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ANDERSON COOPER 360 DEGREES

Auto Plants Shutting Down; Rate Jacking by Credit Card Companies

Aired December 17, 2008 - 23:00   ET

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


ANDERSON COOPER, CNN ANCHOR: Tonight, breaking news out of Detroit: dramatic announcements from Chrysler and Ford. Starting Friday, Chrysler is closing all 30 of its manufacturing plants until January 19th or later; 46,000 employees will be affected.
Chrysler claims its running on financial fumes, and will have trouble paying its bills after the first of the year.

Also today, Ford said it will idle ten of its North American assembly plants for an extra week in January. Both announcements come just a week before Christmas with Michigan unemployment rate now the highest in the nation, reaching 9.6 percent last month and no word yet from Washington on the emergency loans Chrysler and GM say they need to survive.

Joining me now, our chief business correspondent Ali Velshi senior White House correspondent Ed Henry.

Ali 46,000 people of Chrysler alone are going to be affected by the shut-down. It goes much deeper though than the people just at those plants.

ALI VELSHI, CHIEF BUSINESS CORRESPONDENT: Yes that's right, so now we know that Ford -- usually around this time of the year these plants shut-down for two weeks. That's their normal Christmas break. Chrysler is going to double that; Ford is a adding a week to its normal shut-down schedule. And General Motors will be doing it over the first three months of the year. But individual plants could be shut down for between two and four weeks.

Now, here's the concern. The auto industry in the United States, it used to be that automakers had their own suppliers for parts. But over the last several years, the big three share a supplier base. And by the way, it's not just the big three, Toyota, Nissan, Honda they all depend on the same suppliers.

So the argument that the major automakers have been using is let's say that General Motors were to disappear. And that's not what they're saying, but this is a pretty serious development.

Let's say they were to disappear. The same supplier base would have to supply the remaining automobile companies. But these guys are in trouble, too. They have been in trouble with the car companies, so what if the suppliers, one of the major suppliers, let's say, were to go bankrupt? Now you don't have supplies going to both of these two companies, and the danger in both of these cases, and this is what Ford was saying, is that they could just disappear entirely. This could actually trigger bankruptcy.

I actually was in Detroit when this news came down. I was sitting there with the CEO of Ford. And I was saying to him, you know, wouldn't that be interesting if your competitors were to disappear? Isn't that a good thing for you? And he was describing to me that that's actually a big nightmare for them because if their supplier base were to disappear, Ford could be in a lot of trouble.

Listen to what he told me.

(BEGIN VIDEO CLIP)

ALAN MULALLY, FORD MOTOR COMPANY CEO: So if any one of the OEMS or one of the car companies gets in trouble, and would actually go into bankruptcy, that would affect all of the suppliers and actually a good probability would take them into bankruptcy.

(END VIDEO CLIP)

VELSHI: That's interesting. Because Ford is relatively the healthiest of those three Detroit automakers and he was talking about the fact that this could really affect everybody and then you could be talking about 3 million people out of work.

COOPER: Ed, how much pressure is the White House under to do something about this? I mean, what happened to the White House agreeing to bail out with other money that the Congress wouldn't pass?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: A lot of pressure, Anderson, on the White House tonight. But they're still not moving. I mean, Dana Perino, the spokeswoman put out a statement saying the automakers are very fragile. The President is considering various policy options right now to help because as you said a disorderly collapse would be bad for the economy. Well, does that sound familiar? It should.

Last Friday, Dana Perino put out a very similar statement, saying a collapse would have a big impact on the economy. And she said it would be irresponsible to further weaken, destabilize the economy.

Almost a week has passed. The auto companies want to know, where is the action?

And when you think about what has played out over the last couple of weeks in Washington, first the lawmakers dragged up these big three chiefs, really hit them hard, made them testify, lay out their serious detailed plans about how they're going to become more viable. And in the end, Congress couldn't get the job done.

Then it gets punted over to the White House last week. They still haven't gone it done and meanwhile these companies are suffering big time -- Anderson. COOPER: Well Ali, how much of this is a game of chicken though, between the White House and the auto companies? I mean, there are some who might view what the auto company is doing as well, they're just trying to put pressure --

VELSHI: Right.

COOPER: -- to get the money. They're extending this shutdown.

VELSHI: Well, look, we know General Motors is in very real trouble. General Motors has said it may not make it to the end of the year financially. Chrysler said that it has money until about March. And now what they're trying to do is by not operating the plants, they save money, they hoard cash.

And all of these companies have more cars than they need right now. So you don't pay out some of your workers salaries, you don't pay for those parts and you're selling cars. It's actually not a bad thing for the companies to do to try to extend their life.

But the problem is I just said, it's a dangerous game of chicken. And if the suppliers start to get hurt, that's dangerous.

Now, I just got off the phone with General Motors who said, look, there's nothing that's surprising us right now. We're not worried that because Chrysler has extended it's shut down by a couple of weeks that we're going to lose a parts supplier.

But the bottom line is you know that they have to be considering all of these options right now. Things could turn very bad very quickly.

COOPER: Ed, is Obama the one that has going to have to deal with this? I mean, is it possible the White House is just going to push off paying until the next administration takes over?

HENRY: It's possible. But can the auto companies last that long -- at least one if not all three -- can they last until January 20th? You'll remember a lot of this politically started on November 10th when Barack Obama first went to the White House as President-elect and when he went into the Oval Office with President Bush.

They talked about an auto bailout and Barack Obama said I'm not sure they're going to last until inaugural day; you may need to move on this. And that's when they first talked about it.

November 10th, more than a month has passed, Anderson, and as I said, there has been all this dancing on Capitol Hill, no action. Now, the White House is still looking at it, more than a month later.

And so the big question is, can these big three last, you know, one or more of them, until January 20th. That's an open question.

VELSHI: And Ed, one last point here. And that is that the automakers -- Chrysler specifically said today, this development is that 25 to 30 percent of their sales have been eliminated because people who are going into dealerships to actually buy cars can't get credit. I've heard this story from General Motors, I've heard it from Ford, I've heard it from Nissan which is a healthy company.

They're saying this is not the legacy of problems that we've had. This is a new problem; our buyers can't get credit to buy cars.

COOPER: All right, Ali Velshi, Ed Henry, thanks.

New development to what maybe the biggest scam in Wall Street history; this man, Bernard Madoff was in court today, a hearing regarding his bail, he's put his fancy Park Avenue apartment and his homes in Florida in the Hamptons as a guarantee he won't run away.

He's also been given an ankle bracelet and had his passport taken. This is what happened when he headed home today. Take a look.

A crush of reporters pushing and shoving, he's accused of committing a giant Ponzi scheme. Take a look at this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Turn around, buddy. Come on.

(END VIDEO CLIP)

COOPER: Well, I don't think they're his buddies.

Possibly defrauding investors of as much as $50 billion, that's what he is accused of. Today the head of the Securities Exchange Commission, the Wall Street watch dog, Christopher Cox, vowed to uncover why his agency ignored allegations against Madoff going back a decade. Tip-offs that could have stopped the fraud.

The question tonight, did Madoff act alone, as he allegedly claims and how many other frauds have yet to be discovered?

Joe Johns has the latest.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: How do you feel?

JOE JOHNS, CNN CORRESPONDENT: Bernard Madoff made a brief appearance today but it was dramatic as he arrived home to a crush of cameras and pushing and shoving.

He's now under house arrest, as a condition of bail. The drama at the Securities and Exchange Commission was behind closed door. An investigation under way to find out if anyone is supposed to be watching the Wall Street cookie jar could have allowed Madoff to help himself.

CHRIS COX, CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION: The reason for the investigation is to answer any questions on this score, but I want to emphasize that there is no evidence that anyone is aware of at this point that any personnel did anything wrong. JOHNS: One guy who used to work there saw his name dragged through the mud, though. Eric Swanson, a former SEC attorney looked at some of Madoff's trading practices five years ago. Swanson left the agency two years ago and last year he married one of Madoff's nieces. Is that a smoking gun? The SEC says no. Swanson never worked on any of the serious stuff involving Madoff.

One person familiar with Swanson's side of the story told CNN he hasn't done anything wrong. "What people are trying to do is find scapegoats here, and he is not the guy."

Still, it is pretty hard to fathom that one guy, even a Wall Street wizard like Madoff, could have pulled off a multibillion-dollar fraud unless he had help from someone. After all, insiders who took a hard look at Madoff years ago said his investment returns looked, well, surreal.

And that was only one of the many red flags.

FRANK CASEY, HEDGE FUND DEVELOPER: So lack of transparency, black dogs operation, no independent chief financial officer, no independent clearing operation verifying that trade tickets were actually real. And so consequently, we had a situation here where most analysts would be raising red flags all over.

JOHNS: The SEC says it's going to move as quickly as possible to find out why it never caught Madoff. But now, the agency has members of Congress breathing down its neck, and they plan an investigation of their own.

But is this the only alleged big scam out there? No. The federal government has charged hot shot New York lawyer Mark Dreier with fraud for allegedly scamming $113 million, selling fake promissory notes to hedge funds and securities investors.

And get this. He's the managing partner of a 250-attorney law firm. An SEC complaint says he set up a bogus real estate company and distributed phony financial statements and audit opinions, and recruited accomplices to pose as representatives of legitimate companies. Another guy who everybody thought was on the up and up. His attorney declined comment.

Joe Johns, CNN, Washington.

(END VIDEOTAPE)

COOPER: Well, one note on the SEC chairman, Christopher Cox, who had been criticized of his handling of various financial matters, he's going to be leaving the job after the Bush administration ends.

We learned today President-elect Obama has chosen Mary Schapiro, for the position. That is her, she's a former Securities and Exchange Commissioner and briefly served as the agency's chair -- acting chair in 1993.

So do you think the government has a grip on the crisis? Join our live chat; it's happening now at AC360.com. Also check out Erica Hill's live web cast during the break.

Just ahead tonight, a credit card company that is getting $20 billion in bailout money, your tax dollars. So the question is, why is it turning around and sticking its customers with huge rate hikes? We're "Keeping them Honest."

Also, Caroline Kennedy, on the campaign trail, far outside of New York City; she wants Hillary Clinton's senate seat. How did she go over with reporters today in her first face-to-face? You can judge for yourself.

And inauguration controversy: the President-elect inviting preacher Rick Warren to pray at his inauguration. But his opposition to marriage equality for gays and lesbians has outraged some Obama supporters.

We'll also show you how much A-list celebrities are now paying to get in the door at the inauguration.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. CHRISTOPHER DODD, (D) CONNECTICUT: I introduce the credit card accountability, responsibility and disclosure act, the Credit Card Act. This bill will stop abusive card practices that drag so many of our fellow Americans and their families further and further into debt.

(END VIDEO CLIP)

COOPER: Well, that was Senator Chris Dodd back in April. The bill he was talking about to protect credit card consumers from abuse, that hasn't passed, it's stuck in committee.

And now in the thick of recession, Americans, all of us are more vulnerable than ever. Credit card companies are scrambling to limit their risks at the same time they're taking bailout money from the government.

So many are actually jacking up credit card rates, even for customers of great credit reports, so is that how companies that are benefiting from your tax dollars should be treating you.

Drew Griffin tonight, is "Keeping them Honest."

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN SPECIAL INVESTIGATIONS UNIT CORRESPONDENT: It arrived in Rich Stevens' mailbox a few weeks ago, the notice he and his wife were being rate-jacked on their Citibank VISA cards.

RICH STEVENS, CONSUMER: In my case, 9.5 to 16.99, or 15.99 in her case, I'm not sure what her initial rate was, but it went up to 18.99. GRIFFIN: Stevens doesn't know why he's got great credit. But like thousands of credit card customers, he's been notified his rate is skyrocketing.

STEVENS: It almost borders on loan sharking, from my perspective.

GRIFFIN: In the blogosphere, writers are livid at the instant skyrocketing rates, now dubbed rate jacking and Citigroup seems to be the target of most blogger venom. Partly because Citigroup issues so many credit cards and also because Citi began sending the notices right around the same time it was getting a huge government bailout; a $20 billion investment from you, the taxpayer.

We couldn't find a single person at Citigroup, not one in that whole building, who would come out and talk to us on camera. Instead, Citigroup sent us a statement, saying that to continue lending in this difficult credit and funding environment, Citi is re-pricing a group of customers.

Citi told us anyone unhappy with the new rates can opt out and continue paying the lower interest, but they must close their account when their card expires. It's all in the fine print.

New York Congresswoman Carolyn Maloney says, she is sick of the fine print.

The problem has been, credit card companies get away with whatever they want, as long as they put it in the fine print, right?

REP. CAROLYN MALONEY, (D) NEW YORK: Exactly. They all have this provision that says they can raise the rate any time, any reason.

GRIFFIN: In September, she got the House to pass the Credit Card Holders' Bill of Rights that would have stopped rate-jacking and other fees that she says banks have been getting away with.

It passed by 200 votes.

Yours was the first House vote that went against these banks and credit card companies.

MALONEY: First in history.

GRIFFIN: First in history. You passed overwhelmingly like you said with a huge vote. It goes to the Senate. It goes nowhere. Why?

MALONEY: We have to keep working, we have to pass it. There is a lot of push-back from the financial industry.

GRIFFIN: Critics say that push-back is because of green backs. Money, donated to politicians, who pass or don't pass laws that regulate credit cards.

"Keeping them Honest," we contacted the Senate Banking Committee where Maloney's bill has just sat since September. The chairman of the committee is Connecticut Senator Chris Dodd. His staff told us the Senator has his own Credit Card Bill, with tough language to stop things like rate-jacking and shortening the billing cycles, all the things that make consumers angry.

But even his own bill seems stuck in his own committee. No action since July.

Maloney won't criticize fellow Democrats, but does say the pressure from the financial sector is intense. And Dodd took in more than $4 million from that financial sector during his last campaign.

Dodd's office didn't respond to our questions about that, but did say that he's tried repeatedly to protect consumers, but legislation has been met with stiff opposition by the credit card industry.

Makes you wonder who is running Congress.

Well, here is the kicker. Tomorrow, the Federal Reserve is expected to pass its own new rules on credit cards that could clamp down on rate-jacking and other anti consumer practices.

But we really don't know how strong the rules will be, and according to Congresswoman Maloney, Anderson, they're not going to take effect until 2010.

(END VIDEOTAPE)

COOPER: Unbelievable. "Keeping them Honest" thanks, Drew. I appreciate it.

Just ahead, Caroline Kennedy has one of the most familiar names in politics, and now she is no longer dodging the media. Today she faced reporters, talked about why she thinks she should fill Hillary Clinton's seat. How did she do? Well, find out.

Plus a medical marvel, a team of surgeons gives a severely disfigured woman a new face. The most extensive face transplant ever and we re-check in with that French patient who received the first transplant. That was her right after the surgery on the left. See what she looks like today.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CAROLINE KENNEDY, SEEKING CLINTON'S SENATE SEAT: -- candidates that the governor is considering, he has laid out a process, and I'm proud to be in that process.

UNIDENTIFIED MALE: What can you say to New Yorkers that says that you're qualified?

UNIDENTIFIED MALE: Are you ready for this, Mrs. Kennedy?

Ms. Kennedy, you're not going to answer questions at all? (END VIDEO CLIP)

COOPER: Well, finally official, Caroline Kennedy publicly talking about what she has been discussing behind closed doors for days now, her desire to replace Hillary Clinton in the senate.

Today reporters hammered her with questions that she tried for the most part to dodge, you just saw that there.

It was the first kind of frenzied give and take in a big money, big power campaign that is not without controversy already.

Erica Hill has more.

(BEGIN VIDEOTAPE)

ERICA HILL, CNN CORRESPONDENT: The first somewhat official day of an unofficial campaign for New York Senate seat.

KENNEDY: As some of you may have heard, I've told Governor Paterson that I would be honored to be considered for the position of United States Senator. I wanted to come upstate and meet with Mayor Driscoll and others to tell them about my experience.

HILL: Caroline Kennedy's stop in Syracuse this morning had all of the markings of a politician; a meeting with the Mayor, plenty of security, and an entourage closely controlling her every move and word.

UNIDENTIFIED MALE: What can you say to New Yorkers that says that you're qualified?

UNIDENTIFIED MALE: Are you ready for this, Mrs. Kennedy?

UNIDENTIFIED MALE: Mrs. Kennedy, you're avoiding questions.

KENNEDY: I'm following the process laid out by the governor.

UNIDENTIFIED MALE: The governor told you not to talk to us?

UNIDENTIFIED MALE: Thanks, guys.

HILL: Governor Paterson's office declined to comment on that question. But Kennedy's camp tells CNN the governor did not ask her to be quiet.

As for her experience, by the time she arrived in Rochester this afternoon, Kennedy was armed with an answer.

KENNEDY: I have had a life-long commitment to public service, I've written books on the constitution, and the importance of individual participation, and I've raised my family, commitment to education in New York City, training principles, working for kids.

And I think I really could help bring change to Washington.

HILL: Republican Congressman Peter King is eying a 2010 Senate run in New York. He says that's not what this job requires.

REP. PETER KING, (R) NEW YORK: There is no evidence that she's qualified, and I'm not saying you have to be a politician or to have held office to be a United States Senator, but you have to be somewhere in the public arena. The fact is, she has a well-known name.

HILL: There is no denying the magic of the Kennedy name. But not everyone is convinced it's her only qualification. The Senate Majority Leader has already voiced his support, as have some of her fellow New Yorkers.

MAYOR MICHAEL BLOOMBERG, NEW YORK: She has got as much experience as anybody else in terms of the issues that a Senator deals with.

HILL: Those issues are as diverse as the Empire State itself. There's more to New York than Kennedy's hometown of New York City.

And while this isn't an election, support in upstate and central New York is vital.

JEFF SACKMAN, WESTERN NEW YORK RESIDENT: I just would like to have somebody that's a little bit more in touch with what's really going on in New York, certainly where I live in the western part of the state.

ROBERT ZIMMERMAN, DEMOCRATIC NATIONAL COMMITTEE MEMBER: She has to earn this designation by the governor by showing how she can best serve the state, and how she can best connect with and meet the needs of New Yorkers throughout this entire region.

HILL: Next step, answering the questions those New Yorkers are asking.

UNIDENTIFIED MALE: Can you tell us --

HILL: And as for whether or not New Yorkers would actually support her in that role, a new poll out today from Siena college found about 23 percent of New Yorkers, 28 percent of Democrats say they would like to see her in that seat.

But Anderson, one thing to keep in mind, the poll was done before she officially announced her interest and it also has her basically neck in neck with attorney general Andrew Cuomo.

(END VIDEO CLIP)

COOPER: All right, fascinating stuff, Erica, thanks.

Still ahead, does Caroline Kennedy have unstoppable momentum, is this already a done deal? Our panel tackles that in the "Strategy Session."

And later, big party with big names wait until you'll hear how much people like Halle Berry and Samuel Jackson and other stars are shelling out to be at the Obama inauguration. Sharon Stone there.

The event is already causing controversy. Conservative pastor Rick Warren, is going to be there and that has outraged some liberal groups. We'll have details on that ahead.

Plus John Walsh speaking out again today about the stunning news that the killer of his 6-year-old son Adam has finally -- finally have been identified after 27 long years.

When 360 continues.

(COMMERCIAL BREAK)

COOPER: Well, Caroline Kennedy's days of avoiding the media came to a crashing halt today now that she has put herself in the running to take over Hillary Clinton's seat in the Senate.

The media was all over Kennedy in upstate New York as Erica just showed you before the break and is guaranteed to stay that way for a while.

The question tonight, despite some criticism about her qualifications, is this already a done deal?

Let's talk strategy with political analyst and radio talk show host Roland Martin; Hilary Rosen, editor-at-large for the "Huffington Post" and a CNN contributor; and Robert Zimmerman, a Democratic National Committee Member and a CNN contributor, as well.

Hilary, "The Times" described Caroline Kennedy stop in Syracuse today as reminiscent of Sarah Palin's tightly controlled campaign appearances. I'm guessing that's probably not how she wants that to be described.

Is it fair that she is essentially running a stealth campaign?

HILARY ROSEN, CNN POLITICAL CONTRIBUTOR: What an unfortunate comparison. And let's be clear. The National Security requirements of a Junior Senator from New York are nowhere near the requirements of a Vice Presidential candidate.

But the problem -- this is a very odd race. Caroline Kennedy has one voter here and that's Governor Paterson. So the question is what helps Governor Paterson the most in making a decision about who to choose?

And, you know, I think that people -- "The Times" makes a good point in its editorial today, when it says it might go a long way to helping Governor Paterson make this decision if she were to be more forthcoming about her position on some of the issues she would deal with as a New York Senator.

I don't think that's a -- kind of an unusual thing to ask.

COOPER: Roland, is it just up to Governor Paterson? Obviously, he's the one that makes the decision. But should she also have to announce or, you know, at least have some interaction with the American public?

ROLAND MARTIN, CNN POLITICAL ANALYST: Well, first of all, there's -- again, let's go back to what is the requirement, and what it is somebody might advise. I mean, there is no doubt I believe that her people will say, look, we have to be able to begin to articulate our views on various issues, because you are still playing to a general audience, as well, because you want them to also have some influence on Governor Paterson.

But at the end of the day, this boils down to him. What she also has to do is solidify her support if you will with Democrat stalwarts around New York who are also weighing in with Paterson.

Remember, she runs a 2010 special election or even 2012, the people who are running along with her, they want to make sure that she can also carry voters to ensure Democrats are strong in that state come 2012.

COOPER: Robert, you have been quoted as saying, and I want to get it right, that Caroline Kennedy has quote, "Not demonstrated the qualifications or the experience for the position." She hasn't held a 9:00 to 5:00 job, she has served on boards and charities and has raised a lot of money for education in New York.

ZIMMERMAN: She has also written an excellent book.

COOPER: She has written books. I mean, is she qualified?

ZIMMERMAN: She is going to have to make that case. And remember --

COOPER: To whom? To the New York citizens or to the governor?

ZIMMERMAN: To Governor Paterson, and obviously by her tour in upstate New York, it's very clear that one of the ways she is going to make that case is by trying to inspire confidence that she has the drive, the determination, the leadership to represent our state in the United States Senate.

She has extraordinary skills. The question is, do her skills fit this particular position? And remember, she is not just the only person under consideration. There is a wide spectrum of candidates from the labor movement, from the private sector, from the public sector, who really have shown how they serve their country.

COOPER: Roland, I think in the past you have said, well, look, Hillary Clinton had about the same qualifications as she has had, but Hillary Clinton underwent a grueling race.

I mean, she submitted herself to public scrutiny, she talked -- you know, she was in debates. She actually ran a race. There's a big difference between this kind of race and what Caroline Kennedy is doing.

MARTIN: Of course. Personally, if I recall, she also had the Democratic primary, that whole thing was just opened up for her. So it wasn't like she actually had to run in a primary in the Democrats. A lot of Democrats got out of the race to make way for her. Yes, she did run in a general election. Those are the differences.

But the point I was making is when you look at this whole notion of qualifications, Senator Hillary Clinton was a lawyer, worked for various institutions, and also was first lady. You look at Caroline Kennedy; has been involved in public policy, in her own way, whether it's the education, whether it's the arts, her whole issue when it comes to privacy in the constitution.

And so the problem here is qualifications are always subjective. So I think it's wrong to say, well, she doesn't have the qualifications. You've got people right now in Congress who are teachers, lawyers, doctors. They're all kinds of --

ROBERT ZIMMERMAN, CNN CONTRIBUTOR: I hate to ruin a good spin, Roland, but Caroline Kennedy is not running against Hillary Clinton. Caroline Kennedy has to make her case to the governor of New York State --

MARTIN: I understand that.

ZIMMERMAN: And the point is this election is not decided in Manhattan or amongst political pundits. It's decided by how effectively an individual can relate to the laid off workers and lack of one in New York.

MARTIN: I agree.

ZIMMERMAN: And how they can connect with workers homeowners and elders who are facing foreclosure.

MARTIN: But Robert, that mistake that we continue to make is we act as if to be an effective politician you must have already served in office.

ZIMMERMAN: No one is drawing that conclusion but you.

MARTIN: There's something to say about public policy beyond just traditional politician.

COOPER: Hilary, do you think this is already a done deal?

ROSEN: I think it's getting pretty close. But I think -- look, I know for a fact that sources have told me that Governor Paterson has asked other candidates in the race not to drop out. He wants to have a choice, a group of people to choose from. And so that must be for a reason. He's not sure who he wants.

That's, I think, one of the reasons that we see Caroline Kennedy going around the state and trying to make this case. Because in essence, he has told her she has got to prove something to him. Other people, I think, have been doing the same thing.

ZIMMERMAN: That's very much the case. I do take Governor Paterson at his word that I think he's got a very open, and I think there is no favorite candidate at this point. That's very clear by everything we have seen.

COOPER: We'll have more from our panel ahead.

Also, a French woman who received the world's first face transplant in 2005 had a press conference after the surgery. She has made remarkable progress, this on a day -- we have new details on the first face transplant in the U.S. We'll show you. That's the first woman on the left right after her surgery and we'll show you how she looks now.

Plus, inauguration controversy growing tonight; President-elect Obama selected evangelical pastor Rick Warren to pray at the inauguration. Warren spoke out in support of Proposition 8. Now gay rights groups and others are furious.

Our panel weighs in.

Also, Samuel Jackson, Halle Berry, Sharon Stone all are Hollywood A-list paying big bucks, tens of thousands to see Obama sworn in. What exactly does a $50,000 ticket get you? That's ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RICK WARREN, PASTOR, SADDLEBACK CHURCH: I'm opposed to having a brother and sister be together and call that marriage. I'm opposed to older guy marrying a child and calling that a marriage. I'm opposed to one guy having multiple wives and calling that marriage.

UNIDENTIFIED MALE: You think those are equivalent to gays getting married?

WARREN: I do.

(END VIDEO CLIP)

COOPER: It's comments like that from Pastor Rick Warren that made the Internet and blogosphere light up with outrage today when it was announced that President-elect Obama has asked the popular conservative preacher to give the invocation at the inauguration. Now Warren was a big supporter of Proposition 8 which took away marriage rights from gays and lesbians in California. And late today, an Obama spokeswoman said that while the president-elect disagrees with Rick Warren on gay rights issues, he wants this to be the most inclusive inauguration ever.

Let's dig deeper with Hilary Rosen, Robert Zimmerman and Roland Martin.

Hilary, Andrew Sullivan wrote today on his blog. He said, "It's shrewd politics, but if anyone is under any illusion that Obama is interested in advancing gay equality, they should probably sober up now." Is this a slap in the face to the gay community?

ROSEN: You know, from what I gather, every gay person who paid attention to this today felt like we were kicked in the stomach. This is just kind of outrageous that you would choose such a divisive figure to speak out in a blessed prayerful moment at a day of bringing the country together. I think it's kind of an outrageous mistake on the part of the Obama campaign.

COOPER: Roland, of all of the pastors to choose from, why choose someone controversial?

MARTIN: How about choosing Reverend Jeremiah Wright who supports the issue of gay marriage? Obama believes in marriage is between a man and woman. Is that controversial?

Not only that, you have two people who are speaking today who are preachers. You have Rick Warren who is against gay marriage, giving the invocation. You have the Reverend Joseph Lowery who is for gay marriage, giving the benediction.

ROSEN: This is not a policy difference. This is not even about gay marriage. That could be a political or policy difference that obviously Barack Obama has with many gay and lesbian people. This is about the way that Pastor Warren has used homosexuality as a weapon, that he uses religion as a weapon to suggest that gay relationships are akin to -- and pedophilia and other things.

That's the problem. It's not a matter of a policy difference. It's a matter of using this sort of moral religious authority to divide one group from another.



COOPER: Let Robert in here.

ZIMMERMAN: Thank you, Roland, for the opportunity. Here is the point. There is no question Reverend Warren's comments are divisive and ignorant. And I for one personally believe in the rights of both gay and lesbians to marry. It's a moral right that should be protected by the law.

But I believe the inauguration of Barack Obama is much bigger than Rick Warren. And I think obviously the goal here is to try to bring everyone together, to bring people to the table who we differ with, so that we can try to in fact bring them around. It's very important to note how the evangelical community has stood up on issues such as world poverty or the AIDS epidemic or in environmental causes.

And we are seeing progress made in vote after vote to bring the vote around for the rights of gays and lesbians to marry.

MARTIN: That's the point there.

ROSEN: Inauguration day is not a political negotiation. That's not what this is for. If you want to have a political negotiation, have it. If you want to talk about issues that Evangelicals and progressives can agree on, do that. But what this is, this is a symbol to America about the kind of people that we respect and want to be, and the messages that they deliver. MARTIN: Here's the problem --



ROSEN: Roland, I'm kind of outraged.

MARTIN: I understand the outrage. But here is the point that I am making. Your viewpoint is you disagree with him. Obviously on issues when it comes to the homosexuality, gay marriage.

The point I am making is, this is the same pastor who was called a conservative pastor who has a whole different view, using religion when it comes to AIDS, when it comes to -- hold on -- when it comes to poverty, when it comes to global.

ZIMMERMAN: Roland, it doesn't justify Reverend Warren's bigotry.

MARTIN: It goes beyond that. I'm not justifying.

ZIMMERMAN: You're excusing it.

MARTIN: I am making this point that depending upon your view; you can either agree or disagree on his view of religion.

COOPER: I want to read out what the Obama spokesperson has said about this, in reaction to this conference. They said, "The president-elect certainly disagrees with him on [Lesbian, Gay, Bisexual, Transgender] issues, but it has always been his goal to find common ground with people with whom you may disagree on some issues."

Hillary, what does this say about how Obama is going to rule? It does -- to his supporters who don't mind this, they say, look, this shows he is reaching out to people of different faiths, different perspectives, and showing that it's a big tent.

ROSEN: Look, I would make two quick points. First, that glibness about it's a bunch of gays being unhappy that don't agree with him is wrong. The one time the bible was used to justify slavery. If this was a preacher out there using moral weapons against African-Americans, we wouldn't even be having this conversation.

So second of all, the fact that we're actually having this conversation means that this is a mistaken choice. This is a day when people are to be brought together. There are hundreds of preachers across the country with stature and thoughtfulness and other ways to bring this country together on an inauguration day for the new president. That's the choice he should have made.

COOPER: I want to give you each a final thought. Roland?

MARTIN: The bottom line is, Rick Warren is one of the most respected pastors in the country. There are people who obviously agree and disagree. But the bottom line is you've got two preachers that day, one who is for gay rights, one against gay rights.

ROSEN: It's not about gay rights. ZIMMERMAN: This is not about gay rights.

MARTIN: But the whole argument -- the whole segment has been on that issue.

COOPER: Let Robert give his final thought.

MARTIN: That's the whole argument you have been making.

ZIMMERMAN: Roland, this is not about the issue of gay rights. This is about individual respect for humanity and human decency, and Reverend Warren's comments disqualify him from that. He uses faith to preach fear. And I think what's critical here to note -- and this is what my hope that inauguration day represents is a chance to open up dialogues that haven't existed before. And by opening up these dialogues, we can bring people together around common ground and respect for one know.

COOPER: We're going to have to leave it there. Hilary, your final thought.

ROSEN: It's just that's a conversation the country ought to have. This is not the day to do it. This is a day to make everybody feel good about the new president, and the new direction of the country. And with this choice today, he's making a lot of people feel lousy.

MARTIN: And some folks feel good or feel bad, but I guess the millions who read the "Purpose-Driven Life" or the "Purpose-Driven Church," they somehow don't count, right?

COOPER: Hilary Rosen, Roland Martin --

ROSEN: You could find people everybody likes.

COOPER: -- Robert Zimmerman. Thank you.

ZIMMERMAN: I doubt that these days.

MARTIN: I like both of you.

COOPER: The conversation continues online, ac 360.com. Join us there.

More on the inauguration ahead. Don't expect the historic event to be a low-budget affair with some of the biggest names Hollywood shelling out big bucks to get there. We'll tell you details ahead.

(COMMERCIAL BREAK)

COOPER: Seen around the world, the Iraqi journalist who hurled his shoes at President Bush is being hailed as a hero by some, but it looks like he is going to be treated as a criminal.

Jill Dougherty joins us live from Baghdad with the latest.

Jill, what are the charges now against this guy?

JILL DOUGHERTY, CNN CORRESPONDENT: It is assaulting a foreign head of state, Anderson. And you have to say, this seems to be moving ahead very quickly on the legal track. He has already met with an investigative judge; that judge heard his story. That happened actually Tuesday night.

And at that session, they had a lawyer, and also the prosecutor, and this is going to be moving to trial. It could be pretty quickly.

COOPER: A lot of tension erupted in Iraq, across the Arab world also, over his detention. What are the chances -- I mean, what is the trial process? How long is this going to take? What could he possibly serve time for?

DOUGHERTY: Well, as we understand it, it could be five to 15 years, but it really depends upon the court. That's what we heard yesterday from court authorities. So we'll have to see ultimately when it goes to trial.

Actually, his brother said they were called back. The judge said, come back in eight days for a trial. So we'll have to see whether that happens. But, you know, the -- repercussions could be serious depending upon whether he is freed or found guilty. And we have already had demonstrations, as we have been reporting. A lot of them, you had allegations over a beating.

His brother has been saying, without any concrete proof, but he has been saying my brother had his arm broken, et cetera. The court has been saying, no, he has been in good health so far. So that's one thing.

The demos -- you also had the parliament in an uproar just yesterday, where the speaker said he was going to resign. Not only over this, there were other issues, but it was one of the exacerbated points. And then also, we had an incident yesterday in Fallujah where U.S. soldiers were at the Fallujah Business University at an event and a crowd of about 200 people started throwing sticks and stones and shoes, significantly.

COOPER: There is other important news out of Iraq; British Prime Minister Gordon Brown said today that he is going to pull British troops out of Iraq I think by the end of 2009. What does that mean for the U.S. position in Iraq? Or when was the exact date he said?

DOUGHERTY: Yes, mid-2009. Missions will be finished by the end of May and then by the end of July, that's it. They should be out of there.

You know, in a sense, it -- in a physical sense, doesn't make a whole lot of difference. There are 4,000 troops, British troops, but they have already pulled back to their bases. Essentially what they do is train the Iraqis.

And the American troops have been coming in and taking over at least down in Basra some of those jobs. So, you know, you would have to say the next step where do they go after that, because the next question, of course, is Afghanistan.

COOPER: Jill Dougherty, live from Baghdad. Jill, thanks a lot.

Coming up, photographs surfaced today; they're unlike any of Barack Obama we have ever seen. Hip, cool. From decades ago. It's our "Shot of the Day. We'll show you that ahead.

ERICA HILL, CNN ANCHOR: Anderson, OPEC will soon slash production by 2.2 million barrels a day. This is the biggest cut ever for the oil-producing cartel. That dramatic move aimed at halting falling oil prices.

The host of "America's Most Wanted," John Walsh, is praising investigators for closing his son's murder case. On Tuesday, authorities said a serial killer who died in prison years ago murdered Adam Walsh in 1981.

Well, today, Walsh had more to say on the enormity of this moment for both him and for his family.

(BEGIN VIDEO CLIP)

JOHN WALSH, FATHER OF ADAM WALSH: It's about justice. It's not about revenge or vigilantism. It's not about closure. We'll always -- Reve always says, "We'll have that hole in our heart for the rest of our lives." But it's about justice, and yes, today ended that chapter of our life.

(END VIDEO CLIP)

HILL: The first face transplant patient in the U.S. said to be doing well. Today, the lead surgeon who performed the operation at the Cleveland Clinic said the patient was so disfigured she had a hard time eating or breathing on her own and, in fact, was so humiliated -- often so humiliated in public that she rarely went out.

Her identity is not being released at this point.

But you may remember the world's first face transplant in France three years ago. Well, look at the before and after here. It's really pretty incredible. This is the transformation, and she at this point, Anderson, is said to be doing great. So hopefully, it will be the same in a couple of years for this other patient.

COOPER: It's amazing that they can do that. Just incredible. Erica thanks.

Hollywood's coming to Washington. And despite the controversy we just talked about, the inauguration of Barack Obama, each of the stars, well -- there's Samuel Jackson -- paying top dollar. Fifty thousand dollars for a package with all the perks, four tickets to the swearing in, plum spots on the parade route, and all-access passes to the inaugural ball.

Where does the money actually go? We try to figure that out, ahead. And do you know who this guy is? OK, well, he looks a little different these days. A younger, perhaps cooler Barack Obama. Our "Shot of the Day." Some pictures we've never seen before. Stick around.

(COMMERCIAL BREAK)

COOPER: Dan Aykroyd behind the Queen of Soul, Aretha Franklin. She is just one of the big names expected to perform at President- elect Obama's inauguration. I don't think Dan Aykroyd is going to perform there.

Millions of people are expected to crowd the streets of Washington, of course. But to get a front-row seat to the festivities, you need connections and a lot of cash.

Samantha Hayes has the list of big-bucks contributors who -- which, frankly, reads like a who's who of the entertainment industry. Take a look.

(BEGIN VIDEOTAPE)

SAMANTHA HAYES, CNN CORRESPONDENT: It promises to be a premier like no other. Marquee performances by Aretha Franklin, Yo Yo Ma, Itzhak Perlman. And the Hollywood "A" list is snapping up top-dollar tickets. In the audience for change, Halle Berry, Jamie Lee Curtis, Jamie Foxx, Sharon Stone, Samuel L. Jackson.

GARRETT GRAFF, EDITOR-AT-LARGE, "WASHINGTONIAN": What we've certainly seen in this inauguration, I think, is just unprecedented levels of entertainment industry interest and Hollywood interest.

HAYES: For red-carpet treatment, all of those stars have paid $50,000 to Obama's inaugural committee. So what does 50K get you? Four tickets to the swearing in, plum spots on the parade route, and four tickets to the ball of their choice.

It's a measure of the excitement around Obama, that the stars are themselves star struck.

GRAFF: We've never seen this before, especially coming off eight years of President Bush, where there just hasn't been that much interest in Hollywood in Washington and the Bush administration.

HAYES: It may sound like a velvet rope sweet deal for the stars, but the truth is, the Obama inauguration has dramatically cut the ability of the rich and famous to get insider access.

Linda Douglass, the top spokesperson for the inauguration committee, tells CNN, "We have placed stringent restrictions on fund- raising: no funds from lobbyists, corporations, unions or PACs, and a $50,000 limit on individual donations, far below some limits in the past."

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I, George Walker Bush... HAYES: The last time around, for example, the Bush inaugural committee took donations of up to a quarter million dollars, and corporate money was welcome.

This time, the privately-raised funds will also buy things like Jumbotrons and sound systems so people without tickets can see and hear what's happening.

Samantha Hayes, CNN, Washington.

(END VIDEOTAPE)

COOPER: Up next, Barack Obama back in the day. The photos that he never likely thought would be seen by the world. It's our "Shot of the Day."

(COMMERCIAL BREAK)

COOPER: Time for "The Shot." It's a never-before-seen look at a younger and, some would argue maybe, cooler President-elect Obama. These black and white photos were taken in 1980 when Obama was a freshman at Occidental College in Los Angeles.

The president-elect is seen wearing a hat and striking a couple poses and he's also seen smoking, which is a habit, I guess, he's still sort of trying to quit.

Lisa Jack, the photographer who took the photos, ran into Obama at a campus cafe, asked to take his picture for her portfolio. The photos are part of "TIME" magazine's "Man of the Year" cover story. No surprise Obama is the Man of the Year.

Lisa Jack told "TIME," quote, "He was really cute," but what else does a 20-year-old girl remember? There are the photos.

HILL: Kind of cute, actually. But she doesn't remember anything else from the photo shoot, just he was kind of cute.

COOPER: But imagine, like you know, having these pictures taken 20 years ago and then, like, forgetting all about them? And all of a sudden...

HILL: Isn't it insane?

COOPER: It's interesting to see.

All right. You can see all the most recent "Shots" in our web site, ac360.com.

That does it for "360." Thanks for watching.

"LARRY KING" starts now. I'll see you tomorrow night.

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