Maria Bartiromo: Welcome back. Well he is a distinguished military commander and former presidential candidate. Now General Wesley Clark is warning the government about sensitive materials turning up on peer-to-peer file sharing networks. General Wesley Clark joins me now with more on this problem. General, nice to have you with us. How have you been?

GENERAL WESLEY CLARK: Thank you Maria. Good, good to see you.

Maria Bartiromo: Tell me about…tell me a little about the security and the peer-to-peer file sharing networks. You’ve been really on the forefront to tighten security there. What have you found?

GENERAL WESLEY CLARK: Well basically it’s possible now through at least one company, a company I’m affiliated with on the advisory board, to see across the entire peer-to-peer space and see what searches are out there. And what we’ve found is there’s a lot of sensitive corporate information, personal information and government information that is inadvertently exposed to hostile searches in the peer-to-peer space. In other words, if you download a file sharing program, let’s say Limewire – there’s perhaps say 200 of these programs that will let you share videos or music, most of them on the condition that you can take it from someone else’s computer but you have to open up your files. Well, it shows your whole hard drive in most cases and so inadvertently your hard drive becomes a server and everything that’s on it is exposed to being revealed in searches. We watch the searches and there are actually people out there trolling the peer-to-peer space for sensitive corporate information, bank account numbers, social security numbers and we think classified information as well.

Maria Bartiromo: You know, it’s amazing. A really fascinating story. Even when you look at some of the devices that are very commonly used…I mean, you’ve got the French government President Sarkozy telling his top officials that he doesn’t want them using the Blackberry because people can be spying on…on them in the US and in Britain. This is a lot deeper problem than a lot of people realize.

GENERAL WESLEY CLARK: That’s right. Internet security is a big problem, telephonic security – the whole system of digital communications is difficult. In this case, though, there’s a whole new space that’s been opened up by peer-to-peer software. It tends to ride over the internet, but it comes out through a different port. It rides out through corporate computers if they have file-sharing software downloaded or it may be taken home on disks and put in a home computer that has that software and suddenly it’s out there. We discovered last week that the entire network diagram for the Pentagon’s secure internet – all classified information that goes over the internet there goes through this supernet. All of the network diagram was out there along with authenticators that would enable you to encrypt your own queries and so forth. It…it’s some enormous security breeches on the part of the government, classified documents and others are often found out there, but also sensitive corporate information – internal memos, client memos, um…they’re given from law firms, from investment banking firms, from businesses.

Maria Bartiromo: Can anything be done about this?

GENERAL WESLEY CLARK: Yes, but what has to be done is first you’ve got to have the right policies and employees have to understand that they cannot have file-sharing hardware on computers they’re using to work. And then you have to monitor the peer-to-peer space. You have to actually see what’s out there and see what is being exposed. Then you have to track it back to the source and cut it off at the source.

Maria Bartiromo: General, let me switch gears and ask you a little about what’s happening on Wall St. I know that you’ve been the chairman of Rodman & Renshaw for some 18 months now. What has been your instinct when you see what’s happening on Wall St. – yesterday down 300 points on the Dow, today another 200 points – what does your gut tell you?

GENERAL WESLEY CLARK: Well people are nervous about the credit markets obviously and it’s associated with the way that the subprime mortgages have been cut and packaged and shipped around the world. And I think it’s such a complicated system that…through…the dispersion of risk that many of the bankers themselves don’t understand it. So, as they’ve tried to limit their exposure to risk in an effort to let’s say reprice the risk, what they’ve done is they’ve shocked the market a little bit. But, as I look at it right now, I don’t see the triggering event to see something disastrous coming. What I do see is um, it’s summertime, people in Europe are already on vacation, a number of the bankers over there are gone, um there’s light action in the United States and suddenly people are confronted with the…some pretty fundamental issues. They’re asking about CDO’s and how to handle this and what is the real risk and how do you get a measure of the risk. I think the market is asking questions right now.

Maria Bartiromo: Mm-hmm. And certainly that has been one of the cruxes of the problem because there’s been so much uncertainty out there. And of course the uncertainty will continue as we approach the presidential election. Let me get your thoughts on where we are there, General. Um, what do you think of the…who do you think will be the main contenders come 2008?

GENERAL WESLEY CLARK: Well I don’t think either party has it locked up certainly. I think that given the status of the war in Iraq, which seems to be the dominant issue, that the Republicans have to be on the defensive about this. Democrats have to feel good about this. The problem is, of course, there’s no magic solution to Iraq. Simply pulling the plug and, in my view, ordering the troops home in six months is…it’s not a solution to the problem and so Democrats if as they get closer to the election are going to have to articulate real solutions. I think a number of the Democratic candidates have that. I think there are some fine candidates out there and um, I think the American people are going to watch the issue very closely.

Maria Bartiromo: Where are you on taxes, General? I mean the Democrats want to raise taxes and a lot of people say ‘look, that’s going to choke the economy that has already slowed down quite a bit.’

GENERAL WESLEY CLARK: Well, you know I’m…I’m a businessman and I think you’ve got to provide the best opportunities for business in this environment. I think we’ve got to worry about our regulatory environment in the United States on our stock exchanges. I think we’ve got to improve our public-private partnerships. I think we’ve got to invest in a lot of new technologies. But on taxes, in specifically um, I have no problem with the proposal that’s going through the Congress right now for example, to raise taxes on cigarettes in order to pay for improved healthcare insurance for children. I think that’s a sensible tradeoff and I think that the Congress should pass it and the President should sign it.

Maria Bartiromo: Alright, we’ll leave it there. General Clark, nice to talk with you as always. Thanks so much for joining us today.

GENERAL WESLEY CLARK: Thank you.

Maria Bartiromo: We’ll see you soon. General Wesley Clark in Washington.