I also believe we need to have a balance between having a system that works and one that doesn't work. So, we the need increased security--I think we've all bought into that--and we all need that. But what we really need is a system that works.

This system today is failing because the confidence of the traveling public has been lost, due to this act of war. We need to make sure that when the confidence returns, that there are airlines here with the capacity to get the economy moving. Air--transportation has, you know, run the economies of the world for 200 years, and it's, today, air transportation runs this engine.

STEPHANOPOULOS: Well, let's look at that question of what works. Let me start with you, Mr. Mullin, then Mr. Bethune, why don't you jump in, as well. What other security measures are now needed?

MULLIN: Well, I think that the steps that are being taken, both with respect to the addition of sky marshals and additional law enforcement officers at every step of the way, our own attempts to eliminate, say, curbside baggage; you know, that all baggage has to be checked at the counter and the like--all of these are steps that are going to be very, very helpful.

STEPHANOPOULOS: You say--excuse me. Excuse me. You say addition of sky marshals, but are you willing to accept armed marshals on every plane, every flight?

MULLIN: I certainly would be.

BETHUNE: Absolutely.

MULLIN: And for a time. I think that we have to work very closely with the government to do whatever it takes, in a law enforcement way, to ensure that the American public has complete confidence in aviation.

BETHUNE: George, looking at the load factor there's certainly going to be seats available for them.

STEPHANOPOULOS: Mr. Bethune, let me ask you about another possible measure being considered. El-Al Airlines now locks its pilots in the cockpit for the duration of their flights. Is that a good idea?

BETHUNE: Well, I think it is an idea that deserves some scrutiny. There (inaudible) some accommodation for our pilots. But quite frankly, this is a new worry. This is the first time where terrorists have taken over the control of the airplane and not use it to make a political statement but, actually, to use it as a bomb. So we need to deny them the guidance of that vehicle, which is a use for peaceful commerce. And that may be an issue that needs to be more closely looked at.

STEPHANOPOULOS: Sam raised in his interview with Senator Clinton the possibility of passenger profiling. Mr. Mullin, what do you think about that idea?

MULLIN: Well, there is a program called CAP, Computer Assisted Profiling, that has actually been used for a time. I think I also heard Attorney General Ashcroft talk about some of the attributes, which I think from the American way of life, I would never want to see introduced into that, having to do with such issues of racial profiling, which is inconsistent with the American way.

But these computer-assisted profiles look at various aspects of just travel habits that can give an indication as to whether or not a passenger might be operating in a aberrant. And I do think that we do need to use all the techniques that are at our disposal, in order to deal with the magnitude of the crisis that we do face. And we are using every method to ensure the American public that we are going to be very safe as aviation reaches its full potential.

STEPHANOPOULOS: So, it's OK to look at travel patterns, but not ethnicity or race?

MULLIN: Well, I think...

BETHUNE: I would--oh, I'm sorry, Leo. You go ahead.

MULLIN: I would say, from my standpoint, he was asked a specific question of race and I do not think that's appropriate to be included in that. There are some nationalistic questions. Obviously, there are some countries that are somewhat more threatening to America than others, and so those considerations come into play, but not race, as far as I'm concerned.

STEPHANOPOULOS: Mr. Bethune, you wanted to get in here.

BETHUNE: Well, I agree with Leo. Obviously, he said take race off the table, but leave everything else on the table and I think that's what's being done, and I think that's appropriate.

STEPHANOPOULOS: Another issue that's come up in all this is the training and the pay of security personnel. These are low-paid people. they're not--necessarily go through very rigorous training. What more can we do on that end?

BETHUNE: One idea that's been talked about is to nationalize this and make it a national service.

Certainly we would welcome such an attempt to increase the security and have it uniform throughout the United States.

STEPHANOPOULOS: So actually make these a kind of U.S. Marshals?

BETHUNE: Well, I mean, you could name it what you wanted to, but it would be a part of our government's responsibility to ensure the safety of the citizens. Right now it's the responsibility of the airlines and it could be enhanced and I think, you know, broadened.

STEPHANOPOULOS: That's going to take an act of Congress, Mr. Mullin. Can you get it?

MULLIN: I think we could get it. I think that there's going to be a major discussion going on on that very subject. In the European countries, the security measures are the responsibility of the governments and I favor, and I believe most of my colleagues in the industry favor the government taking over all of this. I think--it isn't just a cost situation at all. I mean, at some point somebody has to pay for it in some way. It has to do with giving the confidence to the public that we have a safe and secure aviation system and I think that the American public generally does have confidence in the security that is provided by our governmental operations.

STEPHANOPOULOS: ABC's Betsy Stark reported last night some of the restrictions include, for example, not allowing the shipment of electronic materials in the bellies of passenger aircraft. Mr. Bethune, what is that going to mean for the health of the airline industry, those kinds of restrictions?

BETHUNE: I think those are arbitrary and one's that are not well thought out. Our problems aren't today the integrity of the cargo system. As you see from this week's events, it had nothing to do with checked bags or any of those issues. You, as I think was--the secretary of defense mentioned earlier in the show, can't anticipate where it's going to come next. We need to be able to have commerce in this city--in this country--and people ship routinely their needs on our airplanes and I don't think we should just unilaterally dismiss a whole part of commerce.

STEPHANOPOULOS: So Mr. Mullin, just so I can be clear on that, I'm not sure if you agree with Mr. Bethune, but you both support the increased security measures on passengers but are concerned about those on cargo, is that true for you as well Mr. Mullin?

MULLIN: I think that the entire gamut of security measures that have been taken are appropriate, including those on cargo. To perhaps give a nuance in what Gordon was suggesting, I think that over the next few weeks, we're going to have to adjust those as we go along.

Remember that in one day really, on Wednesday, we have reinvented the entire security apparatus of aviation. It was an incredible effort by the government and the industry through intensive discussions in which both Gordon and I were involved intensively during that day, day and a half to do this. And to anticipate that we got it exactly right on the first try would be unrealistic.

So, I think we'll see some adjustments and I certainly share what Gordon has just said, we have to make those necessary adjustments to keep commerce in this country moving and to really get the engine of our economic life going again, and everybody knows how absolutely essential aviation is to that. And I'm confident that through a joint effort with the government and the airlines, we're going to do that.

STEPHANOPOULOS: I just have one final question for both of you. There's a report this morning from government officials saying that National Airport is going to be closed for a long time and some have suggested it may never open at all. What is that going to mean for the airline industry and how are you going to cope with that? Mr. Bethune, you first and then Mr. Mullin.

BETHUNE: Well, I support whatever the government decides on that. This is a national security issue and if they and their wisdom say that that's not appropriate, then we can support that. We'll put the service into Dulles and to BWI and take the longer ride into town. We definitely want to support our government and all it needs to make our citizens secure.

At the same time, we want to be there for them when this is over so that we can have an economy that we can all be employed.


MULLIN: I think that what I have heard, George, is heightened security measures, different traveling patterns coming in on the airplanes into National. It is absolutely necessary to do that given the magnitude of this crisis. I would be very, very surprised if Reagan National did not reopen, but I also share Gordon's view, we can handle it out of Dulles or Baltimore if we have to and people have their way of getting into Washington.

STEPHANOPOULOS: All right, gentlemen, thanks very much.

MULLIN: Thanks, George.

BETHUNE: Thank you, George.

STEPHANOPOULOS: And joining us for more on the economy is Robert Hormatz with Goldman Sachs International. Let's go straight to the impact of the airline industry on the overall economy. Both Mr. Bethune and Mr. Mullin talked about ripple effects. What are they?

HORMATZ: Well, they're enormous because transportation in this country has been interrupted for people and for goods, as you've pointed out. That's one major factor in an otherwise over-weakening economy.

The economy has been weak, it's going to get weaker. The disruption in transportation is one part of it. The other is that the American consumer has become much more reluctant to spend. Traditionally, in these circumstances, the consumer sort of hunkers down and feels a lack of confidence in the future and therefore cuts back on spending. Those things together and a number of others will weaken the economic outlook going forward.

STEPHANOPOULOS: Vice President Cheney said this morning that the economy isn't only weak but it quite possibly could be in a recession.

HORMATZ: That's certainly possible. We could have a couple of negative quarters as he's indicated. The more important thing down the road really is how we as a country and how we as a government respond. As a country, the quicker we can get back to more normal patterns of living, the better it will be for confidence in ourselves and also for the economy. And also the government, the government's very important. The Federal Reserve's going to create more liquidity, that's going to be important. The lock box on the Social Security surplus is wide open, we're going to spend as much money as we need for security to rebuild New York, perhaps to help the airlines industry.

STEPHANOPOULOS: Because we may be meeting exceptions now, both war and as you say, possibly recession.

HORMATZ: Absolutely, we have war and possibly a recession and therefore, a more relaxed, a more stimulative fiscal policy; maybe new tax cuts. But certainly, a lot more spending can give the economy a very important boast. That will be very helpful. But how the consumer responds--does the consumer become more confident about the future, go back to business as Mayor Giuliani's pointed out for New Yorkers, get back into the swing of things--that will be very helpful, too.

STEPHANOPOULOS: Well (ph), the markets are going to try to set an example tomorrow. They say the opening bell at the New York Stock Exchange is going to ring at 9:30 tomorrow morning. What has the stock exchange told your firms about how they expect the markets to run tomorrow?

HORMATZ: Well, everything has been worked on for the last couple of days. And I think our firm and others feel confident that they can deal with these issues and move ahead, and there's a lot of confidence in the future that the stock exchange will work, the markets will work, and the firms that are operating will be able to work quite effectively.

STEPHANOPOULOS: Well, there are probably at least four separate issues that Richard Grasso, the head of the stock exchange, has said we have to have to look at. The security of the buildings, whether or not telephones and computers work, whether or not the environment down there is healthy, and then these various quality-of-life issues, food, water, transportation.

When you look at those range of issues, which are you most worried about?

HORMATZ: Well, I think that the security of the apparatus, the communications and the computers, has been tested. I think one of the interesting things for all of us is that the financial community is a competitive community, but it's also a community where there are a lot of friends and a lot of close relationships.

And many of our friends are lost. And that psychological impact is going to be enormous. We're in mourning for them, as well as for the firefighters, the policemen and women, the EMS people who tried to save their lives.

And even ring the bell, while we may be able to operate the market effectively, there's going to be a psychological set of concerns that's going to linger for some period of time.

STEPHANOPOULOS: I can't imagine what it's going to be like for all of you to go to work down there tomorrow, when you're dealing with the loss of friends and colleagues.

Let's look at what you expect to happen tomorrow. What do you think will happen when the markets open at 9:30? What's going to--up or down?

HORMATZ: It's very hard to predict the stock market on any given day.

One thing that has worked perhaps to our advantage is that the market has been closed for the last four days, and that has been has given time, I think, for people to assess the situation, probably will mean less of a chance of panic selling than we would have had had the market opened up on Tuesday or Wednesday.

But that I think is going to be one of the factors that's a plus, that we will have perhaps a little bit more stability.

But, traditionally, in these circumstances in the past, the market has tended to go down on the first couple of days when it's open, and then stabilize and perhaps move up. And I think that's going to be an important factor going forward.

STEPHANOPOULOS: But, if you look at the clues from the foreign markets, they were pretty steady early in the week, and then, when the rhetoric of war kind of ratcheted up, starting on Friday, from President Bush, they dropped.

HORMATZ: Yes, they did, the European markets dropped, although the Asian ones did fairly well. I think we're in for a period of considerable volatility, because there is still an uncertainty. What's the extent of the war, how much is it going to cost, how many casualties, what effect will it have on the energy supplies?

If this is going to be in the Middle East or areas close to the Middle East, the Islamic world, there's always a risk of disruption of energy supplies through direct action, through terrorism, or through governments in the Middle East becoming weaker because of support for the United States.

All these potential threats to energy will play a role in the way the market looks at the future.

And we're also going to have what I call a ``terrorism tax'' going down the road. We're going to have to spend more for our security--security of airplanes, security of buildings, security of facilities, Internet security, financial security. This is going to have a long-term weight on the economy. The market will have to take that into consideration as well.

STEPHANOPOULOS: So, given all that, what advice are you giving your clients?

HORMATZ: I think clients have to just be very careful when they go into the market. There are going to be some areas, sectors of the economy that are going to be adversely affected, and perhaps some where people will seen investment opportunities because stocks have fallen too low, or they see good future prospects. It's going to be a mixed market, and you have to select stocks very carefully.

I wouldn't advise anyone to jump in, but I wouldn't advise anyone to panic and sell immediately either, because I think the government is, through the Fed and through fiscal policy and through cooperation with other countries, trying to respond in a constructive way.

And I think the American people are going to dig down deep into their traditional optimism and try to return to normalcy as quickly as we can, and that will help as well.

STEPHANOPOULOS: Well, when you speak about that, do you in the banking world feel any kind of patriotic responsibility to prop the markets up? There have been some reports that the banks have agreed, perhaps informally, to get in and buy if the market goes into free fall.

HORMATZ: I think we feel a patriotic responsibility to support the U.S. government and what it's trying to do, to bring the economy and bring the country back to normalcy, not so much to prop up the market, per se, but to be as honest as we can to our clients, and to the viewing public, to people who listen to what we say about the economy and about the future, and discourage panic selling. I think that's one of the things we can do.

We can also point out that there are enormous strengths in this country and this economy. We've built up our economic institutions over the past 200 years. They're strong. The Treasury's strong, the Federal Reserve, our financial system, our capital markets are strong.

One of the reasons for being able to open the stock market relatively soon, even though it wasn't able to be opened right away, is to demonstrate that these terrorists who struck a blow at the heart of the American capitalist system are not going to succeed in crippling it, that that can come back. And I think that will help, in terms of the morale of the American public, and in terms of strengthening the thing.

There are a lot of investors out there who would like to see the market open and return to normalcy. That again can help to strengthen the fabric of the American resistance to this horrendous act.

STEPHANOPOULOS: Robert Hormatz, thanks very much.

HORMATZ: Thank you.

STEPHANOPOULOS: And of course, ABC News will be on the air tomorrow when the market opens at 9:30.

When we come back now, we'll have more from our roundtable. Stay with us.


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