This is a RUSH transcript from "The O'Reilly Factor," December 29, 2009. This copy may not be in its final form and may be updated.

Watch "The O'Reilly Factor" weeknights at 8 p.m. and 11 p.m. ET!

ERIC BOLLING, FOX NEWS GUEST HOST: Hi, I'm Eric Bolling reporting for Bill O'Reilly. Thanks for watching us. We'll get to our top story, because we've got the new information about the attempted Christmas Day massacre, when 23-year-old Nigerian man allegedly tried to set off a bomb on a Northwest Airlines flight from Amsterdam to Detroit. We're now getting our first look at the explosive packed underwear the suspect wore. He claims he got the material from al Qaeda operatives in Yemen.

Meanwhile, late this afternoon, the president blamed the incident on a combination of bureaucratic breakdowns and human failure.


PRESIDENT BARACK OBAMA: When our government has information on a known extremist, and that information is not shared and acted upon as it should have been, so that this extremist boards a plane with dangerous explosives that could have cost nearly 300 lives, a systemic failure has occurred. And I consider that totally unacceptable. The reviews I've ordered will surely tell us more. But what already is apparent is that there was a mix of human and systemic failures that contributed to this catastrophic breach of security.


BOLLING: And yesterday, as the president detailed the list of investigations he's ordered into the incident from airport security, to no fly lists, it was this part of his Hawaiian statement that caught our attention.


OBAMA: Those plotting against us seek not only to undermine our security, but also the open society and the values that we cherish as Americans. This incident, like several that have preceded it, demonstrates that an alert and courageous citizenry are far more resilient that an isolated extremist.


BOLLING: But all evidence points to the fact that this was not an isolated extremist. Two former Gitmo detainees may have been involved in the Christmas Day plot. They were reportedly released from U.S. custody and sent to Saudi Arabia in 2007 after ending up in Yemen, in which - which is now evidently becoming a breeding ground for terrorists. In fact, a Yemeni foreign minister claims that hundreds of al Qaeda extremists are planning terror attacks from his country.

Joining us now from Little Rock, Arkansas, General Wesley Clark, the former Supreme Allied Commander of NATO and former Democratic presidential candidate.

Watch the segment!

General, thank you for joining us. Okay, earlier today, you heard the president speaking. He made another statement. Did he say everything you needed to hear from him?

GEN. WESLEY CLARK: Well, I was very glad that he said it was a systemic failure, that it's unacceptable, and that the investigation's continuing. And we're going to have to run the rabbit down the rabbit hole on this. There's clearly information out there as he said that wasn't handled properly. There are precautions that should be in place that obviously weren't in place. We were lucky on this. It's time to also go to the source. We need to do more in Yemen, obviously.

BOLLING: Well, we'll get to that in one second here. But what my question was did you hear anything new? I mean, the president spoke yesterday around 3:00 in the afternoon Eastern time, and then repeated some of the same things that he had said yesterday. He repeated those today. I heard nothing new. Did you hear anything new?

CLARK: I didn't hear anything new. But I did hear a note of determination. And I believe the president knows, as every president has known, that most important duty of the United States government is to keep our people safe and secure.

BOLLING: All right, general, let's play a little devil's advocate here. So you're the president right now, general. What do you do? What would you do as commander-in-chief right now?

CLARK: Well, I think you've got to both do defense and offense. On the defense side, you've got to unpack what happened in the systems. Why did we have information? Why wasn't it connected properly? Why did we let this guy on the plane and so forth?

And it means working with our allies on that, too, because he did come through Netherlands. But you've also got to do some offense. So we need to be doing more obviously in Yemen. We don't know how many terrorists are there. We know from public sources that there's been some U.S. activity in the region. We know there have been visits by General Petraeus and others there. We don't know the nature of the assistance we're giving. Obviously, we're not giving enough. Maybe we need to put some boots on the ground there.

BOLLING: General Clark, it doesn't strike me that these terrorists are afraid of us. Should they be afraid of us? Should they worry about President Obama going in Yemen and doing a preemptive strike? Fear might be a good thing in this case, no?

CLARK: Well, I don't know if they're worried about us or not. I'd like them to be right out in the open so we can snatch them all up right at once. But I want to do is take them out. I don't -- I'm not worried about their mindset, whether they're afraid, or cocky. I just want to deal with them. And to deal with them is take them down. Take them down, take them out of business. I'd like to see...

BOLLING: General?

CLARK: ...them brought on trial and dealt with the way terrorists should be dealt with.

BOLLING: General, I read that you'd like to see Gitmo closed. It strikes me as surprising that a general would like to see Gitmo closed. What do we do? We see two Gitmo detainees that were sent back to Yemen, who may have been or probably likely have been involved in a plot to blow up 300 people on Christmas Day. If we do close Gitmo, don't we risk another 195 detainees out there, out there plotting to blow up planes in America again?

CLARK: Well, I hope we've got evidence against these people in Gitmo. I'd like to see them put on trial. And if the evidence supports it, lock them up for the rest of their lives or worse. But I think Gitmo itself is a process that hasn't served the country's needs very well.

As far as these people that got to Yemen are concerned, apparently there was a rehab program that the Saudis were doing. It looks like it didn't work. So, I'd like some feedback on that if I were the commander and chief. I'd say what are you doing? What's our fail safe? We can't have people that are supposedly rehabbed and going back and plotting against us. That won't work.

BOLLING: Well, so what would you suggest? You would suggest, you know, more terror trials here in New York? Maybe a few in L.A.? Maybe some in Miami under the civilian codes rather than the military combatants that a Gitmo might allow?

CLARK: I don't think there was any net advantage of doing it under the military tribunal concept. I think we've got adequate capacity in the civilian courts to deal with these people. We've put them away before. If we need to take extra measures to protect intelligence information, we can do that through the court process. But I think it's really to our advantage as a society as a nation to use the full powers of the rule of law that we believe as Americans, show it as an example to the rest of the world, and show these people's crimes and their plots against humanity. That's what this is really all about. We want the Islamic world to turn against these terrorists in a very forceful way.

BOLLING: General, what do we do with this guy? What do we do with Mr. Abdulmutallab? Do we interrogate him? Do we use aggressive interrogation?

CLARK: I think from everything I've gotten so far, he's singing like a canary right now. So I think it's really up to the specialists who are doing the interrogation to figure out how to handle him, but he's a criminal. He should be charged with attempted murder and terrorism and everything else. I don't expect he'll ever see the light of day again.

BOLLING: You know, general, real quickly though, running out of time, about a minute left here, he could faces a little as 20 years in prison for plotting, attempting to kill 300 innocent people above Detroit. That seems like a fairly soft sentence for a guy who really wanted to carry this out.

CLARK: I'm not sure where you're getting your figure, but I would think that if you put him in, and put the charges against him, and let an American jury hear it, that they'll ensure that he gets a very adequate punishment.

BOLLING: All right, there you go.

CLARK: It's a very serious crime.

BOLLING: There you go, General Clark, thank you. General Wesley Clark from Little Rock, Arkansas. Thank you.

Content and Programming Copyright 2009 FOX News Network, LLC. ALL RIGHTS RESERVED. Transcription Copyright 2009 CQ Transcriptions, LLC, which takes sole responsibility for the accuracy of the transcription. ALL RIGHTS RESERVED. No license is granted to the user of this material except for the user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon FOX News Network, LLC'S and CQ Transcriptions, LLC's copyrights or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.