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American Morning
Government Throwing Citigroup a Financial Lifeline; President- elect Obama to Unveil Economic Team; Jindal Visits Iowa; Michael Jackson Settles Lawsuit With Sheik; Going After Online Lurkers, Legal Issues in Streamline Suicide
Aired November 24, 2008 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
JOE JOHNS, CNN CO-ANCHOR (voice-over): Breaking news, massive rescue for Citigroup. Details of the government's mega deal now.
And just hours away, unveiling of an economic brain trust. Obama's money team.
Plus, military families promised new homes but something went wrong.
UNIDENTIFIED MALE: It's a disgrace. Our military families deserve more than this.
JOHNS: The nightmare land deal.
UNIDENTIFIED MALE: How does all this just slip by without anybody saying hold on?
JOHNS: And now they wait and wait and wait, on this AMERICAN MORNING.
(END VIDEO CLIP)
KIRAN CHETRY, CNN ANCHOR: Welcome. Glad you're with us. It is Monday, November 24th. I'm Kiran Chetry, and we're thrilled to welcome Joe Johns, in for the week for John Roberts.
JOHNS: The hardest working man in television, or so it's time.
CHETRY: Finally, he takes the break. That's right. Good to see you, though.
JOHNS: Yes. I'm glad to be here. This is great. Bright and early, huh?
CHETRY: Exactly.
JOHNS: All right. Good enough.
We begin with breaking news. The federal government stepping in again to rescue another banking giant on the verge of collapse. Citibank will get a $20-billion cash injection from the Treasury Department. Regulators guaranteeing hundreds of billions of dollars in risky assets. Just last week, Citigroup announced mass layoffs and a fourth consecutive quarterly loss.
Christine Romans breaks it all down in a moment.
And New York City crime rankings released just moments ago at the top of the list with the worst crime rate in the country. New Orleans, the battered city, is still reeling from the pounding delivered by Hurricane Katrina in 2005. The city with the lowest crime rate, a woodsy New York City suburb, Ramapo, with no murders.
Israel's outgoing prime minister, Ehud Olmert, is in Washington to meet with President Bush today. It's expected to be the final meeting between both leaders before they leave office. The meeting is expected to focus on Iran's nuclear threat and assess progress in Israeli-Palestinian peace talks.
Last year, two leaders along with Palestinian President Mahmoud Abbas pledged to have a peace deal in place by the end of this year. All parties now acknowledge that target date will not be met.
CHETRY: Now back to our breaking news this morning, the federal government throwing Citigroup a financial lifeline. It's a massive rescue package, including an additional $20 billion government stake in the banking giant. The government will also guarantee more than $300 billion in risky assets.
Now just last week, the company announced thousands of layoffs and posted its fourth straight quarterly loss. Citigroup's stock, as you can see as we take a look at this graphic, plunging. It plummeted from nearly 30 shares in January to less than $4 at Friday's close. For the year, Citigroup shares are down more than 87 percent.
Christine Romans is here "Minding Your Business." So we're talking about this situation with Citigroup and it just seems unreal. On Friday, we talked about the layoffs. Now, we're talking about this massive bailout. Are we really seeing a system on the brink?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: This is a system on the brink. That's exactly right. When you have a bank like Citigroup that the United States government goes in and throws a financial lifeline, again, don't forget, the government has already injected $25 billion in capital into this company, that tells you just how precarious the situation is and the government is not going to let this one fail, backing $306 billion in risky assets.
Now remember we talked about that Troubled Asset Relief Program taking the toxic assets off of the books? Citigroup would have benefited from that. When the treasury switched gears and was just focusing on the capitalization of the banks, Wall Street investors got very, very nervous. So back stopping $306 billion in loans. That's what the government is doing and also going to inject another $20 billion into this company and getting preferred shares in return, actually getting $27 billion in preferred shares in return. And then the U.S. taxpayer, you and me, will get a return on that investment of about eight percent.
The company is going to be allowed to keep Vikram Pandit as its CEO. The company will only be able to allow to give a one-cent quarterly dividend. It will also have to modify its home loans much like the FDIC made IndyMac modify its home loans. So modifying home loans for people who have mortgages held by Citigroup, that could be something that's important for a lot of homeowners.
I want to see if we have this stock year-to-date. But I can tell you that last week, this stock fell below $4 a share. $3.77 a share. All year it has been hammered four quarters in a row of losing money.
When you're talking about the stock of Citigroup that costs less per share than the cumulative say, banking fees for using an out-of- network ATM, that just tells you how dramatic the declines have been for this stock. Now all weekend, we were waiting to find out what would happen. We know that Timothy Geithner, the New York Federal Reserve president and who would likely be tapped as the treasury secretary under President-elect Obama, we know that he was involved in the negotiations. He's been involved in negotiations for bailouts and for the financial rescue all along the way.
So we know that there have been a lot of high-level people trying to figure out, Kiran and Joe, just exactly what to do to save Citi. It was just a couple of months ago we're sitting here Citi was going to maybe buy Wachovia, remember? And then Wells Fargo came in. Ever since that moment, the fortunes have just declined.
(CROSSTALK)
CHETRY: And they keep calling it a crisis of confidence. I know you called it that as well, but it's having real life effects.
ROMANS: Absolutely.
CHETRY: So we're going to talk more about that today. We have a lot of financial people, some of the players as well to talk about this with us. Where does it end? That's another big question?
All right. Christine, thanks so much.
Well, as we mentioned, Citigroup is no small banking outfit. Here's a look in an "AM Extra" now.
It's one of the world's best known finance brands with more than 200 million customer accounts in 106 countries. It employs more than 300,000 people under an umbrella of companies that include Citibank, Smith Barney and financial planner, Primerica. All told, the company holds an estimated $2 trillion in assets.
JOHNS: And the government's rescue of Citigroup comes just as President-elect Barack Obama is set to formally unveil his economic team. Obama is expected to name Timothy Geithner, currently the head of the New York Federal Reserve bank as treasury secretary, and former Clinton administration Treasury Secretary Lawrence Summers as his top economic adviser at a news conference later today.
And Suzanne Malveaux is live in Washington. Suzanne, what are we expecting to hear at this conference later today? SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: You know, Joe, in the wake of the Citigroup bailout, Barack Obama is expected to lay out more details on his plan to fix the economy. He's getting to unveil his new economic team. This weekend, he said he hopes to sign a two-year economic package very soon after taking office, and the stimulus plan includes money to help create 2.5 million new jobs, modernizing the country's infrastructure, schools, plans to invest in alternative energy like wind and solar to help kind of create those jobs.
And we heard from his top adviser, David Axelrod. He said that Obama wants this plan to be big enough to deal with the current crisis. We don't know what those figures are yet. But as you mentioned, Obama is also expected to formally name his economic team, very important, along with Geithner is going to be the treasury secretary. Summers, top economic adviser. Larry Summers, a former adviser.
New Mexico's governor, Bill Richardson, expected to be named commerce secretary later in the week. All of this really to try to give some confidence to the American people that he is on top of this crisis -- Joe.
JOHNS: And we also know everybody in Washington is talking about Hillary Clinton expected to be named secretary of state. Anything on that?
MALVEAUX: You know, Joe, two sources close to Hillary Clinton that I talked to say that they fully expect her to accept the position of secretary of state. There are other sources that have told CNN that Obama is on track to nominate her as the secretary of state and that's likely to happen after the thanksgiving holiday.
JOHNS: Suzanne Malveaux in Washington, thanks so much. See you again.
And CNN will have live coverage of Barack Obama's news conference, where he'll introduce members of his economic team. That is at noon Eastern, right here on CNN.
CHETRY: Also new this morning, President Bush back at work at the White House after what could be his final trip overseas as president. He returned Sunday from the Asia Pacific summit in Peru where world leaders ended their meeting with a bold prediction. They said that with swift and decisive action the global financial crisis could be resolved within 18 months.
Their optimism, however, still not being seen on Main Street in America. "USA Today" reports a growing number of Americans are having trouble paying their car and truck loans. A credit agency study says a number of delinquent loans jumped eight percent in the third quarter. Sixty-day delinquency rates were up more than 12 1/2 percent. The total of $30 billion at risk of not being paid.
And perhaps another sign of the times, a Colorado farm couple canceling a second day of a food giveaway after their crops were picked clean the first day. They say that they expected between 5,000 and 10,000 people to show up for the weekend. They were giving away free potatoes, carrots, leeks. Instead, some 40,000 people showed up, cleaned the farmer out. They say vehicles snaked around the cornfields creating a backup more than two miles. It's estimated the visitors gathered some 600,000 pounds of produce.
JOHNS: That is just incredible.
CHETRY: It is.
JOHNS: Talk about the sign of the times. Just unbelievable.
A Republican in Iowa, is Louisiana Governor Bobby Jindal trying to get a leg up for the competition in 2012? 2012. We look at his visit to the state that kicks off the presidential primary season.
And Michael Jackson versus the sheik of Bahrain. Is the singer walking away from a $7 million hit and a command appearance in a London courtroom?
It's 6:09 right now.
(COMMERCIAL BREAK)
CHETRY: And welcome back to the "Most News in the Morning." We are following breaking news this morning on the federal government's deal to try to save one of the biggest names in banking. The bailout of Citigroup gives the government a $20 billion stake in the company and guarantees more than $300 billion in troubled loans and securities.
The Fed's $20 billion investment will come from the $700 billion financial bailout package that Congress passed last month. Citigroup's stock dropping 60 percent last week alone and more than 87 percent since January -- Joe.
JOHNS: President-elect Barack Obama says he wants to heal the country's economic wounds when he takes office in 57 days. And while Democrats are focused on January 20th in the inauguration, some Republicans are already flipping their calendars ahead, 1,443 days, to be exact, to November 6th, 2012. That's when the next presidential election will be held, and one of the party's rising stars may be getting an early start.
Jason Carroll has been following one candidate perhaps...
JASON CARROLL, CNN CORRESPONDENT: Yes.
JOHNS: ... up to a state that has just a little bit of political significance.
CARROLL: Saw a quick picture of him there just a few moments ago. He's an up-and-coming Republican visiting the state that kicks off the presidential primary season. Sounds a lot -- little too much like coincidence there, doesn't it? There he is. Take a look at him. Louisiana Governor Bobby Jindal, this was Saturday night at an annual dinner held by the Iowa Family Policy Center. The dinner is considered a major event for Christian conservatives in this state, and there's already been plenty of speculation that Jindal will make a run for the White House in 2012.
He was a contender this summer to be John McCain's running mate. He's just 37 years old, making him the youngest governor in the country. He was also the first Indian-American elected governor.
He's a former Rhodes scholar. Many see him as the new face of the GOP. He tried to downplay it all Saturday but couldn't help but slip in some talk about the future of the party.
(BEGIN VIDEO CLIP)
GOV. BOBBY JINDAL (R), LOUISIANA: We are still a center right country, but the voters did vote in 2006 and in this year they fired the Republicans in Congress and they fired us with cause. Our real focus doesn't need to be on fixing the Republican Party. Our focus needs to be much more on what we can do to fix America.
(END VIDEO CLIP)
CARROLL: And as you can imagine, there is a lot of talk about the economy and health care. Jindal maintains he has no plans to run for the White House, but we've heard all that before.
And he's not the only one working on his frequent flyer miles to Iowa. Mike Huckabee, the former presidential candidate and current TV pundit and host, he held an event in Iowa last week, just a few blocks away from where Jindal spoke. So the political word might be small, but the election cycle apparently never ending.
JOHNS: That's for sure.
CARROLL: And never too early.
JOHNS: That's right. A lot of Republicans see Jindal as a very sharp guy.
CARROLL: He is a rising star.
JOHNS: We'll see what happens. All right.
CARROLL: All right.
JOHNS: Thanks a lot.
CARROLL: Thanks, Joe.
JOHNS: Back to you, Kiran.
CHETRY: Could be another thriller for Michael Jackson. Can he beat a $7 million lawsuit? We're live in London with the latest. Also speaking of a multimillion dollar lawsuit, one McDonald's in Arkansas is serving it up hot. We're not talking about fries though. A customer suing for millions after he left his cell phone in the restaurant and something happened to some of the pictures on it, if you know what I mean. We're going to explain just ahead.
Fifteen minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Well, time now to fast forward to some of the stories we'll be seeing here on CNN today.
President-elect Barack Obama will formally announce members of his economic team at a news conference in Chicago. Obama's choice for treasury secretary will be New York Fed Chief Timothy Geithner, and CNN's going to be carrying that news conference live at noon Eastern.
Three spacewalks down, one to go. "Endeavour" astronauts ventured outside of the International Space Station later today. It's the final spacewalk for the shuttle's nearly two-week visit to the orbiting outpost. They're trying to repair a malfunctioning joint that keeps a power generating solar wing on the space station facing the sun.
Well, do you have pictures on your cell phone that maybe you don't want anyone else to see? You may want to delete them. In fact, one customer left his cell phone behind at a McDonald's. The employees discovered nude photos of the man's wife, and they posted them online. The couple is now suing for $3 million which would, of course, buy a lot of Big Macs.
Rob Marciano is in the weather center in Atlanta. Start deleting.
ROB MARCIANO, AMS METEOROLOGIST: Yes, exactly, or -- smile, Kiran, come on. Let's make some muddy here. Say cheese. Oh, you're too fully clothed.
It's cold outside. I understand why you're wearing that much.
All right, guys, chilly across the northeast. And you don't want us to make any money, I appreciate that.
Jacksonville down to Florida, rainfall a good swathe of the midsection of the country really up and down the Mississippi River Valley. Some snow on the back side of this from Madison to Monroe back to Milwaukee. Shouldn't be a whole lot. Chicago will get a little bit tonight, but it really shouldn't amount to much.
Columbus to Cincinnati, back to Birmingham, this is all going to fill in and slowly march its way toward the northeast. Temperatures have been pretty chilly this morning across the northeast ahead of that rain shield. The rain will move in to the New York metropolitan area tonight, and it will be heavy at times. And then as things will begin to dry out behind this front, it does look to be a little bit drier and a little bit cooler.
Thirty-eight degrees in Chicago, 32 degrees in Minneapolis, 39 degrees in Toronto. Fifty degrees for a high temperature in D.C. today. Forty-eight degrees before the rains move in tonight into New York City.
Yes, pictures, Internet, not always a good thing.
CHETRY: You'd think people would learn with all these Web sites and everything else, right? What you think is private these days is not private.
MARCIANO: Sometimes you just snap so many pictures you forget they're in there.
CHETRY: With or without clothes, you're just snapping away, you never know. Poor Rob.
All right, we'll check in with you a little later.
MARCIANO: All right.
CHETRY: Thanks, buddy.
MARCIANO: See you.
CHETRY: Joe?
JOHNS: And what about the guy who actually put the things up on the Internet, anyway?
A London court has just revealed that Michael Jackson has reached a settlement with the sheik from Bahrain. The royal sheik said the king of pop owes him $7 million. He filed a lawsuit in London. Jackson's lawyers maintain the money was a gift. The eccentric pop star was scheduled to testify today in a London courtroom.
Nic Robertson joins us from London with more. Nic, so why won't Jackson be in court?
NIC ROBERTSON, CNN CORRESPONDENT: Well, according to his spokeswoman here in London, he was told by his lawyers, just as he was about to board a plane to fly to London to appear in the court that it wasn't necessary, that a deal has been struck. It took the judge about five seconds to listen to both Jackson's and the sheik's lawyers today say that they reached this agreement.
There is no information at the moment on exactly the nature of the agreement, but it does appear last week Michael Jackson's lawyers were saying that he was too sick to travel. The judge indicated that would be unsatisfactory. Michael Jackson then said he was going to come. Now he isn't going to come, now it's settled. The details, we don't know.
There was a lot of press here expected today to cover this. Of course, no one has barely shown up. It is essentially all over now, Joe.
JOHNS: Great, Nic. Now, here's the big question. He gave up title to Neverland, now settling out of court. The question I guess, is he still hurting for money?
ROBERTSON: Well, you got to ask two questions here, Joe. Why didn't he come? Was he really just not up for traveling and willing to settle out of court because he didn't want -- he just didn't want to make the journey? Was that the deal behind all of this, or is it really that he just didn't want to risk coming, spend all that money to come, have his legal expenses, his hotel expenses here, perhaps lose, perhaps have to pay the sheik's legal expenses as well, plus pay out the $7 million?
Was it just a financial gamble? Is he really that strapped for cash at the moment? It's certainly a question that's on everyone's minds here. And certainly what people say about the courts here in England is, you get good lawyers and if you win, then you have every chance of making all the money you hope to make, and getting the other side to pay the cost that perhaps Michael Jackson had that in mind -- Joe.
JOHNS: Some things don't change on either side of the Atlantic. Thank you so much, Nic Robertson, in London -- Kiran.
CHETRY: Well, a federal government taking some bold steps to keep the troubled banking giant Citigroup from collapsing. Billions more of your money going into another big money bailout. We're going to talk more about that still ahead.
Also, death online. Did a virtual audience really encourage a teen to kill himself live on the Internet? The father of that teen is outraged. We'll bring you more on the legal ramifications of this story.
Twenty-three minutes after the hour.
(COMMERCIAL BREAK)
JOHNS: A father is calling for tougher regulation of Internet sites this morning after a virtual audience allegedly encountered his son and encouraged him to commit suicide.
Justin.TV allows users to broadcast live videos from their web cams. Some viewers say they didn't take the teenager seriously because he had threatened to kill himself before. Police found the young man's body 12 hours after he swallowed a fatal dose of prescription medicine.
AMERICAN MORNING legal analyst Sunny Hostin has been looking into the legal issues here.
Good morning.
SUNNY HOSTIN, CNN LEGAL ANALYST: Good morning.
JOHNS: This is such a sad and awful story.
HOSTIN: It is horrifying.
JOHNS: Right.
HOSTIN: It is horrifying.
JOHNS: And this father has nothing else, and the first thing that comes to our minds is, is there somebody he can sue?
HOSTIN: You know, I don't think so. Probably not. The first question is, can he sue the Web site? Can he sue the Web site? And I think the answer to that question is absolutely not.
Web sites really aren't responsible for posting by third parties and that's been the movement of the law, but this Web site is a little bit different in that it had a mechanism, a mechanism that alerted a moderator to potentially indecent content. And so, I think the question then comes up, should they have known? Did they know and if they knew, didn't they have a responsibility, John (ph), didn't they have a responsibility to do something at that moment, get the police over there, and try to save his life? So there may be a little bit of leeway there but probably not.
JOHNS: But the other question, I mean, when you look at it, what about the people who were watching, the people who were online checking this out.
HOSTIN: Exactly.
JOHNS: Everybody has a different excuse but nobody did anything.
HOSTIN: Exactly. And, you know, I spoke to so many people over the weekend. I mean, this story is just everywhere. People aren't outraged by the web site because people are saying, you know, MySpace, Facebook, teenagers live on the Internet. What people are outraged about are the true voyeurs that sat and watched this, encouraged it. And I think that is where sort of the legal line may be drawn.
There's one -- you know, there's one thing to just sit and watch. You're a voyeur. It's creepy. It's not nice. But it's another thing to say "do it. Take more. Kill yourself.
I would say you certainly have crossed the moral line because don't we have decency in our society at this point? Why don't you do something about that? But I think those that really encouraged it perhaps there's a crafty prosecutor out there that may go after those people.
JOHNS: And there's this other question of regulation. At the end of the day, is there something that the government can do to maybe step in and regulate more of what's going on, on the Internet. You know, there are a lot of people who say don't regulate the Internet at all.
HOSTIN: You know, that's true but I think something needs to be done clearly. The law has not caught up with the Internet. This is technology. They call the Internet the wild, wild west.
We need to do something, because what if there are copycat crimes? What if this -- or not copycat crimes but copycat suicides. What if people start doing this over and over and over again? We really would have a significant problem, a more significant problem than we have right now. So I think regulation is on the way.
JOHNS: Sunny Hostin, thanks so much. Good seeing you today.
HOSTIN: Thank you. Good seeing you too, Joe.
JOHNS: You bet. All right.
Kiran, back to you.
CHETRY: Thanks, Joe. Well, we're just about half past the hour. We're going to check our top stories right now.
A bank that was considered too big to fail will not be allowed to go under. The federal government throwing Citigroup a financial lifeline. It will inject $20 billion into the troubled company and guarantee more than $300 billion in risky assets. Citigroup's stock plummeted after concerns about its financial health and for the year, Citigroup shares down more than 87 percent.
A little bit of a bright spot economically speaking. Now you can get a gallon of gas for an average of $1.91. The last time you could get gas this cheap was back in February of 2005.
And according to AAA, gas prices dropped for about two months straight, down from a high of $4 in July.
And breaking overnight, a magnitude 7.0-earthquake struck in a remote area about 4,000 miles northeast of Moscow. No immediate reports of damage in the area. No tsunami warnings were issued before that quake.
Well, President-elect Barack Obama will address the economic crisis today when he announces his economic team after signaling an ambitious economic plan over the weekend. Now as we've been telling you, the government has rescued yet another big bank, this time taking a $20 billion stake in Citigroup. So how significant is the latest bailout? Where does it end, and how does the Obama camp deal with these economic problems?
Joining from us Washington this morning is Eamon Javers. He's a financial correspondent for the "Politico." Thanks so much for being with us.
EAMON JAVERS, FINANCIAL CORRESPONDENT, "POLITICO": Good morning.
CHETRY: So we have Citigroup shares falling 60 percent. It's a 16-year low. I mean, basically, it's about $4 a share. What happened to make it necessary for the government to throw in this multibillion- dollar cash infusion? JAVERS: Well, two things. Clearly, we had a crisis of confidence among investors, who saw that stock price decline by 60 percent just last week. I mean, Citigroup fell off a cliff last week. And then, the government watching that simultaneously saying, hey, wait a second, we've got to step in here and do something.
This is an institution that really is too big to fail. You know, you wonder about what the size of which something is too big to fail. Well, Citigroup has $2 trillion in assets. That's an enormous amount of money and the ramifications if Citi were to fail were simply too big for the government regulators.
So, they began working on a plan late last week to sort of come up with some kind of backstop here for Citigroup. It's not failing yet but if it were to fail, the government wants to be in a position to keep that from happening. So, here's where multibillion dollars of government money are coming into play.
CHETRY: A lot of people are asking, where does it end? I mean, are we going to wake up every Monday morning, open up the "New York Times" or the "Wall Street Journal" and see another major institution getting billions from the government?
JAVERS: Well, it feels like that, doesn't it?
CHETRY: Yes.
JAVERS: I mean, the question is, how many institutions are going to be deemed too big to fail? I mean, there are not that many that have $2 trillion in assets. But beyond that, where do you draw the line? Where do you say, hey, wait a second, this one, OK, we can let this fail, it doesn't have a ripple effect to the broader economy.
And that's going to be part of the enormous mess that's on the plate of the Obama administration when they come in starting in January 20th. They're going to have to decide some kind of coherent plan here, because what's happened so far is the government has been responding largely on a case by case basis. They've let some entities fail. They've forced others to be sold. They've bailed others out. They've nationalized a few.
It's really been a grab bag of approaches as they've been adapting in real time to an emergency situation. Now, the Obama team is going to have to come in and put some kind of long-term coherent plan on this because, clearly, this a problem that's just not going away any time soon.
CHETRY: Right. The name that we've heard for the past week or more is Timothy Geithner.
JAVERS: Right.
CHETRY: He is currently the Federal Reserve Chairman of New York and he is going to be the new Secretary of Treasury. And, apparently, he also had a pretty big hand in arranging the Citigroup situation that was taking place, this bailout over the weekend. Is that a good pick in your opinion?
JAVERS: Well, the stock market thought it was a good pick, bouncing nearly 500 points on Friday on the news that Geithner was going to be selected as the Treasury chief coming in. And clearly, the reason why he was picked is because he has had his arms and up to his elbows in this bailout mess so far.
So, he doesn't need a whole lot of on-the-job training. He was already working on the Citigroup bailout last week even before he was announced as the Treasury chief. So, this is a guy who's got a lot of experience even though he's relatively young. He's actually exactly the same age as Barack Obama at 47.
CHETRY: Wow.
JAVERS: So, he's a young guy, but he's relatively well- experienced. The market reacted very well to his selection on Friday.
CHETRY: Right. The other thing that's interesting is, he actually has a hand in this real time, but for the rest of the transition team, I mean, Barack Obama is not yet in charge and the Bush administration is sort of the lame duck. In this transition, we're dealing with one of the biggest financial crisis since the Great Depression.
How is this working? Is there -- I mean, there's been some talk this morning that maybe the two administrations need to sort of get together and figure out a way to hammer this out. Is that happening or is that unrealistic?
JAVERS: Well -- no, it is happening and that's what's been remarkable. This is absolutely the worst timing for a financial crisis like this.
CHETRY: Right.
JAVERS: You've got the tail end of an administration going out. Those guys are all sort of working on their resumes and looking for jobs after the White House. You've got the new guys coming in. They don't know exactly what they're doing and where the furniture is in the Treasury Department and all that.
But there's been a remarkable degree of cooperation, I would say, in the Treasury. They've worked very well with the incoming Obama administration folks in terms of getting them up to speed, working together. They've decided to leave a lot of the bailout money on the table for the Obama administration. When they come in, in January, they'll be able to make their own decisions about that. So, there's been a much more coordination than you've seen in the past because the stakes are so high.
CHETRY: All right. A huge challenge ahead to say the least. Eamon Javers, a financial correspondent for the "Politico." Thanks for being with us.
JAVERS: Thank you. CHETRY: Joe?
JOE JOHNS, CNN ANCHOR: Kiran, all eyes are on Barack Obama's economic team. But what will the President-elect's national security team look like? We look at how the Obama crisis team is shaping up.
(BEGIN VIDEO CLIP)
CHRIS LAWRENCE, CNN CORRESPONDENT (on camera): Right here, right now, there should be hundreds of new homes ready for military families to move into. So why is there nothing but an empty field behind me? Chris Lawrence -- I'll have that answer coming up.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
JOHNS: Sunrise in Washington, D.C. There you see a beautiful shot of the nation's capital, the Capitol dome in the foreground. And we, of course, are here in New York. We're following breaking news this morning and counting down to President-elect Barack Obama's big news conference. He'll formally announce the key players on his economic team. CNN will carry that news conference live at noon Eastern.
As we learn more about the economic team of Barack Obama, there are also questions about his military security plans. Pentagon correspondent Barbara Starr is following that for us.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Kiran, Joe, when the phone rings at 3:00 a.m. in the White House during a crisis, President Obama won't lack for advice, but the question may be, whose advice will be the loudest?
(BEGIN VIDEOTAPE)
STARR (voice-over): Barack Obama's potential national security team looks like an all-star lineup. Hillary Clinton on track to be Secretary of State. Robert Gates may stay on as Secretary of Defense. Retired General Jim Jones is a leading candidate for National Security Adviser. And according to the "New York Times," retired Admiral Dennis Blair may be named as Director of National Intelligence. But can so much high-powered talent really get along?
DAVID GERGEN, CNN SR. POLITICAL ANALYST: Are there downsides? Sure. When you have people of this much stature, there can be ego clashes. You know, everybody's ego has got to get into the same room, and at least one or two of those cases, I'm sure, people think that their egos are big enough to fill the room all by themselves.
STARR: Senator Clinton has applauded Gates' candor but early on put him on notice.
SEN. HILLARY CLINTON (D), NEW YORK: We need a strong secretary of defense, but that doesn't mean strong-headed.
STARR: And Gates?
ROBERT GATES, DEFENSE SECRETARY: One of the most important lessons of the wars in Iraq and Afghanistan is that military success is not sufficient to win.
STARR: Gates urgently needs the State Department to contribute billions of dollars in aid for Iraq and Afghanistan. But the real power broker may be retired Marine Corps four-star Jim Jones. A former Middle East adviser, Jones is known as a strong commander. As national security adviser, he would have to make sure President Obama not only gets the best advice, but that the team plays together nicely.
PAUL BEGALA, DEMOCRATIC STRATEGIST: There nobody stronger than a four-star Marine general, and he would be able to take this team of rivals and play the role of integrating everybody together.
(END VIDEOTAPE)
STARR: And what about General David Petraeus? Now, the top commander overseeing the wars in Iraq and Afghanistan. Petraeus always had a direct line to President Bush. Will he have the same speed dial to President Obama -- Joe, Kiran.
CHETRY: Dead end.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: It's a disgrace. Our military families deserve more than this.
(END VIDEO CLIP)
CHETRY: The land deal that turned into a money pit. Millions of tax dollars wasted while military families wait for new homes. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: And welcome back to the "Most News in the Morning." Wouldn't you like to be there right now? Miami, Florida, we're at 75 degrees. Some showers for today, but you know, they don't stick around long in South Florida, do they? That's courtesy of WPLG, beautiful shot this morning.
The terminals, by the way, in Miami and airports across the country are going to be jammed as we know soon with Thanksgiving travelers. Hard-hit airlines had actually cut back on flights and it means that your plane will most likely be more crowded this year. The skies, though, won't be as congested. And there should be fewer flight delays, fingers crossed.
Well, a military housing disaster. A government deal with a private developer went sour and now it's affecting more than 100 families outside of Seattle, Washington. And when the project manager tried to intervene, he got fired. Chris Lawrence investigates. (BEGIN VIDEOTAPE)
LAWRENCE (voice-over): Hundreds of military families were promised brand new homes on this hillside.
UNIDENTIFIED FEMALE: And then two and a half years later, we're still here.
LAWRENCE: The Navy partnered with a private developer to build 141 homes here but it never happened. So, families are stuck in neighborhoods with no playgrounds, living miles from base in cramped old homes.
UNIDENTIFIED FEMALE: Problems with gas leaking because of the furnaces.
LAWRENCE: This military wife is afraid to go public with her complaints.
UNIDENTIFIED FEMALE: I don't want any retribution to come down on my husband.
LAWRENCE: The land the developers selected is full of deep ravines and protected wetlands, an empty field not suitable for hundreds of homes.
(on camera): Nobody from the company took a look at this property before they paid $6 million for it?
UNIDENTIFIED MALE: Apparently not.
LAWRENCE (voice-over): John Jack was the building director for developer American Eagle. Jack says he was fired when he documented his company's mistakes, and complained to the Navy that nothing was getting built for the families.
They deserve more, they got less, and the military doesn't care.
LAWRENCE: The Defense Department says it's turned over thousands of new homes to private developers, under 90 deals similar to American Eagles.
And we have really six of them that had a problem with the developer. John Jacks worked for the bad developer.
LAWRENCE (on camera): How does all of this just slip by without anybody saying, hold on?
UNIDENTIFIED MALE: It's a lack of oversight.
LAWRENCE (voice-over): Last year, American Eagle sold the Navy contract to a new developer for five times its initial investment. The company then broke up and partners went their separate ways.
It's a disgrace. You know, our military families deserve more than this. LAWRENCE: Jack filed a whistle blower lawsuit against some of American Eagle's partners. They responded in a statement saying his allegations have no merit, but the government held the company somewhat accountable.
UNIDENTIFIED MALE: We've gotten I think about a half a million in damages from them in the northwest project.
LAWRENCE: True, but the Navy also forgave another $14 million in delays and cost overruns. American Eagle's partners say it wasn't their fault and the Navy basically agreed. Now the project's in the hands of that new developer, who is looking for a usable plot of land outside Seattle. Residents hear their new homes could be ready next year.
UNIDENTIFIED FEMALE: I'm not holding my breath on that.
LAWRENCE (on camera): I asked the new developer point blank, is there any end in sight? Well, they hope to close on a new piece of land by early next year. And if, if everything goes well, move those families into new homes when school starts next fall.
Chris Lawrence, CNN, Marysville, Washington.
(END VIDEOTAPE)
JOHNS: Monkey business.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: From the hot hand towels to the ashtrays, to taking your money, and delivering your change.
(END VIDEO CLIP)
JOHNS: Swinging into action, the wild idea that's keeping one restaurant from going out of business. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
JOHNS: Welcome back to the "Most News in the Morning." With many businesses in Japan, the feeling the economic pinch, one tavern is changing the face of customer service to turn a profit, employing monkeys to wait tables. CNN's Kyung Lah has the story.
KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT: Good morning, Joe and Kiran. The global economic slowdown is hammering restaurants in Tokyo, except for one that's seeing business go up.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: (SPEAKING IN FOREIGN LANGUAGE)
LAH (voice-over): When you order a beer at Kayabuki tavern
UNIDENTIFIED MALE: (SPEAKING IN FOREIGN LANGUAGE)
LAH: The waiters scampering to your table is in a monkey suit, a real one.
UNIDENTIFIED MALE: (SPEAKING IN FOREIGN LANGUAGE)
LAH: From the hot hand towels to the ashtrays to taking your money, and delivering your change, 5-year-old Fuku-chan and 12-year- old Yat-chan are working the tables. Unlike thousands of food service employees who are expected to lose their jobs this year.
(on camera): It's a tough time for Tokyo's 160,000 restaurants. 2008 will be a record breaker for the number of restaurant bankruptcies in Tokyo. Kayabuki says sure it's relying on a gimmick, but that gimmick is keeping it open.
(voice-over): "Because of my monkey, we get all kinds of customers" says the tavern's owner. "We're not affected by the economic downturn." They're even bringing in tourists from around the globe.
UNIDENTIFIED FEMALE: It's crazy.
LAH: The Fenners from St. Joseph Michigan saw the waiter monkeys on YouTube and just had to see it for themselves as part of their Tokyo vacation. Not exactly something they'd see back home.
GREG FENNER, AMERICAN TOURIST: I don't think they'd allow it. I mean, I see absolutely nothing wrong with it, but the animal rights people probably wouldn't allow it.
LAH: The owner gets around that by working his pet monkeys only two hours a day. Health Department inspectors gave this a green light as long as the monkeys wear clothes, says Otsuka. Now, they're a nightly fixture.
Even helping to answer the phone. All they ask is a (INAUDIBLE) customers who are eating up the monkey show and the tavern's daily dishes, and for one restaurant surviving a global economic slowdown, that's something to cheer about.
(END VIDEOTAPE)
LAH: The restaurant does not deny that this is all very silly, but it also points out that in its immediate neighborhood, 15 o 20 other restaurants have closed down recently, while it continues to see good business every night -- Joe, Kiran.
JOHNS: Good business.
CHETRY: How about it?
JOHNS: That's unbelievable.
CHETRY: We'll work for soy beans, too, what the heck.
JOHNS: Right, exactly. But do they baby sit? That's what I want to know.
CHETRY: It is hysterical. They are slinging beer, you know, running back and forth. I'd go -- I'd go just to see it.
JOHNS: For sure.
CHETRY: Oh, love it. All right. Well, it's 51 minutes after the hour.
JOHNS: Massive rescue for Citigroup, trying to stop a crisis cold. Why this bank? Why this morning?
Plus, UFO encounters.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Just gone.
(END VIDEO CLIP)
JOHNS: "In Search of Aliens," day one.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Could it have been a problem with the radar? Could it have been a weather phenomenon?
UNIDENTIFIED MALE: No.
UNIDENTIFIED MALE: Could it have been a meteorite?
(END VIDEO CLIP)
JOHNS: Credible or crazy? You decide. You're watching the "Most News in the Morning."
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(BEGIN VIDEO CLIP)
GOV. BOBBY JINDAL (R), LOUISIANA: We are still a center right country, but the voters did both in 2006 and in this year, they fired the Republicans in Congress and they fired us with cause. Our real focus doesn't need to be on fixing the Republican Party. Our focus needs to be much more on what we can do to fix America.
(END VIDEO CLIP)
JOHNS: Louisiana Governor Bobby Jindal already in Iowa. Could he be campaigning for 2012? Seen by many pundits as one of the new leaders of a struggling Republican Party. Still recovering and regrouping after their election day losses.
So, what is the way forward for the GOP? There's a long list of prominent Republicans looking to take the reins. Have their agenda heard and take credit for the party in bringing it back. And what about the promise of a Republican in the Obama cabinet? That would mean new meaning to the term team of rivals.
Joining me now is a senior fellow with the American Enterprise Institute, contributor to the National Review online, David Frum.
And I guess a lot of people are wondering right now about Hillary Clinton. What do you see in this thing? What does it mean to have Hillary Clinton as the secretary of state? How will she end up there?
DAVID FRUM, SENIOR FELLOW, AMERICAN ENTERPRISE INSTITUTE: Well, it means that Hillary Clinton has just moved from having an independent power base in the Senate to being in effect an employee of Barack Obama. And not just any employee, but one who has had to open her files to Barack Obama.
I just imagine the scene of the Obama people going through the Clinton files and saying, wow, this could be embarrassing if anybody ever found out about it. Don't worry, it's safe with us.
He has just cemented his enormous power over her, and the sentimental idea out there that he's reaching for a rival and padding the dust off her and bringing her into a cabinet to be his rival -- no, he's putting her into his cabinet in order to control her. It's a pretty impressive display of tough politics.
JOHNS: But why would she take the job. Why would she leave the United States Senate and go over to secretary of state, where she would be the employee of Barack Obama?
FRUM: Well, I think part of it, she was trapped. The series of leaks that happened over the past week, they leaked the news of the offer. Barack Obama looks of course very magnanimous, making such an offer.
She probably wanted the job anyway. And although the Senate is powerful, it's also frustrating. So, she may have had reasons for going, but he also put pressure on her by leaking the news of the offer. Could she afford to look less magnanimous? Could she afford to say no and look like she was keeping some kind of grudge? And that might put her on the outs for a lot of Democrats for whom Barack Obama is the leader.
JOHNS: At the same time, there is a lot of self-interest here on her part. She gets to be on a world stage and push American policy to all these other countries.
FRUM: Does she really or does she take orders from the vice president, Joe Biden, who also has a lot of strong policy ideas, and who may end up having a role not unlike that of Dick Cheney. And maybe not as powerful quite as Dick Cheney, but he's got a big institutional base, a lot of strong foreign policy ideas. There will be some rivalry there.
JOHNS: A lot has been made of the relationship between these two, particularly because of the primaries. And I suppose the question there is not what is the relationship currently, but what could it be if they work closely together in the administration? FRUM: Well, we'll see. We have had eight years in which the national security adviser has been a relatively weak figure compared to first Secretary of State Colin Powell, and then when Steve Hadley moved to the job, even though Condoleezza Rice has been a relatively weak secretary of state. Again, the national security adviser was weaker still. The power rested very much in the vice president's office. But the norm since 1960 has been for the national security adviser to be very powerful and often more powerful than the secretary of state.
JOHNS: Do you anticipate, realistically, at the end of the day, friction between the president and the secretary of state in this new administration?
FRUM: I have -- I don't know. But I think what you are -- the question I would have is, does the power of the secretary of state get a cliff by the vice president, by the national security adviser?
By the way that's one reason -- your point before putting a Republican in the cabinet, I don't think it's generally a good idea to reach across the aisle and I say this as a Republican. People vote for a Democratic policies, they should get Democratic policies, good and hard, too, to teach them a lesson.
But what we have competitions for a reason and you don't want to negate the power of voter choice by saying, you know, if you vote Democratic, you don't get something pretty different.
Also, it's hard to see what Republican would take the job and any Republican who would take it, he wouldn't give Barack Obama lot of credit with Republicans.
JOHNS: David Frum, always good to see you, meeting us from Washington. Thanks and come back.
FRUM: Thank you, Joe.
JOHNS: Kiran, back to you.
