Former federal prosecutor: IG report shows Obama's failures

This is a rush transcript from Thursday, June 14, 2018. This copy may not be in it's final form and may be updated.

NEIL CAVUTO, FOX NEWS CHANNEL HOST: Just in case you didn't know, that inspector general report is out. And, man, oh, man, all of this as the New York attorney general is digging in. We're on top of both. Welcome, everybody. I'm Neil Cavuto. And this is "Your World." And a world of fast-paced developments just as the Justice Department's inspector general issues his scathing report, claiming that former FBI Director James Comey broke with protocol, among other things. We're hearing that two FBI agents were bent on stopping this president from ever becoming president. The New York attorney general, meanwhile, going for broke with a lawsuit targeting this president and his family and his Trump Foundation, of all days, a coincidence. And the Dow dropping as word of that lawsuit hit. So what does that really mean and why does the Dow drop every time things look potentially bad for the president? We're on top of that, fascinating developments today. We have got House Freedom Caucus Chair Mark Meadows on the timing issue, Florida Democratic Congressman Val Demings on the whole Comey-Clinton issue, and what it could mean for Democrats in the election. And the former Whitewater special prosecutor Robert Ray on if all this is a very big issue for one Robert Mueller. First, FBN's Edward Lawrence at Justice Department with the latest on that I.G. report -- Edward.

EDWARD LAWRENCE, FOX NEWS BUSINESS CORRESPONDENT: Well, Neil, the big takeaway on all of this is that the -- President Trump's confirmation of, so to speak, bias within the FBI, the inspector general's report points to a number of items that might be suspicious in terms of bias in the FBI here.Now, specifically, it pulls out these text messages between the man who was in charge of the FBI Clinton e-mail investigation, who has now left the FBI, and also an FBI attorney, Lisa Page.Now, let me show you exactly what these text messages said. They said,first: "Trump's not ever going to become president, right? Right?"And that's from the former attorney Lisa Page in the FBI.Peter Strzok says: "No, No, he's not. And we will stop it."Now, the report was very critical of former FBI Director James Comey, in fact, at one point calling him insubordinate, saying he did not follow proper protocols in some cases, and that led to a possible bias perception within the FBI.Now, they specifically pointed to the July 5 announcement from Comey that he made in saying that there should be no reasonable person bringing charges against Hillary Clinton because of her e-mail controversy there.Now, again, the report very critical of Comey on that front.

Now, it also finds that Clinton's e-mail servers were in fact hacked. They were in fact hacked by foreign actors or bad foreign actors, possibly other foreign countries, getting e-mails. At least one of those e-mails that was taken was listed as secret.Now, all of this has Republicans in Congress very upset, very concerned about exactly what's going on. Senator Lindsey Graham coming out and saying that he's very concerned about the people in charge of the Clinton investigation as to whether they were really in the tank or not. Now, we do have some word from James Comey about all this. He tweeted out just after the report was released, saying that he respect the inspector general's report. He says that he urged them to do this review. The conclusions are reasonable, he says, even though he disagrees with some.He says people of good faith can see an unprecedented situation differently. He prays that no director faces this again -- Neil.

CAVUTO: Edward, thank you very, very much, my friend. With us now, House Freedom Caucus Chair Mark Meadows from the beautiful state of North Carolina.Chairman, what do you make of all this?

REP. MARK MEADOWS, R—NORTH CAROLINA: Well, obviously, I was in a briefing earlier, started reviewing this I.G. report around 11:00 this morning. And here are some -- three takeaways. One is, why is Peter Strzok still working for the FBI based on this, 17 months of knowingly having a conflict and bias in this damning report? And yet he still there working.The second part of this is...

CAVUTO: Do we know what he's doing? I didn't even realize that. Do we know what he's doing?

MEADOWS: Well, I think he's working in the H.R. department, but he still has his top security clearance. And this report was...

CAVUTO: No, I don't mean to belabor the report. The reason why I ask is because I thought he was still getting paychecks, but he's not working at the FBI. But you could be right. Go ahead. I'm sorry.

MEADOWS: Well, but it's still -- I mean, he shouldn't be working for the FBI, based on this report.And the fact of the matter is, Rod Rosenstein knew about many of these issues before that.What we also know, that indeed that some of the information that came out in this, Congress has not seen. Now, we have been conducting oversight. And yet DOJ and FBI has consistently stonewalled and obstructed our investigation, constitutional responsibility to investigate.And they haven't given us the information. But I think that the last thing is, is that this the tip of the iceberg. Not only are we seeing the fact that classified information actually was compromised, contrary to Director Comey's sworn testimony.But we're also seeing that there was a real bias, a rush in to go into the Russia investigation, at the expense of everything else. So, as people start to read through this, I think you will find that not only are we troubled by it, but we should be alarmed by it. And I, for one, will continue to work and report back to you, Neil.

CAVUTO: Chairman, one of things I was reading in the report myself is that the inspector general accused the former FBI Director James Comey of a lot of things, including insubordination, big-footing his bosses at the Justice Department, who should normally make any public pronouncements, stumbling through how he handled the whole e-mail thing with Hillary Clinton, but that, for all of that, he exhibited no bias. What do you make of that?

MEADOWS: Well, here's the reason.

And we got some clarification. So I want to let you know that, in there, they were saying there were a number of individuals that showed extreme bias. But because there were so many people in the decision-making process, they came to the conclusion that not all of them could have worked together and having a biased recommendation.

Yet, when you read the report, you can see not one, not two, but five or more FBI investigators had bias and really should have recused themselves in this.

And so pages 420 and 421 start to give some analysis of what really the inspector general thought of the biased claims.

CAVUTO: Now, I know the instructor general, Mr. Horowitz, or will be up on Capitol talking to both branches here.

So, ahead of that, something that comes up is that a number of Democrats are saying, for all the Republicans' whining about whether this whole thing is a trumped-up thing against Donald Trump, no pun intended, sir, it was his investigation and stumbling around, James Comey, they're referring to, that cost our candidate the election.

What do you make of that? That almost seems to be the official position I have heard from not all, but many on the left.

MEADOWS: Now, it doesn't surprise you, Neil, and it doesn't surprise your viewers that they're going to try to spin this as, this is the reason why Donald Trump won the election.

Let me tell you why he won the election. Because the American people have had enough of Washington, D.C.'s business-as-usual attitude. And it's not the Russians. It's not Director Comey. It's not any of that.

It was the American people that...


CAVUTO: No, no, I'm sorry, Chairman.

I wasn't clear, because I...

MEADOWS: OK. I'm sorry.

CAVUTO: But what they were saying was, if there was bias, it was bias to go after Hillary Clinton and not to touch Donald Trump that, at the time, tipped the election to him.

You say what?


I mean, you can't read the report and actually -- a thinking person cannot read the report and actually have that conclusion, because what we do know, Peter Strzok, when the Anthony Weiner laptops came out, he made a choice not to go after that and not to look at that and to focus on the Russia of collusion investigation.

So he made a conscious choice to go after what he thought would be most damaging to this president, instead of actually going and following...


CAVUTO: Do we know that for sure?

Now, I didn't read the report. You have had more access to it than I, sir.
And I'm just wondering, when they were referring and when he and Peter Strzok and Lisa Page were texting back and forth with one another, this guy couldn't be president, we want to make sure this guy, referring to Donald Trump, doesn't become president, was it just their anger, they hated the guy, or were they privy to information on this Russia thing that made them really hate the guy and really fear the guy becoming president?

Do we know the context for those remarks?

MEADOWS: Yes. Well, great question, Neil.

And I'm glad you're -- you're wanting classification, because it's not just the text messages. If you look at the decisions, the investigative decisions that were made, there was one standard for Hillary Clinton.
There was another for President Trump.

And what we found was is, in that, certainly in those critical times in September and October of 2016, Peter Strzok and the investigative team made a decision to go one direction which would be more damaging to this president than following up on other leads as it relates to Hillary Clinton.

And you can see that in the context of it. But everybody will dissect that. But it's not just the text messages. And I appreciate you clarifying that.

CAVUTO: Real quick question on how this affects the Robert Mueller investigation.

As you know, he was talking back and forth quite a bit to James Comey.
And, of course, now he has to think about how much he goes and presents forward based on conversations and/or questioning he had of Mr. Comey.

Earlier on, he had fired Peter Strzok and Lisa Page himself. So, I'm just wondering, in a weird way, just to make sure he has got all the I's dotted and the T's crossed, this delays his final investigation, because he has got to make sure no embarrassments pop up in term of, like, oh, this person said these disparaging remarks, or this person was doing this on the side.

MEADOWS: Well, here's the interesting thing.

In this I.G. report and in the communication that went back and forth -- and you have got to figure that, at this particular point, in some of the overlooking that we have with this I.G.'s report, there is no mention of any -- in any way of any possible collusion.

And that's taking it up through May of 2017 in some of the correspondence that we have reviewed. And so, when you look at that, yes, it could delay it.

What it should do is send off the alarm bells, because a number of people that showed bias in this report actually worked on the Russia investigation.

And, again, it is just extremely concerning that we would have this kind of bias in the premier law enforcement agency in the world. And I think it's time that we clean house and that we start over and make sure that we return them to the position of honor that most Americans, including myself, hold them.

CAVUTO: Congressman, thank you very much, Mark Meadows of North Carolina.
Thank you, sir.

MEADOWS: Thanks, Neil.

CAVUTO: All right.

All right, a lot of spottings today back and forth, including one Deputy Attorney General Rod Rosenstein, seen at the White House, as the inspector general's report was being released. Whether he was the actual guy doing the releasing, I don't know.

But let's go to Kevin Corke at the White House with more on that.

Hey, Kevin.

KEVIN CORKE, FOX NEWS WHITE HOUSE CORRESPONDENT: Yes, the deputy attorney general was here at the White House, clearly taking part in the briefing for the president.

And, remember, for them, Neil, this is all about clarity. What did the FBI and largely the DOJ's know and do during the Clinton e-mail investigation?
And, more broadly, I think they want to know what role that politics may have played during that investigation and some of the decisions made thereafter.

I asked the White House press secretary, Sarah Sanders, about that recently released I.G. report today during the briefing. And here's what she told


SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: The president was briefed on the I.G. report earlier today. And it reaffirms the president's suspicions about Comey's conduct and the political bias among some of the members of the FBI.

Director Wray, as you know, will be holding a press conference later this afternoon. And we would encourage you to tune in for specific questions.


CORKE: That, of course, is coming up right around 5:30 this afternoon.

Also, today, Neil, very interesting, the New York state attorney general hit the Trump Foundation with a lawsuit, looking for nearly $3 million in fines and damages, alleging illegal conduct by the front -- by the foundation, including, apparently, they suggest, trying to assist the 2016 Trump presidential campaign.

Clearly unimpressed by the suit, Sarah Sanders also said today during the briefing that she was basically echoing the president's sentiment that this is a political hit job.


HUCKABEE SANDERS: The foundation raised $18 million, while giving $19 million to charity, while virtually having zero expenses.

The previous New York A.G., who was forced to retire in disgrace, made its stated mission to use this matter to advance his own political gain. And the current acting New York A.G. has stated that battling the White House is the most important job she's ever done.

That sounds outrageously biased and certainly problematic.


CORKE: A little bias there, so says the White House.

Don't forget Director Christopher Wray will be briefing today at 5:30.
Certainly, we're looking forward to finding out his impression of the recently released I.G. report.

By the way, that lawsuit, Neil, that you and I were just discussing, the one in New York, is the latest in a series of suits the White House would suggest to you that are sort of basically rolled out by Democrats and their backers in this sort of effort to distract the president, maybe getting his taxes.

They say this is just more of the same, from their vantage point -- Neil.

CAVUTO: Thank you very, very much, Kevin Corke, at the White House here.

So, you know, both sides have always said, you know, at our core, we trust our institutions. But after this today, from Democrats and Republicans alike, not these, and not at this time, and not with some of the folks in charge and handling things.

What is next? After this.


CAVUTO: All right. We are awaiting the official Democratic response to this.

Chuck Schumer and Nancy Pelosi will take to the microphone to give their take on a development here that called into question the timing of this investigation, Hillary Clinton and her e-mails, so soon before the election. You know the drill there. They're ticked off.

Republicans are ticked off. So, both sides are united in the fact that they're ticked off.

Anyway, former Department of Justice official Tom Dupree, I don't know if he's ticked off.


CAVUTO: But, Tom, what do you make of all this?

TOM DUPREE, FORMER JUSTICE DEPARTMENT OFFICIAL: Oh, I'm ticked off, too, Neil. No, absolutely.

CAVUTO: All right, good. Well, at least we're all on the same page. Very good.


DUPREE: In all seriousness, this is a very thorough and comprehensive report from the inspector general.

From my perspective, it confirms a lot of what we have been hearing both about Director Comey's misjudgments, Attorney General Lynch's misjudgments, and, of course, the blatant bias exhibited by some of the folks inside the FBI.

I think what is notable is that this is a report generated by an Obama- appointed official, the inspector general, who is a neutral independent arbiter of these issues.

And I think this will be seen in many quarters at least as the definitive report of what actually happened behind the scenes in 2016.

CAVUTO: He was reappointed by President Obama, correct?



So, let me get your take on where this goes. I had a crackpot theory that, if Bob Mueller is doing his work, and a lot of it has relied on conversations he's had and questions back and forth he's had with James Comey, to say nothing earlier on of the research he got from the likes of Peter Strzok and Lisa Page -- and, of course, we know what happened to them
-- he's going to have to be extra vigilant and extra careful now in coming up with his final report and recommendations.

And could that potentially mean delaying that report to make sure everything is right, that there's no possible boomerang here?

DUPREE: I think that's a fair concern, Neil.

I think, if you're Bob Mueller, you have to view Jim Comey at this point as a tainted witness. Right? If you say I'm going to rely on something that Jim Comey told me, I think all Americans by this point are going to take that with multiple grains of salt.

So I think, if you're Bob Mueller, you have got to make sure that in whatever conclusions you are going to draw, based on your investigation, that you have independent evidence to support it and you're not going solely on the word of Jim Comey.

CAVUTO: Jim Comey was deemed to be insubordinate, but not politically biased. Do you buy that?

DUPREE: That is a fascinating conclusion, Neil.

And I'm not quite sure what to make of it. I think I understand the inspector general basically to be saying that, look, Comey made all sorts of misjudgments. He circumvented the ordinary DOJ procedures in these situations, but I don't find that he was acting based on some political motive.

And I think that's one of the hardest things, frankly, for any inspector general to get his head around, because you can never see into Jim Comey's mind to figure out what was driving him to make these decisions.

But, at the end of the day, there's no question that, whatever was motivating Comey, he blatantly violated DOJ rules.

CAVUTO: Now, he will argue he violated those rules because the DOJ wasn't moving.

He talked to Loretta Lynch about all of this and what he wanted to do. And it seemed like felt stymied or they weren't going to do anything about it, and they weren't keen on him making any pronouncements about it. Yet he did.

What do you think?

DUPREE: Yes. Yes. That's what he says.

And, look, I think, right now, a lot of us are kind of sick of this whole holier than thou persona. We have seen it in spades on his book tour.

And I think reflected in the I.G.'s report, in that this was an example of Jim Comey basically saying, I'm going to be a one-man band here. I'm not going to follow the protocol. I'm not going to loop in other folks at the Justice Department because I and I alone know what the right thing to do here is.

And I think it's backfiring.

CAVUTO: Do you think, when both parties seize on this, Democrats say it cost them the election, Republicans say it shows clear bias, what happens?

DUPREE: Well, my concern, Neil, is that what happens is that this is going to be kind of yet another thing that leads Americans to lose faith in the FBI and law enforcement generally, which I think, frankly, would be a tragedy.

One thing that is a little heartening is that, although the inspector general certainly found evidence of bias and bad actors on the part of the FBI and DOJ, it's not clear to me how broadly that bias spread.

And I believe to this day that the vast majority of men and women at the FBI are honest, independent, law-abiding, law-enforcing people who are serving their country honorably.

CAVUTO: All right, very good seeing you again, Tom Dupree, the former DOJ official, real smarty pants on all this stuff.


CAVUTO: All right, we're going to get the political responses. We promised we'd bring them to you, including from Democrats right now, with Chuck Schumer and Nancy Pelosi ready to hold a news conference.

We will have more on that, including the Dow getting hit today by about 25 points. But it could have been worse, and a lot of it has to do with these investigations. I will explain after this.


CAVUTO: All right, they say timing is everything.

But I found timing of this and the effect on the markets rather revealing.

In the middle of this day we were going to get the I.G. report, out of nowhere, the New York attorney general all of a sudden went after the Trump Foundation, the Trump family, Donald Trump himself.

And a lot of people are reading into that, man, oh, man, that takes sort of the attention off of the I.G. report. And when the markets digest this about an hour and 15 minutes after trading, they went from being up a lot to down a lot.

And, as the day ensued, it really could never recover.

So, this is a reminder yet again, whether you like the president, dislike the president, these guys, I always say, are not red or blue on Wall Street. They are green. They love money. They like to make money.

And they think that this president, things as they are, is a way to make money, good numbers, good economy, good markets.

So, that was potentially disrupted by the unknown, whether that's fair or not.

Let's get the read from Catalina publisher Cathy Areu. We got American Majority CEO Ned Ryun, and, last, but last least, Jonas Max Ferris.

Jonas, what do you make of that? The markets, I always think, are driven by their basic greed and interest and it's been coming to their advantage to just go with this president and stuff happening under this watch.

JONAS MAX FERRIS, FOX NEWS CONTRIBUTOR: This market likes this president.
I don't think it knows why it likes him so much, but it definitely...


CAVUTO: Money. They like money.

FERRIS: There's definitely these corporate tax cuts they don't want to go away. And there's a lot of other reasons.

I don't think there was enough here in this report to lead to anything going either way significantly. This is relatively minor.

CAVUTO: The New York state A.G., right?

FERRIS: I think, to an investor, it would look like they're investigating everybody and their only bias is self-preservation and promoting themselves and having a big bust.

And that's -- it's like in "The Wild Ones" when they ask Marlon Brando, who you going at, he says, who do you got? I think they just investigate whoever will get them the most attention and make the FBI look good after many missteps with intelligence over recent decades.

CAVUTO: What do you think, Ned?

NED RYUN, PRESIDENT, AMERICAN MAJORITY: Shocking, the timing, right?

Amazing. The day the I.G. report comes out, after a two year investigation. Just managed to pick June 14? Wow. Also, the president's birthday.

Also, after a very successful North Korean summit, all of a sudden, you have this come out. So, yes, call me a little skeptical on the timing of it.

And then they're defining it as persistent criminal behavior. It was pretty interesting to say that, because we have the IRS for that to look into nonprofits, to family foundations, and we have got the FEC, because they're also claiming some campaign violations.

CAVUTO: And her predecessor, the New York A.G. predecessor, Eric Schneiderman, he had something like this and never pursued it, right?

RYUN: He never brought it.

And then they're calling for the dissolution of the Trump Foundation.
Well, that's what they wanted to do. The Trump Foundation wanted to shut down in December of 2016. Laid out their plans, said, we're going to shut down, were unable to because of the Schneiderman investigation.

CAVUTO: Right.

RYUN: And some of the stuff that they're going after is the self-dealing, the self-dealing ban that was a violation.

IRS looks at it as, if you call a foul on yourself and pay the ban -- pay fine, you're fine. And the Trump Foundation did it at least once, if not twice.

CAVUTO: I know the president did tweet on this to the effect that more money went out than came in. So, if that's impropriety, it has a funny way of showing it.

But, Cathy, what do you think?

CATHY AREU, PUBLISHER, CATALINA: Well, the money went out, that's the question. Why did it go out? Who did it go out to? Was he buying votes in 2016 for veterans? Came out on his birthday. I don't think it was a birthday present from the A.G. of New York.


CAVUTO: But what do you think of the timing of this, when everyone is focused on the I.G. report?

AREU: It's been two years. It's been two years.


CAVUTO: That's not what I asked. What do you make of the timing that it came out with the I.G. report?

AREU: Well, there's always something with this president, it seems like.
So, probably never a good time for this president. There's always going to be something. So...

CAVUTO: So, you still don't like the president?

AREU: I'm just saying, well, if it came out in a month, it was probably going to be a bad day, because something new would be coming.

CAVUTO: All right, let me go back with the I.G. report and the back and forth on that.

I have sort of a weird view on this, it might surprise you, that, in a way, it could complicate things for Bob Mueller, in that he's going to make sure everything he gets is done right, and that anyone with whom he's chatted or based a lot of his investigation on is impeccable, which means it could delay his final report. What do you make of that?

FERRIS: I think when Comey...

CAVUTO: You can just say, you're right, Neil.

FERRIS: I think they lost the momentum they had when Comey became a celebrity.


CAVUTO: Who lost the momentum?

FERRIS: The Mueller investigation, by taking so long.

And in the background, you see these -- the texts from these lovebirds. I think there's a lot of things that look bad. So, he is going to have to have that much more to show.

CAVUTO: Could it delay it? Could it delay it?

RYUN: It could potentially. You're right.

CAVUTO: Thank you.



RYUN: But I would say this.


RYUN: First of all, I think this is going to be settled in the court of public opinion. And you're seeing the numbers for Mueller go down.

I think people have decide at some level what this is all about. They either believe that it truly is nonpartisan or they believe that it's a political witch-hunt.

So I think people -- a lot of people have made up their minds. I would rather it end sooner, rather than later, because I don't think there's -- first of all, I thought it was spun up on false pretenses, rumors, innuendo, fake dossier paid for by partisans.


RYUN: And then obviously weak memos by a very aggrieved and bitter former employee by the name of James Comey.

So, the sooner it ends, the better. But I don't think you're off on saying that perhaps some of what took place today might extend it a little bit longer.

And then my question becomes, as Trump has pointed out, now that we're coming into the elections and the midterm, what happens? If it's going to be extended, again, it's that whole perception of bias coming into midterm elections and maybe putting the thumb down on the lever.

CAVUTO: But both sides felt that Comey damaged them.


CAVUTO: Democrats I have talked to -- Cathy, do you feel the same, Cathy, that Comey cost your candidate the election?

AREU: Well, it was the first time an FBI director had ever done that to a presidential candidate.

CAVUTO: I realize that.

AREU: So, that is the first time. So, yes, that wasn't...

CAVUTO: Do you think he did?

AREU: I think the timing was horrible. That was horrible timing.

And, yes, he might have cost her the election. It was the first time that that ever happened to a candidate, ever. There was no reason for this.


AREU: The only reasonable can claim that any -- that 10 days before the election it might have impacted is because I think of his July -- it was July 2016, what I think was illegal and lawless exoneration of Clinton at that point.

The only reason she was still in the race at that point, 10 days before, is because I think he did something very wrong and very poorly decided back in the summer.

But when people make that argument, let's not forget, we're also talking about a private e-mail server that we know at least was hacked and classified information was found by a foreign agent.

CAVUTO: Now, we don't know the context or the timing of some of the remarks, including the infamous exchanges between Peter Strzok and Lisa Page about, this guy can never become president, referring to Donald Trump.

Do you wonder, Cathy, that that -- that they were exposed to or trying already to look into this Russian thing and make sure he never became president?


AREU: Well, who knows. Who knows what...

CAVUTO: I'm asking you.

AREU: Well, gosh, I don't know what they were thinking.

I think the timing was absolutely awful. We don't know anything, though, about this Russia thing, because the investigation is not over.

I met Mueller when I was with The Washington Post. And everyone was very happy when Mueller got on this case, because he is a guy who dots his I's, crosses his T's. He's always been careful.

So, there's nothing that was going to make this guy more diligent, because he's always been a careful person.


CAVUTO: He loves Comey and said great things about Comey. And Comey has said great things about him.

AREU: Well, but he is the one that let Comey go.

He was -- he alerted everyone to what was happening with Comey. So, he did stand by Comey's side when it all went down.

So Mueller is a careful guy. He's always been a careful guy. So, we didn't know how long this investigation was going to go on. So now want to rush it or now say it's taking too long, I think, is crazy, because at the time that it started, we all said as long as it takes to get to the truth.

So, what is the problem?

CAVUTO: It could take a while.

FERRIS: And the longer it takes, the more they got to get.

If it's just like several years, and you're like, oh, it was the meeting, like, that would have been really cool a few months ago. But they better get -- the story has got to get bigger. It's like a bigger "Star Wars"

It's got to be -- it just seems to me that, if you look at it through the lens of personal promotion, all these timing things you're talking about today, it makes more sense than a partisan side. I think it's all about maximum promotion.

RYUN: I will say this, just going back even to the whole I.G. report.

I think what was troubling today is I think one of the reasons we even saw Donald Trump rise and win in 2016 is people, the American people are losing faith and trust in their institutions.

I'm not really sure the I.G. report actually encouraged me to have faith and trust in the DOJ and the FBI to be nonpartisan.


CAVUTO: But isn't that something Republicans will pound, that, look, this institution just can't be trusted, none of these institutions?

RYUN: There has to be reform. We have to have reform.

And I think the only way we can get to that, I think Trump has an opportunity to do a lot of radical declassification to allow the American people to see some radical transparency, to understand what took place over the last two or three years to make up their own minds.


Guys, I don't want to jump on you here, but the leading Democrats on Capitol Hill are responding to this.

Let's dip in a little of this, meanwhile, get their take on this.


SEN. DIANNE FEINSTEIN (D), CALIFORNIA: ... report, we found no evidence that the conclusions by department prosecutors were affected by bias or other improper considerations.

Rather, we determined that they were based on the prosecutor's assessment of the facts, the law and past department practice.

What the I.G. did conclude was that James Comey violated Department of Justice policies on three occasions, with his July 5 press conference, his October 28 letter to Congress, and his November 6 notification to Congress.

Now, many of us agree on that conclusion. And the I.G. report repeatedly says that the Justice Department forbids discussion about ongoing investigations.

Again, let me read a quote from the report: "Comey engaged in ad hoc decision-making based on his personal views, even if it meant rejecting longstanding department policy or practice. We found unpersuasive Comey's explanation as to why transparency was more important than department policy and practice with regard to the reactivated midyear investigation., while, by contrast, department policy and practice were more important to follow with regard to the Clinton Foundation and the Russia investigations.
Department policy and practice is to not discuss investigations."

And, for me, that is the key takeaway today.

CAVUTO: All right, we're monitoring.

These are prominent Democrats responding, of course, to the I.G. report that is out today.

Another one joins us right now, a special guest here, Val Demings, Democrat of Florida, on -- who sits on House Judiciary Committee.

Congresswoman, thank you for taking the time.

What do you make of all this?

REP. VAL DEMINGS (D), FLORIDA: Well, I will tell you what.

We finally have seen the long-awaited I.G.'s report. And I think certainly it clearly demonstrates that Director Comey violated FBI code in his handling of the Hillary Clinton investigation.

But it also, at the same time, I think, demonstrates that Director Comey was not motivated by any political bias. And so, you know, the report is out. And we're glad to see it.

CAVUTO: He was considered insubordinate, in that he should have deferred to the Justice Department. That's the way it goes.

I guess his comments in the past, as you know, Congresswoman, have been, well, I would have done that if they would have done something about this or at least updated people on what's going on and the revelations that came to light.

So, what do you make of that and that he moved and did what he did because of Loretta Lynch and those at the Justice Department did not and would not?

DEMINGS: Well, we know that he basically acted alone in this case.

He says that it was more about transparency. But I do believe, having served as a 27-year law enforcement officer, that following policies and procedures and rules are very, very important.

But what we do know is that there is nothing in the I.G. report that demonstrates that any action taken by Director Comey helped or hurt Secretary Clinton.

To the contrary, we believe it helped President Trump.

CAVUTO: If you wanted to go get Donald Trump, and you're James Comey, and you have Russian intelligence, wouldn't you want to happily share that?

DEMINGS: Well, what I can tell you is, as a career law enforcement officer, I have had an opportunity to work very closely with the FBI, their agents.

And what I have always seen is that they're not ones who really like the limelight. They are -- usually have their heads down, very involved in their investigation.

And they allow the facts of the case to follow them or they follow the facts to the truth. And so I have no reason, really, to believe that there was any preconceived notion or that they were out to get anybody in that case.

I just think that...

CAVUTO: Well, a lot of your colleagues think that if -- by raising the e- mail server issue so close to the election, Congresswoman, Comey did reveal that and did compromise that.

But if he was so intent on doing that, he would also be just as zealous to release information on this Russian thing, if it was available to him, and he didn't do that.

DEMINGS: Well, we do know, clearly, he handled the two quite differently.

He called a press conference, and clearly gave information about the investigation on Secretary Clinton, didn't make mention...


CAVUTO: So, do you think he favored Donald Trump? Because Republicans say quite the opposite. You say what?

DEMINGS: Did not make mention of President Trump and any Russia investigation that may have been going on at the time.


DEMINGS: But, no, I do not believe the A.G. report shows us anything that would indicate that he had any bias one way or the other.

CAVUTO: Or that he even had that information at the time. Right? There are some people who doubt whether at that time there was anything to go on.

DEMINGS: That's absolutely correct.

CAVUTO: OK. All right.

Congresswoman, very good having you. Thank you for taking the time. I appreciate it.

DEMINGS: Thank you.

CAVUTO: All right.

Well, back to New Jersey. All things go back to New Jersey, where you can place your bets and you can start legalized sport betting. The guy who likes the idea, but doesn't like all the other ideas -- after this.


CAVUTO: You know, there's a lot of money to be made now in, well, gambling. That, we know. And now that you can just get revenue from it in states like New Jersey, where they're pursuing it right now, and sports gambling and sports betting and all the like, it could be a treasure trove.

It started out with Chris Christie wanting to make it happen in New Jersey.
It has happened under this Democratic governor's watch.

New Jersey Senate President Steve Sweeney on what to make of that right now.

Senator, very good to have you.

Where are you on this and how much revenue this could mean to the Garden State?

STEVE SWEENEY (D), NEW JERSEY STATE SENATOR: Yes, it was a great victory for us. And Governor Christie, myself, Senator Lesniak, we all worked together to get it done.

CAVUTO: I remember.

SWEENEY: But it's not a big revenue number, Neil. It really isn't.

It's more about jobs. There's potential a increase in jobs, help our racetracks. We're scoring in our budget maybe $25 million total from sports betting.

CAVUTO: Is that right?

SWEENEY: I think everyone -- yes.

Everyone -- I think everyone has this idea that it's the end-all and the be-all. But we set the tax rate at 8.5 percent. If you tax it too high, Neil, people stay with the bookies. It makes no sense.

So, we're trying to keep the tax rate lower, unlike some neighboring states, who are looking at higher tax rates.

CAVUTO: Well, Governor Murphy, the newly elected and sworn-in Democratic governor, has spending plans that go beyond that $25 million.

Now, since he failed to get through and because of resistance like yours and others a millionaire's tax, where is that money going to come from to get all this stuff?

SWEENEY: Neil, I keep saying this. We have got to look at -- we have structural deficits in this state, in New Jersey, that no amount of money is going to fix. We can't pour any...

CAVUTO: But you are the only Democrat in the state, sir, who realizes that.

And I worry that basic math seems to be an alien concept to a lot of people, including the governor.

SWEENEY: Well, you know, Neil, it's -- some people say it's courageous to raise taxes. It's not.

The courageous thing to do is to actually fix what is wrong. In 2011, we did benefit reform. But it's -- that's the tough stuff to do. And people want to run and hide from it, but we have problems that be fixed by raising taxes.

CAVUTO: All right.

But, obviously, your influence and others were able to stop that planned tax hike on millionaires and the rest. But the governor seems to be seeking out revenues elsewhere.

And I'm wondering if he goes after businesses, many of whom are chafing at the possibility that they could be the next on his target list. What do you think of that?

SWEENEY: Neil, like I said, we're concerned all the way around that, you know, we're not really addressing the structural problems.

I'm repeating myself. The structural problems...

CAVUTO: You say, we're not. Or it is he not? Is the governor not?

SWEENEY: Well, the administration isn't at this time.

And what we need to do is get in a room with the administration and start really having real dialogue on how we fix what is wrong in New Jersey.

You know, we did the sales tax increase back in 2006 that I wouldn't vote for. And they said if we did the sales tax, it would fix everything. It was $1.8 billion. That's what 1 percent is. And, unfortunately, we have had it 12 years now, and nothing is fixed.

CAVUTO: So you think we have got to get into a room. You're both Democrats, you and the governor. You're the second highest ranking Democratic official in the state.

I would imagine, if anyone can get into that room with the governor, it is you.

SWEENEY: Well, we're trying, Neil.

CAVUTO: All you have to do is say, Governor, I'm here, how you doing?
Come on.

SWEENEY: Well, I made a phone call, just so you know, today, saying, we're out of time, we need to start working through this and have an honest dialogue.

CAVUTO: What does he tell you?

SWEENEY: Whether we like -- well, I'm going to get an answer, I think, hopefully by the end of the day today.

But, at the end of the day, we have to deal with...

CAVUTO: You're the Senate president, Steve. You are the Senate president.

You're not like some, you know, Joe Schmoe like me calling the governor's office. You're the second highest ranking Democratic official in the state of New Jersey, and he's not getting back to you?

SWEENEY: Well, the problem right now, Neil, is they don't want to hear what I have to say. And I understand that.

But we -- I really don't want to hear what he has to say. So, you know what that means? We get in a room, we talk, and we work things out or we try to work things out.


CAVUTO: But you're not getting in a room. You're not talking to each other.

SWEENEY: Well, I'm hopeful that we start tomorrow again. We have had a couple meetings with the administration.

CAVUTO: But the onus shouldn't be on you. The onus should be on the governor. Right?

SWEENEY: Hey, listen, I'm not going to put it all on him.

I'm going to be -- it's on all of us to get in a room, the speaker, myself, and the governor. And we need to do it now, because we're not going shut government down.


SWEENEY: We might not agree on what everyone has talked about, revenue raisers.

And we're being criticized for not having the courage to raise taxes. It's not about raising taxes. It's that we know that that raising of the taxes is not going to fix the problems we have.

And New Jersey is a tax-weary state, Neil. You're a resident. You know.

CAVUTO: Yes, indeed.

SWEENEY: I hear people every single day in the gym early in the morning saying, please. They're trying to change the name of taxes to investments.

Well, investments is spending and revenues are taxes. You can call it whatever you want. But when they say, well, we need the investment side, well, that is the spending side. And the revenue side is the tax side.

And we're not talking about the things that need to be done, because look, our pensions and health care are going to take up 30 percent of our budget pretty soon. That's insane.

CAVUTO: But he's not doing anything to rein those costs in or at least even address the growth.

Chris Christie, whether people liked him or not, I know you were working with the former governor in this regard, at least slow the growth. There's no sign here that even that is being addressed now. So, you guys are going to run out of money fast.

SWEENEY: Neil, a couple years ago, I did a 2 percent property tax cap.

And I tell everybody, I regret not doing zero, because New Jersey is unaffordable. Its average property tax is $8,600 a year. It's well beyond middle class and working poor people to be able to afford to stay here.

The problem is, they're the ones that can't leave. The wealthy can.

CAVUTO: All right, Steve Sweeney, thank you very, very much.

I feel a little better after our chat, because all the calls we have made to Governor Murphy's office, I thought he just didn't get back to me because he doesn't like overweight anchors. It turns out he ignores bigwigs in his own party. So, I feel a little better.

Senator, thank you very, very much.

SWEENEY: Thanks, Neil. Thank you.

CAVUTO: All right, fair and balanced. That call is always out, Governor.
Come on. We don't bite.

More after this.


CAVUTO: All right.

We are a half away -- hour away, I should say, or thereabouts from hearing from Christopher Wray, the FBI director, to comment on a lot of these developments today and what he makes of the I.G. report.

Ahead of that, I have Robert Ray, the former Whitewater independent counsel, what he makes of it all.

I am confused, Robert, because Democrats find something to complain about, and it's fair game. A lot of Republicans, the same thing.

What about you?

ROBERT RAY, FORMER INDEPENDENT COUNSEL: Well, I mean, yes, sure they do on both sides of the political process.

I suppose they're weighing in to take advantage of whatever they can find in a 500-plus page report.

Let me tell you what I think.


RAY: What I think it reflects a colossal failure of leadership, not only within the Department of Justice, but also from President Obama on down.

Now, remember, the report, in part, faults a number of people, prominently among them Jim Comey. But there are others who do not escape criticism.
And that includes the former Attorney General Loretta Lynch, the deputy, Sally Yates, and indeed even President Obama, who commented early on in the investigation and frankly did considerable damage as a result of his comments from October of 2015, suggesting that there was really no there there regarding the Clinton e-mail investigation.

So, you know, in the vacuum that was created as the result of the fact that, frankly, Loretta Lynch was someone who should have stepped aside from leading the investigation and didn't, and, similarly, you know, Sally Yates seems to be intimidated by Jim Comey, and then, Jim Comey, of course arrogates to himself the powers of being a prosecutor, rather than just simply limiting himself to being the FBI director.

CAVUTO: But what do you make giving him the benefit of the doubt and say he had to do that because his higher-ups would not?

RAY: I think he -- I mean, he has a point.

It's understandable. Michael Horowitz, the inspector general, I think appropriately, weighs in with, wait a minute now, but department procedure is that investigators do investigations. They don't act as prosecutors.
They don't announce decisions. And it's contrary to the Department of Justice policy.

I think all that is true. Jim Comey in an op-ed that will appear in tomorrow's New York Times that it's not such a simple decision. These were all very, very hard decisions. And I grant him that.

But you're right. In the vacuum that was created by the absence of leadership, Jim Comey stepped in. You can criticize that judgment. I think he probably felt that he did the best he could under the circumstances.

But the -- basically, all of the sort of collateral consequences that flow from the lack of leadership from the top on down, that's the mess that was created that occasions this 500-page report.

CAVUTO: But, Robert, I remember the July 2016 presser. It wasn't a presser. It was a statement, what have you.

And one of the things that struck me at the time was that he made it very clear at the beginning, I'm not going to take this any further, and then afterwards said she was sloppy, she was reckless and all that stuff.

And I talked to a lot of legal scholars who look at this and said he should have taken harsher action, and didn't. I know it's water under a legal bridge here. What do you make of that?

RAY: That's the criticism that has come from, among others, the former Attorney General Michael Mukasey.

CAVUTO: What about you?

RAY: And I think that is -- he makes a substantial point.

I don't like to see the exercise of criminal power with regard to a situation in which, even if the statutes allow it, to prosecute in the absence of criminal intent. I think that's a dangerous game to play.

CAVUTO: And that was the issue for him as well, too. There was no clear criminal...


CAVUTO: ... that could be proven.

RAY: I think that's right.

Right. And I think the question is, unless you can prove really an extreme case of gross negligence, bordering on recklessness, in other words, the equivalent of intent, you ought not to be prosecuting.

CAVUTO: OK. Right.

RAY: I think that is the judgment that Michael Horowitz came to, that that was correct.

But along the way, look at all of the host of problems that were occasioned by this investigation, when leadership wasn't in place.

CAVUTO: Robert Ray, thank you.

With all this breaking news, we did want to pick your fine brain on all of that.

We're going to hear from the present FBI director and what he makes of all of this, Christopher Wray. Very rare to him to have a statement on this.
And, of course, he will talk to reporters and get his take on this and what happens to the FBI, where to from here. So much more.

That will do it for us.

"The Five" is next and, of course, that presser coming up as well.


<Copy: Content and Programming Copyright 2018 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2018 ASC Services II Media, LLC. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of ASC Services II Media, LLC. You may not alter or remove any trademark, copyright or other notice from copies of the content.>