This is a RUSH transcript from "The O'Reilly Factor," August 26, 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!

BILL O'REILLY, HOST: In the "Impact" segment tonight: controversy still raging over Attorney General Eric Holder's decision to appoint a special prosecutor to look into alleged CIA abuses in the interrogations of about a dozen terror suspects. ABC News is reporting that CIA chief Leon Panetta confronted some high-level White House people and even used obscenities in the heated discussion. Joining us now from ABC News headquarters in New York, the chief investigative reporter for that outfit, Brian Ross.

So we're hearing it was Rahm Emanuel that Leon Panetta went toe to toe with. Is that what you're hearing?

Click here to watch the segment!

BRIAN ROSS, ABC NEWS: I heard the same thing, Bill. They won't confirm that. But people at the CIA said that it's not unusual to have a profanity-laced screaming match at the White House...

O'REILLY: Is that right?

ROSS: ...with certain key officials, and…

O'REILLY: Wouldn't you like to see that? You know, not unusual to have obscenities? Well, with Rahm Emanuel it's not unusual because he just curses all day long, but Leon Panetta is a very nice, quiet, civilized guy. I've done three lectures for Leon out in his Monterey, California, think tank. You couldn't get a more mild-mannered guy than Leon Panetta.

ROSS: Although they say he does use salty language, but he's a real gentleman, and a real...


ROSS: ...he's very adept at the Washington game of power, and he has run into frustrations in his job up against people in the White House.

O'REILLY: What set him off?

ROSS: Well, he has been unhappy about the directions from the White House, about his relationship with Congress, particularly Democrats, who were his former fellow colleagues. As well, the decision to go ahead with prosecutions, or at least an investigation by the attorney general. And then the questions of how much of that CIA inspector general's report should be made public. He has positioned himself, I think correctly, as a defender of the CIA. He feels it's very important that the people of the CIA be defended so that officers at the CIA who are doing their job continue to do their job.

O'REILLY: All right, so he's sticking up for his team. He doesn't want morale to collapse. He doesn't want a witch hunt. He doesn't want any of this. So he goes to the White House, because he gets advance notice that Holder is going to do this, and he confronts Chief of Staff Rahm Emanuel, and they have words. Now, we also hear that...

ROSS: That's supposition. But, you know, there's lots of facts and they are correct, whether that's exactly what happened, I'm uncertain.

O'REILLY: All right. But that's the scenario that's being put out. We also hear that Panetta is close to quitting. Are you hearing that?

ROSS: Well, the CIA says in the strongest terms that that's garbage, that's nonsense. But we were told by our sources, both current and former intelligence officials and advisers to the president on such matters, that he threatened to quit. They deny that, and they say he has no plans to resign whatsoever, but we're also told that at least one possible replacement candidate was contacted by the White House and asked would he be in a position to take over if necessary.

O'REILLY: And who was that?

ROSS: I can't reveal that now.

O'REILLY: Why? Why can't you reveal that name?

ROSS: Because, as you know, sometimes we have confidential sources, and we're not prepared to reveal that.

O'REILLY: So I just want to know how this works. I mean, I know how it works. But I want you to tell the folks. So the person you're talking to says, "Listen, Brian, I'll tell you who it is, but you can't tell anybody else. Only you can know." Is that right?

ROSS: Well, at this point, we're talking to people close to that particular person, and because of the delicacy of the situation...

O'REILLY: They don't want to embarrass the person.

ROSS: The White House — I think one point is the White House wants Panetta to continue.

O'REILLY: Oh absolutely, because if he quits, it makes them look like idiots, there's no doubt. What if I come over there — you're about 20 blocks north of me in Manhattan. What if I come to ABC right now with my gang and waterboard you? Would you tell me the name then if I did that?

ROSS: I don't know if I could withstand the pressure from the most powerful news organization in the country. But I certainly — I would resist.

O'REILLY: It's a tie between ABC and FOX.

ROSS: I would resist.

O'REILLY: All right, Brian, keep us posted. We appreciate you very much. 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.