All In With Chris Hayes, Friday, May 17th, 2013

ALL IN with CHRIS HAYES
May 17, 2013

Guests: Robert Costa, Marielena Hincapie, Barbara Lee, Elyse Cherry, Derrick Harper

CHRIS HAYES, HOST: Good evening from New York. I`m Chris Hayes. And
thank you for joining us on this Friday.

News out of the White House that can have major, major implications
from American foreign policy.

Also, the single most jaw-dropping story of wrongful foreclosure that
I have ever heard. And that is saying something.

Plus, break out the cone of silence. I have a special message for my
fellow liberals, just between us.

But, first, scandal-gate week continued. It concluded with a
vengeance in Washington today. This morning, the soon-to-be departed
acting head of the IRS, Steven Miller, was called up to Capitol Hill to
testify about the controversial decision by IRS employees to target
conservative groups for heightened scrutiny.

The president asked Miller to resign earlier this week but that could
not spare Miller from being thrust up and served to House Republicans like
a pig for slaughter. It was a classic bit of Washington hearing porn,
substance, not so much. Grandstanding? You bet.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Why did you resign?

REP. PAUL RYAN (R), WISCONSIN: How can we conclude you did not
mislead this community?

REP. DAVE CAMP (R), MICHIGAN: Too abusive of honest, hardworking
taxpayers.

RYAN: I`m going to help give you some clarity here.

UNIDENTIFIED MALE: An American who still doesn`t know to this day why
he was question number 26.

UNIDENTIFEID MALE: Completely failed the American people.

UNIDENTIFEID MALE: Why are you resigning?

(END VIDEO CLIPS)

HAYES: It was, as "Red States" ombudsman Erick Erickson tweeted
today, "An opportunity to allow crappy congressman to look like
conservative badasses."

And you think that what you just saw from the hearing was over to top,
well, let me be clear, we are just getting started.

In fact, Heritage Action for American, wing of the think tank the
Heritage Foundation, wrote explicitly to John Boehner and Eric Cantor
instructing House Republicans to forget about legislating and go all
scandal all the time. Quote, "It would be imprudent to do anything that
shifts the focus from the Obama administration to the ideological
differences within the House Republican Congress."

And while that letter`s intransigence is enough to make your head want
to explode, I have a theory that I`ve been working on all week and I think
it is proving to be true, and it`s a theory that has a promising
conclusion. It may very well be that the government doesn`t have to choose
between the scandal-mongering and legislating. But that the scandal-
mongering might actually help the legislating.

All right. Here me out, while all of the headlines are about today`s
IRS hearings, big moves are being vied (ph) by the House`s very own gang of
eight, the bipartisan group of congressmen working in the House on
comprehensive immigration reform, whose progress Speaker John Boehner
worried about just yesterday morning.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: I am concerned that
the bipartisan group has been unable to wrap up their work.

(END VIDEO CLIP)

HAYES: There was a lot of question about whether this group was going
to hit their deadline, whether they would come to any kind of agreement.
And late last night, the bipartisan group announced they had mostly come to
agree on terms for their outline of comprehensive immigration reform. From
what we know, which is truthfully, very little, it would be similar to what
we know on the principle and Senate, but on a whole, quite a bit more
conservative.

And what makes this announcement so huge is that while the House`s
gang of eight has been toiling away from behind the scenes for the last
four years, with much less attention and fanfare than the Senate`s gang of
eight, it has been very, very unclear and to some very unlikely they were
ever going to be able to agree to anything. But they did. And that`s a
very big deal.

And here is why scandal fever and incomprehensive immigration reform
are related. Republicans have this problem. They lost the Latino vote in
2012 presidential election by 44 points. A truly astonishing margin,
Latinos are the fastest growing part of the electorate. Republicans
recognize their stance on immigration is a huge impediment to closing
margins.

And basically, everyone at highest levels of GOP recognizes that --
the consultant class, the donor class and politicians themselves. But they
still have the same base they`ve always had. And believe me that base is
not psyched about immigration reform, 60 percent of Republican voters
oppose a pathway to citizenship for undocumented immigrants. Republicans
still have the same base that got riled up the last time Congress tried to
pass comprehensive immigration reform back in 2007 and blow it up.

So if you are a Republican, you`ve got a problem. You`re trapped
between the two big challenges. You have to get right on immigration
reform but do it without taking on your base.

Now, enter the IRS scandal. Now if you are, say, Paul Ryan, who is at
the hearing today and also a friend of the house`s gang of eight`s efforts
on immigration reform, you can just you go around beating the living crap
out of the administration about the IRS scandal or Benghazi, you know,
defending on your mood that day, and then quietly go back and do some
negotiating and trying to make immigration reform happen.

And the great thing for you is talk radio will only talk about
scandals and not about immigration reform.

This week, Rush Limbaugh mentioned the IRS, a whopping 308 times on
his radio show. Benghazi got 85 mentions. "The Associated Press" got 53,
and immigration got four, just four mentions times, and this from a guy who
is beating up Marco Rubio just last month.

And so, this is basically the perfect setting for Republicans to
legislate and use these scandals as cover. In other words while everyone
in Washington this week is asking, will scandal destroy Obama`s second term
agenda? These scandals might be the best thing that ever happened to
Obama`s central legislative priority for his second term, immigration.

Joining me tonight, Robert Costa, Washington editor for "The National
Review" and CNBC contributor, Marielena Hincapie, executive director of the
National Immigration Law Center.

Robert, I will begin with you and ask your response of someone who
knows the House caucus very well, is very well-sourced there.

How plausible you find this theory?

ROBERT COSTA, THE NATIONAL REVIEW: I`m a little suspicious. I think
it is a good argument, Chris. It`s well-argued.

Here`s the problem --

HAYES: That`s very kind, but don`t hold back.

COSTA: So, I was on Capitol Hill today huddling with some House
Republican sources, huddling with leadership sources. And you`re right,
they are very much consumed right now with the IRS, Benghazi and "The A.P."
But the resistance to the gang of eight`s bill that`s coming out of the
Senate and resistance to the House bipartisan groups bill is still there.
The Bob Goodlattes of the world who run the judiciary committee, the
conservative flank, the Steve Kings of House of Republican Congress,
they`re still going to try to kill this, Chris. As much as there is a
scandal distraction, there is still the resistance.

HAYES: Marielena, were you surprised that the House gang of 8 came to
terms today? Was that something you were expecting or is that a turn of
events from where you stand?

MARIELENA HINCAPIE, NATIONAL IMMIGRATION LAW CENTER: I think you are
on to something, actually. I completely agree with you. I think this
scandal is basically given the Heritage Foundation some coverage. They had
a really bad week. They need the scandal. They don`t want Congress,
senators or representatives, to legislate.

In fact, that`s what they are doing. One of the incredible things
happening on Capitol Hill is you`ve got senators, Republicans and
Democrats, who are actually sitting down, rolling up their sleeves and
engaging in common sense immigration reform debate.

On the House side, I think they feel the momentum we feel in the
immigrant community. We know that the American public is so much further
ahead than our policy makers, on many issues, including immigration. So,
the fact this they reached agreement in principle, right, we don`t have the
details of that. But there are -- but it is I think very significant.

COSTA: But real quick, Chris.

HAYES: Please?

COSTA: One thing I heard from Senate sources is that the Senate deal
itself is to fragile that if the House conservatives and House Republicans
mess for instance with the time line for the path to citizenship, making it
15 years instead of a lower number, that can ruin the Senate bill, that
could ruin the Senate compromise. So this thing is so fragile, it`s on
thin ice that it seems like immigration reform with the blessing of people
like Paul Ryan is moving ahead, you can see it is steaming forward a little
bit but it has such a long race ahead of it, that I`m really just doubtful
that these scandals are going to ease the skids.

HAYES: Yes, I mean, I agree -- I think it is remarkable what is
happening here, and this I think is the most fascinating story in
Washington right now. I mean, you`ve got what will be the most significant
piece of domestic legislation of the second term, and one of the most
significant pieces of domestic legislation in a generation if it happens,
being assembled, it`s like people trying to build a Jenga tower in the
middle of a crowded dance floor, like they are trying while everyone is
going all over the place. There`s all this energy.

They`re trying to just get the thing -- and you`re right when you use
the word delicate Robert. I absolutely think that`s the case.

And the question is, it is so development that these little
incremental changes seem to me to make a big difference. So, you were
talking about the right plank in the House, the Goodlattes and Steve Kings.
And I agree with you, right? They`re going to try to kill this no matter
what.

What I`m interested in, is go is going after the IRS give Paul Ryan
some space to run. Does it give Lindsey Graham some space, the folks who
are going to try to stand out there and be the ones who bridge the gap?
Does having a thing that they can go and talk to Rush Limbaugh about and go
on FOX News about and beat up the administration about take pressure off
them if they are also in the afternoon going to negotiate on the
immigration bill?

COSTA: That`s a great point, Chris.

One thing, I follow Marco Rubio around on talk radio at a recent
conservative conference and he was being slammed interview after interview
by conservative talk radio hosts. And he was having a tough time the past
month. But now, he is out there talking about the IRS, about the, quote,
"culture of intimidation" within the Obama administration.

So, I think your point is a good one. I`m not saying I think it`s
going to make sure that immigration passes. But Mark Rubio is in a
different political position with conservatives right now because they are
cheering him as he goes after the White House. And it may be like your
Rush Limbaugh studies shows, less interested in what he`s saying on
immigration, maybe let more negotiations happen.

HAYES: And here`s a great example of this and Marielena, I want to
get your reaction of this. So, Mark Zuckerberg has put this group
together, and they are trying to do precisely what I just said, right,
Robert, which is give cover to politicians who are going to be part of the
comprehensive immigration solution as it were. They are running ads for
Lindsey Graham, they have nothing to do with immigration. They are just
trying to cover his right flank and make sure he doesn`t get a real nasty
Tea Party challenge.

Take a look at this ad.

(BEGIN VIDEO CLIP)

NARRATOR: When Lindsey Graham is in Washington, what does he do? He
stands up for South Carolina values.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Change you can believe in
after this healthcare bill debacle has become an empty slogan. And it is
replaced by shady politics when you think about it.

I`m not going to be intimidated by this president. What I am
suggesting is that we work smart and we work together. We are about to
spend a trillion dollars sometime tonight, maybe. If this is change we can
believe in, count me out.

NARRATOR: Call Senator Graham. Tell him to keep fighting for South
Carolina.

(END VIDEO CLIP)

HAYES: So, this is my point. I mean, the word immigration does not
appear in that ad. The only reason it`s being run is to get in the face of
immigration.

And, Marielena, I wonder, when you see that ad, are you in the mind of
whatever means necessary to get this thing done? If this is the kind of
message you need to give him the room he needs to craft this legislation
and move it forward, then that`s the price you got to pay.

HINCAPIE: So, as a progressive, I`m not necessarily in favor or
against that. But I have to say, there`s a lot of -- you know, the
dynamics, Chris, are incredible. Senator Graham and many of his Republican
senators are getting a lot of love from many folks in the immigrant rights
community and for many, many folks.

So, there is a sense we want to give cover to those policymakers who
are willing to engage in common sense immigration reform. And folks like
Sessions and perhaps Goodlatte and Cruz, for example, are outliers. They
just haven`t gotten the memo that it`s time for them to get immigration
reform done and to get through the finish line.

There will be consequences for both Democratic and Republican elected
officials who do not vote in favor of immigration reform. It does matter
what kind of immigration reform we get, of course.

HAYES: Yes, and as that move forward, and, Robert, you made that
point in the difference of the basic time span of path to citizenship years
is two years longer, as far as we can understand, coming out of the House
and the new Senate. Those details are going to matter a lot.

HINCAPIE: Absolutely.

HAYES: And whether that the drunken stumbling on to the Jenga tower
that knocks the thing over, that`s going to be the big question.

I still think after this week, the odds of something getting past have
gone up during week, somewhat counter intuitively.

Robert Costa of "The National Review", and Marielena Hincapie of the
National Immigration Law Center -- thank you both. Have a great weekend.

HINCAPIE: Thank you.

COSTA: Thank you.

HAYES: An amazing admission before Congress yesterday about just how
long we will be at war. And new sign the White House is ready to speak
about the unspeakable. That`s next.

(COMMERCIAL BREAK)

HAYES: An update tonight on a story we`ve been following. The
collapse of the Rana Plaza garment factory that killed more than 1,100
people last month in Bangladesh. "The Washington Post" reports the Obama
administration is considering revoking money-saving import breaks
Bangladesh currently enjoys, which allowed the country to save $35 million
last year.

A decision like that would be used to indicate the U.S. will not
tolerate such flagrantly unsafe working conditions. The question remains,
will revoking tariffs improve working conditions in Bangladesh, or will
major brands move their manufacturing as they have in the past? We will
continue to follow this story here and on our Web site, allinwithchris.com.

(COMMERCIAL BREAK)

HAYES: All right. This week, a scoop, a new bit of information that
really caught my eye in "Newsweek" by reporter Daniel Klaidman that
suggests the White House is about to do something it has resisted for
years. The president is now about to deliver a speech, probably this
month, focusing on drones, Guantanamo, the administration`s national
security agenda and its full theory of the legal foundation for the
continued global war on terror.

Klaidman writes, "In the coming days, Obama plans to lay out a legal
framework for the administration`s evolving strategies on targeting
detention and prosecution. The delicate process of putting together such a
major presidential statement has apparently taken months and involved
arduous interagency wrangling."

It`s been building for sometime as the drone program has gone under
increasing scrutiny by the way of congressional criticism and investigation
by the United Nations.

There is also increased domestic pressure on the president to close
Guantanamo, where it`s now been 100 days since 102 prisoners held there
launched a hunger strike. Today, protesters demanding the closure of
Guantanamo submitted a petition to the White House. Colonel Morris Davis,
a former military prosecutor at Guantanamo and the person who started an
online petition at change.org, was the one who handed it over.

Colonel Davis wrote to the president, "I urge you to order relevant
authorities to take swift measures to humanely and lawfully address the
immediate causes of hunger strike in a manner consistent with international
standards, medical ethics before irreparable harm occurs to the detainees."

But anyone who wants to know about the Obama administration`s view of
what the legal grounding for the current global war in terror they`re
waging is, doesn`t have to wait for the president`s speech. In fact, quite
a bit was revealed yesterday in a hearing before the Senate Armed Services
Committee that absolutely flew under the radar amidst all the talk about
Benghazi, the IRS and "The A.P."

Pentagon leaders were question about the 2001 authorization to use
military force, or AUMF, which is, of course, is the resolution passed just
after 9/11, that says that the president is authorized to use all necessary
and appropriate force against those nations, organizations or persons, he
determines planned, authorized, committed, or aided the authorities that
occurred on September 11, 2001, or harbored such organizations or persons
in order to prevent any future acts of international terrorism against the
United States by such nations, organizations, or persons."

At least one member of Congress was shocked by the breadth of the
assertions that were made by Michael Sheehan, the assistant secretary of
defense for special operations, in support of the grounding document for
the unending open-ended global war we found ourselves in.

(BEGIN VIDEO CLIP)

SEN. ANGUS KING (I), MAINE: I have only been here five months, but
this is the most astounding and most astoundingly disturbing hearing I`ve
been to since I`ve been here. You guys have essentially rewritten the
Constitution here today.

I don`t disagree we need to fight terrorism. But we need to do it in
a constitutionally sound way.

(END VIDEO CLIP)

HAYES: Joining me now is Democratic Congressman Barbara Lee, who
represents California`s 13th district, who was only member of either house
to vote against the original authorization to use the military force.

Congresswoman, it`s good to have you here. My first question for you
is what did you make of this hearing yesterday?

REP. BARBARA LEE (D), CALIFORNIA: Chris, first, thank you very much
for reading the resolution, because I hope the public will begin to listen
to what took place. And that was a blank check that allowed for perpetual
war until we actually repeal it. I`m very delighted that the hearings took
place because the debate that is occurring now should have occurred three
days after the terrible events of 9/11. That debate did not occur.

So, now, we`re going to see the senators at least hold hearings. We
are beginning to hold forums. We`re beginning to see "The Washington
Post," "New York Times" begin to editorialize on this.

And so, finally, after 13 years, we are finally coming to grips with
the fact that this blank check was a blank check which allows now for a
state of war to be the new norm. Unfortunately, peace is the exception.

HAYES: The Pentagon leaders that were testifying yesterday, they
asserted a very broad scope for the war and the authority to grant. Was
that surprising to you or pretty much what you expected and understood from
the administration?

LEE: Well, the broad scope of the resolution is very broad. I mean -
-

HAYES: Right. And the language of the actual thing at issue.

LEE: It`s very broad. That`s why I couldn`t vote for it.

HAYES: Right.

LEE: And we wrote to the president, eight or nine of us, and asked
the president to really lay out the legal justification for the use of
drones. This resolution has been used for domestic surveillance, it`s been
used dozens of times. Abroad, it`s been used to take troops into combat
areas. It`s just a blank check that needs to be repealed.

So, finally, we`re going to hear the president talk about legal
justification for much of what is taking place.

HAYES: I want to play this exchange from the hearing between Senator
Lindsey Graham and Michael Sheehan again. And this is on the subject of
how long, I mean, this has been the question, since days after the attack
of 9/11, since the passage of AUMF, through the duration of the Bush
administration and into the Obama administration, how long? How long does
this last? When can we say it`s over?

Take a listen.

(BEGIN VIDEO CLIP)

GRAHAM: Do you agree with me, the war against radical Islam or terror
or whatever description you would like to provide, will go on after the
second term of President Obama?

MICHAEL SHEEHAN, ASSISTANT SECRETARY OF DEFENSE FOR SPECIAL
OPERATIONS: Senator, my judgment, this is going to go on for quite a
while, and yes, beyond this term of the president.

GRAHAM: And beyond this term of Congress?

SHEEHAN: Yes, sir. I think it`s at least 10 to 20 years.

GRAHAM: So from your point of view, you have all of the authorization
and legal forum necessary to conduct a drone strike against terrorists in
Yemen without changing the AUMF?

SHEEHAN: Yes, sir. I do believe that.

(END VIDEO CLIP)

HAYES: Congresswoman, do you agree? Do you think this war is going
to go on 10 to 20 years? Is that surprising thing to hear from the
administration?

LEE: Well, it`s not surrounding, but it`s outrageous. First of all,
I have legislation HR-129, to repeal this authorization to use force.

Come on, Chris. We can`t allow, first of all, our systems of checks
and balances to be eroded. Only Congress can declare war. If we`re going
to be in this state of perpetual war forever, then my goodness, why can`t
Congress debate this and make a decision as to whether or not we`re going
to declare war.

So, no, I don`t agree with that is taking place, and I think that we
need to actually, hopefully, get the public to really understand that this
overwhelmingly, unending war, is taking away precious resources from our
domestic agenda and nation-building right here at home.

HAYES: The president is reported to be working on a speech. I just
read you the report by Daniel Klaidman, in which there is a plan now
apparently for the president to come out and actually address all this head
on. They have not talked about it in a very public way. John Brennan has
given a few speeches. The chief legal adviser at the State Department,
Harold Koh, gave a somewhat noticeable speech.

But the president himself hasn`t had a big speech on these issues.
What are you hoping to hear when he does come out and talk about this?

LEE: First, I have to applaud the president for doing this. This is
exactly what we asked him to do a couple months ago. This blank check was
not a blank check that I voted against just as it relates to President
Bush, President Obama, any future presidents will have this broad
authority.

So, I hope the president will lay out the legal justification and why
the White House believes and the Pentagon believes that they can continue
to allow our country in this state of perpetual war, this unending war,
without coming to Congress. Once again, we cannot relent as members of
Congress.

The president is the commander-in-chief. He has to secure our country
and make our country safe. But we as members of Congress as it relates to
our system of democracy, we have a duty and responsibility to debate and
ensure that checks and balance prevail. That`s exactly what needs to
happen.

So, hopefully, the president will lay it out and members of Congress
will understand we have to do our job.

HAYES: Congresswoman Barbara Lee, thank you so much for joining us.

LEE: Thank you.

HAYES: OK, liberals, are you watching? I need to talk to you.
There`s something that we are not seeing eye to eye on. I want it make my
case. So let`s talk, next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. KEVIN BRADY (R), TEXAS: Is this still America? Is this
government so drunk on power that it would turn its full force, its full
might to harass and intimidate and threaten an average American who only
wants her voice and their voices heard?

Mr. Miller, who in the IRS is responsible for targeting conservative
organizations?

(END VIDEO CLIP)

HAYES: That was some world class umbrage-taking by Republican
Congressman Kevin Brady of Texas, while he was grilling the soon-to-be
former IRS chief Steven Miller.

You probably have a similar thought, as I did, watching that -- relax,
buddy. And, in fact, you probably have been feeling that way all week as
it what we in the office has taken to call scandal-gate has unfolded
between the ridiculous Benghazi talking points and the worrisome but
ultimately what appears to be bureaucratic failure at the IRS.

As a liberal, it`s easy to get your dander up and say, hey, guys, back
off. These are not scandals.

But there`s another one I think we should talk about and, liberals,
here me out, because in fact, you know what, come closer. There we go.

I understand reflexively doubting the brain of the Washington media
complex of pundits on cable news, of politicians grandstanding about
scandals, particularly this kind of scandal season when a lot of scandals
are wholly invented. But we cannot let that blind us to what the stakes
are in another really troublesome episode, what the Department of Justice
did when it seized two months of phone records for all phone calls for more
than 20 different Associated Press phone lines.

I want to take just a second to explain why this matters and why it is
a big deal and why it is outrageous, what the DOJ did. In march of 2006,
the Associated Press reported on a confidential videotape showing federal
officials warning President Bush and his homeland security chief before
Hurricane Katrina struck that the storm could breech New Orleans` levees.

In 2005, an AP investigation found top lobbyist Jack Abramoff appealed
to some three dozen members of Congress to write to Interior Secretary Gail
Norton urging her to block an Indian casino in Indiana that threatened
casino tribes that had hired Abramoff. In 2010, the AP, in an exclusive,
found that to keep his detention program secret, the CIA in 2003 whisked
9/11 figures out of Gitmo prior to a court ruling.

Those are just a few stories about Bush era malfeasance or
incompetence, stories that were brought to you by the Associated Press.
And those stories happened because people took a chance, people that
identified wrongdoing, people that found a secret that shouldn`t be a
secret, and believed that we should know about it. Those people spoke to a
reporter with the trust that their secrets could be protected and they
wouldn`t face humiliation and recrimination.

Think of every source that every AP reporter has right now and whether
they are going to trust the AP again. Think of someone right now who might
be sitting on an Army base who knows about a serial sexual predators at a
high level, who want to blow the whistle and is terrified reading the news
that their call logs are in the hands of the same government that they want
to blow the whistle on.

That`s the chilling effect of what the DOJ has done to the AP. Not
just the AP; the chilling effect on every single possible news source, as
well as reporters themselves.

Barack Obama is not going to be president forever. After him, there
will be others. It is a core function of democracy and the First Amendment
that we have an oppositional press that is trying to find out things the
government does not want to know. And we cannot let the government use its
power to destroy the press` ability to do that.

Now over the past week on Twitter and Facebook, when I`ve said
something like this, I`ve seen a fair number of liberals and Democrats come
to the Department of Justice`s defense and saying basically what Eric
Holder and President Obama have said about this leak.

(BEGIN VIDEO CLIP)

ERIC HOLDER, ATTORNEY GENERAL: It put the American people at risk.
That is not hyperbole. It put the American people at risk.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Leaks related to
national security can put people at risk.

(END VIDEO CLIP)

HAYES: But it is important to remember this is always what presidents
and officials say about leaks to journalists, some less eloquently than
others.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: I`m going to
tell you something. Leaks of classified information are bad things.

(END VIDEO CLIP)

HAYES: We can`t just take these assertions at face value because we
have no independent way to know what degree -- to what degree they are true
in each specific instance. In fact, that`s the whole problem. We need the
press to tell us stuff the government doesn`t want us it know. And if it`s
hounded out of the business, then the only things we will learn about the
massive, ever expanding secret government are things that make that
government look good.

Obtaining a massive trove of phone records from a journalistic outfit
is more than just a one-off happenstance. It is part of a worrying trend.
And it constitutes a terrifying precedent for future administrations. When
you`re watching this unfold, take a moment to ask yourself, honestly, how
you would feel if George W. Bush was the one doing it.

We will be right back with Click Three.

(COMMERCIAL BREAK)

HAYES: While Congress was busy holding hearings over an alleged
scandal in Washington today, we were looking into one of the scandalous
stories I have ever heard about wrongful foreclosure in America, the tragic
death of a disabled veteran and the bank that took his home. That`s next.

But first, I want to share the three awesomest things on the Internet
today, beginning with the increasingly bizarre story of Toronto`s right
wing populist mayor, Rob Ford. "Gawker" reports a cell phone video
currently being shopped reportedly shows Ford going full on Marion Barry
and smoking crack cocaine. Ford denies the allegations. The video has not
been made public.

Fortunately, Taiwanese amateurs offered this dramatization.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Toronto Mayor Rob Ford caught on tape.

(END VIDEO CLIP)

HAYES: Let your imagination run wild with this depiction of Ford
partying alongside a hockey player, a woodchuck and Mountie. And if you
think this is unbelievable, Buzzfeed has a solid round up of all the
bizarre things this guy has done in real life, including abruptly leaving a
city council meeting to put Rob Ford Mayor fridge magnet on people`s cars.

Now, Ford calls the crack cocaine allegations ridiculous. No word yet
on what he calls this attempt at throwing a football.

The second awesomest thing on the Internet today, an update to a Click
Three story from last night. Few things more predictable than the right
wing hysteria that mobilizes following anything that has to do with the
Obama White House. So it should be of no surprise that even Obama`s
umbrellas are a scandals now.

The sight of two Marines sheltering the president and Turkish prime
minister from the rain has activated the trolliest of trolls, Sarah Palin,
posting, "Mr. President, most Americans hold their own umbrellas."

The blog "Hot Air" is demanding justice for the Marines. "These guys
aren`t valets." One conservative PAC is even fundraising off the incident,
using the hash stage #SemperDry, which is kind of funny. But the top prize
goes to the "Daily Caller" website, as always, with the headline, "Obama
Breaches Marine Umbrella Protocol," not a joke. The caller alleges the
commander in chief was violating the Marine Corp code because a male Marine
is not allowed to carry an umbrella while in uniform. Before your head
explode, please check out Wonkette`s guest post from a U.S. Marine about
Barack Obama`s shocking and disgusting use of an umbrella.

However, because this is a family show, I can`t actually read you what
is written.

And the third awesomest thing on the Internet today, we have your feel
good Friday moment right here. This is fantastic. Nine-year-old Alana
Adams threw out the first pitch at last night`s Tampa Bay Rays/Boston Red
Sox game. First, the Jumbotron played a pre-recorded pep talk from her
father, Lieutenant Colonel Will Adams, serving in Afghanistan. Alana`s
pitch fell a little short. And that`s when the guy behind home plate,
dressed in full Rays gear, grabbed the ball, lifted up his mask. Turns out
he wasn`t a catcher, but in fact Alana`s dad.

Needless to say, it was a big surprise for the whole family, organized
by the USA. An overjoyed crowd got to witness this amazing reunion between
father and daughter. And today the story went viral. I was watching it
and crying in my office. "I thought it was a dream," Alana later told
reporters. Well done, Lieutenant Colonel Adams. And welcome home.

You can find all the links for tonight`s Click Three on our website,
AllInWithChris.com. We`ll be right back.

(COMMERCIAL BREAK)

HAYES: In a week of scandals, I want to tell you the most scandalous
story I heard this week. It was a story more outrageous than anything that
came out of Washington. And it made my face literally flush with rage. It
is a story of Larry Delasis, a 62-year-old disabled veteran whose neighbor
and friend filed suit this week against Wells Fargo, the bank that owned
his mortgage, for wrongful death.

Delasis died in December in a courtroom during a hearing challenging
his foreclosure with Wells Fargo. And he never should have been in this
court to begin with. We have reported quite a bit on this show about the
absolute systemic error, incompetence, malfeasance and corruption in the
foreclosure process by the big banks. But this one, as alleged in the
lawsuit, surpasses them all.

Larry Delasis, pictured here at his assisted living facility where he
lived after he lost his home, bought that home in 1995, 320 Hermosa Avenue,
Unit 105, Hermosa Beach, California. His first mortgage with Wakovia,
which later merged with Wells Fargo, was for 130,000 dollars. And for 13
years, Delasis didn`t miss a single payment, according to an extensive
review of court documents by Ed Palola (ph) of EasyReaderNews.com.

In 2007, Delasis refinanced into one of the most predatory kinds of
loans. It`s called a Pick a Payment, and now considered to be among the
most predatory and deceptive loans made during the height of the housing
bubble. The new loan meant that Delasis was now paying 75 percent of his
disability just to make his mortgage. And so he started collecting cans
and bottles to help make ends meet.

But he still made those mortgage payments, according to the complaint
and according to a review of court documents by Palola. In fact, Delasis
had a habit of making his payment in advance. And the straw that broke the
camel`s back was a letter saying that he owed 13,361 dollars in back
property taxes that was false.

The subcontractor hired by the bank to assess property taxes mistook
his lot number for a neighbor`s. That subcontractor used the wrong lot
number. So here he is, a disabled veteran, making those payments, grinding
it out, refinanced into a predatory loan during the peak of the boom years,
still making those payments by collecting cans. And then he is told he
owes 13,361 dollars in back property taxes that he did not actually owe.

Eventually, Wells Fargo would acknowledge they made a mistake. And
yet they still held him in default and took his home from him, selling it
on May 13th, 2011, for a profit of 178,257 dollars.

Now the precise facts of that default are in dispute. It is entirely
possible the default originated in the fact that Delasis had a habit of
making payments early, and his last payment was misapplied. But what is
not in dispute is that on December 19th, 2012, Delasis was in that court
hearing having watched his entire home be taken away from him. And the
stress of it, the lawsuit contends, killed him.

Delasis had a blood condition that the lawsuit argues actually
increases the level of ammonia his body cannot handle. And the level
increases, according to the suit, right along with stress. The lawsuit
alleges wrongful death, elder abuse and breech of contract.

The lawsuit is filed by former neighbor and friend Anthony Truhillo
(ph), on behalf of Debbie Popovitch, another friend of Delasis and
administrator of his modest estate. ALL IN called Wells Fargo for a
comment. Their response includes a dispute of the facts. It reads, in
part, "Wells Fargo received inaccurate information that led to a tax
overcharge." So that`s confirmed. "When that mistake was discovered, we
reversed all the charges and, as the court ruling stated, put him in the
same or better position prior to the error."

In a sworn deposition, Mr. Delasis, clearly and honestly, stated his
default was not related to the issue regarding the property taxes. Mr.
Delasis was reviewed -- get this, listen carefully -- was reviewed for a
modification, but we were unable to find an option that would allow him to
keep his home.

Even if you put aside the error in the property taxes, what Wells
Fargo did is something known as duel tracking, looking for ways to modify a
loan, while at the same time pursuing foreclosure procedures. This was
part of the massive settlement between the attorneys general and the big
banks.

Now this may seem like an extreme case, and it is, but just recently
there was an official investigation by federal regulators that found that
nearly four million homeowners had either been wrongfully foreclosed upon
or are the victims of abuses short of actual foreclosure. There were
members of the armed services wrongfully foreclosed upon.

There were people who foreclosed upon who had never missed a
statement, were never in default, had their homes taken away. There are
stories, if not quite as egregious as Larry Delasis, all over the country
everyday. But -- and here is the good news -- one nonprofit in Boston has
figured out a way to do this right, has actually figured out how to keep
people in their homes as productive members of society. And we are going
to tell you about the magical trick they figured out right when we come
back.

(COMMERCIAL BREAK)

HAYES: We just told you about one of the most jaw dropping egregious
stories of foreclosure madness ever. And if you missed it, you should
check it out on our website, because it really is something. But we want
to tell you about the right way to handle a threat of foreclosure. There`s
a nonprofit group called Boston Community Capital. And it has figured out
a way to deal with potential foreclosure that keeps people in their homes
and keeps communities in tact.

It`s using a 25 million dollar loan from East Boston Savings Bank to
buy more than 75 homes from people who are in default or subject to
foreclosure, and reselling the homes back to the owners at affordable
mortgages.

Joining me now, the chief executive of Boston Community Capital, Elise
Cherry, and Derrick Harper, a homeowner who is at risk of foreclosure and
was helped by the program. It`s great to have you here. All right, so
walk my through. Housing finance is deathly dull and confusing. But
people staying in their homes is awesome. So explain to me how you`re
using housing finance to keep folks in their homes. How does this work?

ELYSE CHERRY, BOSTON COMMUNITY CAPITAL: Sure. Let me see if I can
thread this needle.

HAYES: Thread the needle.

CHERRY: When we started looking at what was happening in Boston`s
neighborhood and the surrounding cities, we could see that housing prices
was skyrocketing, but people`s incomes were flat. We could not understand
how that was sustainable. And needless to say, it was not sustainable.

HAYES: Let me just stop you there, because you are one of many groups
that were working in communities during the housing bubble, who picked up
on this. The Federal Reserve completely clueless, Wall Street totally
clueless. But I have sat across from folks like you in places like North
Carolina, in places like Scottsdale, Arizona, who saw this coming, before
all the big wigs did, because they saw exactly what was happening at the
ground level.

CHERRY: That right. As I say, my favorite -- or least favorite
example, we had a hair dresser full-time making 23,000 dollars a year. Her
mortgage was 325,000 dollars. She could have put 100 cents of every dollar
she made into that mortgage and she never would have been able to pay it.
So as the bubble grew and then crashed, what we could see was that housing
prices in the neighborhoods were not sustainable.

But the people who lived in those homes were quite sustainable, but
that the prices needed to come back down to current market prices. And
there was a huge differential. So a home that was maybe 400,000 dollars --
this is Boston after all -- during the bubble might now be down to 200,000
dollars in terms of its real value. So what we thought was, if we can go
out and raise enough money to actually buy up a group of these homes and
sell them back to the homeowners, maybe we can not only stabilize the
homeowner, but stabilize the neighborhoods.

HAYES: So the idea is, I`m a homeowner; I`m way in over my head; I`m
under water on this mortgage because I refinanced during the boom years or
I bought the house during the boom years and the mortgage is 400,000
dollars. The house is worth half that. You guys come in, you buy it, and
then you turn around and you sell it back to me with a mortgage for 200,000
dollars. And that I can afford.

CHERRY: That`s correct.

HAYES: All right. So tell me about your story, Derrick. Where were
you living?

DERRICK HARPER, HOMEOWNER: I`m in Hyde Park, Massachusetts, a section
of Boston. And I`m a social worker. I contract my services out. But the
agency I was with couldn`t pay me. I would go for months on end not
getting paid or getting partial payments. And we fell further and further
behind.

My wife`s an X-Ray tech. We fell further and further behind. At one
point, I owed 50,000 dollars in back mortgage payments and penalties and
fees. Then the recession hit and the house was under water. We couldn`t
sell it. It was worth half of what they said it was worth before. Trying
to deal with the bank, they wouldn`t offer anything that we could handle.

So we tried. We tried. We worked hard. I almost became an expert on
how to write letters and research and who to talk to.

HAYES: This is something I have heard from -- I`ve done dozens,
probably hundreds, at this point, of interviews with folks going through
foreclosure. And what they are up against, just in terms of the shear
bureaucratic nature of the forms you have to fax in, and back and forth
with the bank is astounding, right? I mean, it`s not easy. It`s a full-
time job.

HARPER: Yes, absolutely. But a friend of mine told me about some
initiative from Boston Capital. I filled out the application. They
brought us in. Essentially, they saved our home. I mean, we were
depressed. I thought I was going to lose my home. The only thing I have
to leave to my children is my home. I thought we were going to lose it. I
couldn`t imagine paying that back mortgage. I just didn`t know what we
were going to do.

HAYES: And that`s your only -- that`s your chief asset, right? I
mean, that`s what you have.

HARPER: That`s it, my only asset. They came in. They did a short
sale with the bank, and then sold it back to us at an affordable rate.

HAYES: With a new mortgage.

HARPER: New mortgage. It is about a year and half and we are going
strong with it.

HAYES: So the question is, this isn`t magic. The money has to go
somewhere, right? So someone is taking that loss. Who is taking that
loss?

CHERRY: Well, there are two halves to this. One is the loss. And
the second is where do you get the cash in the first place to actually
create that mortgage? So in terms of the loss, what we try and do is we
buy from a lender at exactly the same market price anybody else is going to
sell it to them at. The fact that it is going back to the homeowner
doesn`t really increase the size of that loss.

HAYES: Of course.

Right, someone is going to take the loss no matter who buys it. It
might as well be the home owner.

CHERRY: Well, as near as I can tell, nobody is still buying at bubble
price. So it`s a current price. So we go and we offer current market
price. The challenge of it is you have to have cash to do that with. So
we went out and we raised enough money, primarily from foundations, high
net worth individuals, to actually make 50 million dollars worth of
mortgages.

We put up 10 million of our own dollars, because we wanted to be clear
to folks that we were in there too. But then once we had made those
mortgages -- and we are now at about 56 million dollars, there had to be
some new source of capitol or we weren`t going to be able to continue.

HAYES: Right.

CHERRY: Up stepped these Boston Savings Bank. What we said to them
is, look, in the entire rest of the residential mortgage industry, the way
that you achieve liquidity, that is you cycle your money, is that people
buy the revenue stream from the mortgage.

HAYES: Right. Let me -- it`s technical, right? So the whole way
that Wall Street worked, the reason that we had the market we was, is that
no one held on to the actual mortgage. They resold it into another market.

CHERRY: Yes. Although there are lots and lots of issues about that,
so we weren`t going to do. Because we, in fact, keep lots of the risk of
the mortgage. But what we had was a situation in which every single person
that we are lending to is in foreclosure, default of foreclosure. Nobody
wanted to buy the loan.

HAYES: So here`s is my question: why is this only happening in 75
homes in Boston, when we have four million wrongful foreclosures or
foreclosures with abuses? Why is this not happening everywhere?

CHERRY: Well, the first problem is that you need a source of cash,
right? We think we have solved that problem, not just with our primary
investors, but now we have actually had a commercial bank step in, in a
breakthrough transaction, and say I can see that these are properly
underwritten loans. We`ve done a ton of diligence. We`ve figured out that
the values are there. We are happy to lend against them, just like we`d
lend against any other set of mortgages.

We think that`s the key to expanding.

HAYES: So you had a breakthrough where this was a pilot project. But
you`re now going out into -- this is not a charity case. You are actually
going out to the market and saying, hey, this is a viable business model.
And you`re finding financing to be like, all right, let`s do it.

CHERRY: That right. We are actually, in terms of households helped
at this stage, pushing up to 400, maybe 275 mortgages. But we are teed up
now to expand because of the transaction.

HAYES: What has this meant for your life, to go from being -- having
this rock sitting on you of pressure, to having your house back and having
another shot?

HARPER: I mean, I was very depressed. My whole identity was tied
into providing for my family. You start feeling like a failure when you
think you are going to lose your home. Look at my wife, I started asking
my wife, what is it going to be like. We were in that home for 13 years --
12 years. And I first thought we were going to lose it.

When they came in, and they helped, it was like a huge weight off, you
know. And it is amazing. And my future is bright, you know. And I have
something that I can leave for my children.

HAYES: This -- what you`re talking about, that -- just the experience
of foreclosure and the experience of pressure of debt, which is something
you can`t quantify, is -- that has been one of the biggest scourges of this
entire crisis, and a scandal that we let it go on.

Elyse Cherry of Boston Community Capital, social worker Derrick
Harper, really, thank you very much. This is a really hopeful, promising
story.

CHERRY: Thank you.

HAYES: That is ALL IN for this evening. Thank you for being here.
"THE RACHEL MADDOW SHOW" starts right now.

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

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