This is a rush transcript from "Hannity," August 19, 2010. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Tonight, we are following the very latest on the Ground Zero mosque in New York City. Now opposition to the project is growing. And in just a moment you will hear directly from former New York City Mayor Rudy Giuliani on this extremely sensitive issue.

But first earlier today Governor David Paterson of New York spoke out again on the matter urging the developers of the project to consider moving the mosque away from Ground Zero.

Take a look.


GOVERNOR DAVID PATERSON, D-N.Y.: What we would like to do is promote some ethnic and cultural understanding even before the first brick of the building is laid.

And to that end, I've invited them to a dialogue with myself and maybe others who might have some ideas as to how to bring about a solution that would be favorable to everyone.


HANNITY: And A group of 9/11 families is calling for exactly that. They want the developers to understand how painful this project is for them and they have released this chilling new video.

Take a look.


UNIDENTIFIED MALE: Lost half our family on 9/11.

UNIDENTIFIED FEMALE: When the plane was hijacked, first call came from Peter about quarter to 9. And the last words from him was oh my God, oh my God. And we looked up at the television and we saw the plane hit the building.

UNIDENTIFIED MALE: This mosque -- it's wrong. It's so wrong.


HANNITY: And as promised, we are joined now by former New York City Mayor Rudy Giuliani, as well as Florida Attorney General Bill McCollum who is running for governor of that state.

Gentlemen, welcome come back to the program.



HANNITY: All right, Mr. Mayor. Look, you've had some -- some very strong words. You've said they have a right to build here. But you're questioning the judgment. You're pointing out how divisive this is.

Why don't you explain to people why you believe that's the case?

GIULIANI: Well, I mean the reality is, the theory of this mosque, if you can believe them, is they want to do healing. They want to create inclusiveness. And of course, what they are doing by putting it up is offending the people that have been the most hurt by September 11th.

They are creating tremendous anguish for the families who don't deserve any more anguish.

My goodness, I mean, I -- knew many of the people that died, some of them were close friends of mine. I've gotten to know many of those families really, really well. The last thing you would want to do, if you were interested truly in healing, is to create more anguish for them, more pain for them.

The reality is, you can't escape the fact that this attack was done in the name of Islamic extremism.

I understand, you understand, that most Muslims are good people. They don't endorse this kind of activity. But the simple fact is that when the Pope was faced with this issue with Auschwitz where there was a convent right near Auschwitz he had a perfect right to keep the convent there.

The nuns had a perfect right to keep it there. Understanding the anguish that it might cause, he took the convent back and put it somewhere else.


GIULIANI: That's if you're a healer. So they have to decide whether they're healers or warriors. What part of the Quran are they going to emphasize?

And I think Governor Paterson's suggestion here -- I called the governor today. The governor has -- has taken one of the most responsible positions of anyone in saying he'll meet with them and try to find another place for them.

HANNITY: Yes. But what's fascinating is he's now reached out his hand a number of times. Offered perhaps even state land.

Sixty-three percent of New York --


HANNITY: Hardly a Democratic state. Hardly a liberal state, 63 percent of New Yorkers oppose this mosque. And they say this is about healing, why won't they even sit down with the governor of New York?

GIULIANI: Well, they are very close to really allowing us to draw the conclusion that they are not about healing, that they are about division. That they are about making a political statement.

Why you would turn down the offer of Governor Paterson -- a Democrat, a good man. A man who's been involved in racial healing all of his life. He has no ulterior motive here but to try to find a solution.

I don't know. Maybe they don't want to answer questions about where the money is coming from.

HANNITY: Well --

GIULIANI: Maybe they don't want to answer question -- maybe they don't want to answer questions about the imam saying that America was an accessory --

HANNITY: To 9/11.

GIULIANI: To September 11th, I mean.

HANNITY: Yes. Well --

GIULIANI: Yes. That's the reason, Sean. That's the reason I gave the money back to the Arab sheik.


GIULIANI: Or prince who gave us $10 million because he wanted to say that American foreign policy was an accessory to September 11th.

HANNITY: And that -- and by the way that was -- that was the right and courageous thing to do.

Mister Attorney General, Bill, it's good to have you back on the program. Thanks for being with us.

I want to ask you from a legal standpoint --

MCCOLLUM: Good to be back with you, Sean.

HANNITY: I want to ask you from a legal standpoint, Mr. Attorney General. This is important. Because they are now saying they might accept money from Iran. They might accept money from Saudi Arabia.

This guy says he wants America to be Sharia compliant as the mayor pointed out that, you know, he accused -- 19 days after 9/11, he accused America of being an accessory to 9/11. Wanting America Sharia compliant.

I -- is there anything legally, you see, that bothers you about this imam that's spearheading this?

MCCOLLUM: Well, a lot of things do. First of all, Iran is a terrorist state. They are on the list of the remaining terrorist states and we forbid business with a lot of the countries that are on those lists. There are real questions as to whether any money can come in here. I think that's perfectly illegal to do.

On top of that, Sean, you may remember that I founded and chaired for a number of years the terrorist task force in Congress before September 11th. And one of the things that really is critical here with this imam and the connections that he's got, is that the radical Islamists -- we're still at war with them. We're still at war with Al Qaeda.

They see this as a sign of weakness. This is not just an insult to the families of the victims of September 11th. It's also a problem for our soldiers that are still fighting in Afghanistan and Iraq and the efforts that we're making to defeat this enemy we're at war with.

It's a sign of weakness to the way they view things.

HANNITY: From a legal standpoint, Mr. Attorney General -- and Mr. Mayor, I'll ask you next about this. When somebody says that America should be Sharia compliant -- we know what life under Sharia is. We've been examining it on this program now for the better part of this week.

And that is that women don't have rights. Women can't drive in many Sharia countries or countries with Sharia law. Women are stoned to death.

What does he mean by that?

MCCOLLUM: Let me respond. Well, first of all, Sharia law is not law in the United States. It never should be a law. I know there are people who want that and they say --

HANNITY: This imam wants America Sharia compliant.


MCCOLLUM: It's -- that's right. The imam wants that and that's not going to be and is not the law. Would not be in Florida. I'm sure it's not in New York. And in addition, the idea of taking money from a terrorist state and bringing to United States, I have to check the books but I believe that that's against the law, too.

GIULIANI: Yes, it is.

HANNITY: Yes. Mr. Mayor --

MCCOLLUM: So I think that all of this is wrong. All of this is wrong.

HANNITY: Yes, and Mr. Mayor --


HANNITY: He's also called for a judiciary within a judiciary. In other words Sharia courts. Something Europe has experienced.

GIULIANI: Well, you know, if these people who are so concerned about freedom of religion, which I am very concerned about, how come they are not focusing on that?

HANNITY: Good point.

GIULIANI: I mean that would be an outrageous violation of separation of church and state if all of a sudden we had Sharia law imposed on us or we have -- if we have an imam here who wants to impose Sharia law on the United States, this is an imam who has no regard at all for the doctrine of separation of church and state, freedom of religion.

The reason I say they have a right do it is they have the property. They have certain rights with the property. I really believe that we have to honor freedom of religion.


GIULIANI: But that doesn't mean in honoring freedom of religion, we insult people. They can act here like healers if they want to or they can prove to us that they're not.

HANNITY: Yes, well --

MCCOLLUM: It is just very wrong, Sean. The whole thing legally is wrong in terms of the Sharia part of this. That part also is a weakness sign because we are giving in to something they've been wanting to make a statement on for a long time.

This imam -- you know, there are practicing Muslims that the mayor and I would say we know --

GIULIANI: Absolutely.

MCCOLLUM: If they had a, you know, mosque somewhere else, if it were the right group. This imam is not acting according to what we would normally find acceptable. And to allow this to go on is wrong. It's maybe --

HANNITY: I got to tell you.

MCCOLLUM: -- legally wrong. It's certainly morally wrong.

HANNITY: And in spite of all the controversial statements that he made -- America is an accessory, America should be Sharia compliant -- our State Department is paying for his trip to the Middle East which I just --


HANNITY: You know.

MCCOLLUM: This administration is unbelievable what they're doing. It's unbelievable the effort to embrace this part of the world in some way -- you know, peace through strength is Ronald Reagan's theme. Now we've got a president who's actually trying to appease, that's the sort of the chamberlain part of this.

We cannot appease the radical Islamists.

HANNITY: All right. Guys, we --

MCCOLLUM: That there's no way you win the war that way. You cannot do that.

HANNITY: All right. We're going to be watching, by the way, your primary I believe is on Tuesday?

MCCOLLUM: It's on Tuesday, Sean. And it's been a close race. We pulled ahead in the polls recently, I'm very pleased with it right now, for governor. My opponent outspent me by a lot but the basic grassroots Republicans and Jeb Bush and --

HANNITY: All right.

MCCOLLUM: And the Florida Chamber of Commerce are all supporting me, endorsing me, coming in and helping in.

The mayor is here today --


MCCOLLUM: Yes. The mayor's supporting me.

GIULIANI: This is the attorney general who began the effort --

MCCOLLUM: He's here. He's here.

GIULIANI: This is the attorney general who began the effort against Obamacare.

HANNITY: All right.

GIULIANI: If there's anybody who can take on --

HANNITY: That's true.

GIULIANI: -- the problems we have, it's Bill McCollum. This is the guy who started. Everybody else followed. He's the one who started it.

MCCOLLUM: That you, Rudy. You're a great friend.

HANNITY: We'll be watching it on Tuesday night. We'll have full coverage right here on "Hannity."

Gentlemen, thank you for being with us.

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