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Congress Questions Oil Company Executives; Implications of Yesterday's Elections; "A.M. Pop"
Aired November 9, 2005 - 09:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Welcome back, everybody. There's the stock exchange. Opening bell rang just moments ago on Wall Street. The Dow 10,539, off 46 points on Tuesday. Over at the Nasdaq marketsite, trading on the composite index begins at 2,172, down 6 points at Tuesday's close.
MILES O'BRIEN, CNN ANCHOR: Live pictures now, Washington Senate hearing room. And there's Senator Ted Stevens, chairman of the committee, as he begins a preliminary discussions about this hearing, where members of Congress will be asking some hard questions, we presume, of the executives at some large oil companies.
One of the issues, Ted -- excuse me, Ed Henry joining us now to fill us in on this. They will be testifying under oath regardless. That is standard operating procedure before Congress. But the question that is before the committee right now is, as a formality, should they stand up and raise their right hand? Which, of course, will become the 30-second voice-over which we'll use ad infinitum. Ed Henry, even this is a political debate, isn't it?
ED HENRY, CNN CONGRESSIONAL CORRESPONDENT: Absolutely. It's all about political theater there. And this hearing, as you say, has barely gotten under way and there's already been one fight about this. Democrats like Maria Cantwell of Washington, Barbara Boxer of California, have been pushing in recent days to get these oil executives to stand up, raise their right hands, as you said.
They, the Democrats, want that picture. The infamous picture that the tobacco executives had to go through several years ago, you'll remember, when they had to testify under oath and it was later found that they had lied under oath about tobacco. And basically, Democrats want to push hard here and get the oil executives not just -- you're right, they're already under oath. But they want to show the American people, get those right hands up and show that they are under oath. Because they want to ask them some tough questions.
Now, the Republicans are saying they're going to ask tough questions, too. Let's remember, the Republicans called this hearing. But Democrats are saying that this is going to be a lot of show. The executives come in, but they're not really going to get tough questions from the Republicans. Time will tell on that, Miles.
M. O'BRIEN: All right, Ed Henry, we'll watch for that picture and we'll watch how it goes. The hearing is officially under way. And we will -- there they are. Apparently we're not going to get that picture. We're going to listen in for a bit, or should we press on? All right, let's listen for a bit.
SEN. TED STEVENS (R), ALASKA: ... chairman and CEO of British Petroleum of America, and John Hofmeister, president and U.S. country chair of Shell Oil Company. We thank you, gentlemen for coming to appear before us today voluntarily. This hearing's an opportunity for your companies, the major energy companies of our country, to address these concerns. We sincerely -- we do sincerely want to listen to your thoughts.
This is a joint hearing. There are members of each committee are here today, and as I indicated, each senator will be entitled to ask questions for five minutes. I urge that witnesses be succinct in their answers as possible, and that witnesses observe the timer clocks, which should be visible to all concerned.
In my judgment, these hearings should be a respectful discussion...
M. O'BRIEN: All right. We're still in the preliminary phase, as you have gathered. Why don't we press on for a bit, talk about a few other things. And we will be watching every word, and as soon as it gets a little more interesting, we will bring it to you live -- Soledad?
S. O'BRIEN: Clearly we're watching this hearing. And I think that's just a fascinating debate, really, to begin with. One minute in and they're really discussing, you know, the $64,000 question about do you raise your right hand and swear in? Because that is the picture that will be on the cover of all the newspapers everywhere, and has a lot of implications, I think.
CAROL COSTELLO, CNN ANCHOR: Well, but you know, they voluntarily came in. And it's supposed to be a conversation so both sides can learn more. Actually, so one side can learn more. So maybe it's unfair to make them stand up and raise their right hand.
M. O'BRIEN: Maybe they should just say, talk to the hand? I don't know.
S. O'BRIEN: Like we were talking about earlier today.
COSTELLO: I don't know, interesting that they're putting time limits on the answers, too. Five-minute answers.
S. O'BRIEN: Well, thank God. I mean...
COSTELLO: Yes, could go on forever.
S. O'BRIEN: ... these things go on ad infinitum, as our own hashing over it is going on ad infinitum.
Let's talk about the election. We're watching that closely as well. Because, of course, it's not just what happened yesterday and the results today, it's long range implications, as well, that everybody's watching.
CNN's senior political analyst Bill Schneider is in Los Angeles this morning to talk about that. Good morning to you.
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Good morning, Soledad. Well, as we know, here in California, Governor Arnold Schwarzenegger put four measures on the ballot, and they all got terminated.
S. O'BRIEN: Let's take a look at them, right there.
SCHNEIDER: One would have imposed tougher state spending restrictions. A second would have taken the power to decide what voters live in what districts away from politicians. The third would have restricted the political use of union dues. And the fourth would have made it tougher for public school teachers to get tenure.
Schwarzenegger asked voters to vote yes on all four, and they voted no, no, no, no. And after spending the year fighting with the unions in the Democratic legislature, last night, Governor Schwarzenegger sang a slightly different tune. Let's listen.
(BEGIN VIDEO CLIP)
GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: Californians believe that the state is on the wrong track. Californians believe that we need reform, we need change. But the people of California are sick and tired of all the fighting, and they're sick and tired of all those negative TV ads.
(END VIDEO CLIP)
SCHNEIDER: Wait just a minute, his critics said. Who started this fight? Here's one.
(BEGIN VIDEO CLIP)
WARREN BEATTY, ACTOR: You have, I believe, made this scam of an extra election, this abuse of the initiative process, backfire on the people who had the power to call it.
(END VIDEO CLIP)
SCHNEIDER: So there -- Soledad?
S. O'BRIEN: You know, I guess the bigger question -- I mean, we started by talking about implications. You know, what personally will be the implications for him? Because, obviously, he was elected in a recall. Could he get elected today?
SCHNEIDER: Today, no.
S. O'BRIEN: Not so much?
SCHNEIDER: His approval rating is down in the low 30s, below George Bush in California. But the election ain't today. It's a year from now. And he's got a year to make things up and to make things change. What he's got to do is rediscover "Terminator One," which is the Arnold Schwarzenegger that first governed in 2004 and did a pretty good job.
He worked with Democrats and Independents in the legislature and got a lot of important reforms passed in the budget process, reform workers compensation. And all was sweetness and light that year. His popularity soared. This year he picked fights, didn't do so well. Go back to the first Arnold Schwarzenegger.
S. O'BRIEN: People don't like in-fighting and they also don't like spending. And many people perceived these ballot initiatives to just be a whole big waste of money.
SCHNEIDER: That's right. The whole election, they thought, was a waste of money. Many voters thought that. They thought why not just wait until the next regularly scheduled election, which would have been next June? What was the big emergency that required spending $50 million of state money to hold an election? And the entire election cost $250 million in spending by all the different sides.
S. O'BRIEN: Only have a minute to ask you about some of the other elections today. Good news for Democrats in the gubernatorial races. At the end of the day, what's the impact on the White House, do you think?
SCHNEIDER: I think the White House is chastened, probably feels chastened. The president's facing the same problem. He, of course, doesn't have to run for re-election like Governor Schwarzenegger, but he's worrying about his legacy and what he's going to get done in the next three years. He's got to figure out some way of restoring his popularity so that even his own Republican party will listen to him and he can start a new agenda.
What they've got to do is figure out a new agenda. It will be announced, most likely, in the State of the Union speech in January, because it's kind of hard to figure out exactly what is on President Bush's agenda right now for the next three years.
S. O'BRIEN: Yes, no, hopefully for him, certainly, you would imagine that you'd want your Republican colleagues to want you to campaign for them, and I'm not sure that's the case this morning, Bill Schneider.
SCHNEIDER: It is not.
S. O'BRIEN: Nice to talk to you as always. Thanks, Bill.
SCHNEIDER: Sure, Soledad.
M. O'BRIEN: Take a look at Washington. We're watching those hearings for you. Still in the preliminary stages here. Senator Bingaman there. As they go through this, we're listening. And as soon as it gets operating on all cylinders, if you will, we'll start running this thing.
S. O'BRIEN: Much more interesting to listen to what the executives have to say rather than the senators.
M. O'BRIEN: I think so.
M. O'BRIEN: We're also going to check in with Andy Serwer. He's going to talk about ATMs and free ATMs. Is there a free ATM left in the world? One bank is saying goodbye to them completely.
Also this morning, more and more celebrities suing tabloids and the paparazzi, too. Potentially, though, they could be biting the hand that feeds them if you get my gist. AMERICAN MORNING Pops, ahead on AMERICAN MORNING.
S. O'BRIEN: Welcome back, everybody.
You're taking a look at some of the testimony coming to us from the Senate this morning. Right in front of you is Mr. Lee Raymond. He's the chairman and CEO of Exxon Mobil Corporation, as he answers questions from senators. This hearing began just about 15 minutes ago, after a little squabble over whether those testifying on the record, which is sort of standard operating procedure if, indeed, they would raise their right hands, because, of course, that photo certainly would be an interesting one to see on the front page of newspapers everywhere. It was very much done in the tobacco industry hearings, as you well recall.
Andy Serwer is joining us, a little business perspective on all of this. Do not expect these guys to give a lot of ground today to the senators, do you?
ANDY SERWER, "FORTUNE" MAGAZINE: I do not. And lee Raymond in particular, the CEO of Exxon, you can see here testifying, is known to be a hard-liner when it comes to policies and practices of the oil industry. I would imagine he will be very defensive in defending Exxon's right to extract profits in this business, and they will point out that it's a cyclical business, and this happens to be a high part of the cycle, and there have been down parts of the cycle where the company hasn't made as much money. It will be interesting to see the interaction between the senators and executives like Mr. Raymond.
M. O'BRIEN: All right. We are in the -- well the introductory phases. You know, it's kind of like starts up '66 Chrysler 300. It takes a while to get it humming. This hearing isn't humming does. And when it does, when they get to Q&A period, we will share some more with you. Andy, what else can we expect to hear? Will there, you mentioned Mr. Raymond being on the hardline side of things. Will there be a pretty much unity among these executives, or will we notice some subtle differences?
SERWER: Well, considering that none of them really did do anything during this period of crisis, they didn't give any ground or give any money, particularly to Katrina victims, I think you're going to see sort of a uniform front here.
Interestingly BP, British Petroleum, is known to be more of a green company. So you might see some differences between executives there and someone at Exxon, for instance. On the other hand, I'm sure they're all going to be resisting any calls for a windfall-profit tax, and so again, you'll see them all in line on that one I'm sure.
S. O'BRIEN: What's the market reaction been as these hearings get under way?
SERWER: Well, I think it's perceived to be probably good theater by Wall Street, and that's about it. On the other hand, you know, stocks of oil companies have fallen, along with oil prices, and along with gasoline prices. They were very, very high in September. Traders made a lot of money going in to that period in the beginning of the year. They've fallen since then. The bloom is sort of off the rose there.
S. O'BRIEN: All right, we're going to keep listening, and we are going to take a break. And when we come back, we'll have more of this. We'll still watch those hearings for you, and we'll keep you posted on everything else you need to know.
Stay with us for more AMERICAN MORNING.
I predict these hearings are going to get very testy as the senators start throwing questions about culpability to these executives.
That's ahead. Stay with us. We're back in a moment.
S. O'BRIEN: This just into AMERICAN MORNING. I can't say this without laughing. Celebrities who make millions and millions of dollars getting their pictures into magazines are fed up of getting their pictures into magazines. Well, really, they're fed up with the paparazzi who take the pictures that eventually end up in those magazines.
M. O'BRIEN: Or perhaps they enjoy being fed up, because further gets their publicity out there and their picture out there. It's just a thought.
S. O'BRIEN: And, in fact, Kate Hudson is one of the growing -- one on the growing list of celebrities who's now suing, suing -- filed a lawsuit about some of the coverage about her weight. By the way, she looks fabulous.
Jessica Shaw from "Entertainment Weekly" joins us and is helping us out on this. Nice to see you. Good morning.
JESSICA SHAW, "ENTERTAINMENT WEEKLY": You, too. Good morning. S. O'BRIEN: You know, you got to wonder if you could potentially backfire as a strategy if you start suing these publications or the paparazzi themselves, couldn't it?
SHAW: Well, I don't know about that. I think it's very cool right now to sue the paparazzi. I mean, Kate Hudson this week. Five publications she's suing for claiming that she has an eating disorder. Brad Pitt this week kind of caught a member of the paparazzi peering into his living room window. And a few years ago, maybe it would be like oh, that's so annoying, whatever. But now it's like call the LAPD, call your lawyer, file the suit, take action.
M. O'BRIEN: Well, there's blood in the water here, right? there's some actual cases here -- Tom Cruise being the one we know the most about...
M. O'BRIEN: ... where they've gotten some big money, right?
SHAW: Absolutely. I mean, Tom Cruise, very litigious. Cameron Diaz, Justin Timberlake, Ashley Olsen. These are all people who have who filed multi-million dollar lawsuits and have done well. And even Governor Schwarzenegger signed a bill that goes into effect this January that will basically stick members of the paparazzi with huge fines if they endanger someone while taking a picture.
S. O'BRIEN: Well, you know, in some of these cases, when you read the details -- and I think it sounds like Lindsay Lohan may not be the greatest driver, but she's clearly being chased down the street by people -- you know, a lot much people who want to take her picture. It's got to be very scary.
SHAW: And I think that that was really a turning point. Because her life was potentially in danger. I mean, she was being chased. She ended up crashing her car. And there's a big difference between that and between someone perhaps losing their dignity by, you know, a picture of them picking their nose or looking really bad when they're going to get Starbucks on the street in the morning.
M. O'BRIEN: Well, you know, because that one in particular -- because it hearkened back to Princess Diana.
M. O'BRIEN: I think people -- and it really resonated with people. They felt sorry for them all of a sudden. And I think going after the paparazzi, who, after all, are not a sympathetic group...
M. O'BRIEN: ... you know, that strikes a chord with fans as well. so it could be really a slam dunk, if you think about it.
M. O'BRIEN: You might get some money, and you're going to get in the papers for suing.
SHAW: And you get so much sympathy for it, I mean, yes.
S. O'BRIEN: But a lot of times, the suits are just because the stars wanted to sell their own baby pictures. You know, so someone gets a picture of their kid, and they're not saying, listen, I'm worried about my child's safety, I don't want their picture in their paper. What they're saying is, I had a deal for a $1.5 million to sell my own kid's picture, and that -- you know, I was cut off at the knees by that paparazzi.
SHAW: That's where you get very little sympathy. But there are celebrities who are very smart, like Catherine Zeta-Jones and Michael Douglas. They said we don't want paparazzi, kind of, you know, in helicopters, taking pictures of our wedding. And they sold it for a huge amount of money, you know, and that's one way of handling it.
S. O'BRIEN: Become your own paparazzi.
M. O'BRIEN: Well, but that -- you see, take your own staff paparazzi is what to do. But that wouldn't stop people from being in the bushes though, right?
M. O'BRIEN: I mean, let's face.
S. O'BRIEN: Which is creepy.
SHAW: No, it definitely is creepy. But, you know, it is -- there's definitely an ick factor. You have to feel bad for these stars, even though they're making gazillion, you know, millions of dollars, when you see someone who just had a baby, like Gwyneth Paltrow, and she's walking out with baby Apple, and there's a million flash bulbs going off. The woman just gave birth, she just got out of the hospital. That's enough.
S. O'BRIEN: There's a back door to the hospital, with all due respect. But, but, I actually feel more sorry for people...
SHAW: Only for celebrities like you, Soledad.
S. O'BRIEN: Oh, please. I'll tell you, there was not one person waiting for me, not even a taxi when I was taking my kids out of the hospital.
M. O'BRIEN: I'll come with my camera next time.
S. O'BRIEN: It's not a pretty picture. But, in all serious, I feel more sorry for people who are sort of captured on the street when they're just trying to get a quart of milk, because a lot of the baby pictures, you know, are orchestrated. You know, your publicist calls and says, she'll be coming out the entrance X at a certain time, make sure you get a good picture. And she's wearing makeup and she -- you know, I'm not speaking specifically about Gwyneth. Some of these are orchestrated and some of these are surprise. SHAW: Absolutely.
S. O'BRIEN: I mean, you feel sorry for the surprises but not the orchestrated ones.
SHAW: Definitely, but on the other hand, if you're going, you're getting a quart of milk, OK, you made $20 million for your movie. At a certain point, you know...
S. O'BRIEN: Throw on some lip gloss.
SHAW: You know, it's a give and take. Your life can't be totally perfect, come on.
S. O'BRIEN: You got to have someone get that milk for you. Jessica, always nice to see you. Thanks a lot.
SHAW: Thank you.
M. O'BRIEN: Life in the fish bowl.
S. O'BRIEN: Isn't it, though? We've got a short break. We're back in just a moment. Stay with us.
S. O'BRIEN: Welcome back, everybody. We've been following and monitoring the Senate hearings. You're looking at some of the executives this morning from the big oil companies who are testifying. Andy's been monitoring that for us.
SERWER: Right, that's David O'Reilly, the CEO of Chevron. Before that, we heard Lee Raymond from Exxon, warning the senators against any quick fixes that would have unintended consequences for the oil industry and says that Exxon continues to spend a lot of money exploring during thick periods and thin periods.
` One line of questioning, I think is, how are gas prices set? I think the senators will probably key in on that, don't you?
S. O'BRIEN: No question. I think everybody who spends money on gas would like to know exactly what percentage is going for profits and what percentage, you know, is going for state taxes and...
S. O'BRIEN: ... and federal taxes and across the board. I'd like to know.
M. O'BRIEN: A little transparency in the whole thing would be good. All right.
S. O'BRIEN: Daryn Kagan's going to pick up the rest of the story there. She's obviously monitoring this, too. Daryn, good morning.
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