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American Morning
Government Injects $20 Billion to Citigroup; Obama to Unveil his Economic Team; Economy Suffering Between Bush and Obama; Spitzer's Prostitute Speaks Out; Reliable Sources Who Say Aliens Exist
Aired November 24, 2008 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: All right. Thanks, Joe. Well, we're following breaking new. The federal government stepping in yet again to rescue another banking giant on the verge of collapse. Today we're talking about Citigroup. It's going to get a $20 billion cash injection from the Treasury Department. Federal regulators are also guaranteeing hundreds of billions of dollars in risky assets. Just last week Citigroup announced mass layoff in a fourth consecutive quarterly loss. Christine Romans is breaking it all down for us in just a moment.
But there's also some positive economic news, if small in comparison, but AAA says the national average for a gallon of regular is now down to $1.91, that's less than half of what it was back in July when gas prices hit a record of $4.11 a gallon. Gas prices have now dropped for 68 straight days and we haven't seen gas prices this low since February of 2005.
Breaking news overnight in Russia, a magnitude 7 earthquake struck in a remote area about 4,000 miles northeast of Moscow. No immediate report of damage in the area, also no tsunami warnings issued after the quake.
Back to our breaking news this morning. The federal government throwing Citigroup a financial lifeline. The massive rescue package includes an additional $20 billion government stake in the banking giant. The government will also be guaranteeing more than $300 billion in Citigroup's risky assets. Just last week the company announced thousands of layoffs and posted its fourth quarterly straight loss.
Citigroup's stock, you'll see it on this graph we're about to show you, plummeted from nearly $30 a share back in January to now less than $4 a share at Friday's close. For the year, Citigroup shares are down more than 87 percent. Christine Romans is here "Minding your Business" with more perspective for us on what's going on. First, is this cutting our of the $700 billion bailout money.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: The $20 billion I believe is coming out of the $700 billion with that $300 billion backstop, backstopping against that. That's coming from the FDIC and the Treasury. That is -- that is your money. It's all your money, frankly. And you know, we don't have the money.
So, what we do, taxpayers, we borrow the money from other people. So that's something to put it in perspective here. We're already spending more money than we have. But this was something that the government decided that that we absolutely had to do to try to prevent some sort of calamity for the financial system.
So, this is what it looks like. We're going to backstop losses against toxic assets worth more than $300 billion on Citi's books, and then we're going to purchase $20 billion in stock. We've already purchased $25 billion out of the troubled asset relief plan, that $700 billion. It would take another $20 billion, and in return, taxpayers are going to get $27 billion of preferred shares. They're going to pay eight percent interest.
So, taxpayers will get interest on that. This is what the Treasury said in a joint statement with the FDIC and the fed for why this was so important. With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy.
This is about the United States economy. This is about an unraveling that's been going on in the financial system, that unraveling that you can see in the stock as Kiran pointed out, down 87 percent so far this year.
When you have shares of Citigroup, this banking giant, this until now very, very respected global banking behemoth. When those shares are worth less than the fees you would pay for using the Citigroup ATM card out of network, that just tells you what has happened, the unraveling of the prospects, the confidence in this company.
And so, this is -- how did this happen? Bad loans. Lots and lots of bad loans. They bet on the mortgage industry. Wrong. They bet on the wrong direction on housing prices, and they got burned. This is the reckoning.
CHETRY: And quickly, does this mean anything different this morning for people who bank with Citi?
ROMANS: It doesn't mean anything different. It means that your bank has been given a lifeline and everything is business as normal for Citibank customers.
CHETRY: Thanks, Christine.
JOE JOHNS, CNN CO-HOST: You can bet a lot of people are going to be talking about this. CNN's Allan Chernoff is getting reaction to the latest monster bailout. He's live outside Citi's world headquarters in New York.
Allan, how are you doing out there?
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Good morning, Joe. It's not exactly happy days are here again over at the Citigroup headquarters here on Park Avenue. There is a bit of a sigh of relief of people walking in, glad that at least the government is helping out, helping this massive bank make it through this very, very difficult period. But keep in mind also, a lot of the people walking in behind me, most of whom would not talk to me, but a lot of them are concerned about employment.
Last Monday, Citigroup announced plans to lay off 52,000 people. Most of the people who will lose their jobs, just don't know yet if they are one of those, one of those unlucky employees. So, a lot of uncertainty here. Among clients, customers, a lot of them say the government had to do this.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I think the bailout is positive. That's what the government should do. It's inevitable. And as a customer, I'm feeling that my savings and my deposits will be fine.
UNIDENTIFIED MALE: They have 2 trillion dollars in assets. So, they are too big to go down. If they go down, Bank of America, everyone else, I think they're too big.
CHERNOFF: Too big a domino.
UNIDENTIFIED MALE: Yes, absolutely. I think that this would be bigger than Lehman Brothers.
(END VIDEO CLIP)
CHERNOFF: And remember, Lehman Brothers, of course, when it was allowed to fail, that really triggered the financial crisis. One employee told me, he wouldn't identify himself, but one employee said, you know what, we're going to make lots of money, we're well- positioned as soon as the global economy stabilizes and the government is saying, helping Citigroup is essential for stabilizing the economy.
Joe?
JOHNS: Allan Chernoff right here in New York. Thanks, Allan.
Here's more on Citigroup in an "AM Extra." It's one of the best known financial 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 dollars in assets.
CHETRY: Well, the government's rescue of Citigroup comes just as President-elect Obama is set to formally unveil his economic team. Obama expected to name Timothy Geithner, who's currently the head of the New York Federal Reserve Bank as Treasury secretary. Also, former Clinton administration Treasury secretary Lawrence Summers, as his top economic adviser. All of this to be announced at a news conference later today.
Our Candy Crowley is live for us in Washington with more on just how significant this announcement is coming from the president-elect today, given all of the financial news we've heard, especially Citigroup this morning.
Hey, Candy. CANDY CROWLEY, CNN SENIOR POLITICAL ANALYST: Hi, even more significant today than it was yesterday, and that's pretty significant. They have known all along, look, what was this election about, it was about the economy. So they have understood all along that these top economic advisers, one who has to pass muster on Capitol Hill, and that's Geithner and Summers, who will, of course, advise as part of the White House staff, so he doesn't have to go through that nomination process.
But they have known that the signal here is so important. They have watched this economy. You've talked this morning so much about confidence. This is about confidence on Wall Street throughout America, so they wanted to send a signal here with these two picks saying, listen, here's who's going to help me guide the economy.
They are hoping this will soothe Wall Street which, in turn, soothes Main Street when they see not all these gyrations so high up, so far down. So, they have understood from the get-go that certainly the Treasury secretary and his top economic advisers are key signals that they wanted to send the economy. It's always been that the secretary of state job is the jewel in the cabinet. It remains so.
But the fact of the matter is, I think at this particular point in time they have always understood that this is their key nomination and their key picks, and they wanted to get those out first to kind of try to settle things down and say, listen, you do have confidence. You can have confidence. We are coming in here with old hands. And by the way, old hands who know each other and apparently worked very well together.
CHETRY: Yes. And Tim Geithner who's actually actively helping, you know, steer this Citigroup bailout as the New York Federal Reserve chairman. Obama has kept a low profile, though, for the most part since the election. He didn't get involved publicly in the dispute over the auto industry. Does today's announcement signal a change or is this about as involved as he's going to get publicly.
CROWLEY: I think publicly from what we've seen so far and certainly from their original plan, remember, there's only one president at a time. Part of that is there is only one president at a time, but part of that is that what the Obama presidency, the way they envision it, is that he comes in and offers these solutions and put his agenda in play using the capital and it's considerable that he got during the election.
There is no sense in a lame duck Congress to spend capital that you aren't really in a position to spend at this point and put the very first move of the Obama presidency in waiting, put a lot of fingerprints, at least public fingerprints on some of these things that had been going on Capitol Hill -- the auto bailout or a stimulus plan, both which seemed to kind of be going down. But they didn't want to get out there and own a problem so much as they want to come in January 20th and own a solution.
CHETRY: I got you. All right, Candy Crowley for us this morning in Washington. Thanks so much. And again, don't forget, we're going to bring you President-elect Obama's news conference live. It's at noon Eastern from Chicago, right here on CNN.
Joe?
JOHNS: Two months until inauguration day, but with more and more economic news piling on, a lame duck president still in office has some people asking, who's in charge here? We'll look at the power vacuum in Washington.
And the prostitute who brought down Eliot Spitzer, making the media rounds. But could Ashley Dupre wind up in serious legal trouble for publicly admitting what she did. It's eight minutes after the hour.
(COMMERCIAL BREAK)
JOHNS: A lot of worry in Washington over the economy. It's still about two months until Barack Obama's inauguration, but with Wall Street on a roller coaster ride and so many Americans are just trying to stay afloat, can we afford the wait? Jim Acosta is looking into that from Washington this morning.
Good morning.
JIM ACOSTA, CNN GENERAL ASSIGNMENT CORRESPONDENT: Good morning, Joe. You know there is a term for this interim period, it's called an interregnum. And historically during interregnums, presidents try not to make any waves. But a lot can happen between now and January 20th, when Barack Obama is sworn into office, and some economists are starting to wonder if the country can wait that long.
(BEGIN VIDEOTAPE)
ACOSTA (voice-over): It's an American transition tradition. President-elect bides his time and puts together his cabinet, while the current commander-in-chief winds down, bidding the world farewell. But there are growing fears this tradition has left the nation in a power vacuum exposed to an economic crisis without clear leadership.
UNIDENTIFIED MALE: This interim period, how would you describe this period. Some economists say we're in a pretty dangerous time here right now.
AUSTAN GOOLSBEE, OBAMA ECONOMIC ADVISER: I think it is a dangerous time. It's hard to deny that.
ACOSTA: One Obama economic advisor says the incoming president has urged the current president to do more to fix the economy.
GOOLSBEE: We have repeatedly called on the administration to do things like a stimulus, but the president did not appear to be interested in doing that.
ACOSTA: Mr. Obama has kept a low profile in transition, maintaining there's only one president at a time. But some Democrats say this is no time for the future president to stay on the sideline.
SEN. CARL LEVIN (D), MICHIGAN: I would like him to become -- at least offer to become more involved, and I think that offer would be welcomed, not just by the Democrats in the House and the Senate, but also by the White House itself.
ACOSTA: One idea is to change the constitution and swear in Mr. Obama as soon as possible.
THOMAS FRIEDMAN, N.Y. TIMES COLUMNIST: I think we should seriously consider moving up the inauguration day. Because I don't know that we have two months to have a political vacuum at this moment in this economic crisis.
ACOSTA: Former secretary of state James Baker is proposing a historic face to face meeting between both men to generate ideas to stabilize the markets.
JAMES BAKER, FORMER SECRETARY OF STATE: I think just the mere fact of their sitting down together and seeing if there's not one thing that they could come together on would do a lot to restore confidence and remove the anxiety and fear that's out there.
(END VIDEOTAPE)
ACOSTA: But there may not be much hope for any dual president initiatives. As one advisor to the Obama transition team put it, the next two months are an opportunity to put together a team and a plan. But no plans for any co-presidencies, Joe.
JOHNS: Good enough. Jim Acosta in Washington, thanks for that.
ACOSTA: You bet.
JOHNS: Kiran?
CHETRY: Well, she's the prostitute who wound up taking down a governor. Ashley Dupre speaking publicly for the first time about her call girl past, but could that interview backfire? The potential legal fallout, ahead.
Plus, think only crooks and crazies believe in aliens and UFOs? The believers walk among us and they could be a neighbor, a friend, even your congressman. It's 14 minutes after the hour.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
ASHLEE DUPRE, FORMER CALL GIRL: I really didn't see the difference between going on a date with someone in, you know, in New York and him taking me to dinner and expecting something in return.
(END VIDEO CLIP)
CHETRY: That was Ashley Dupre, the woman behind the sex scandal that ended up bringing down New York Governor Eliot Spitzer. She spoke to Diane Sawyer on "20/20" and she's also giving an interview to "People" magazine this week. And in both interview, she openly talks about being an escort for hire for the first time since the story broke eight months ago.
AMERICAN MORNING legal analyst Sonny Hostin has been looking into possible legal issues here, and she joins us now with more on this.
Thanks for being with us.
SUNNY HOSTIN, CNN LEGAL ANALYST: Sure.
CHETRY: You know, we didn't hear a lot -- I mean, you think something this salacious as a New York governor brought down because of basically paying a prostitute, we didn't really hear many facts about it. Are there gag orders or how does this work?
HOSTIN: Well, it's interesting. It's been reported that she received immunity, but my sources tell me that she didn't receive formal immunity. When you get formal immunity from a federal prosecutor, you get a piece of paper handed to you with the government's signature, your signature. She did not get that.
My understanding, Kiran, is that she got sort of oral immunity which is why when you look at "People" magazine and you look at the "20/20" interview, she was very careful. She was almost scripted and she could still have legal exposure and that is really what is curious about a case like this.
CHETRY: And it's also interesting because the Governor Eliot Spitzer was never prosecuted as well. I believe that they were looking into whether he had improperly used the money, they determined that, you know, he didn't -- he didn't take money --
(CROSSTALK)
HOSTIN: Use public funds.
CHETRY: Use public funds or campaign funds. He used his own money. But let's listen to what Ashley Dupre said about him to Diane Sawyer on Friday.
(BEGIN VIDEO CLIP)
DUPRE: He looked familiar, but I was 22 years old. I didn't -- I wasn't reading the papers. I was so involved in my life, and I was so selfish and caught up in my life and I didn't know who he was.
(END VIDEO CLIP)
CHETRY: So there she is speaking a little bit about the former governor. Were you surprised that -- that Governor Spitzer wasn't tried?
HOSTIN: Everyone around here knows how I feel about this. I was very surprised. I actually was outraged by it. I can't imagine that the government could not find federal charges there. He moved money to offshore accounts, Kiran. That's a structuring charge. He certainly transported her from New York to Washington. That's transportation interstate -- come on.
CHETRY: Yes, yes, yes. But he had been held to higher standard, because Johns aren't always -- often times they are let off the hook, right?
HOSTIN: Well, they are. And that really is policy by the Justice Department. But this was not your ordinary John. And the government often times makes examples of people. We remember Martha Stewart and that was the same exact office that prosecuted Martha Stewart that gave the governor a pass. It really is completely outrageous.
CHETRY: And playing devil's advocate, there were some who say, look, he lost everything. I mean, public humiliation.
HOSTIN: Really? So? Really?
CHETRY: He lost his governorship. He's reseeded into obscurity.
HOSTIN: Well, he's a wealthy man. He's working for his family's business. I don't think that that was enough in this case, especially in light of the fact that there were nine other people --
CHETRY: Right.
HOSTIN: -- described in the indictment, nine other men, they were given a pass, but the bookers, two bookers, college students, and also the folks that ran the ring, they all pled guilty here. This was a huge, huge case and everyone got a pass, but Ashley Dupre has not received a pass. And what does that say?
(CROSSTALK)
CHETRY: OK. So, she's in legal limbo here. When does she know for sure if she's off the hook?
HOSTIN: We don't know. She doesn't know if she's off the hook until she has that piece of paper. And Ashley, you don't have that yet.
CHETRY: All right. So, maybe we won't hear any more from her until -- until she knows for sure.
HOSTIN: That's right.
CHETRY: Sunny, great to see you. Thanks.
HOSTIN: Thanks.
JOHNS: Another banking giant rescued as President-elect Barack Obama gets his financial house in order. We'll ask a senior Obama advisor about the new economic team and plans for recovery going forward. It's 20 minutes past the hour. CHETRY: In search of aliens.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Unless the Defense Department proves us otherwise, that it was probably some form of an alien spacecraft.
(END VIDEO CLIP)
CHETRY: A former governor, an astronaut and even a president, all witnesses to UFO sightings? You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
CHETRY: Are we all too afraid to speak? The music is scaring us. Go ahead.
JOHNS: All right. Sorry. When it comes to life beyond this planet, there are plenty of skeptics, but also a lot of people who believe. We remember Dennis Kucinich saying he saw a UFO and, years ago, even President Carter. All this week, we're bringing you a special series of "In Search of Aliens" reports. Our space correspondent Miles O'Brien is here.
And you may have found one person who might surprise you who actually believes in extraterrestrial life.
MILES O'BRIEN, CNN CHIEF TECHNOLOGY AND ENVIRONMENT CORRESPONDENT: That would be me, yes. Not necessarily the alien part, the UFO part, though. Years ago, I actually saw one myself. I can't explain it. Tell you more about that in just a little bit. Sure was odd, though. You know, a lot of otherwise not so odd witnesses will tell you a similar story.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Well, apparently, it's one of the better flying airplanes.
O'BRIEN (voice-over): Milton Torres is not the kind of guy to tell a tall tale. 20 years in the Air Force, an engineer with a Ph.D., a professor. He's all about brass tacks and left-brain thinking. So, I was all ears when he started talking about his UFO encounter over England in May of 1957.
MILTON TORRES, FORMER AIR FORCE PILOT: I got scrambled one night and my first orders are, you will be ordered to fire on this mission.
O'BRIEN: In just a few minutes, he was over the North Sea in a fighter like this at 31,000 feet traveling nearly the speed of sound. In the dark and in the clouds, Milton saw the strongest signal he had ever seen on his radar screen.
TORRES: Bigger than (BLEEP) the target was there. And the target looked like an aircraft carrier. It was that big on my screen. O'BRIEN: He flew toward it to try and shoot it down.
(on camera): And it takes off like you're just standing still.
TORRES: Like I wasn't even there. Like I wasn't even there. Just gone.
O'BRIEN (voice-over): Milton has no earthly explanation for what he saw.
(on camera): Could it have been a problem with the radar? Could it have been a weather phenomenon? Could it have been a meteor? Any of those things?
TORRES: No, everything was explained to me already.
O'BRIEN: Yes?
TORRES: I knew what it was. It was some design of an aircraft by some space alien.
O'BRIEN (voice-over): Milton Torres says a U.S. intelligence agent ordered him to keep his mouth shut. The odd encounter is one of hundreds of once classified UFO sightings released last month by the British government. It's the sort of disclosure UFO investigators are demanding from the U.S. government.
How would people react?
EDGAR MITCHELL, APOLLO 14 ASTRONAUT: It would be kind of good. It's about time.
O'BRIEN: Former astronaut Edgar Mitchell is the sixth man to walk on the moon and a firm believer that aliens have visited our planet repeatedly. So, I had to ask, why are they coming in these little glancing visits and we haven't had a more meaningful dialogue or contact or attempt to communicate with these?
MITCHELL: Well, I think we have.
O'BRIEN: Really?
MITCHELL: I think we have, but it is not common knowledge.
O'BRIEN: Mitchell told me after he returned to the moon, he was briefed at the Pentagon by a high-ranking officer, whose name he would not reveal, who said the U.S. government does have evidence of alien spacecraft and is keeping it a secret.
MITCHELL: I think the real reason to keep it secret is power and control, controlling whatever technology exists.
O'BRIEN: All of this is fascinating stuff, if it is true, but consider this. There are thousands of sightings of odd, unidentified flying objects reported every year the world over, and yet, no one has produced smoking gun proof of any visits from another planet. So, is there more likely they are some sort of natural phenomena or maybe secret military aircraft or just plain old hoaxes? Maybe, but consider this one. March of 1997, a huge v-shaped craft appears to fly over Phoenix. Among the witnesses, then governor and seasoned pilot Fife Symington.
FIFE SYMINGTON, FORMER ARIZONA GOVERNOR : And I suspect that unless the Defense Department proves us otherwise, that it was probably some form of an alien spacecraft.
O'BRIEN: Or consider this one. Before he became president, even Jimmy Carter saw something strange in the sky over Plains, Georgia.
JIMMY CARTER, FORMER U.S. PRESIDENT: I and about 25 others saw something in the air that changed colors and was round and came and left.
O'BRIEN: Carter doubts what he saw was an alien craft, but most Americans need no convincing. Maybe it comes from movies like "Close Encounters" or maybe art is imitating extraterrestrial life.
(on camera): For those who are skeptical of you, what do you say? Are you saying, open your mind?
TORRES: Be skeptical. Be as skeptical as you want, but by all, don't close your mind.
(END VIDEOTAPE)
O'BRIEN: Who knows, maybe we will soon get the full story. Among the people fascinated by the notion of aliens and UFOs -- the man in charge of Obama's transition team, John Podesta.
Now, in a speech at the National Press Club just a few years ago, he said this, "It is time to open the books on questions that have remained in the dark on the question of government investigations of UFOs. It is time to find out what the truth is, that's really out there."
Can we bring the music back in now?
CHETRY: What if we can't handle the truth?
O'BRIEN: He said it's not just the right thing to do, it's the law. Now, he's a big "X-Files" guy. He's a believer. And so, who knows. Maybe just --
CHETRY: And you're a believer, too?
O'BRIEN: Well, you know, I saw something that was very odd about 20 years ago with my wife. We're in Maine. It was dusk. We saw what looked like, you know, a planet, you know, bright planet, but then it took a 90-degree turn and took off at about Mac 20. And I'm a pilot. I know speed. It was amazing. I've never seen anything like it. Could have been a meteor. Could have been some block program. Could have been something else. JOHNS: Area 51, here we come.
O'BRIEN: They might be there now, yes.
JOHNS: Thanks, guys. Tomorrow, we look at a famous spotted UFO history, Roswell, New Mexico. It's been 61 years since something happened there. Still a mystery or is it case closed? Miles will be back tomorrow here on AMERICAN MORNING.
CHETRY: Maybe, maybe not.
JOHNS: I know. And have you seen something funny in the sky, convinced that aliens exist or just science fiction? We want to know. Send us your pictures and video at cnn.com/am. Just click the iReport link.
CHETRY: All right. Miles, thanks. We look forward to tomorrow's installment. We'll just about half past the hour.
Now checking the top stories. A bank that was considered too big to fail won't be allowed to go under. The federal government is ensuring Citigroup the financial lifeline, injecting $20 billion into the troubled company, also guaranteeing or backing up more than $300 billion in risky assets.
Just last week, Citigroup announced you may remember, the layoffs of some 53,000 workers. The company's stock has plummeted because of concerns about its financial health. For the year Citigroup shares are down more than 87 percent.
And after a lot of buildup there will be no thriller in London. Pop star Michael Jackson has settled his $7 million lawsuit and will not appear in court to give evidence today as scheduled. Jackson was sued by the prince of Bahrain who says that he paid Jackson for a book and an album. Jackson claimed that cash was just a gift.
Well this is not an unidentified flying object. We know what this is. Check out this amazing video of meteor lighting up the skies over Edmonton, Canada. It made its way to earth without burning up and now scientists are searching all over to find it. It's a rare find since most meteors do burn up in the atmosphere.
Well back to our breaking news and word of another massive bailout that comes just as President-elect Obama is set to announce the team that will help him try to heal the economy and joining me now from Chicago is Austan Goolsbee. He is Obama's chief economic advisor during the transition. Austan, thanks for being with us. And we're glad we're getting a chance to talk to you today because, boy do you guys have some challenges ahead on your plate.
Let's start with the Citigroup bailout. Citigroup will be the government's third effort in just three months to try to contain this seemingly growing financial crisis deepening problems. Where does this end?
AUSTAN GOOLSBEE, OBAMA ECONOMIC ADVISER: Well, hopefully it ends, you know, when we get the economy coming out of its, what seems like a tailspin. What we have had, the president-elect has been saying is an attitude over the last eight years which was, let's just sit and wait for crises to happen, let's not try to prevent them, let's not have stimulus, let's not have a housing program, let's not have tax relief for ordinary Americans. That put us in a very weak spot and now we kind of have to put out fire after fire. That's where we are. But we got to change the dynamic.
CHETRY: Let me ask you a quick question, we did have a stimulus, the Bush administration did approve a stimulus, with that not enough, do we need another one and in what form?
GOOLSBEE: Yes, we definitely need another one. That one was not enough. It's quite clear that the economy has continued to deteriorate after the brief interim from that stimulus. It ought to take the form in President Obama's view, of investments in the things that we know we're going to need going forward, but investments that can take place within the next two years. So he outlined a goal of trying to create 2.5 million jobs. He's tasked the economic team with putting together a series of programs relating to infrastructure, spending on roads, bridges, schools, spending for green energy, renewable energy, tax cuts for ordinary Americans, things of that nature that can get out the door within a short time frame and really try to head off what is looking to be the most serious downturn in decades.
CHETRY: Now, we talked, let's talk a little bit more about this in detail if we could. This is going to exceed the $175 billion that was unveiled during the campaign. Chuck Schumer, when he talks about this new jobs program that you just outlined, says it could cost anywhere between $500 to $700 billion. Where are we getting that money and is it a good idea to continue to borrow or print money or whatever it is we're doing to try to stimulate our economy?
GOOLSBEE: OK. The thing about stimulus is, you don't want to pay for stimulus. Otherwise you're putting in and taking out at the same time.
CHETRY: Right.
GOOLSBEE: The thing with stimulus is, it is going to increase the deficit. That's what it has to do. In the short run, we're facing a very large deficit, but it's one that we have to incur because if you try to reduce the deficit or balance the budget in the face of the stiffest recession in decades, you threaten to repeat the mistake that caused the Great Depression. They have a banking crash and then Herbert Hoover starts trying to balance the budget and drives things further and further down the tubes.
CHETRY: I got you. Let's hear what Mitt Romney told our Wolf Blitzer yesterday on "Late Edition" the former republican presidential candidate.
(BEGIN VIDEO CLIP)
GOV. MITT ROMNEY (R), FMR. PRESIDENTIAL CANDIDATE: We're going to be facing a trillion dollar deficit in his first year. And I know he's going to want to stimulate the economy at the same time, but you know, we're going to have to cut back on some of the excesses of government or the massive borrowing could cause some secondary effects that would hurt us long term.
(END VIDEO CLIP)
CHETRY: Does he have a point and is this something that's being considered and how would you guys solve that?
GOOLSBEE: Well yes. He has a point that we want to make government as efficient as possible. The president-elect throughout the campaign and continuing today, said we're going to go through the federal budget line by line and get rid of the programs that don't work and keep the ones that do. There's an extensive effort in transition doing exactly that, it's very onerous to do but the one thing that I would say that Governor Romney is, perhaps, mixing is the issue of the short run versus the long run. In the longer run, of course, we're going to pay for our programs and Senator, now President-elect Obama, outlined the ways to do that. But in the immediate term, we cannot do that. You cannot start trying to balance a budget. It would be terrible.
CHETRY: Austan, I got you. Also, I think this is the prevailing feeling that I get from a lot of people, which is that does anybody exactly know, a, what the problem is, and b, where this ends. We wake up and we read in the "Wall Street Journal" or the "New York Times" about another big corporate bailout. There's obviously still concerns with mortgages, foreclosures, homeowners not to mention the auto industry, I mean is there a broad vision? You guys have a huge challenge, but do we know where this ends, where the floor is on this thing?
GOOLSBEE: Well, where it ends depends on what the government does and what the economy does. Obama's view is that we need a fundamental shift away from the philosophy we've had the last eight years. We need a clean break and he's going to come in with a bang. You know let's stat acting rather than sitting around waiting for it to get better. That's where you - you've got to kind of set the floor. If you did nothing, if we just continue to just try to rescue financial institution after financial institution, without addressing the root economic causes of our problems, the slow down in the economy, the problems in housing, the black of a margin for error for 85, 95 percent of the country, we're just going to go from crisis to crisis and we're never going to hit the floor.
CHETRY: Austan Goolsbee, senior economic adviser for the Obama transition team. Thanks for being with us this morning.
JOE JOHNS, CNN ANCHOR: They're getting bailed out with billions of taxpayer dollars. So why are banks raising fees on the very people who save them? You. Personal finance editor Gerri Willis has some answers. We'll be right back with the latest update on the great sex challenge. Joining us the minister who challenged married couples to have sex every day for seven days. How did that work for you? (COMMERCIAL BREAK)
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JOHNS: Last Tuesday we spoke with Pastor Ed Young, he's the Fellowship Church of Texas. He's the pastor, challenged his congregants to seven days of sex. Yes, seven days of sex. And how did he do? Did he last seven days? Pastor Ed Young and his wife Lisa join me from London where they're preparing to head off on a mission to Africa. Thank you so much for giving us a little bit of your time. So, how did it work?
LISA YOUNG, WIFE OF PASTOR ED YOUNG: Thank you.
JOHNS: Did you guys take the challenge? How did you do?
PASTOR ED YOUNG, FELLOWSHIP CHURCH OF TEXAS: It was great, but I hate to confess, I missed one day. I was too tired and Lisa woke me up and goes, honey, remember the sex challenge and I said, let's just do it tomorrow. I'm too tired. So I confess, we were six out of seven.
JOHNS: So Lisa, what was it like for you?
LISA YOUNG. It was awesome. You know, it renewed my understanding that I've just learned over the years that, you know, sex is a priority in marriage or it should be a priority in marriage and it's a component that kind of gives - is an indicator of how other things are going in your marriage. So I really enjoyed the challenge and I think the women of our church were especially reminded of this.
JOHNS: So you were both essentially trying to send a message to the congregation about the importance of intimacy. That's the bottom line message here, correct?
PASTOR ED YOUNG: Yes.
LISA YOUNG: Right.
PASTOR ED YOUNG: Yes, the bottom line message is intimacy but it's also building marriages at homes because so goes the marriage, so goes the home and the bedroom really reflects what's going on in the rest of people's lives. So, you show me someone's sex life in marriage and I'll show you how the marriage is going and then I'll show you, too, how the family is going and it's time that the church, I believe, really steps up and steps out and talks about how great sex is and that god is the one who invented it.
JOHNS: So we just happen to have a couple quotes here from some of the congregants to get a sense of what people were saying. This one is from Debbie Highland, of Village Texas. She said "one of the main barriers I'm having is to overcome is energy with three kids and life, I'm just tired. One day I choose to take a nap during the day so I wouldn't be so tired at night. I see a change in our connection with each other because we're thinking of each other more." So, energy is an issue and you both saw that as well. It's really kind of hard at the end of a long day with kids and work and all you have to do, you got to summon the energy somewhere to participate in a challenge like this.
LISA YOUNG: Well, I think especially women, if you stay at home with your children, Ed and I have four children so we face that challenge and how tiring just life can be, but it's not just your kids, it's your career, its commitments that we give priority and it seems like the marriage relationship often times becomes secondary or way down on the ladder of what's important. And so, this challenge reminded so many couples of keeping the marriage at the forefront and I know that that's what it did for Ed and I.
JOHNS: Now here's another graphic we have and this talks about problems in the marriage. It's from Amy of Flower mound, Texas. "This challenge has been a challenge because my husband had an affair but we want our marriage to work. This challenge is helping us because when I choose to give myself to him, he feels forgiven and I experience healing." So we've always talked about sexual healing ever since the Marvin Gaye song, but it's a real thing, huh?
PASTOR ED YOUNG: Yes. Especially for men. And when men make love, it is how we express our love, one of the ways that we express love, but also, one of the main barriers that any couple faces when they get over infidelity is to have regular sex. But one of the great things about this sex challenge has been that many couples have had the guts now to walk into a counselor's office and to talk about some of these issues that have been buried because of their lack of sex, because the more you have sex, the more you've got to bring your all to your mate and you got to talk about the things on the rugged plains of reality. So that's, yes, something that's very, very critical.
JOHNS: Well thanks so much to both of you for coming in and good luck on your travels. Kiran.
LISA YOUNG: Thank you.
PASTOR ED YOUNG: Thank you very much.
CHETRY: Good luck on their travels. How about other things?
JOHNS: They're on their way to Africa on a mission.
CHETRY: All right. All right. While the federal government gives Citigroup a massive shoulder to lean on, the banking giant is putting the squeeze on millions of credit card customers who are also, of course, footing the bailout bill as taxpayers. Our personal finance editor Gerri Willis tells us what fees are going up and why.
Also you can probably guess which celebrities get the most money for magazine layouts but what about the celebrity kids who can fetch top dollar as well. These little celebrity money makers. Well, we got the list of the top 10 hottest tots in Hollywood.
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CHETRY: Well banks are claiming the biggest piece of the pie when it comes to the $700 billion bailout. Some 250 billion of the total package and that's your taxpayer money that they're claiming but the take doesn't stop there because now bank fees are at their highest levels in years and, of course, that also comes right out of your pocket too. CNN personal finance editor Gerri Willis joins us now with more on which fees we could be unfortunately be looking at paying more for and why?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: You know, the big question is, how much is coming out of your pocket and it's going up each and every day, right. Let's look at a couple fees. You many not have heard about.
Citigroup is raising fees on its credit cards, interest rates to holders will go up two percent to three percent. This isn't for all Citigroup credit card holders but about a fifth of them. They have 54 million so about 10 million folks will see higher credit card rates and at Chase, JPMorgan Chase their credit card holders are looking to pay an extra service charge of about $10 monthly.
That's a small percentage of the folks who simply are not getting any traction on their payments, they have big balances and they are not paying them down. Chase is going to sock them with a monthly fee. Plus they're going to see increased monthly payments. So those folks are struggling, why? Why is this happening because they can. They raise fees each and every year to new highs these banks. Really outrageous to consumers out there, not only are you paying the higher fees, but you're giving them a lot of taxpayer money to bail them out. $25 billion already for Citigroup. Another $20 billion today. Chase got $25 billion too. So it's just outrageous.
CHETRY: When you take a look at how they add up, i mean this is a big problem, right? I mean for some people, it can take a bigger chunk than you think out of your wallet.
WILLIS: Let's look a breakdown here. Bank rate surveyed these fees and took a look at them in depth, check it out. Bounced check fees up 2.5 percent to $28.95. You know and one of the interesting things here if you have a checking account that pays interest, you really pay for the privilege, those rates go down.
The interest rate that you get going down to 0.24 percent. And you have to have a higher and higher balance to get that money. ATM surcharges, up 11 percent to $1.97 on average. Big fees and they rise every year. Talk to the folks at bankrate, they say, you know Gerri, they just set new records every year.
CHETRY: Right. And this is because of the struggling financial health of these banks?
WILLIS: Well, you notice with some of these credit card increases in interest rates and fees on credit cards, they're really trying to bring that in under control, trying to get people to pay those down, get those businesses back in line. Yes, it is connected to the economy and it is connected to how their business lines are doing. They're trying to make sure they can get the money back at the end of the day. But I have to tell you, if you're out there and you have a high credit card balance right now, you're going to have to do something to bring it down because the terms, they're onerous.
CHETRY: They are. Gerri Willis, thanks.
WILLIS: My pleasure.
JOHNS: They may be small but their photos can fetch big bucks. You can probably could guess Suri Cruise or Shiloh Jolie-Pitt. But who else is on the list? The top 10 hottest tots in Hollywood.
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UNIDENTIFIED MALE: Suri Cruise, the two-year-old daughter of Tom Cruise and Katie Holmes tops the forbes.com second annual list of Hollywood's ten hottest tots, which begs the question, what hell is going on at forbes.com?
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CHETRY: Right. It is a little creepy when you think about it. Hot tots. Anyway, you've heard of young Hollywood but this may top everything in the past. "Forbes" magazine lists the highest celebrity earners and now their web site is showcasing the younger set of Hollywood's hottest tots. Our Lola Ogunnaike is here to reveal the top 10.
First of all, it's interesting that even talk about how they ranked this. Talking about how much money they get from these paparazzi photos, et cetera?
LOLA OGUNNAIKE, CNN ENTERTAINMENT CORRESPONDENT: It's a little bit of that, how much their earning potential, it's their popularity on web sites, news clippings, you know magazine covers, magazine mentions, and also the popularity of their parents. So all those factors combined to create this list and of course at the top of the list, our favorite, Suri Cruise. Our hair inspiration Suri Cruise.
CHETRY: I know, the Suri bob.
OGUNNAIKE: We all have the Suri bob. And obviously she's the daughter of Katie and Tom, who are two major celebrities in Hollywood, but she also has her own huge presence. She's got style. She's got the hair. She's also always impeccably dressed. That explains why she's at the top of the list.
JOHNS: Marketing.
OGUNNAIKE: Marketing. She's got out there early. She's followed by Shiloh. Shiloh was actually number one last year, Shiloh Jolie-Pitt, the daughter of Brad and Angelina. She was number one last year but Suri came up and bumped her off the top spot, but she's number two this year. Followed by her sister, Zahara who is number three, Pax who is number four, and for the sports fans out there, Tiger Woods' baby Sam Alexis Woods.
CHETRY: How about it. She's just one, and right there's - they had another baby too.
OGUNNAIKE: There's another one on the way. So watch out older sister. Someone could bump you off the list for next year.
CHETRY: All right. You got the Beckhams, Victoria, Posh and Becks.
OGUNNAIKE: Cruise Beckham is number six; Matilda Rose Ledger is number seven; David Banda, son of Madonna, the Malawi adoptee, number eight; Sean Preston is number nine; interestingly enough, his brother didn't make the list. Apparently, Sean Preston has more news mentions than his younger brother so he's on the list, but the younger brother isn't; and number 10, Sam Sheen, daughter of Charlie and Denise Richards.
JOHNS: So they don't count how many toys you have as -
OGUNNAIKE: No.
JOHNS: That doesn't fit in anywhere.
OGUNNAIKE: No. It's not about the Legos. It's not about anything like that. It's not about your Dora the Explorer. It's all about your presence.
CHETRY: You poor kids move out of Hollywood now. Move out. Go somewhere else. You're getting ranked and you're only 2 and 3.
OGUNNAIKE: It's interesting who didn't make the list. Violet Affleck did not make the list.
CHETRY: Yes.
OGUNNAIKE: And Kingston, son of Gwen Stefani didn't make the list either. There's still next year. They just have to up their profile.
CHETRY: I guess so. And right now they can't read so they can't tell over the tabloids. So they don't know. They're just having fun. Run around without a diaper on and see if you can get the paparazzi.
JOHNS: Always next year. You bet. All right. Thanks.
OGUNNAIKE Thank you.
JOHNS: CNN NEWSROOM's just minutes away. Betty Nguyen is at the CNN Center with a look at what's ahead. Betty.
BETTY NGUYEN, CNN, ANCHOR: Hi, Joe. Here's a check of what we are working on in the NEWSROOM. So meet the money team. President- elect Obama introduces the group who will put his economic plan into place. Also we're giving you a Thanksgiving travel snapshot, what you can expect at the airports and on the roads this holiday. And a dying boy's final wish inspires others around the country to do good. We get started at the top of the hour right here on CNN. JOHNS: Thanks, Betty.
He went into McDonald's for a burger and fries but because some naked pictures on one man's cell phone, the fast food trip ended up in a lawsuit. We'll tell you all about it. It's 57 after the hour.
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CHETRY: If you have some private pictures on your cell phone don't bet you're the only one who will ever see them. In fact, a good reason perhaps to get rid of them. A cautionary tale, man left his cell phone behind in an Arkansas McDonald's and the employees found the phone. Well they opened it up, looked through it, turns out there's some naked pictures of the man's wife on this cell phone. So what do they do? They upload these pictures on-line. The couple is now suing for $3 million.
JOHNS: Yes. I mean, OK, how many breakdowns were there?
CHETRY: I know.
JOHNS: You take the pictures, then you put it on the phone, and then you leave it in the restaurant and then somebody in the restaurant puts it on - it's like somewhere in there, somebody didn't get it.
CHETRY: Sometimes technology gets the best of you, right?
JOHNS: Yes. Unbelievable.
CHETRY: All right. It's time for us to say good-bye. It's great having you with us this morning.
JOHNS: Thank you.
CHETRY: Joe Johns is back tomorrow as well as for the rest of the week and thanks so much for joining us on this AMERICAN MORNING. We'll see you back here tomorrow.
JOHNS: Right now here's CNN NEWSROOM with Betty Nguyen.
