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Storms in Southeast; Mortgage Meltdown: Grim Numbers, Good Advice; Mortgage Company CEOs Grilled on Capitol Hill About Huge Pay

Aired March 07, 2008 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

TONY HARRIS, CNN ANCHOR: You're with CNN. You're informed.
Good morning, everyone. I'm Tony Harris. Heidi is off today.

Developments keep coming in to the CNN NEWSROOM. It is Friday, March 7th.

Here's what's on the rundown.

Storms in the Southeast. Tornadoes rip homes and power lines. New video, fresh video from Florida, just in to CNN.

An accused international arms dealer, he's been called "The Merchant of Death." Will the United States put him on trial, and is he tied to a crisis in South America?

A new all-time high for foreclosures. What can you do if you're losing your home? Our guests with solutions.

You're in the NEWSROOM.

And we begin this hour with the storms in the Southeast, and what a system. A look at the radar now.

This massive storm system fueled by the Gulf of Mexico, stretching across south and southeast Georgia. And as you can see, a massive section of Florida as well.

We have been hearing from some of the people who have weathered the storm, in pretty good shape. Their homes not in such good shape.

Let's listen to some sound into the CNN NEWSROOM from just moments ago.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Deputies came to investigate and found that we had some sort of wind event occur. We have trees that are down, power lines are down. We've got trees on houses.

So at this point the deputies began checking the houses to make sure everybody was OK. It's a tight-knit community. Everybody knows everybody. So very quickly we were able to ascertain that there were no deaths and no injuries.

(END VIDEO CLIP) (BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: When most of it happened, I woke up with him screaming for me to come downstairs. And my A/C unit came flying through my window. But he actually has seen most of it, so he will be able to explain it better.

UNIDENTIFIED MALE: Your A/C unit came through your window?

UNIDENTIFIED MALE: Well, a little wall unit A/C on the upstairs floor. When the trees came down, it pushed it in. Just blew the A/C right into the room.

But, yes, it's just windy, real windy. I was on the front porch when it came through. This was on the opposite side of the House. Man, the back door blew open. The winds came through the House like a wind tunnel. All I could do was just yell for her, you know, "Come downstairs! Hurry up, there's a tornado coming!"

UNIDENTIFIED MALE: Were you afraid?

UNIDENTIFIED MALE: The first time I've been through one. I mean, a little shook up. But just knowing the damage, you know, it could have been worse.

(END VIDEO CLIP)

(WEATHER REPORT)

HARRIS: Another story that we want to give you a quick update on, this is a lumberyard fire in Salisbury, North Carolina. That's about 40 miles outside of Charlotte, North Carolina.

This is a story that popped up on our radar about an hour or so ago. And at the time there were initial reports of perhaps two injuries. We are getting an update now from our local affiliate in the area, WCNC. WCNC is now reporting four firefighters injured, two of them possibly seriously injured at this point. All taken to an area -- a regional medical center right now.

And take a look at these pictures. Boy, new video into CNN. Pretty dramatic stuff there in Salisbury, North Carolina.

We will keep an eye on this situation for you throughout the morning and bring you updates, particularly on the condition of the injured firefighters, as we get that news right here in the NEWSROOM.

And several new twists and turns this morning in the Times Square bombing investigation in New York City. Authorities are taking a closer look at surveillance video. They're searching for a hooded bicyclist seen just before the blast at a military recruiting station.

And this development just a short time ago. Authorities now saying an incident last month at the U.S./Canadian border in New York does not -- does not appear to be linked to the bombing. Now, earlier today they said there appears to be no connection between the bombing and letters sent to members of Congress. They included photos of the recruiting center.

The nation's sputtering economy, you may feel the pain every time you reach for your wallet. This morning, a whole bunch of gloomy news.

New payroll reports shows 63,000 jobs disappeared last month. That's the second month in a row of job losses, and adds to all of the anxiety surrounding the possible recession.

And we will see how those concerns play out on Wall Street. We are following the numbers throughout the day.

The markets opened, oh, about 90 minutes ago now. The Dow immediately plunged triple digits in the first few minutes and dipped for a while there below the 12,000 mark. And as you can see, the Dow has rebounded off those early session lows.

We're still down in negative territory, but by 39 points at this point. Overnight, Asian markets tumbled at least 2 percent. Much of the reason for this, the troubled economy -- the housing crisis in particular, and new signs it is actually getting worse.

Foreclosures hit an all-time high last quarter. And for the first time since record keeping began in 1945, American homeowners are now saddled with more debt than equity.

The nation's housing crisis, what can you do when it lands at your doorstep? Two financial experts offer their advice.

To political news now. Wooing Wyoming. The state and the spotlight ahead of tomorrow's Democratic caucuses.

Hillary Clinton heads there after starting her day in Mississippi. Barack Obama also on the campaign trial in Wyoming today. In a tight race where every delegate counts, they're both going after the 12 up for grabs in Wyoming tomorrow.

There's still no winner in Tuesday's Democratic caucuses in Texas. As of yesterday, Obama was leading Clinton 56 to 44 percent. But that's with less than half of the precincts reporting. Polling places were chaotic Tuesday with overcrowding and long lines.

Republican nominee in waiting John McCain is on a southern swing. He is holding a town hall meeting in Atlanta this morning before heading to New Orleans. His last remaining rival, long-shot Ron Paul, hinting that he will officially end his White House run soon.

Grief and mourning in Jerusalem. Eight seminary students who were gunned down at their school buried today. Their bodies wrapped in cloth and laid on benches in the school's courtyard for a ceremony. At least nine others were wounded in yesterday's attack.

The State Department says an American was among those killed, and one is severely wounded. The shooter was armed with an AK-47 and a pistol. And he actually had time to swap weapons during the massacre before being shot dead by an off-duty Israeli military officer. The suspect identified as a Palestinian driver from east Jerusalem. Sources in Gaza tell CNN the man was a member of Hamas, but received his orders for the attack from outside Gaza and the West Bank.

New jobless numbers this morning for the second straight month. Thousands of American workers are cut loose.

A closer look, ahead in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: Let's talk about the nation's housing crisis. The numbers pretty grim and apparently getting worse.

Foreclosures hit an all-time high last quarter. And mortgages in danger of foreclosure are at the highest in more than 20 years. For the first time since record keeping began in 1945, American homeowners are now saddled with more debt than equity.

So what does all this mean to you? In a word, plenty.

Terry Savage a "Chicago Sun-Times" syndicated columnist.

Terry, great to see you. Thanks for joining us this morning. This is important stuff.

And Mark Zandi is with Moody's Economy.com.

The same to you, Mark. Thanks for being with us.

You know, I'm not asking either of you to sort of out-doom and gloom other analysts here, but I am really interested in bottom-lining this and you guys giving us an honest assessment of this.

How bad is this sector right now, the housing sector? And we can break it down and maybe talk about financials in a moment. We're talking about homebuilders, retailers, those retailers selling big- ticket items for homes. We're talking about refrigerators, washers and dryers.

Terry, let me start with you. How bad is it right now?

TERRY SAVAGE, "CHICAGO SUN-TIMES": Well, it's pretty bad. There's no indication that it will get better. In fact, plenty of indication it will get worse, because every one of those 900,000 homes in foreclosure means that some family, some individual is really in trouble.

Then the bank forecloses. They put the house on the market and sell, and they'll sell for any price just to get as much money as they can. That devalues every other home on the block, or the home sits empty and that really is bad for the neighborhood.

HARRIS: Yes. SAVAGE: So it spreads. Not only does no one go out and buy a new house and a new washer and dryer, but people who weren't even thinking of selling are going, whoops, I better not go out shopping for new clothes or a new car. And it's a vicious cycle downward just like we saw the boom times upward.

HARRIS: Yes.

Mark, what are your thoughts on this?

MARK ZANDI, ECONOMY.COM: Well, it's about as bad a housing market as we've ever had. House prices, which are -- the statistic I think most of us are focused on, are down 10 percent from their peak, which was over two years ago. And as Terry points out, there's no sign of stabilization. Things are getting worse and prices will fall further.

HARRIS: I'm curious as we look at this issue and we think about the financial sector, you know, we all have mortgages. Most of us certainly do. We all work through banks.

And I'm wondering, what help is there on the horizon for the financial sector that's taking a big hit in this area as well? Ben Bernanke, the Fed chief, says that there's something -- there's more that needs to be done here.

So, Mark, I'm curious, what do you see on the horizon here, and do you see anything out there that suggests that the financial sector that we all count on here might be rebounding in this area sometime soon?

ZANDI: Well, lower rates. Those are slashed rates, and they're going to cut rates further in the next few weeks, couple of months. And that is going to help a little bit, but I don't think that's enough.

I do think Congress and the administration are going to have to become more aggressive in coming up with a policy response to try to help out the mortgage market, the housing market, and keep more people in homes.

HARRIS: Terry, more aggressive action needed? And what's the government to really do? The government has offered up a couple of plans already.

SAVAGE: All right. Well, here's the problem -- if you're a homeowner out there and you see these statistics, and you weren't the speculator that was trying to get rich quick, you're a homeowner and you want to keep the roof over your head, and you can't make the payments because they've gone up, or you've lost overtime, or your job, there is no real help right now.

You call -- everybody says, well, call your lander. Lenders don't want to talk to you. The servicers tell you, oh, my gosh, your loan has been sold. There's nothing we can do. They have to foreclose when you're 90 days late. Even this Hope Now Alliance is really a toll-free number that is put out by the financial services industry to take you to counseling, which delays resolution of the problem. So the real talk here, Bernanke has admitted, we can lower rates, we can put money into the economy, Congress can give you a rebate. It's not working.

HARRIS: But we...

SAVAGE: So even conservatives -- well, there's a proposal now that's about to surface. It's sort of in Congress now. Senator Dodd has proposed it -- the American Enterprise Institute. Conservatives who don't want government interference, they have written a report out saying, you know, in the '30s, there was something called the Homeowners Loan Corporation, a government-backed agency, when at that time half of mortgages were in default, half of them in the 1930s.

They went out and bought mortgages. They made new loans to people at lower home values. The lenders had to take sort of a write- off. They weren't happy with it either, but it got the mortgage market going. And there are some new versions of that being introduced in Congress to get the government sort of in the middle of this.

HARRIS: Yes.

SAVAGE: It doesn't please anyone, but it would be something that would get the problem going now.

HARRIS: OK.

When we come back -- we're going to take a quick break. When we come back, I want to focus a little bit more on the idea of interest rates. More good advice about a tough topic, foreclosure.

Terry and Mark staying with us.

We're back after a quick break.

(COMMERCIAL BREAK)

HARRIS: The nation's housing crisis, how it is hitting home and how you can fight back.

We want to continue our look with two financial gurus. Terry Savage is a "Chicago Sun-Times" syndicated columnist, and Mark Zandi is with Moody's Economy.com.

Again, thanks to both of you this morning.

Terry, let me start with you. Do you think we're going to get another round of rate cuts from the Fed this month? And is there a chance that this round, if we get it, will actually impact the benchmark 30-year fixed? It seems that the most recent cuts have really benefited banks borrowing money from other banks.

ZANDI: Yes, I think the Federal Reserve is going to cut interest rates. They may even cut them three-quarters of a percentage point when they meet a little over 10 days from now.

I think that should be should begin to help mortgage rates. But you're right, they're being very stubborn. There's a lot of concern in credit markets about credit risks, and therefore those rates aren't coming down. But I think with time they will start to come down. And people with good credit histories and a down payment and a good solid job, they should be able to get a reasonably good mortgage a couple months down the road.

HARRIS: Well, Terry, what do you think? Another rate cut coming? Will it be helpful?

SAVAGE: Well, Tony -- well, two points about that. The Fed can cut short-term rates, but America owes $9 trillion around the world. And those people who buy our debt are saying, what do you mean you're lowering rates? We don't want your dollars anyway.

And look at what's happening. They're selling dollars and buying gold, buying the euro. So the Fed's a little constrained. They can cut rates, but mortgage rates and long-term rates are set out there in the bond market, where they are selling dollars, not trying to invest in the dollar. That's number one.

Number two, the real problem for so many people is that even with lower mortgage rates, they can't get a new mortgage because they have no equity. For my column I was talking with the head of Consumer Credit Counseling in Nevada. She said the median home price there is down $75,000. It was over $330,000, and 95 percent of the people that come in for credit counseling owe more than their house is worth.

So we're in a logjam here. They can lower rates, they can push money into the bank. The banks are scared to lend, and consumers have no equity or down payment. And that's a real crisis.

HARRIS: Well, wait a minute. Wait a minute. Wait a minute.

So what do you do? You've got this situation here, and perhaps you're one of the people who was looking at a reset on one of these -- it feels so gimmicky now -- one of these ARMs, two-year ARMs. You got a low tease rate and then two years later you've got this reset coming. And that rate, who knows where that's going to end up.

So, Mark, help me, help folks. What do you do?

ZANDI: Well, you know what I would do? I would call my lender and ask about an FHA loan.

As part of the stimulus package that was passed, FHA now has more authority to make bigger loans to people. And they're able to make loans to people who are under some distress, that have delinquent loans, don't have much in the way of a down payment, if any at all. So that's where I would go first.

I would go to my lender and say, can you help me with an FHA loan, do I qualify? If I don't qualify, what do I need to do so that I can get the mortgage down the road? HARRIS: Terry, is that good advice?

SAVAGE: Yes, the toll-free number for that program is 800-CALL- FHA. And then, of course, Consumer Credit Counseling is now gearing up to help you. That's 800-388-2227. Those are on the home page at terrysavage.com.

The lenders is a problem. The practical problem is you get caught in voice-mail hell. It's "Dial one if you want to make a payment, dial two if you would like a statement." And it's very hard to get someone at either the lender or the servicing company to help you. You have to be very persistent.

And in most cases, when you're behind they can't help. And if you have no equity they can't help. That's why you need to be routed through consumer counseling, and that's why the government needs to act.

HARRIS: Yes.

SAVAGE: See, I always think the government makes a worse mess every time it tries to fix a problem. But somebody has to step in here and say, OK, lenders and the people who bought these securities, you're going to have to take a loss.

Homeowners, you're going to have to -- we don't want to foreclose you. It's a big problem for America.

HARRIS: Right.

SAVAGE: We'll lower the amount you owe. We'll give you a rate and a payment you can afford. And we'll get the system working again.

HARRIS: And -- but then the other side of it -- and I'm so out of time -- the other side of this is that we don't want -- we don't like the idea of a bailout for folks for financial institutions and individuals who should have known better and didn't, and made these bad -- all right. I've got to go.

SAVAGE: Exactly. And it's not fair to the people who are paying on time.

HARRIS: Yes.

Mark, Terry, great conversation. Good to talk to you. Thanks for your time this morning. Appreciate it.

ZANDI: Thanks a lot.

HARRIS: And this note -- there is help out there for people at risk of losing their homes. One source, the Homeownership Preservation Foundation. Here's the number: 888-995-HOPE, or you can call HUD, just mentioned this a moment ago, 800-569-4287.

And we are going to do much more on this, go deeper into this topic of your money. It is the CNN "Financial Security Watch," a special hour-long look at what you need to know in this struggling economy. That is today, coming up shortly at noon Eastern Time.

The rich get richer. On Capitol Hill this hour, mortgage company bosses grilled about their fat paychecks.

CNN Senior Correspondent Allan Chernoff is monitoring the hearing.

Allan, good morning to you. Can't wait to hear what's coming out of this hearing.

ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Well, it will be coming. Three executives who received huge pay as their company suffered losses in the mortgage business will be on the hot seat before the House Committee on Oversight.

They are Angelo Mozilo, the chairman and CEO of Countrywide Financial; the former CEO of Merrill Lynch, Stan O'Neal; and the former CEO of Citigroup, Charles Prince.

O'Neal and Prince actually lost their jobs as a result of the losses their companies took by investing in risky mortgages. Now, combined, the three executives received more than $460 million in compensation from 2002 to 2006, according to the committee.

(BEGIN VIDEO CLIP)

NELL MINOW, EDITOR & COFOUNDER, CORPORATE LIBRARY: It's an outrage. It's appalling that people should get paid like this for the kind of performance that they turned in. And when that happens, it undermines the credible of the American capitalism. In global markets, that's a risk that we literally cannot afford. There's an outrageous disconnect between pay and performance.

(END VIDEO CLIP)

CHERNOFF: The spotlight is on Countrywide's Angelo Mozilo, who the committee report says received almost $250 million in total compensation since becoming CEO, and another $406 million from selling Countrywide stock.

Mr. Mozilo tried to prevent his pay from being cut, according to House report. After Countrywide's compensation committee tried to put a pay cut in place, Countrywide management brought in a new consultant.

Let's have a look at a memo from John England (ph) to that consultant, Towers Perrin, to Mr. Mozilo commenting on the cut. "... this is missing a number of items like the aircraft travel policy for your wife. My primary unhappiness with what the board has put forth is that it lowers your maximum opportunity significantly."

Now, Mr. Mozilo did respond in an e-mail. He said, "... at this stage of my life at Countrywide this process is no longer about money but more about respect and acknowledgement of my accomplishments."

Mr. Mozilo in January did agree to give up $37.5 million of severance tied to his company's planned takeover by Bank of America as his company stock was plunging. Towers Perrin says that Countrywide hired the firm to help keep Mozilo as CEO instead of retiring, and that it was not acting as a personal advocate for Mr. Mozilo. Though, Tony, of course the tone of that e-mail certainly does give that impression.

HARRIS: Yes, it does. Boy, can't wait. Grilling the hot seat, all afly here.

All right. Allan Chernoff for us this morning.

Allan, thanks.

And here we go, coming up on the half-hour. Good Friday to you. Welcome back, everyone, to the CNN NEWSROOM.

I'm Tony Harris.

(WEATHER REPORT)

Still to come in the NEWSROOM, teaching Iraqi women the rules of the game.

UNIDENTIFIED MALE: I want them to put a goal and fight for it.

HARRIS: Barbed wire at Baghdad University. Our Kyra Phillips on young women escaping the war through sports.

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We call this hatching a reef ball. I mean personally, satisfaction comes from diving on a reef ball and see that the environment has been rehabilitated and the roof is actually there and that our grandkids will be able to see the same thing.

(COMMERCIAL BREAK)

HARRIS: And this news just in to the CNN NEWSROOM. We learned that the president, President Bush will be making a statement on the economy at 2:15 Eastern Time this afternoon from the south lawn of the white house, a lot of gloomy economic news this week. Most recently in the news today, about the economy shedding more jobs, thousands of jobs for the second month in a row. The economy losing 63,000 jobs last month. The most recent jobs report out this morning. So the president will be making a statement on the economy 2:15 Eastern Time, the south lawn of the white house. We will bring that statement to you right here live in the CNN NEWSROOM.

Amid the violence in Iraq, hints of normalcy, our Kyra Phillips is in the war zone. Kyra Phillips, there she is. K.P., we understand that you've been, wow, playing a little tennis there. I know you love that sport.

KYRA PHILLIPS, CNN CORRESPONDENT: I always look for an opportunity to play some type of sport, right? When I'm not in Baghdad, Tony. You know me well. We actually went to Baghdad University's college for women sports. I remember standing in the gym in this one teacher and coach said, I wonder what my life would have been like if I grew up in the United States and had this same love for sports. Well, all these girls want is opportunity.

(BEGIN VIDEOTAPE)

PHILLIPS: What do you love so much about tennis?

SINAN HISHAM, BAGHDAD UNIV. TENNIS COACH: Self confidence, speed, strength, flexibility, endurance and I love it because the whole people watching me and I love it.

PHILLIPS: And Sinan Hisham can be forgiven if she hams it up a little. Once a star on the tennis team, she taught me a few things on the court. Oh, you know, I can't get logged. And about life in a war zone.

HISHAM: The war, at first we are happy and we are free, free, free. But then the, you know, things get bad and bad. It happens.

PHILLIPS: So now, Sinan has come back to where she started, but this time to coach.

HISHAM: I want them to put a goal and to fight for it.

PHILLIPS: This is the sports college for women at Baghdad University. These women are breaking out of traditional roles, aspiring to jobs and professions that could take them anywhere now. And to do this, they and their teachers risk their lives every day just to get here.

If I don't put myself in danger, anatomy Professor Maitham Mahdi tells me, and these girls don't put themselves in danger and other Iraqis don't do so, our whole nation will stand still and never improve.

And don't let the makeup and jobs fool you. These women got game.

A lot of Americans think that women are wearing their scarves and they don't play sports and they do what the men tell them to do.

You're embarrassing us, she says. This is wrong. And the wrong perception of women in Iraq. Each one of these girls has a dream, coaching, teaching, maybe even going pro. Being here elevates our ambitions, she tells me. It makes things better. Our society is a closed one now but we still have hopes and aspirations. Sports is our outlet.

For these athletes, stepping into the gym doesn't just lead to a college degree. It's an escape from war.

We're used to these conditions. We leave it up to god. We walk with the explosions behind us as if they don't even exist. We just want to get here, live our lives like nothing is going on outside.

Any thoughts of winning a war are sidelined here as these young women concentrate solely on winning the game.

(END VIDEOTAPE)

PHILLIPS: Now, Tony, there's one more thing that they're up against now. Even though they have much more freedom, they're dealing with sexism as they build a democratic government here, that means that more groups have additional voices in the system, so conservative Muslims are extending this mentality, a sexist mentality, they say they just don't agree with women and sports.

HARRIS: What a story, what a set of stories from you this week, Kyra. I tell you, a little Tennis, a little b-ball, I'm loving it. What are you working on?

PHILLIPS: Well, going for a little bit of harder edge here, Tony. I've always got to get a few investigations into the mix as well. Oil smuggling, $5 billion comes into this country every month. I'm talking about oil revenue. So where is all that money going? I sat down with the minister of oil to try to get some answers.

(BEGIN VIDEOTAPE)

PHILLIPS: I spent time with a smuggler. I talked to him about how he smuggles the oil, how he hiding it in his ship. He showed me the holes. He showed me where he takes it. How do you stop these smugglers? What are you doing to put a stop to these guys?

UNIDENTIFIED MALE: I always said to the minister of defense and minister of interior if you can sink a couple of those boats, this would be the best message.

PHILLIPS: Now the question is how do they sink those boats. Coming up next week, inside the smuggling world. You will meet this smuggler and he will tell you how he not only smuggles the oil but who his number one customer is, Iran.

HARRIS: Wow, can't wait. Great reporting, as always, Kyra. Good to see you. Thank you. Time now to take a look at some of the most clicked on videos at CNN.com. A little town of big trouble, Mountain Park, Oklahoma, is broke. The former city clerk accused of embezzling $100,000 of the town's money. Now water and trash bills are up and city hall has no heat.

Titusville, Florida, amateur video captures the fiery moments after two planes collide. Look at this, man! Sadly, three people died, a fourth was in critical condition. See more of this video at CNN.com/mostpopular.

And the story that is so shocking people are still talking about it, a 4-year-old girl hidden under a blanket as she is taken from her elementary school. Police say she was drunk. The teacher noticed the girl's odd behavior and called authorities. They believe she drank before she got to school.

Now for more of these stories and other top videos, just of go to CNN.com/mostpopular. Income, you can take us with you anywhere on your iPod with the CNN daily podcast. CNN NEWSROOM podcast available to you 24/7 right on your iPod.

The economy and the power of your decisions, what you need to know, when you need to know it ahead in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: All right. Another major setback for the economy; a report out just a few hours ago showed the nation's job market is getting worse.

Stephanie Elam is on the floor of the New York Stock Exchange with details of how Wall Street is reacting.

Stephanie, we know that the president will be reacting to this jobs report and all of the gloomy news about the economy this week. 2:15, south lawn at the white house, a statement from the president. We'll, of course, have that for you live right here in the NEWSROOM.

How is Wall Street reacting this morning?

STEPHANIE ELAM, CNN CORRESPONDENT: Well you know Tony, when you look at this report coming out, it's a big kahuna of the economic reports we get. It's the biggest one. Everyone waits to see what it's going to show, this jobs report. And right now it's showing the economy is in a dire condition.

Typically, you know, we tell you how many jobs are added to the economy. Last month employers actually slashed 63,000 jobs. That's the biggest cut in five years. Meanwhile, if you take a look back at January's reading, it was revised downward to a loss of 22,000 jobs. So this means, this is the first monthly back-to-back job loss that we've had in five years as well. The cuts, they were wide spread, I mean big reductions in construction and manufacturing, and retailing. Probably not too much of a surprise there about construction. There is also a silver lining to this employment report. It's a thin one but we'll take it. Workers with jobs saw a modest gain in wages. Average hourly worker pay rose to $17.80 last month, Tony. We have to find some hint of something good in there.

HARRIS: Yeah. Dare we say we are in -- do I dare use the "r" word, recession here?

ELAM: I don't know how to tell you not to use it that the point, Tony. I mean you look at numbers like this. It kind of paints a really bad picture. A separate report shows the unemployment rate edged lower to 4.8 percent but before we get too excited about that, that's only because so many people actually dropped out of the workforce all together.

There's only one agency that is actually in charge of officially declaring a recession but they usually do that after it's over. So that doesn't really help us right now.

Of course, the actions by the Federal Reserve show policymakers, they're concerned. The fed is boosting the amount of money it will auction to banks on -- they're going to do that this month from $60 billion to $100 billion. The auction should allow banks to keep lending money to customers.

As for overall stocks, they've been all over the place. We've only been open for a short time here. The dismal jobs report pushed the Dow down 100 points in the early going. Then we had a bounce back. We were all in the green across the board. And now we're back in negative territory, as you can see. The Dow off 95 points at 11944 there. NASDAQ following. Same thing with the S&P, they're all down that the time, Mr. Harris.

HARRIS: All right. Stephanie, you're going to be in Hotlanta over the weekend anchoring some NEWSROOM programs for Fredricka Whitfield.

ELAM: I am.

HARRIS: Can't wait to see you here.

ELAM: I'm looking forward to being there. Can you just tell Bonnie to do something about the rain here in New York and Atlanta so my flight gets there tonight? That would be awesome. Yeah.

HARRIS: You're going to have to fight that battle on your own.

ELAM: I tried. I tried. Put in a good word.

HARRIS: See you this weekend. All right.

As a matter of fact, let's get to Bonnie Schneider now. Bonnie's been following this expansive storm system that has rolled through Florida principally and also south and southeast, Georgia and we're getting some I-reports in.

SCHNEIDER: Absolutely and we do appreciate them. We have a brand new I-report coming in to us now at CNN. Let's go to it now.

This comes to us from Chad Stewart. We are looking at Lake City, Florida. This is actually debris. That roof that you're going to see on the ground there, that's from a nearby Publix grocery store on Cold Terrace. Chad was at his office. He felt the wind from the storm. Didn't see a funnel cloud or tornado formation but he lost power as many people did. We appreciate that report from you, Chad.

If you want to send in your I-report just go to CNN.com. You can send it online or you can send it straight from your mobile phone. We do appreciate it.

I want to also talk about this region because we have numerous power outages in the Live Oak area. Some of the tornado touchdowns unofficially have been report we as far north as Georgia all of the way down to Keaton Beach, in Florida. Nothing has been confirmed yet but we do have a bunch of these reports still coming in.

Now, some good news. Most of the tornado warnings, in fact, all of them at this moment have expired. That's the first time I can say that since early this morning. The tornado watch for parts of Georgia and northern Florida, that only has about nine minutes to go. We're almost done. It's a possible situation where you can see more watches and warnings reissued with heavy thunderstorms across much of northern Florida right now.

And as I mentioned, Tony, we're also facing airport delays due to this storm. On the back side of it we're getting quite a bit of snow into places like Arkansas and Tennessee. It's really a mess for those people stuck in there traveling today.

HARRIS: It really does. OK. Bonnie, we'll be checking back with you before the top of the hour.

This just in to CNN. A top adviser for Barack Obama's campaign, one of his team leaders in foreign policy, in that area, is leaving the Obama campaign after making some pretty negative statements. Well, actually one comment about Hillary Clinton. She described Hillary Clinton as a monster and some comments. Certainly one of the most personal comments we have heard yet in this campaign.

And now word that Samantha Power is leaving for make that comment, calling Senator Clinton a monster. A bit of a statement here from Samantha Power with deep regret, I am resigning from my role as an adviser for the Obama campaign effective today. Last Monday, I made inexcusable remarks that are at marked variance from my off- stated admiration for Senator Clinton and from the spirit, tenor and purpose of the Obama campaign. And I extend my deepest apologies to Senator Clinton, Senator Obama and the remarkable team I have worked with over these long 14 months. That statement from Samantha Power as she leaves the Obama campaign.

New jobless numbers in this morning for the second straight month. Thousands of American workers are cut loose. "Financial Security Watch" with Gerri Willis at the top of the hour.

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BONNIE SCHNEIDER, CNN METEOROLOGIST: I'm CNN meteorologist Bonnie Schneider with a look at your cold and flu report for Friday.

It's pretty uniform across the country, all of the way from Alaska to Hawaii and pretty much everywhere except for Florida. We're getting reports of widespread cases of the flu. You may know someone suffering from the flu or at least a bad cold right now as we kind of transition from winter to spring. We are getting reports of less of that down maybe because the weather's better down in Florida. That's where we have regional outbreaks reported. That's a look at your cold and flu report for Friday.

I'm meteorologist Bonnie Schneider.

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HARRIS: NEWSROOM continues one hour from now.

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