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Bailout Flip-Flop: Treasury Has a New Plan; Helping Homeowners: Government May Spend $50 Billion on Mortgage Aid; Faith and Acceptance

Aired November 13, 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: It is Thursday, November 13th, 68 days until inauguration day. Here are the top stories in the CNN NEWSROOM.
The Bush money team trying to get banks to lend with a bailout strategy switcheroo. Today, Congress chiming in with a blistering shot at financial execs.

A blizzard of job cuts about to hit the Windy City. Chicago's mayor says, that is the cold warning he's getting from CEOs.

And you thought the race for the White House was over. Everybody wants the Obama girls to pick their favorite pooch or first pup.

Good morning everyone. I'm Tony Harris. And you are in the CNN NEWSROOM.

(BEGIN VIDEO CLIP)

SEN. CHRISTOPHER DODD (D), CHAIRMAN, BANKING COMMITTEE: Our nation clearly is in a crisis. We all know this. We're at war in two distant countries, our financial markets remain uncomfortably close to the precipice of collapse. Working Americans have been forced to cut back in their personal lives, even as they've been asked to shoulder the enormous burden of propping up the financial sector

At this time of austerity and apprehension, it would be regrettable if some carried on as if they do not owe a duty of restraint and modesty to those countless Americans whose sacrifice, helps make your viability and prosperity possible at this moment of national economic peril. For those tempted to conduct business as usual with respect to their compensation policies, I would simply ask, where would you company and industry be today without taxpayer-backed deposit insurance, without taxpayer-backed guaranties of your bank debt, without taxpayer-backed special lending facilities at the Federal Reserve, and without all the other special benefits that your industry is receiving courtesy of the American taxpayer?

If you believe that you would be no worse off than you are today, then I invite you to return to the treasury the billions of dollars in taxpayer investments, guarantees, and discounts that you currently receive. And I wish you well as you try to make it on your own.

(END VIDEO CLIP)

HARRIS: Wow. Hot talk on Capitol Hill. Lawmakers searching for answers.

The Treasury Department doing the bailout flip-flop. The $700 billion Troubled Asset Relief Program, or TARP, now not being used to buy troubled assets, instead supposedly going directly to help consumers. The Senate this morning holding a hearing on the bailout. Again, you're looking at live pictures now.

So many questions this morning. We will try to get those answers during the next two hours right here in the NEWSROOM. .

We've assembled the CNN money team, including Personal Finance Editor Gerri Willis.

Let's begin, however, with Christine Romans in New York.

And Christine, help me sort through a couple of issues here. We're talking to Representative Rangel next hour. He says, in reacting to yesterday's briefing from Treasury, "I didn't vote for a bailout of Wall Street, I voted for a bailout of Main Street."

Now, I guess my question is, is it true that at this point, not a single person facing foreclosure has received or will receive a dime of TARP money? Was the plan ever designed to help homeowners facing foreclosure?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Tony, homeowners facing foreclosure have not received a dime of the TARP money, and they were never intended to receive a dime of that money. It was always meant to be a big bailout of the financial institutions to prevent some kind of huge calamity, the lights going out in the global economy. Right? And we were told that we had to get the toxic assets off the banks' books.

HARRIS: Including mortgage-backed securities?

ROMANS: Including mortgage-backed securities. We had to get them off the banks' books.

And then the Treasury would have the leverage when it owned those mortgage-backed securities. They would have this leverage that they could push industry and they could push people to modify those loans, and they could push the process and try to help homeowners. And they would also be helping the banks.

But they're not going to buy those toxic assets. That's not what they're going to do. They haven't bought any of them. In fact, the whole thing has changed. We've been reporting for you for a couple of weeks now how they've been injecting money into the banks directly.

HARRIS: Yes. But Christine, those assets stay on the books of those banks?

ROMANS: Yes.

HARRIS: Why isn't this good money chasing bad money? The assets are still on the books. ROMANS: The assets are still on the books, Tony. You're absolutely right.

And this is why you're seeing two hearings today where you have got congressmen and senators who are screaming about this, and they're saying this is not what I voted for. You told us we had to get those assets off the banks' books. They're still on the banks' books. Now what are you going to do?

And the treasury secretary says, well, now we're looking at other consumer finance, other consumer lending. We're going to try to go in that direction now, but we're not going to be buying these assets, which leads to all these questions. These congressmen are saying this is not what I voted for.

HARRIS: Right.

ROMANS: And the Treasury Department says, no, you voted to give us broad authorities, and we're using those broad authorities. That's what we're doing.

HARRIS: Well, now the TARP is an investment plan.

ROMANS: Yes.

HARRIS: I have no idea as a taxpayer what's on the books of the bank of Romans. I have no idea whether this is a good investment or a bad investment.

ROMANS: Listen, I'm telling you something right now. There are so many questions about what's happening here, and we knew from the very beginning, didn't we?

Didn't we know the day that this thing was voted on? Didn't we say, look, we've never done this before? We're giving huge authority to the government to try to figure out how to fix this mess.

You know, Jeffrey Sachs earlier from Columbia this morning was saying there was no plan. There was no plan. And the Treasury Department is now switching the plan as it goes because there was no plan and things were changing so quickly. And we are -- we're in a mess right here, and they're doing the best that they can.

HARRIS: And the banks at some point have to begin to redo these home loans. I mean, that ultimately -- because the credit crisis -- I'm sorry, the housing crisis is at the root of all of this.

ROMANS: And it's intensifying, the housing crisis. It's intensifying even as this has gone on now for five weeks and six weeks, and 14 months of a credit crisis, and you still have the underlying problem here that's not showing any kind of letup, like 2,700 homes last month, every single day, a padlock was put on the front door and the person lost their house. That's the very end of the foreclosure process -- 2,700 homes a day, and that's what these congressmen are all raging about. HARRIS: All right. Well, Christine, we're going to tell that story. I wanted to get to the first time jobless claims, but I know you've got a radio show to do. But after that, let's talk some more. All right?

ROMANS: Yes. I'm going to talk to Ali Velshi on his radio show and then we'll talk about jobless claims.

HARRIS: OK. Let's do that.

All right. Christine Romans for us from New York.

The crushing effect of this financial crisis, more and more families like yours losing their homes. New figures out today show almost 85,000 homes were lost to foreclosure last month alone. Imagine that.

In addition, more than 279,000 borrowers received foreclose filings like bank repo and auction notices. That's one in every 452 homes. RealtyTrac, an online marketplace for foreclosures, says the foreclosure activity is up 25 percent from October of 2007.

Now back to the bailout program, roundly criticized for helping the fat cat and not the little guy. Now the government may -- may shift $50 billion of bailout money to help struggling homeowners.

Personal Finance Editor Gerri Willis joins me now.

Gerri, a big "may" there.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey there. Yes, definitely.

HARRIS: Well, what is this plan about, Gerri? What do we know?

WILLIS: Well, you know, let me tell you what we know here. And again, this is a program that's going to help some people, not all people.

It will be run by Fannie Mae and Freddie Mac, $50 billion would streamline modifications for people who are at least 90 days behind on their mortgage. So this isn't everybody who is worried about their mortgage.

HARRIS: Got you.

WILLIS: This is people who are really and truly behind. And so it really narrows the field of who is going to get helped here.

Now, one interesting thing about this, it's really going to help rewrite these loans, bring down the principle payments to a more affordable level, say 38 percent of income. So it's really trying to get back to the issue of affordability, which we got so far away from during the boom.

But I've got to tell you, I think this is going to be troublesome, because at the end of the day, some of this debt will be forgiven, some of it will not. It will just be deferred.

Interest rates will come down for these folks in some cases. This is really going to be a loan-by-loan kind of thing where they look at the individual circumstances of the people and try to come up with something that's more workable.

HARRIS: Yes.

WILLIS: And of course, you know, Tony, this isn't the only plan that we have out there.

HARRIS: Yes, what else is out there?

WILLIS: Major banks in this country are also signing on with big programs. JPMorgan Chase, Citibank, Bank of America, they're all coming up with their own programs. Right now you're seeing other programs that have come out at the federal government.

You know, we've thrown a lot at the wall here -- Hope Now, FHA Secure, Hope for Homeowners. These are all programs that came out earlier, over the last -- I guess it's got to be 12 to 16 months now.

HARRIS: That's right. That's right.

WILLIS: Those first two, Hope Now and FHA Secure, these really have been programs that were voluntary on behalf of the banks that were involved with them. Hope for Homeowners came out of the big bailout program that was passed by Congress this summer. We don't even know how well it's doing yet because it just got started.

But we've tried a lot of things that have had some traction, but obviously from the foreclosure numbers we're seeing right now, they haven't solved the problem. And my big fear is that people out there are sort of throwing up their hands at this point because the problem is so difficult to solve...

HARRIS: Yes.

WILLIS: ... and really to get a lot of traction against. You heard the treasury secretary there say, well, you know, I think we've probably done what we're going to do here. You know? And I'm worried that this program is going to get lost as we turn our focus to places like Detroit.

HARRIS: That's right.

Outstanding. All right, Gerri, if you'll stick around for just a moment...

WILLIS: I sure will.

HARRIS: ... I've got another question for you coming up in just a moment.

Who would benefit from the mortgage plan involving Fannie and Freddie? CNN's Josh Levs joins me now to talk us through that.

Good morning, Josh.

JOSH LEVS, CNN CORRESPONDENT: Good morning to you.

Yes, you know, it's interesting, because Gerri was just touching on this. It's really hard for people to tell if they're going to benefit in any way at all from actually any of the bailouts that have been discussed. But we have heard this week about the Bush administration talking about this Fannie and Freddie plan.

Gerri touched on this aspect of it, but I want to help all our viewers know right now if it would apply to you.

First of all, let's go to this graphic. The plan centers on these two agencies. Now, they do own technically the majority of mortgages in the U.S. They own or back 31 million mortgages totaling about $5 trillion. And as we know, the government overtook them in September.

But under the plan discussed, only a few people would be helped. Here is who is eligible. And our folks at CNNMoney.com put this together.

It's homeowners who are 90 days or more late in their mortgage payments and owe at least 90 percent of their home's current value. And you have to still live in your home. And also, you also cannot have filed for bankruptcy.

So how many people is that in actual numbers? We don't know. The latest figures we have from Fannie suggest 1.7 of their mortgages are delinquent at least 90 days. But that doesn't mean that all of those also meet all the other criteria. And the latest figures from Freddie are expected soon -- Tony.

HARRIS: OK. And Josh, what would this mortgage plan do for them?

LEVS: Right. Well, here is the basic idea.

What it would do for them, if you're one of the people who applies under this, it aims to help them avoid foreclosure. It would give them lower interest rates or longer repayment schedules. And the goal is to bring the payments below 38 percent of monthly household income. Their thinking is that that's (INAUDIBLE).

Now, let me just tell everyone, if you're watching now, if what I've described applies to you, we would love to have you let us know. Send us your iReports or your emails.

HARRIS: Outstanding.

LEVS: Either ireport.com, or send us an e-mail, cnnnewsroom@cnn.com. Put "Mortgage" in the subject line. If you're someone who will be helped under this scenario, I know it's not easy necessarily to tell a news network, "Yes, I'm 90 days delinquent on my mortgage."

HARRIS: Yes. Yes.

LEVS: But you know, obviously, we handle it with sensitivity. We would love to know if you're one of these people. We'd love to hear from you -- Tony.

HARRIS: Well, maybe we can help you.

LEVS: Yes, it's possible.

HARRIS: So give us the information. Let us help if we can.

All right, Josh. Appreciate it.

LEVS: You got it.

HARRIS: Let's bring Gerri back for a quick question.

Gerri, the head of the FDIC says all of this, all of this, the plans we've discussed to help homeowners facing foreclosure, may not be enough. Why?

WILLIS: Well, you know, what we've seen -- and I think Josh brought this up a little bit -- these programs have typically helped tens of thousands of people. You know, I think that one of the programs, something like 200,000 people.

We have millions of people who are at risk of foreclosure or in foreclosure. Expectations that foreclosures this year alone will go to three million people.

The problem is epidemic, and solving it requires something where people don't just have to choose to get in. For example, lenders can't decide whether they're going to play the game or not. They have to be forced to come to the table.

HARRIS: Yes.

WILLIS: And I think that's where you see such a big difference between what the administration is saying and what other people, especially Sheila Bair at the FDIC, is saying. You know, we've got to have a bigger, more thorough plan that helps more people because remember, Tony, this is where the crisis started.

HARRIS: That's right.

WILLIS: It was in mortgages, it was in the real estate industry, in homes. And it's not getting fixed. And if we see more layoffs coming down the road, that's going to lead to more foreclosures, frankly.

HARRIS: Which brings us... WILLIS: So that's what we're looking at.

HARRIS: Sure.

WILLIS: I mean, we've really got to go after this problem. And I think it's really complicated and difficult to get your arms around.

HARRIS: Which brings us back to the numbers from RealtyTrac that we reported just a couple of minutes ago. New figures out today showing almost 85,000 home were lost to foreclosure last month alone.

Gerri, appreciate it. Thank you so much.

WILLIS: My pleasure, Tony. Thank you.

HARRIS: Thank you.

And again, as the most serious credit crisis in decades rocks your finances, CNNMoney.com has some advice, answers. Check out our special report, "America's Money Crisis." That's at CNNMoney.com.

Switching gears for just a bit, saturated land -- look at these pictures -- giving way to a downpour. High waters in the Pacific West.

(COMMERCIAL BREAK)

(WEATHER REPORT)

HARRIS: Reaching across religious lines, the United Nations puts the focus on faith and acceptance. This hour, President Bush addresses a conference on religious tolerance.

Senior United Nations Correspondent Richard Roth joining us live now with more.

Richard, good morning.

RICHARD ROTH, CNN SR. UNITED NATIONS CORRESPONDENT: Good morning.

Usually the United Nations does not deal with religious subjects. In fact, this two-day interfaith conference was a religious summit by political leaders. But most significant, there was the leader of Saudi Arabia and the president of Israel in one room at the same time. Two nights ago there was a special dinner kicking off this event, and that is quite rare, when you have those two leaders in the same room.

There was minimal contact. But both leaders were praising the effort here.

For Saudi Arabia, it was an attempt to burnish its image and to show that Islam is not all about terrorism. However, it's a tough road, especially critics say Saudi Arabia does not practice what it is preaching here at the United Nations at this conference, that it's highly religiously intolerant, not allowing other faiths to be practiced other than Islam.

President Bush arrived here this morning at the United Nations for what is undoubtedly his final appearance at the U.N. Some thought his traditional September appearance at the General Assembly in September would be his last appearance, but he was here.

He told this conference a short time ago faith changed his life. It sustained him through challenges and joys, and now will guide him in his later days. He appreciates the focus of the conference on faith.

The White House spokesman dismissing any criticism of this event, saying that any attempt to preach for freedom and religious tolerance has to be encouraged -- Tony.

HARRIS: Richard Roth for us at the United Nations.

Richard, appreciate it. Thank you.

Advocates of same-sex marriage say they plan to take their protest nationwide this weekend. They are angry over the passage of Proposition 8 banning gay marriage in California. The issue was the focus of heated debate on CNN's "ANDERSON COOPER 360" last night. Protest participant and author of "The Commitment," Dan Savage, sparred with Tony Perkins of the Family Research Council.

(BEGIN VIDEOTAPE)

TONY PERKINS, PRESIDENT, FAMILY RESEARCH COUNCIL: There was a full debate on this. In fact, Dan's side raised more money, and it came from special interest groups, or wealthy individuals, like Tim Gill, who put in the money. And they had this full discussion about this in California.

In fact, they have had it twice now. I don't understand...

(CROSSTALK)

DAN SAVAGE, SYNDICATED SEX ADVICE COLUMNIST: They have had it twice now. And, in 2000, your side won by 20 to 30 points. This time, you won by four points. You guys are losing this war against religious freedom.

There are religions in this country that will marry gay and lesbian couples. What about their religious freedom?

PERKINS: Look, the courts have stepped. You have gone to the courts. The courts overthrew the vote of over four million people from 2000. They gathered over a million signatures, put it back on the ballot. They passed it this time over five million votes.

SAVAGE: Which is part of what courts in our system are supposed to do. The Constitution exists to protect the rights of vulnerable minorities against the tyranny of the majority.

PERKINS: No. You don't understand the rule of law. If you want to change the law, instead of using the courts to redefine marriage...

(CROSSTALK)

SAVAGE: So, Loving v. Virginia, when the courts declared interracial marriage to be a constitutional right, in the teeth of popular support, which was against interracial marriage at the time...

(CROSSTALK)

PERKINS: Dan, you know that that is a red herring. That is absolutely not true, because...

SAVAGE: It is not a red herring. It's analogous.

PERKINS: ... when you talk about interracial marriage...

SAVAGE: It's a total parallel.

(CROSSTALK)

SAVAGE: You are talking about the function of the courts and the role of the Constitution. And that's what I'm addressing.

COOPER: No one can hear if we overtalk.

SAVAGE: Well, he's filibustering.

COOPER: Dan, finish your thought, and then we will have Tony respond.

SAVAGE: Well, Tony is saying the courts have no right to overrule the will of the people. That's what the courts exist for, what the constitution exists for. It's what the Bill of Rights is there for. To carve out certain things from the tyranny of the majority.

COOPER: Tony, should civil rights of individuals be left up to the majority to decide?

PERKINS: No one has unrestrained liberties in this country to marry whomever they want. This -- you know, someone can't marry a close blood relative. They can't marry an underage person. There are restrictions that have been upheld in almost every civilization for millennia.

(END VIDEOTAPE)

HARRIS: The debate continues.

Still to come, retail stores are struggling. Some are even bringing back layaway.

Issue #1 and you.

(COMMERCIAL BREAK)

HARRIS: And another reminder you only have a week left to vote for your CNN Hero. So be sure you do so at CNN.com/hero.

And while those votes are coming in, we have asked various celebrities to tell us about their heroes. Today we hear from the big man, basketball star Shaquille O'Neal.

(BEGIN VIDEOTAPE)

SHAQUILLE O'NEAL, BASKETBALL PLAYER: Domestic abuse is a very disturbing thing. I don't really think a lot of women know what to do.

My name is Shaquille O'Neal. My hero is Karen Earl. She helps and keeps women out of domestic violence situations.

KAREN EARL, COMMUNITY CRUSADER: My friend brought me to Jenesse Center. She said, "Karen, they need volunteers."

I never knew that there were shelters that were safe houses. And I thought about, you know, my mom. I remember us having to run out of the house at midnight with sheets wrapped around us.

I know the impact it had on my mom, and, of course, the impact on me and my siblings. So I volunteered and I never left. And in '97 I became the executive director.

O'NEAL: The Jenesse Center is a very comprehensive center. You can bring your children. They'll help you get back on your feet.

EARL: We have more than a hundred beds where the women and their children can stay for two years.

We started something that we call Healing Through Art. We try to work with that particular family to help them express what it is that they're feeling.

O'NEAL: Ms. Earl is a tireless, fearless woman. She's helping those in need.

You get the presidential clap from me.

(END VIDEOTAPE)

HARRIS: And again, seven days left to vote for your favorite CNN Hero. Go to CNN.com/heroes to see their stories and then vote. Then join Anderson Cooper Thanksgiving night and find out who will be CNN's Hero of the Year.

Vote now at CNN.com/heroes. Only seven days left.

The Windy City is boasting of the new president-elect, but Chicago's leaders are fearful of a huge economic disaster.

(COMMERCIAL BREAK)

HARRIS: How bad is the economy? Listen for a moment here to Chicago mayor, Richard Daley's, lament over job lay-offs now and next year.

(BEGIN VIDEO CLIP)

RICHARD DALEY, MAYOR OF CHICAGO: Huge lay-offs are coming in November and December. Next year there's going to be huge lay-offs. And all the corporation CEOs are coming to tell me that's just the beginning. It's not their end result.

This is a very frightening economy. And next year, because it really started in June -- only the six months, this is going to be all year. So it's going to be a very frightening economy. Each one of them tell me what they're laying off and they're going to double that next year. So you're talking about huge numbers of permanent lay-offs for people in the economy. It's going to have a huge effect upon all businesses, relying off of each -- one another.

Of course, for cities, counties, states, your revenue is going to keep coming down.

(END VIDEO CLIP)

HARRIS: I lost count at four. I think he said huge four times there. Chicago's mayor also predicts some local governments next year will not have enough to pay their workers.

Sour faces, forced smiles of post election post-mortem at the Republican Governors Conference in Miami. Live pictures now of the meeting. Rising Republican star Governor Tim Pawlenty channeling Barack Obama. He says his party must change. Pawlenty pointed out the Republican deficit among women, Hispanics, African-Americans and the middle class. Alaska governor Sarah Palin is the conference's top draw. In her speech a short time ago, praise for the president-elect.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R), ALASKA: ... Barack Obama well as the 44th president of the United States. And if he governs with the skill and the grace and the greatness of which he is capable, we're going to be just fine. And as he prepares to fill the office of Washington and Lincoln, know that this is a shining moment in American history. Senator Obama has achieved a great thing for himself and for our country.

(END VIDEO CLIP)

HARRIS: You know, since the election nine days ago, we've seen more of Sarah Palin than Joe Biden, and he won. The governor aggressively defending herself against critics. She called some of them jerks. Palin turned up on two CNN programs Wednesday. She told Wolf Blitzer her options are open for 2012.

(BEGIN VIDEO CLIP)

PALIN: Not ruling that out. But there again, that is based on my philosophy of, it's crazy to close a door before you even know what is open in front of you. As you travel this road in life, and as you turn a corner and there may be something there that -- circumstances change, you've got to call an audible and you decide to shift gears, take another direction. I'm always open for that.

(END VIDEO CLIP)

HARRIS: And later, Palin talked about the campaign's nuttier moments with our Larry King.

(BEGIN VIDEO CLIP)

PALIN: I think that was the most ridiculous part of the campaign, was the whole clothes story. They weren't my clothes. They aren't my clothes. I don't have the clothes. And I don't think it was $150,000 worth of clothes anywhere. It was for eight people, everybody in my family plus a couple of others that arrived at the convention with our overnight bags. There was a wardrobe there just like there was staging and lighting and all the other effects of a national, multi, multimillion dollar convention. Borrowed the clothes along the campaign trail, wore them once in a while and they are back in the RNC's hands.

(END VIDEO CLIP)

HARRIS: You know, the truth is, Palin has been a regular Chatty Patty since the election loss. She cooked moose chilly with Matt Lauer on the "Today Show" this week. She talked with Fox, as well as local TV stations in Anchorage.

Critical to get it right. That's why Barack Obama's aides say the president-elect is taking his time to find the right cabinet.

Here is CNN's Candy Crowley.

(BEGIN VIDEOTAPE)

CANDY CROWLEY, CNN CORRESPONDENT: Barack Obama made history. But as he puts together his cabinet, he doesn't want to repeat it.

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: I want to move with all deliberate haste, but I want to emphasize deliberate as well as haste.

CROWLEY: What is deliberate haste? This moment, said one Obama aide, the definition is, "not this week." It looks more like deliberate than haste, in part because the president-elect wants a clear runway taking off January 20th, nothing messy, no the drama Obama. That is, no Zoe Baird's, Bill Clinton's first choice for attorney general, no Kimba Woods, his second choice for the same job, both jettison for different reasons. And no Linda Chavezs, President Bush's top choice for labor secretary. She went down in flames over an undocumented immigrant who lived in her house.

It is history not to repeat. No miss picks to send a fumbling first impression or taking up valuable time in the all important first 100 days when new presidents begin to brand their era. OBAMA: I think it's very important in all these key positions, both in the economic team and the national security team, to get it right and not to be so rushed that you end up making mistakes.

CROWLEY: Another part of the deliberate side of deliberate haste, the Obama team sees the cabinet as an ensemble cast. I know it sounds like kindergarten said a top adviser, but you need people who can work together, not a collection of individuals. Historical reference, 2001. George Bush taps Colin Powell as secretary of state and Donald Rumsfeld at the Pentagon. Their disagreements were the stuff of headlines.

But hold up in Chicago transition headquarters, the president- elect is most concerned about this, and this, and this. A close adviser noted the selection of the Treasury secretary nominee will send unbelievable signals throughout the economy. Others, defense secretary, secretary of state and the national security team, will send signals across the world. It is crucial they get it right.

Candy Crowley, CNN, Chicago.

(END VIDEOTAPE)

HARRIS: Well, embattled Alaskan Republican Ted Stevens falls behind his challenger in one of three still undecided Senate races. At last count Stevens was trailing Democrat Mark Begich by just over 8,000 votes. Thousands of votes have yet to be counted.

Stevens is also fending off corruption charges. He was convicted in October of failing to file -- of filing false statements on his financial disclosure forms.

Plans are in place for a recount in the Minnesota Senate race. Incumbent Republican Norm Coleman and Democratic challenger Al Franken are less than half a percent apart. The recount is set to begin next Wednesday. Minnesota secretary of state hopes to have information back from the counting centers by December 5th.

(BEGIN VIDEO CLIP)

MARK RITCHIE, MINNESOTA SECRETARY OF STATE: Our genuine hope, and for those of us who enjoy the holiday season, if we can make that date, I think it can help us meet our objective of getting this done before the holiday season.

(END VIDEO CLIP)

HARRIS: John McCain back on the campaign trail today. Not for himself, though. He is in Atlanta to support Republican senator Saxby Chambliss. Chambliss faces a December 2nd run off against Democratic challenger Jim Martin. Chambliss supporters are hoping McCain's appearance will help rev up the GOP faithful.

We're talking presidential pups when we come back. Choosing a pet for the Obama girls is all the rage.

(COMMERCIAL BREAK)

HARRIS: Wow, how about this? Cash-strapped Americans are heading to Wal-mart in droves, and other stores are reviving some tried and true methods to bring in a new generation of bargain shoppers. Wait until you hear this. Stephanie Elam is at the New York Stock Exchange with details.

Stephanie, good morning.

STEPHANIE ELAM, CNN CORRESPONDENT: Good morning, Tony. Yes, they're taking it back to the old school.

But let's start off by talking about Wal-mart. The CEO says -- quote -- "it's our time," end quote. The retailers earnings show that is the case. While others stores are struggling, Wal-mart managed to post an increase in quarterly sales and a $3 billion profit. Now to reel in customers, Wal-mart has been cutting prices on thousands of items.

Over at Sears they're bringing back their lay-away program starting next week. Sears cut most of its pay-as-you go plan nearly 20 years ago, Tony. So for those of us who remember it, we're showing our age.

HARRIS: Yes, how about this? It may be a concept from -- well -- old school. We are going old school when we talk about lay-away, but many of us grew up with it.

Why did stores ever get rid of the program?

ELAM: It's all easy to wrap up in one word: plastic.

HARRIS: OK.

ELAM: So now they went to credit cards, right? Most stores got rid of lay-away because people weren't using the service. Instead, shoppers turned to their credit cards. Get it, have it in their possession and pay for it off their credit card as they went, right? But now we're in the worst financial crisis since the Great Depression. And ironically, lay-away is a program that has roots in that very time period. So there you go. Lay-away making a comeback.

On Wall Street, we're not seeing a lot of buying around here. An early rally has faded as retail stocks like Wal-mart and Sears have declined. The Dow off seven points, 8275, and Nasdaq off 14 at 1484.

So lay-away making a comeback. Green on the screen is not.

HARRIS: If we can get the markets to make a big comeback, that would be nice.

Stephanie, see you next hour. Thank you.

ELAM: Sounds good, thanks.

HARRIS: Another sign of the times, Delta cutting flights at its Cincinnati hub. About 40 flights a day, or 12 percent of its flights there. The new schedule is an attempt to avoid competition with Delta's hub in Detroit. Cincinnati airport officials say the airline is trying to streamline services. But some passengers are nun too happy.

(BEGIN VIDEO CLIP)

DEBRA SHEPHERD, TRAVELER: I had to fly through Salt Lake City to get to Cincinnati from Albuquerque. And usually I can fly straight in. And I tried to get a flight two months in advance and I still couldn't get on the only flight here.

TED BUSHELAMAN, SR. DIR. COMMUNICATIONS, CVG: It affects the airport all the way down the line because, you know, we've got less revenue coming in.

(END VIDEO CLIP)

HARRIS: Delta's regional carrier, Comair, will layoff 120 pilots early next year as a result of the changes.

Funny thing happening on the way to the ball park, the economy hit a foul. The Boston Red Sox are the latest Major League team to freeze ticket prices for 2009. The Sox had the highest average ticket price in all of Major League Baseball last season, $48.80.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's good that they're keeping it where it is. Because right now people couldn't afford it if it's going up.

(END VIDEO CLIP)

HARRIS: Well the Giants, Mariners and Reds are also holding the line on ticket prices. The Nationals, the As and Padres have cut prices next season.

Even the NFL is feeling the pinch. Ticket prices on play-off games will cost an average of 10 percent less.

The last surviving member of the Jimmy Hendricks experience has died. Drummer Mitch Mitchell's body found in a Portland, Oregon, hotel room early Wednesday. A medical examiner says he apparently died of natural causes. Mitchell was on the drum kick on all five of Hendricks' hit singles and performed with the legendary guitarist at Woodstock. Jimmy Hendricks and his psychedelic sound remains a signature of the late 60s, died in 1970.

(COMMERCIAL BREAK)

HARRIS: The president-elect may have trouble keeping one of his promises. We're not talking about tax cuts or health care here. We're talking about the search for a White House dog. Barack Obama says it needs to be hypoallergenic since one of his daughters is allergic. Well here is the problem, doctors who specialize in children's allergies says there is no such thing as a hypoallergenic dog.

He's not even the president yet and Barack Obama is already getting lobbied by pet owners wanting him to choose their dog's breed for the White House pooch.

CNN's Jeanne Moos takes a look.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: Just when you thought the campaign was over --

UNIDENTIFIED FEMALE: Yes, we can. Yes, we can.

MOOS: -- the canine candidates for first dog are barking, and the lame duck, Barney, is surly. Owners are practically auditioning their dogs --

UNIDENTIFIED FEMALE: He's a border collie. He watches the border.

MOOS: -- even pointing out similarities between the president- elect.

OBAMA: A lot of shelter dogs are mutts like me.

MOOS: And Shadow, the border collie.

UNIDENTIFIED FEMALE: He is black, white and brown.

MOOS: They're making videos showcasing doggy skills.

UNIDENTIFIED FEMALE: Good boy.

MOOS: They're sending photos captioned, please pick me; did you say White House?; bullies for Obama. All lobbying for their breed from the Bichon Frise in high heels to the Irish Wolfhound, gigantic enough for Sasha and Malia to ride.

There's even a nominee for secretary of da-fence. Everybody is making suggestions.

(BEGIN VIDEO CLIP)

JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Today President Clinton told him the Oval Office is a great place for a husky female. He said that's a fantastic --

(END VIDEO CLIP)

MOOS: While Bill Maher joked about accusations Barack Obama's enemies might make.

(BEGIN VIDEO CLIP)

BILL MAHER, HOST, "REAL TIME WITH BILL MAHER": How do we know this isn't the dog that pals around with terriers?

(END VIDEO CLIP)

MOOS: As in any campaign, there are dirty tricks being played with dogs on both sides, lifting their legs. And there are countless polls. What breed? Should the Obama's get a purebred or a rescue?

Obama already had a strong doggy base. There's even a dog with the unfortunate name Herpe trained to supposedly can speak Obama's name. Folks are suggesting names for the first dog, and there's a clear favorite.

(on camera): Here, maverick. Come here, maverick. Here, boy!

The John McCain and Barack Obama doggy chew toy, perfect for the White House pet.

(voice-away): From as far away as Peru came a suggestion of a hypoallergenic breed called the Peruvian hairless.

UNIDENTIFIED MALE: What does Molly want?

MOOS: But why insist on a first dog? Why not a first llama? The Obama Llama. Wouldn't she look cute on the White House lawn, asked her owner? And for a less labor intensive pet, may we suggest the one making the rounds on the Internet.

The White House must have a piano, and popcorn --

Jeanne Moos, CNN, New York.

(END VIDEOTAPE)

HARRIS: And we want to see your suggestions for first pup. Send them along to us at ireport.com.

Foreclosures up, jobs down. What's going on with issue No. 1, the economy? More answers in the next hour of CNN NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: In Afghanistan, a suicide bomber misses his target and winds up killing 18 civilians. A U.S. soldier also died in the attack. The U.S. Military says it happened today in the town of Batikot, just outside Jalalabad. The attacker apparently intended to ram his vehicle into a U.S. Military convoy, but swerved and crashed into popular market instead. The blast also wounded 50 civilians.

Frightening signs of a worsening security situation. Foreigners and the well to do increasingly becoming the target of criminal gangs in Afghanistan. One victim told his harrowing story to CNN's Atia Abawi. We warn you that some of the video is disturbing.

(BEGIN VIDEOTAPE)

ATIA ABAWI, CNN CORRESPONDENT: They are sending a brutal message. Kidnappers whip their hostage, the son of a wealthy businessman. He begs his family to pay a ransom, which they eventually do.

It's a fast-growing security problem. Wealthy Afghans living in daily fear of being abducted, not by the Taliban but by criminal gangs.

SHUKRIA BARAKZAI, AFGHAN PARLIAMENT MEMBER: It's an easy way to make money. And their lack of rule of law (ph), it's a big problem. They come to (INAUDIBLE) in Afghanistan. If somebody was doing wrong they should be punished according to the law.

ABAWI: But the kidnappers are rarely caught. Primitive holes, similar to this one, are used to contain victims.

15-year-old (INAUDIBLE), the son of a car dealer, shows us where he was snatched by gunmen outside his home. He was taken to a remote location and dropped into a well. 32 days, 15 meters below ground. He was blindfolded and bound. When his father and uncle couldn't pay the ransom, his abductors used a little persuasion throwing two grenades into the family's home. So they sold their belongings, borrowed money and got (INAUDIBLE) back. Now they're looking for a way out of Afghanistan.

HASIBULLAH, UNCLE OF KIDNAP VICTIM (through translator): We are still not at ease. They stole or lives, they stole our happiness. These kind of people are out there.

ABAWI: Here in the city's money market, you can find some of the richest men in Afghanistan. Those who have decided to stay. Many are choosing to leave.

AMIN JAN KHOSTI, BUSINESSMAN (through translator): Kidnapping is like a venom for this country because no one dares to invest their capital in Afghanistan due to the problems of personnel and capital insecurity.

ABAWI: At every turn in Kabul you find uniformed and well-armed guards. But neither Afghans nor foreigners feel secure. And the surge in abductions has hurt investments.

(on camera): The government is under pressure to do more to combat the epidemic of crime in Kabul. Recently setting up an anti- kidnapping unit and it's talking about the death penalty for those criminals convicted of kidnapping.

(voice-over): The legislator, the businessman and the hostage. All agree on one thing, that the root cause for the deteriorating security situation is unemployment and poverty, leading to desperation and brutality.

Atia Abawi, CNN, Kabul.

(END VIDEOTAPE)

HARRIS: And hello and welcome again to CNN. I'm Tony Harris. Here are a few of the stories we're covering for you today in the NEWSROOM.

Congress testy over the $700 billion bailout, particular scorn going out to banks that took taxpayer money but aren't lending to consumers.

The Bush money team switching its bailout strategy. I will talk live with two House members about the direction the bailout is taking.

President-elect Obama walking a tight rope on the financial crisis as he assembles his new administration.

You're in the CNN NEWSROOM.