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The Rachel Maddow Show, Transcript 7/21/17 Manafort cancel Senate meeting

Guests: Bob Bauer, Walter Dellinger

Show: THE RACHEL MADDOW SHOW Date: July 21, 2017 Guest: Bob Bauer, Walter Dellinger

RACHEL MADDOW, MSNBC HOST: Good evening, Joy. You`re working seven day as week again, aren`t you?

JOY REID, MSNBC HOST: I am. I blame the White House.

MADDOW: Exactly. All of us are like surveying our failing health, you know what I mean?

REID: Lots of eye drops happening around here.

MADDOW: Yes, eventually our bosses are going to relent and start mainlining us vitamins all day long while Trump is president.

REID: Yes, hopefully.

MADDOW: Hope you get some sleep. Thank you.

REID: Thank you. You too.

MADDOW: And thanks to you at home for joining us this hour.

You know, I have to tell you, we have just had a remarkable communication from the president`s top lawyer. Now, the president`s top lawyer on Russia matters had been Marc Kasowitz, a New York lawyer who had represented the president on previous things like the Trump University fraud case and keeping Mr. Trump`s divorce records secret.

One of the many things that happened in today`s news concerning the president is that Marc Kasowitz was either demoted from his lead role on the president`s legal team, or he has left the legal team altogether. It`s not entirely clear which.

But in Mr. Kasowitz`s place, now apparently leading the president`s representation on matters related to Russia is John Dowd, a Washington, D.C. lawyer who is like Mr. Kasowitz, also known for having a hot temper. Now, you might remember last night on this show, we had "Bloomberg News" reporter, investigative reporter, Greg Farrell, here.

Greg Farrell and a colleague yesterday reported for "Bloomberg this seemingly very important story. You see the headline there, Mueller expands probe to Trump business transactions. The reason I say this was a seemingly very important story is in part because of the freak out it seems to have occasions in the White House. That "Bloomberg" article came out yesterday, mid morning. It was updated a couple of times during the day, but initially came out mid-morning yesterday.

By the time we were on the air last night, these were the stories that were breaking in "The Washington Post" and in the "New York Times" about the president considering his pardon powers, having his legal team discuss who he`s allowed to pardon, including considering the question of whether he`s allowed to pardon himself, and the White House trying to cook up ways to discredit Robert Mueller, the special counsel`s investigation, giving clear indication that the White House is now basically trying to find a way to fire the special counsel. And to that end, they`re trying to cook up ways that they would be able to justify that firing if and when they do it.

Those stories broke last night while we were on the air. Now, what led to that incredible turn in the news, what led the president to consider those radical options, in that news that was broken last night? What were the things that happened that drove the president to start considering these options that you would consider a president to do only as his very last resort? What pushed him to that point?

Well, according to the reporting from the "Washington Post" last night, quote: the president is irritated by the notion that Bob Mueller`s probe could reach into his family`s finances. Quote, his primary frustration centers on the prospect that the Mueller information could spread into scrutinizing many years of Trump deal-making.

Quote: The president told top aides he was especially disturbed after learning that Bob Mueller would be able to access several years of his tax returns. Quote: A close adviser to the president is quoted by "The Post" saying that the president`s tax returns are outside of Mueller`s investigation. One of the president`s lawyers, Jay Sekulow, told "The Post" that the president`s real estate transactions are, quote, far outside the scope of a legitimate investigation. All of that explanatory reporting and work down from the "Washington Post."

Simultaneously, "The New York Times" reporting last night that Bob Mueller`s inquiry evolving into an examination of Trump`s financial history, quote, has stoked fears among the president`s aides.

So I say that "Bloomberg" story yesterday was really important in part because of what it seems to have occasioned, "Bloomberg" reports that the president`s finances and his financial transactions and his business transactions are now being investigated.

Also, "The New York Times" reporting within the last couple of days that Deutsche Bank, a boink -- a bank -- a boink.

Deutsche Bank, a bank that Trump has hundreds of millions of dollars in loans with, Deutsche Bank is having its Trump transactions reviewed by banking regulators and Deutsche Bank expects to be handing over their Trump-related records to Bob Mueller very soon.

So, you take all that together, what happens over the course of the last couple of days, and particularly with that Bloomberg story, is that it becomes clear that this thing is taking a turn into finances. They are following the money.

It`s about finances. It`s about business transactions. And the response from the White House, as of last night is that the White House is going nuclear, right? Pardons. Maybe the president pardoning himself.

Maybe firing the attorney general, right? Prepping to fire the special counsel. Just nuclear. Like break glass in case of emergency. They were smashing the glass last night.

And so, having sort of lived through that breaking news last night wondering what occasioned that incredible turn, we decided to try to chase it down in a granular sense to figure out all we could about how the White House was explaining the president`s new radicalism against the Russia probe.

And there was one piece of the White House reaction that would be fairly easy to chase up. It was a very specific quote. It was from a named official and it stuck out as kind of strange. It was from that initial "Bloomberg News" article which said the Mueller investigation is shifting to look at Trump`s business transactions.

In that article there is a quote from the man who is now apparently the president`s top lawyer on Russia issues. It`s from John Dowd. This is John Dowd`s quote to "Bloomberg".

Quote: Those transactions, meaning Trump`s business transactions, are in my view well beyond the mandate of the special counsel. They`re unrelated to the election of 2016 or any alleged collusion between the Trump campaign and Russia. And most importantly, he says, they are well beyond any statute of limitations imposed by the U.S. Code.

Who said anything about statute of limitations? Why are you bringing that up? The statute of limitations for prosecuting what crimes exactly? What are we talking about here?

This was -- I mean, the president`s lawyer brought up the prospect that the president`s business activities are crimes and they`re beyond the statute of limitations. He brought that up apparently unprompted, which is unusual.

So, it wasn`t a blind quote, had a name attached to it. So we contacted John Dowd today, we contacted the president`s lawyer today, actually tonight, to see what that meant, to see whether there was something in particular about the president`s past business transactions that made him look up the statute of limitations for certain crimes.

And Mr. Dowd took our call and he told us, quote: We have no evidence that any of these entities, meaning Trump business entities, we have no evidence that any of these entities are under investigation. He then told us, quote: I`m beginning to think it`s not true. I`m beginning to wonder where the hell it came from.

He then told our producer that he would never speak to him again, quoting, he told our producer, quote: This is the last call we`ll ever have.

I`m beginning to think it`s not true. I`m beginning to wonder where the hell it came from. This is the last call we`ll ever have.

Some days are weirder than others in this job. But you never really expect them to get that weird in conversation with the lead attorney for the president of the United States. But we have had -- it`s been a weird day. And because it`s Friday, we`ve had a bunch of breaking news tonight. We have a flurry of news break just in the last couple of hours.

If the president is going nuclear, to try to stop the Russia investigation, to try to stop Robert Mueller`s investigation, as you know, he basically has two paths to do that.

The first path goes through the person that`s now overseeing the Mueller investigation, Deputy General Rod Rosenstein. If the president can`t persuade Rod Rosenstein to fire Mueller, and it seems like he probably can`t, then he could order Rod Rosenstein to fire him and if Rod Rosenstein says no, he can fire Rod Rosenstein. And then he would have to keep firing every other ranking person at the Justice Department from the top down until he found someone at a high rank who would fire Bob Mueller. That is a hard path. That is potentially a long path.

What became clear this week is there is an easier and shorter path for the president. Quicker way to do it would be for him to put someone new, instead of Rod Rosenstein in charge of overseeing the Mueller investigation. And the way you do that is just to kill Jeff Sessions, to proverbially, politically kill off Jeff Sessions.

I mean, he may love Jeff Sessions, but if Jeff Sessions gets fired or quits as attorney general, Trump could appoint a new A.G. who would not be recused from the Russia investigation, who would not be recused for overseeing Mueller. And then that new attorney general who he appointed to replace Jeff Sessions could fire Bob Mueller, and then the White House would retroactivity explain it with all of the stuff they`re trying to cook up to try to undermine Mueller`s credibility.

That scenario is what is looming now over the question of the future of the Russia investigation, the prospects of what the president might do to try to stop it. And that, that coming into focus this week, with the president turning on Jeff Sessions the way he did, and everybody expecting Jeff Sessions to resign, that put this bombshell from "The Washington Post" tonight in a whole new light.

"The Washington Post" tonight breaking the news that on U.S. intelligence intercepts, the outgoing Russian ambassador to the United States, Sergey Kislyak, was heard telling Moscow, telling his superiors in Moscow, quote, that he discussed campaign-related matters, including policy issues important to Moscow with Jeff Sessions during the 2016 presidential race.

Now, initially Jeff Sessions denied ever having any contacts with Russian officials during the campaign. He then later had to admit that yes, he did have contacts with Russian officials during the campaign. That admission immediately preceded Jeff Sessions having to recuse himself from all campaign related investigations, including the Russian one.

But even when Jeff Sessions was admitting, was finally admitting that, yes, OK, he had talked to Russians, even when he was admitting that, he was explicit in still denying what "The Post" has just reported.


JEFF SESSIONS, U.S. ATTORNEY GENERAL: Let me be clear: I never had meetings with Russian operatives or Russian intermediaries about the Trump campaign.


MADDOW: That was Attorney General Jeff Sessions in March but the "Washington Post" reports tonight that Ambassador Sergey Kislyak`s accounts of conversations with Jeff Sessions one in April and one in July were intercepted by U.S. spy agencies.

Quoting a former official, "The Post" says that the intelligence indicates that Sessions and Kislyak in fact have substantive discussions on matters, including Trump`s positions on Russia-related issues and prospects for U.S.-Russia relations in a Trump administration.

Now, it is entirely possible that the Russian ambassador was lying to his bosses at the Kremlin, and really he and Jeff Sessions were talking about Candy Crush and gardening and other stuff it`s so weird that they both love, right? But with Jeff Sessions all but being pushed out of the administration right now, right, with senior aides telling "The New York Times" they were stunned when Jeff Sessions didn`t quit as attorney general yesterday morning after the president threw him under the bus on Wednesday night.

I mean, this being the new front page story in "The Washington Post" tonight, newly raising the question of Sessions` own contacts with the Russian, newly raising questions about whether he further lied about his contacts with the Russians during the campaign. That is either the best timing for Sessions or the worst timing for Sessions, because what the president is publicly complaining about when it comes to Jeff Sessions is that Sessions recused himself from overseeing the Russian investigation, which he shouldn`t have done. The president didn`t want him to do that.

But this is exactly the reason why Jeff Sessions so truly really did have to recuse himself from the Russian investigation.

So, on the one hand if you`re attorney general resignation watch, this looks like bad new damning information about Jeff Sessions maybe that will push him to resign. On the other hand, if the reason he was going to resign is because the president was complaining about his recusal, this bad news about Jeff Sessions and his contacts with the Russians further bolsters the fact that Jeff Sessions recused himself from the Russian probe, as he should have.

So, Attorney General Jeff Sessions has so far given no sign that he would resign. If he does resign, it would not be terribly surprising and it could be a sign that the president is starting to move to try to shut down the Russia investigation under Robert Mueller, which will precipitate a major and presumably bipartisan crisis in this country. We do not know exactly what sparked the president`s newfound sense of urgency on wanting the Russia investigation shut down. W

hite House staffers and lawyers as "The Washington Post" reported have been indicating really it`s the turn toward the president`s finances and his business transactions and his taxes that have ratcheted this thing up to DEFCON 1 for him. That`s a no go area for him. Shut this thing down now.

Other long time observers of the president have said even before this started happening that the thing to watch for with him, the sort of -- I don`t know if it`s the right metaphor, his kryptonite, his Achilles heel, his red line, long time observers of this president have said for a long time now that the other thing that might send him into panic mode in any kind of crisis, in any kind of confrontation would be if anything from his life, from his political life, starts to affect his adult children in a negative way.

There have been serious issues raised as to whether or not Jared Kushner has problems with his security clearance application. Whether or not Kushner not disclosing his own meetings with Russian officials on his security clearance application might open him to potential criminal prosecution. I should tell you that one of the prosecutors who`s been brought onboard the Mueller investigation recently secured a high-profile conviction for a DEA agent who deliberately left things off his security application.

So, Mueller`s team is experienced in prosecuting people for leaving stuff off of that form. If there are problems with Jared Kushner`s form, with his repeated nondisclosures, on his repeated re-filing of that security clearance application form, any resulting liability that he faces because of that might also accrue to his wife, the president`s daughter, Ivanka. Because the form, the SF86 security clearance application form, the way it asks its questions, it asks about you or your family having contact with foreign nationals. It doesn`t just ask about your own. It asks you or members of your family.

And so unless Ivanka disclosed Jared`s Russian meetings while Jared didn`t disclose his Russian meetings, Ivanka may be in a pickle and potentially be open to prosecution on these matters. And if that really is just personality wise and in terms of his values and in terms of what emotionally gets him, if that really is the kind of thing that would send the president into panic mode, that may be part of this as well.

Well, now tonight, "The Wall Street Journal" was the first to report they have had to refile and amend their financial filings because they left millions of dollars in dozens of assets off of their initial filings. Now, two days ago on this show, we spoke with outgoing head of the Office of Government Ethics, Walter Shaub, who resigned basically in frustration at the enormity of the ethical violations by the Trump administration and the Trump family. Walter Shaub warned us two nights ago that the president might try to do an end-run around his office basically around the person from that office who is next in line under Walter Shaub and who would be expected to take a lead ethics job in an acting capacity after Walter Shaub left.

Shaub warned us two nights ago that the president might instead -- instead of installing that person next in line that ought to have the job, he warned us that the president might instead go around that person who is next in line and instead pick somebody else out of the office. He warned us that the president might try to install a lower ranking ethics person from that office, a known person who is expected to be more lenient, would be expected to be softer on the Trumps.

Shaub warned about that two days ago and today, the president did in fact elevate that reputably more lenient, more pliable ethics official to be acting head of that office, and that is the person who signed off on Jared`s revised financial disclosure that got released today. And we`ve actually got one more piece of news about that that we`re going to be breaking in a few minutes which I think is important.

Meanwhile, Jared Kushner has been scheduled for interviews with the Senate Intelligence Committee on Monday, and this is new, with the House Intelligence Committee on Tuesday. So, two days in a row he`ll be meeting with the staff behind closed doors, Monday and then Tuesday.

And then, on Wednesday, we have just learned tonight -- I told you it was a busy night. On Wednesday, remember how we`re supposed to get live televised testimony on Wednesday from Donald Trump Jr. and Paul Manafort? Not anymore. Senator Chuck Grassley, the chair of the Judiciary Committee in the Senate, now says that`s not going to happen. He now says Trump Jr. and Paul Manafort will hand over documents and they`ll speak with staff and will talk to the committee at some point in the future, but not now.

In the meantime, though, Chuck Grassley is going to hold an entirely different hearing on Wednesday and he`s tonight filed a subpoena to compel testimony from the head of the research firm that paid for the Christopher Steele dossier of alleged Russian dirt on Donald Trump, that dossier that caused such a stir when it was published by "BuzzFeed" in January. It has a lot of lurid stuff in it that is still unsubstantiated. But honestly, it also has a lot of stuff in it that has been borne out by subsequent serious investigation.

This thing that`s going to happen on Wednesday that just got scheduled tonight, this is the thing I have been saying is coming. This is the thing I have been saying is coming from congressional Republicans and from Republicans who want to defend Donald Trump.

Senator Grassley has set the subpoena tonight to the head of Fusion GPS. He has canceled the testimony from Don Jr. and Paul Manafort and instead hearing from them next week on the collusion issue, the Senate instead will play host at a big, open, televised hearing to the big Republican pushback theory they have been gearing up with -- gearing up for on conservative media for a couple of weeks now.

This is the big pushback in which they will claim that there is a Russian scandal but it`s not a Trump-Russia scandal. It`s the Democrats. And the dossier on Trump, that`s the real Russia scandal. That`s from Russia and the scandal is about Hillary Clinton and the Democrats.

It`s -- we have known this was coming. Now as of tonight we know it is arriving Wednesday morning in the Senate. And the first subpoena has just gone out for that.

So, that`s all happened tonight. That`s all been reported tonight and also the White House spokesman, Sean Spicer, resigned today and Anthony Scaramucci was hired as White House communications director and there are many rumors that the chief of staff, Reince Priebus, is going to be next to go. And his former deputy chief of staff Katie Walsh, who already left the White House today, she went back to the RNC.

And the spokesman for the president`s Russia legal team resigned. And the man who had been the top lawyer on the president`s Russia legal team was apparently replaced and the guy who replaced him and is the new top lawyer on the Russia legal team just told us he doesn`t believe Trump`s business dealings or financial transactions are actually being investigated, and then he told us this was the last call we will ever have, and it was super weird.

So, happy Friday. Things are weird and a lot is happening. And mostly I have questions.

And tonight, we have structured the rest of this hour, the rest of the show to try to get me and get us some answers to those questions. So, stay with us tonight. It`s a lot, I know, but this is important stuff. This is an important time. Stay right there.


MADDOW: So, we`re still absorbing breaking news from "The Washington Post" which reports that according to U.S. intelligence intercepts that have been described by current and former U.S. officials, Russia`s ambassador to Washington told his superiors in Moscow that he discussed Trump campaign matters, including Russia-related policies with Jeff Sessions during last year`s presidential race. That`s a big deal because even once Jeff Sessions admitted that he did have contacts with Russian officials during the campaign, despite the fact that he previously denied it, even once he admitted to it, he explicitly said, as attorney general, he explicitly said when he had those contacts with Russians, he did not discuss the Trump campaign with any Russian operatives or intermediaries.

Now, "The Post" says, citing a former official, the intelligence indicates that Sessions and Kislyak had substantive discussions on matters, including Trump`s position on Russia-related issues and prospect for U.S.-Russia relations in a Trump administration.

Again, it could be that Kislyak was lying to the Kremlin and really he didn`t talk about anything of consequence with Jeff Sessions. But this story comes after the president told the "The New York Times" he wishes he had never chosen Jeff Sessions to be his attorney general. After senior Trump aides told "The Times" they were stunned when Jeff Sessions didn`t quit following the criticism from the president. He also told "The Times", he essentially hinted that Jeff Sessions had lied to the Senate in his sworn testimony during his confirmation hearings.

If Jeff Sessions does resign or the president fires him, if President Trump gets to nominate a new attorney general, one who presumably would not have to be recused from overseeing the Russia investigation, then it would seem like getting rid of Attorney General Jeff Sessions would put President Trump one giant step closer to being able to end the Russia investigation by firing Robert Mueller.

Is that the way to look at it? People who really understand the law here, who really understand how government lawyers work, is that correct? If that is correct, what would happen to the Russia investigation once Trump went after Mueller?

Joining us now is somebody who knows these things. Bob Bauer was former White House counsel to President Obama.

Mr. Bauer, I really appreciate you being here tonight. Thank you for your time.


MADDOW: Let me just ask you first about what I was just saying there about the removal of Attorney General Jeff Sessions. If he quits or resigns and the president does get to name a new acting attorney general and then appoint somebody new for that job, is that potentially a path for him to end the Mueller investigation?

BAUER: He might think of it that way. He or his lawyers might also think of it as a way the make sure that they exercise a little more control or feel they can exercise a little more control over Mueller. They may believe the deputy attorney general, Rod Rosenstein, is no longer able to do that. And as you know, they`ve expressed a concern that Mueller is expanding his mandate to include the president`s finances, that he`s, if you will, sort of veering out of control.

Sessions can`t do anything about it and they may feel that Rosenstein can`t do anything about it. So, they may feel their best bet might be to have a new attorney general who is not recused.

MADDOW: If -- if either through the Rosenstein path or through getting rid of Jeff Sessions path, they are able somehow down the road, to figure out a way to fire Bob Mueller, in that instance, is there any other part of the law enforcement -- any other part of the justice system in this country that could take up the investigation in Mueller`s wake?

BAUER: As a practical matter, I mean eventually while it might be difficult for them, there are road blocks along the way, if you will, to firing Mueller. President Trump could get there if that`s what he was determined to do. At that point, fundamentally, it becomes a question for Congress. I think at that point, the attention is going to shift from an incapacitated Department of Justice to a Congress who would have to consider articles of impeachment.

MADDOW: I believe -- I believe that in the abstract. I believe that as a student of political science. I`m also looking ahead, though, to what is going to happen in the Senate next week. I think in the Judiciary Committee, Senator Grassley is signaling with the subpoena he says he`s issuing tonight with his cancellation of testimony from Paul Manafort and Donald Trump Jr., that the congressional Republicans who more or less support President Trump are about to start a political counteroffensive to try to create a competing narrative, to try to make the Russia scandal a Democratic scandal, because it at least feels to me as an observer that that`s about to happen. It`s hard for me to believe that anything that the president is going to do about this Russia investigation would result in Republicans newly looking at this as potentially impeachable acts.

BAUER: I`m not certain. I think that if President Trump does something that members of Congress on both sides of the aisle have publicly warned him not to do and in his own interest he fires Mueller, having expressed dissatisfaction, being under investigation at all, of having the investigation expand to include finances, I think it might trigger a powerful counter reaction from Congress.

Obviously, that`s hard to predict. But this is going to sound too much to people like Watergate, too much like a president interfering with the law enforcement process in his own interest. And that`s something that`s going to resonate I think, frankly, across party lines.

MADDOW: Bob Bauer, former White House counsel for President Obama, I have two additional questions for you on very specific matters. Can you stick around for a bit to make me smarter?

BAUER: Certainly.

MADDOW: All right. We`ll be back with Bob Bauer right after this.


MADDOW: I have a tree falls in the forest question for you. If the president issues a pardon, do we have to know about it? Would he have to tell us? Is it possible he`s already pardoned somebody? Is it possible the prosecutors or investigators might just find that out when it comes time to file an indictment against that person but it`s never been publicly announced?

I think this is an answerable question but I have no idea what the answer is.

Back with us once again is Bob Bauer, White House counsel to President Obama.

Mr. Bauer, thank you again for sticking with us.

BAUER: Certainly.

MADDOW: I know that when presidential pardons or commutations are issued for all previous presidents, we have always known about it. There`s always been a public statement about it.

Is that legally required or could a president do this in a way that we didn`t necessarily know about it, at least if are the time being?

BAUER: I think it`s highly unlikely for a couple of reasons. And, of course, this depends on the degree to which the White House is careful about looking at the exercise of the pardon power. Who`s to say? Eventually, it has to become public or it`s useless. It`s an act of immunization. You have to have the pardon out there so whoever benefits from it can use it to their advantage.

Secondly, it`s very clear from the founder`s conception of the pardon power that it was meant to be an act of full public accountability. It was extraordinary power but it was balanced out by the president`s requirement of answering for it, for example, to the Congress, to the American public. And there`s never been a pardon that has been sort of issued surreptitiously and then revealed weeks later.

In truth, I think the answer to the question is, it is absolutely needs to be public. And then there`s a third tactical consideration or strategic consideration. In issuing the pardon, a president is going to want to be able to say that he issued it for appropriate reasons, in the general welfare. Not for any nefarious purpose.

And so, that president is going to want to trump at the grounds for the pardon that he or she is relying on, and that`s another reason why it would be a very public act, is a public defense of the exercise of the pardon power. I think in this case, we can imagine why this president would be advised to do that.

MADDOW: The grounds that makes me -- I said I only have two questions for you but you`ve sparked another one. I`m sorry. It`s a follow-up so we won`t be count it against my numbers.

The president obviously has the legal authority, has the power to issue pardons. But presumably the president could not issue a pardon in exchange for a bribe. He could not issue a pardon for an improper reason. Is it possible that if he pardons -- either he tried to par on the himself or pardons members of his family or other people from the administration specifically to obstruct the investigation into the Russia matter that the pardon itself while a legal act could be seen as an illegal obstruction of justice?

BAUER: Yes, an act in furtherance of an obstruction of justice. There`s some disagreement among legal scholars about this. I think the better view is that, clearly, if a pardon is issued in the president`s self interest, to, for example, to protect himself, his family or his aides, that would expose him to a charge of obstruction of justice. And the fact that he has pardon power wouldn`t save him.

MADDOW: OK. Last question for you, I mean it. We learned today that President Trump apparently met in person with specific U.S. attorney nominee, Jessie Liu, nominated to be the U.S. attorney for the District of Columbia. Ms. Liu disclosed that meeting to the Senate Judiciary Committee and some people expressed concern about the president putting himself personally in a meeting like that with a potential nominee, especially for the U.S. attorney for that crucial district.

How do you view that?

BAUER: I don`t know the details of this. I have not reviewed any detailed in the press. But I`m frankly troubled by it. I mean, I`m troubled by it, I`m trying to be fair about this, but I`m troubled by it because you have in various turns this president having private meetings with various senior people, officials in law enforcement, and they`re not just random meetings. He didn`t meet with the U.S. attorney for some distant state, which he doesn`t have any particular, you know, direct interest in at the moment.

And so, yes, I mean, I think there`s a question of whether in fact we`re going to have a Department of Justice and White House relationship which is run among traditional lines with accountability on policy which is perfectly appropriate but careful controls to make sure that it is not being, if you will, dictated to in its law enforcement decision making. It`s not being controlled by the executive in law enforcement.

MADDOW: OK. So, the bottom line on that, it is a red flag, but it is a red flag that points in the direction of a broader concern that we`re seeing -- that we have other red flags about.

BAUER: Yes, I would put it that way. It`s one of a piece with another similar behaviors.

MADDOW: Got it. Bob Bauer, White House counsel in the Obama administration, somebody who speaks very, very clearly on these matters, even what I don`t -- thank you for your time tonight, sir.

BAUER: Pleasure. Thank you.

MADDOW: All right. I still have a lot of questions, and I have somebody else lined up here tonight for our next interview who is perfectly positioned to answer my next round of stuff I just don`t understand about what could conceivably happen next.

Stay with us. This is going to be good.


MADDOW: So, we`re continuing tonight with sort of a list of questions that have been raised at least in my mind by the avalanche of news we`ve had over the last 48 to 72 hours. I talked at the top of the show about a very intriguing -- I would call it a provocative question raised by the president`s lead lawyer on Russian matters, John Dowd. He told "Bloomberg News" yesterday that Donald Trump`s business transactions are not only something that shouldn`t be investigated by the special counsel, he also said they are, quote, well beyond any statute of limitation imposed by the United States code.

I don`t know what he was talking about. We called up John Dowd to ask what transactions he was talking about, what crimes might be associated with those crimes, whose statute of limitations he`s been checking to see if it`s expired. He told us in response that he doesn`t think the special counsel is looking into Trump`s business transactions. He then told our producer who was on the phone with him that he would never speak to him again and then he hung up on him.

But aside from that sort of weird behavior, that is a serious question. What`s John Dowd talking about? What is the president`s lead lawyer talking about?

I mean, if there are Trump business transactions that happened long enough ago that they would fall outside the statute of limitations for prosecution as criminal matters, does that mean those things are out of bounds? Sort of not useful for the special counsel`s investigation?

I mean, the White House appears to be en fuego about this investigation turning toward financial matters and toward to the president`s business in particular. Should that be that upset about it? Should those matters be out of bounds particularly if any criminal liability there has expired because of time passed?

Joining us now is Walter Dellinger. He`s a former acting solicitor general under President Clinton.

Mr. Dillinger, thank you very much for being with us tonight. It`s nice to have you here.


MADDOW: Let me start with that first issue that the president`s top lawyer raised. He`s responding to news which he contests that the special counsel investigation has turned toward the president`s business transactions and financial transactions. He described any such transactions as being beyond the statute of limitations. I just love to hear your interpretation of what that means and its potential relevance.

DELLINGER: Well, of course, the Federal Criminal Code has limitations period within which you have to bring criminal charges or you know they`re done with. It could be two years. It could be four years. In some cases, it could be 10 years for the more serious charges. You`d have to know precisely what crimes the president`s counsel has in mind are beyond the statute of limitations. But that is one of the defenses at a criminal proceeding that the president could raise.

Two points about that, Rachel. First of all, that wouldn`t keep Congress from investigating it as grounds for impeachment, that kind of limitations period would not be a limitation on Congress because the nature of impeachment would have to be very serious matters but not necessarily technically within the criminal code. Being a criminal is not even necessary or sufficient.

Moreover, I think he`s making -- they`re making a larger point that -- they`re setting up an excuse, a pretext for attempting to discharge the special counsel by arguing that his mandate is only to investigate the Russian campaign involvement. But the special counsel`s mandate, it does say matters directly related to that. But matters directly related to any links, quote/unquote, any links between the Russian government and individuals in the Trump campaign. And certainly financial relationships are part of those links. And a serious prosecutor wants to look at a whole series of financial connections over a period of time.

So, I think the notion that -- and the special counsel would be moving outside his mandate by looking at financial ties between the president, his family and his top people and Russian-related interest close to Vladimir Putin. That clearly is within his mandate and would not -- would be utterly pretextual to try to fire him for those reasons.

MADDOW: Is there anything that the president or the White House or his lawyers has raised in terms of objections to this investigation? They`ve talked about political donations made by lawyers involved in the investigation. They`ve talked about Bob Mueller having been a Trump golf club member at some point. They`ve talked about obviously these complaints about looking into financial matters and Trump business matters.

Are any of the things that they`ve raised, to your mind, legitimate concerns or legitimate grounds for trying to undermine the investigation?

DELLINGER: Not only do I not see them as legitimate, it`s clear from the reporting that they are looking for a pretext for discharging him. First of all, with regard to Mueller personally, this is someone who is a lifelong Republican who was head of the criminal division in Republican administrations who for 12 years was head of the FBI in both Republican and Democratic administrations, respected by law enforcement across the country. They raised the fact that he had worked with James Comey. But Comey may be not necessarily a central figure in this.

But in any event, Comey and Mueller have never been to each other`s houses. One was head of the FBI and one was deputy attorney general and they overlapped. That`s absurd.

Of course, there with people on his staff who have participated in supporting political candidates. It must be Mr. Trump`s position that only Trump supporters are allowed to investigate him. People were either for Trump or for Clinton. And Mueller would not have given that any consideration whatsoever in assembling his staff.

So, I don`t see that they have anything. The idea that Robert Mueller would risk his reputation that he`s spent a lifetime gathering to try to go after someone just because of a 6-year-old fee dispute at a golf club is beyond absurd.

MADDOW: Walter Dellinger, former acting solicitor general under President Clinton -- Mr. Dellinger, thank you for being here tonight. I really appreciate your time.

All right. We`ve got much more ahead tonight. It`s like MADDOW SHOW goes to law school, but with a tutor who doesn`t know anything about this stuff.

This is -- the stuff that`s happening in the news right now is moving really fast, staying grounded in terms of what`s possible within the law is getting increasingly difficult. But we have no choice but to do it. Stay with us.


MADDOW: Three days ago, the top ethics official in the U.S. government left his job, basically in frustration. He left, making the case that the ethics laws in the U.S. government didn`t anticipate -- they weren`t written to constrain the kind of flagrant, willful violations of ethics norms that the new administration is demonstrating. Basically, he argued that the old rules were premised on the idea that if your conflicts of interest were exposed, you`d be ashamed, and that would stop you from doing them.

When shame no longer applies, the ethics rules turned out to have a pretty flimsy foundation when pushed sort of to the limit. He`s now left government service to try to push for stronger rules. But while he was here, the day after he left government office, left government office three days ago, he was here two days ago. He gave us a warning about something he thought was about to happen in short order. It has just happened. That`s next.



WALTER SHAUB, FORMER ETHICS DIRECTOR: The White House reaches down and plucks somebody else out of the office to put them in the acting role rather than the person it should default to, everyone should be asking, why would they do that? What advantage do they think they`re going to gain? Or do they think they will find an individual who will give them a better deal than Ms. Finlayson who is tough as nails and as experienced as they come?


MADDOW: We got that heads up two nights ago from Walter Shaub, who just resigned as director of the Office of Government Ethics. He told us to watch for how the White House filled his role with an acting director. He said to watch for the White House potentially skipping the next person in line to lead that agency, Shelley Finlayson, and instead installing somebody else.

He told us, you know, does the White House think they`ll find an individual in that office who might give them a better deal than the woman who`s next in line?

That was the warning two nights ago. Well, now, we`ve got the news that the president has made his choice. And as Walter Shaub warned us, the president, in fact, skipped over Shelley Finlayson, who would be the person next in line, and instead tapped an official in the office who Shaub says, quote, tends to lean toward the permissive end the spectrum.

He says, quote: I`m concerned that the White House may be trying to ensure looser oversight.

And who knows? But we got that announcement today about the new acting director for the ethics office.

And then lo and behold, well after the close of business on this summer Friday night, we got another big piece of news from the ethics office concerning the president`s family. Jared Kushner has amended his financial disclosure forms that he is required to file. It turns out he found more than 75 different assets that his lawyer says he plum forgot to declare before.

So, we got that news tonight from the Ethics Office at 7:00 p.m. Eastern Time. Kushner updating his financial disclosure form, revealing more than 75 new assets and millions of dollars he didn`t previously disclose.

And just look at this. If you look at Jared Kushner`s new form -- can we put that up? You will see that the ethics official who certified this form is the new and reputedly more lenient acting director of the office. His new form was signed off on by the person the White House plucked out of line for that job, and he signed off on that form not today when we got it well after close of business on a summer Friday night. He actually signed off on it yesterday, Thursday.

But then that form, for some reason, doesn`t hit the news until Friday night after the close of business. Apparently, that timing is unusual for that office.

We spoke again tonight to Walter Shaub, the former ethics director. He told us it`s been the agency`s policy for years to release financial disclosures on the same day they are certified. If a report seemed likely to garner extra attention, like say, a disclosure from the president`s son- in-law, he says the office made an extra effort ensure that the forms got released to the public the same day they were signed. That is how they used to do it when he was in charge. Now that the White House has hand- picked someone to take over that job, apparently, we get the Kushner forms 7:00 on a Friday night.

That does it for us tonight. We`ll see you again on Monday.

Now, it`s time for "THE LAST WORD." Ari Melber sitting in for Lawrence tonight.

Good evening, Ari.