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American Morning
Multiple Failures of the SEC; Shoe-Thrower Gets a Day in Court; Obama Names Arne Duncan as Secretary of Education; One-on-One Interview with President Bush; Adam Walsh Case Closed; Big Kennedy Endorsement; Layoff Survival Guide; Arne Duncan Named Secretary of Education Nominee
Aired December 17, 2008 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
JOHN ROBERTS, CNN ANCHOR (voice-over): Breaking news. The SEC chief rips his own organization for missing the biggest rip-off ever.
FRANK CASEY, SECURITIES EXECUTIVE: The SEC is going to simply come in after the fact and clean up the bodies and the blood and not prevent the hit. It doesn't serve any purpose.
ROBERTS: Why $50 billion disappeared undetected. Plus, case closed.
JOHN WALSH, ADAM WALSH'S FATHER: We needed to know. Today we know.
ROBERTS: His 6-year-old son murdered nearly three decades ago. Now John Walsh, host of "America's Most Wanted," finally gets his own answers.
WALSH: He didn't die in vain. A beautiful little boy.
ROBERTS: On the "Most News in the Morning."
(END VIDEO CLIP)
ROBERTS: Good morning. Thanks very much for being with us on this Wednesday, December 17th. John Roberts. We welcome in Carol Costello this morning.
CAROL COSTELLO, CNN CO-ANCHOR: Kiran Chetry, she discovered she had done no Christmas shopping so that's what she's doing today.
ROBERTS: Found herself at the end of the year either with a whole bunch of vacation days. Oh, my goodness. Christmas shopping or whatever.
Can you believe it that after everything that's happened in the economy in the last 18 months, the feds were asleep at the switch yet again?
COSTELLO: It's just unpardonable. I mean, I don't what's happening in the financial world. But do you trust any financial institution? I mean, can you trust anybody anymore? ROBERTS: It's difficult to have faith these days, isn't it? There are lots of stuff that we're going to be talking about with you today.
COSTELLO: Exactly. So let's begin, shall we?
Today President-elect Barack Obama will announce more key players to his energy team. In just a few hours, he's expected to name Colorado Senator Ken Salazar as his pick for interior secretary. And he's also expected to tap former Iowa governor, Tom Vilsack, for secretary of agriculture.
They have become more popular in today's economy. A new crash test finds small cars are safer than ever. The Insurance Institute for Highway Safety testing nine cars, all of them receiving the group's top rating in frontal crashes. But only the Suzuki FX4 and the Toyota Matrix got top marks when it came to side impacts.
Right now, nasty wintry weather tearing across much of the country. People in the Midwest and in the west coast -- or on the west coast, I should say, are waking up to temperatures below zero. Snow and ice blanketing parts of New England, too. In Chicago, hundreds of flyers stranded after storms forced airlines to cancel more than 300 flights.
And markets in Asia in positive territory this morning. The confidence coming after the fed cut a key interest rate to its lowest level on record sending the Dow soaring by more than 350 points. Hong Kong closed up by more than two percent. Japan's Nikkei also closed up slightly.
ROBERTS: Right now to this morning's top story. With serious questions about where were the feds during the $50 billion Wall Street scam? The Securities and Exchange Commission, the government's Wall Street watchdog now confessing it dropped the ball for at least a decade.
Bernard Madoff, the alleged mastermind behind the big money rip- off, is scheduled to go before a judge this afternoon. So why wasn't Madoff stopped years ago? CNN's Joe Johns looks into that part of the story.
(BEGIN VIDEOTAPE)
JOE JOHNS, CNN SENIOR CORRESPONDENT (voice-over): He was a Wall Street genius and pioneer who once proudly proclaimed that there was no way to cheat on the street.
BERNIE MADOFF, ACCUSED OF $50B SCAM: By and large, in today's regulatory environment, it's virtually impossible to violate rules. And this is something that the public really doesn't understand.
JOHNS: But now, Madoff himself is accused of breaking the rules big time. And the government never caught him until authorities say he admitted his role in an alleged fraud he estimated at an astounding $50 billion. So, where was the sheriff of Wall Street? The Securities and Exchange Commission? At first, officials said they were on top of the case.
LINDA CHATMAN THOMSEN, SEC DIRECTOR OF ENFORCEMENT: And to bring everyone who was responsible for the conduct at the Madoff firm to justice.
JOHNS: SEC Chairman Christopher Cox says his agency appears to have screwed up repeatedly and in a big way, saying that credible and specific allegations regarding Madoff go all the way back to 1999. That he is gravely concerned by multiple failures of the agency and that he's launching an internal investigation.
So who were the whistle-blowers? Securities executive Frank Casey for one. Back in 2005, he and a colleague, Ari Marcopoulos (ph), started looking at Madoff's gravity-defying investment returns and figured something was up.
FRANK CASEY, SECURITIES EXECUTIVE: And Ari (ph) said, Frank, you know that this can't be right. It's got to be a fraud.
JOHNS: Casey says Marcopoulus even took it to the next level, firing off letter after letter to the SEC, all but predicting how the Madoff story would end.
CASEY: This is a Ponzi scheme. I mean, in giant letters. 36- type instead of 12-type. This is a Ponzi scheme. And he laid out 25, 28, if I can recall, red flag areas, that they need to investigate.
JOHNS: But Casey isn't congratulating the SEC for finally figuring things out because they got there too late. After all, billions of dollars apparently vanished through the doors of Madoff's office.
CASEY: The SEC is going to simply come in after the fact and clean up the bodies and the blood and not prevent the hit. It doesn't serve any purpose.
JOHNS (on camera): It's not the first time the SEC has gotten slammed for oversight in the last few years. But now, some critics are saying the case of Bernie Madoff just might turn the place inside out.
Joe Johns, CNN, Washington.
(END VIDEOTAPE)
ROBERTS: Now Christine Romans joins us now.
Christine, people shaking their heads that after everything we've gone through, as I said at the top of the show with Carol, that the feds could be asleep at the switch yet again.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: This is the exclamation point on the fact that where were the regulators. Where were the regulators over the past ten years? Where was this idea?
This idea took hold that the industry can regulate itself. I mean, that there were warnings all along the way that were ignored. That the SEC chief now, Chris Cox, is saying he's looking into it and he is, you know, gravely concerned about this.
Are you kidding me? I mean, this is $50 billion. $50 billion. When you look at how Enron imploded and the value of Enron, an entire company with thousands of employees, and this is $50 billion. It rivals some of the biggest corporate scams of all time, let alone being what could be the biggest Ponzi scheme of all time.
ROBERTS: But what's --
COSTELLO: But you know what's even worse, though, is because nobody seems to have ethics. Nobody really feels guilty about this. It's just the way you play the game on Wall Street.
ROBERTS: Yes.
COSTELLO: I mean, what happened to our morality in this country?
ROBERTS: Mort Zuckerman was here yesterday saying he does not know how this guy sleep at night.
ROMANS: This is why you have watchdogs, right?
COSTELLO: They ripped-off charities.
ROMANS: Watch dogs or lap dogs? I mean, what is the story here? I mean, we have seen the biggest financial collapse in our generation, in our lifetime probably. We have seen now this, an alleged $50 billion Ponzi scheme right under the nose of the smartest people on Wall Street. I mean, this guy was a former chairman of the Nasdaq stock market.
COSTELLO: When you're saying smartest people, I'm beginning to wonder.
ROMANS: The smartest people, I mean, come on.
There will be, no doubt some soul searching at the SEC like we have never seen. And there are a lot of people calling for a top to bottom reorganization that Senator Chuck Grassley from Iowa who's himself a watchdog of the watchdogs, a perennial critic of lapses like this. I mean, he's saying that this is just -- this is ridiculous that this would allow $50 billion. I mean you got to work pretty hard to -- you have to work pretty hard to miss a $50 billion scam if you're watchdogs in Washington.
ROBERTS: So what about the fed rate cut that happened yesterday?
ROMANS: Right.
ROBERTS: Is this going to do anything? Is this just sort of an indicator that they're going to take aggressive action in a number of different areas?
ROMANS: It's supposed to make things cheaper for us to buy. It's supposed to make things cheaper for us to borrow, I should say. It's supposed to lower our borrowing cost and get the economy greased again.
We've had a lot of fed rate cuts probably, and we've still seen the economy kind of in a slump. So we'll talk a little bit more later about near zero interest rate policy and it made history actually. The fed definitely made history yesterday.
ROBERTS: We'll find out whether or not we indeed will be saved by zero.
ROMANS: That's right.
ROBERTS: Thanks.
COSTELLO: Time now to take a look at some stories that are new this morning.
The global demand for gas and oil tanking. OPEC is planning on slashing production by a record two million barrels a day. OPEC, producer of 40 percent of the world's oil, is looking to shore up falling oil prices.
An amazing medical story to tell you about. Doctors in Cleveland have performed a successful face transplant. This is the first time the surgery has happened in the United States. Doctors replaced 80 percent of the patient's face. Senior medical correspondent Elizabeth Cohen will join us in the next hour with more on this.
And more police are on the streets of Paris and other major cities today. The extra security coming after dynamite was discovered at a major upscale department store in the capital yesterday. President Nicolas Sarkozy is urging everyone to remain vigilant. A group calling itself the Afghan Revolutionary Front is threatening more attacks if French troops are not pulled out of Afghanistan.
And in Baghdad, that reporter who threw his shoes at President Bush was visited in jail by a judge after a court appearance. Foreign affairs correspondent Jill Dougherty is following the story for us. She joins us from the Iraqi capital this morning.
So, what happens now, Jill?
JILL DOUGHERTY, FOREIGN AFFAIRS CORRESPONDENT: Well, Carol, you know, it's really going on in to fronts. There's a legal side of it and then there's also what you could call the court of public opinion.
On the legal side, an investigative judge now has met with, in fact, it happened yesterday, with this journalist who threw the shoes at President Bush. Unclear whether that journalist actually admitted that he was culpable or not. But it is going to apparently go to court. And that we don't know exactly when that will happen. But this could be potentially quite serious. He could be facing five -- we understand five to 15 years in prison.
Now, in the court of public opinion, that's another case. There have been demonstrations in Iraq in the city of Fallujah and then also here in Baghdad, and at least two locations. And the people who support this journalist essentially are saying they ought to free him and that he was an honorable man.
Now, the brother of the journalist says that he actually hated the U.S. occupation and interestingly, hated the Iranian influence in Iraq. That it was spontaneous, he claims. And in spite of the fact that, Carol, apparently the journalist changed shoes before he went to this news conference, putting on Iraqi shoes to make sure the symbolism I guess was correct.
Then also you have a definite campaign by the television station for whom this journalist works, Al-Baghdadia. They have been running constant reports about this situation. And also on Web sites around, lots of support, at least among some people, for this journalist -- Carol.
COSTELLO: Fascinating. Jill Dougherty live in Baghdad this morning. Thanks.
ROBERTS: Well, Caroline Kennedy scoring a major endorsement in her bid for Hillary Clinton's Senate seat. But one prominent Democrat on "The View" program is not speaking out on Kennedy's behalf.
And President-elect Barack Obama names his choice for secretary of education. But who is he really? And is he a strong choice to fix the nation's school system. We'll find out.
It's 10 minutes after the hour.
(COMMERCIAL BREAK)
COSTELLO: Thirteen minutes past the hour. Time for Wednesday's "Political Ticker."
Caroline Kennedy gaining support in her campaign for Hillary Clinton's Senate seat. The most powerful Democrat in the Senate, Majority Leader Harry Reid, called New York's governor urging him to appoint Kennedy. But not all the buzz surrounding the possibility of another Kennedy in Washington has been good buzz. Coming up at the half hour, we'll tell you what "The View's" Joy Behar is saying about Kennedy's chances. Joyce always like this.
President Bush offering up career advice for his brother, Jeb. In an exclusive interview with CNN's Candy Crowley, the president answered yes, when asked if he's told his brother told Jeb, his son, to run for the Senate in 2010.
ROBERTS: Brother.
COSTELLO: What?
ROBERTS: Brother. COSTELLO: Brother, I'm sorry, that's right. I need more coffee this morning.
But President Bush does look a lot older, doesn't he, now that his term is up. Anyway, Mr. Bush said he doesn't know if, in fact, if his brother is going to run.
You're going to have to belly up to the bar a little earlier if you want to toast Barack Obama's inauguration. Quit laughing at me, you two.
Bars and nightclubs in Washington will only be allowed to sell alcohol until 4:00 a.m. during that week. That's an hour earlier than the original planned fest two weeks ago. Right now, bars can only stay open until 2:00 a.m. during the workweek.
And the president-elect fielding more questions from the kids than the press while in Chicago. About a dozen grade schoolers got the chance to quiz Barack Obama after he announced his new education security. And when asked about the new puppy, Obama said his girls will be responsible for picking up the poop.
I did say that on television. And don't forget you can get all the updates from our political ticker anytime, even if you're away from your television set. Just go to CNN.com/ticker.
ROBERTS: Oh, yes. Well, the cabinet slots in President-elect Barack Obama's administration are filling up fast. Yesterday Obama named his basketball buddy and Chicago school's chief, Arne Duncan, to be the next secretary of education. Duncan is a man who many people say has produced results and he's shown that he's not afraid to embrace controversial policies.
CNN's Jason Carroll joins us now with a little more on who Duncan is. Good morning to you.
JASON CARROLL, CNN CORRESPONDENT: Good morning to you. Controversial policies like green for grades. You know, paying students to get good grades, closing schools when they aren't working, opening charter schools, a lot of things. Duncan gets high marks for many people we spoke to. They say his record in Chicago is a good indicator he is ready to take on the nation's educational challenges.
(BEGIN VIDEOTAPE)
CARROLL (voice-over): President-elect Obama put his new education secretary, Arne Duncan, in front of a familiar audience. But the tough questions were firmly directed towards Obama.
UNIDENTIFIED FEMALE: When are you going to send the soldiers home?
BARACK OBAMA (D), PRESIDENT-ELECT: Well, you know, do you have somebody in your family who's in Iraq.
UNIDENTIFIED FEMALE: A cousin. OBAMA: You have a cousin in Iraq? Well, one of the things that I promised I would do is to try to bring this war in Iraq to an end.
CARROLL: The students are from the Dodge Renaissance Academy, just one of the Chicago schools Duncan is credited with turning around. It's symbolic of why many in education support him.
BUDDY ROEMER, FORMER LOUISIANA GOV.: I think he's been effective because one, he's willing to go out and close schools that aren't working. Two, he has been rigorous in the demand for that district to raise its expectations.
CARROLL: Seven years ago, when Duncan became Chicago's school superintendent, the city had one of the country's worst urban school systems. Duncan raised elementary test scores. More than 65 percent of students meeting or exceeding state standards. The number of high school students taking advance placement classes doubled during his tenure. Education, he says, is his life's work.
ARNE DUNCAN, EDUCATION SECRETARY NOMINEE: Education is the common thread. It's the civil right's issue of our generation and is the one sure path to more equal, fair and just society.
CARROLL: Duncan supporters say he's passionate but not an ideologue.
RANDI WEINGARTEN, PRESIDENT, UNITED FEDERATION OF TEACHERS: We've been talking Arne Duncan as a good choice for the last several weeks.
CARROLL: Despite Duncan's efforts to reform the city's schools, still only about half of Chicago's high school students graduate, leaving some to wonder if he has what it takes to fix the nation's ailing schools.
VERONICA ANDERSON, EDITOR IN CHIEF, CATALYST CHICAGO: He's been criticized for his lack of classroom experience and he's also -- there are people who say, you know, he just does what Mayor Daley tells him.
CARROLL: But Veronica Anderson, who is editor and chief of an education publication called "Catalyst Chicago," does credit Duncan for recruiting better teachers and improving the curriculum.
ANDERSON: I think those things bode well for someone who is looking at a nation where there are a lot of other urban school districts that are dealing with very complicated problems.
(END VIDEOTAPE)
CARROLL: Duncan supporters say he has been successful in Chicago because he's willing to embrace a broad range of ideas. For example, pushing for after school programs in impoverished neighborhoods. You also had thousands of high school freshmen voluntarily return to class one month early to receive academic support. So he's willing to look at a lot of different ideas. ROBERTS: If it's one thing though to make changes on the local level at one single school district, but then try to do it across the country, as well.
CARROLL: Right. Well, that is true. But, you know, when you look at a lot of the people who were out there who support him, they say that one of the benefits to managing a large school district like Chicago or New York or Los Angeles is that you're used to dealing with a lot of different people with a lot of different ideas.
ROBERTS: Yes. No shortage of agendas in the board of education, that's for sure.
Jason, thanks so much.
CARROLL: All right.
COSTELLO: Let's stick around, OK, Jason? Because...
CARROLL: Are you sure?
COSTELLO: ... you're going to want to comment on this next story, I'm sure.
CARROLL: OK.
With the selection of Arne Duncan as education secretary, some people are starting to notice a bit of a trend, that Barack Obama is suiting up an impressive starting lineup.
Duncan played professional basketball in Australia. National security adviser James Jones played at Georgetown. And incoming attorney general, Eric Holder, and U.N. ambassador Susan Rice played in high school. Something Obama touched on during yesterday's news conference.
(BEGIN VIDEO CLIP)
BARACK OBAMA (D), PRESIDENT-ELECT: I just wanted to dispel one rumor before I take questions. I did not select Arne because he's one of the best basketball players I know. Although I will say that I think we are putting together the best basketball-playing cabinet in American history.
(END VIDEO CLIP)
COSTELLO: You know instead of jogging, you can see them all playing basketball somewhere.
CARROLL: So maybe there is a place for Sarah Baracuda in the Obama cabinet.
COSTELLO: That's right. She played basketball too.
CARROLL: It makes me wonder if there is a height requirement in order to be part of this cabinet or something. In which case I obviously wouldn't make it. I'm too short.
COSTELLO: Yes.
CARROLL: But I'm good at ball though.
ROBERTS: Yes.
CARROLL: You know.
ROBERTS: Muggsy Bogues was (INAUDIBLE).
CARROLL: Oh, thanks, John. Thanks very much.
ROBERTS: Terror on the mountains, skiers in Canada suspended in midair when a cable snaps on their gondola. We'll tell you how it ended.
And President Bush in a one-on-one interview with CNN describing that shoe-throwing incident and some of the darkest days during his second term in 2006.
Twenty minutes now after the hour.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
SIMON AND CYNTHIA JENNINGS, TRAPPED ON A HANGLING GONDOLA: The car was coming off the cable one by one because they were swinging so violently. And we thought it was going to be our car next. It was a little horrific for us for a short period of time. We were a little afraid that we were kind of come crashing to the ground.
(END VIDEO CLIP)
COSTELLO: Can you imagine that? Just two of the more than 50 terrified skiers trapped for three hours in a swinging gondola. The drama began when a gondola tower snapped at a Canadian ski resort. At least two of the cars hit the ground but there were no serious injuries. A spokesperson for the resort says five people did require medical attention though.
ROBERTS: That is a gondola that I have taken many times. In fact, Carol, I broke my leg on that mountain. So intimately familiar with it.
Take a look at this new video. Chicago getting pounded by ice and snow, creating dangerous conditions for drivers. Is there any relief in sight?
Well, let's go to Rob Marciano who's tracking the extreme weather in the weather center in Atlanta. How's it looking, Rob?
ROB MARCIANO, AMS METEOROLOGIST: Well, it's really formed today. Then after than another storm coming, John. Very active weather pattern shaping up. Chicago to Cleveland right now, dry. But not only Chicago but other spots yesterday seeing a decent amount of snow.
Take you to Ohio just south of Columbus, Chillicothe, where we had some action in the form of some snow. There you go. They had the salters and sanders and the plows out.
Cincinnati saw a record snow amount. Not a whole lot but this time of year if you get anything in the Ohio River Valley, that's a cause for either concern or celebration depending on your age.
All right. That snow is now moving to the northern New England and upstate New York. Could see a couple inches here. Winter weather advisory is out.
Hey, and in the New York metropolitan area, talking about yesterday, probably not seeing a whole lot of accumulation in some spots. We've got one, two, and maybe even three inches out there in outer Long Island.
So mostly in the form of rain this morning but certainly cold enough to get it, to be slick out there until this moisture has past.
Beginning to break up where we had issues with ice yesterday across the Tennessee Valley. And guess what? Another system coming into Southern California with the potential of flooding and this will correspond to snow on the mountains and then running into cold air in the midsection again. And Chicago is under a winter storm watch now for ice potentially tomorrow night and Friday, and it's still cold; 23 in Chicago, 13 degrees in Minneapolis, and 41 degrees for a high in New York City.
John, back up to you.
ROBERTS: It looks like you guys are looking pretty good down there in Atlanta, though?
MARCIANO: You want to warm up, you come to Atlanta, Tampa, Miami.
ROBERTS: I'd love to do that.
All right. Rob, thanks so much. We'll see you soon.
MARCIANO: All right.
COSTELLO: When it comes to credit cards, you may be getting more power in your pocket. From the fine print to the added fees, we will tell you about the changes that could force credit card companies to play fair.
And if you get laid off, the first thing you do after it happens matters most. Gerri Willis has your checklist in our special series "Layoff Survival Guide."
It's 25 minutes past the hour.
(COMMERCIAL BREAK)
COSTELLO: With just 34 days until he's out of a job, President Bush is opening up to our senior political correspondent, Candy Crowley, about those flying shoes. He's also reflected on a major part of his presidency, the Iraq war. Here's CNN's Candy Crowley.
CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Good morning, John and Carol. Perhaps the most important part of this interview with President Bush was his admission that particularly in 2006 there were times when he wondered whether the war in Iraq was winnable. He also admitted that even within his administration there were voices calling for him to withdraw.
(BEGIN VIDEOTAPE)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I listened to a lot of people before we went into Iraq. And I listened to a lot of people, including in my own administration, who said, it's just not working. Let's get out. And I listened very carefully to them. And obviously came to a different conclusion.
You know, ultimately, I had great faith in the universality of liberty. I had great faith in our military. I had faith in the Iraqis who suffered so much.
And I could not live with myself if I had chosen to just leave and leave behind the valor and the sacrifice of a lot of our young men and women. I would never have been able to face their loved ones.
CROWLEY: You know, Karl Rove, you know him fairly well, right?
BUSH: Never heard of him.
CROWLEY: He said last week, listen, maybe if we'd known the WMD weren't there and then al-Qaeda wasn't there, that there was no connection between Saddam and 9/11 maybe we wouldn't have gone in.
Did you have a moment in your presidency when you began to learn these things when you began to learn that the intelligence was wrong, to do think, oh, maybe we shouldn't have gone in?
(BEGIN VIDEOTAPE)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Never heard of him.
CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: He said last week, listen, maybe if we'd known the WMD weren't there, and then al- Qaeda wasn't there, that there was no connection between Saddam and 9/11, maybe we wouldn't have come in. Did you have a moment in your presidency when you began to learn these things? When you begin to learn that the intelligence was wrong. Did you think, oh, maybe we shouldn't have gone in?
BUSH: First of all, my dear friend, you must recognize there are no do-overs. So, the idea of us walking back in time and saying, this, that or the other is just not a realistic assessment. Because once you're in, you're in for victory. And I truly believe the world is better off without Saddam Hussein in power. I know we're safer. I know our allies in the Middle East are safer and I know the Iraqi people are better off without him in power, and...
CROWLEY: Were you ever angry about it, when you found out, like what was that moment when you found out?
BUSH: No weapons?
CROWLEY: No weapons, the intelligence was wrong.
BUSH: I think angry is too strong a passion. I was not happy.
(END VIDEOTAPE)
CROWLEY: The president was not yet ready to talk about any plans to help save the auto industry. But he did say in general that he has made the commitment to keep the economy from collapsing, adding that he had to abandon free market principles in order to save the free market -- John and Carol.
CAROL COSTELLO, CNN ANCHOR: And of course, Candy had to ask the president about that shoe-throwing incident. Here's what he said.
(BEGIN VIDEO CLIP)
BUSH: First of all, I didn't have much time to reflect on anything. I was ducking and dodging. And I -- first of all, it's got to be one of the most weird moments of my presidency. Here I am getting ready to answer questions from a free press in a democratic Iraq, and a guy stands up and throws a shoe. And -- it was -- it was bizarre. And it was an interesting way for a person to express himself. I was asked about it immediately after the incident. And I said (INAUDIBLE).
(END VIDEO CLIP)
JOHN ROBERTS, CNN ANCHOR: Well, it's 31 minutes -- almost 32 minutes after the hour now. And here's a look at this morning's top stories. The economic downturn taking a bite out of New Yorkers' wallets. Governor David Paterson proposing a slew of new taxes to close a gaping hole in the budget, taxes on everything from cab fares, sporting events, cable TVs, soda to even downloading songs for your iPod. Paterson needs to find $15.4 billion to trim the deficit.
While the government goes deeper and deeper in debt for bailouts, the U.S. Navy is sitting on top of $7.5 billion of extra parts and other goods. More infuriating is the reason -- poor planning and management. The Government Accountability Office says it has been warning the Navy about the waste for the past seven years.
And John Walsh, the host of "America's Most Wanted," and his wife finally have closure on the murder of their young son, Adam. Police in Hollywood, Florida closed the 27-year-old case naming convicted pedophile and killer, Ottis Toole, as the child's murderer.
Our John Zarrella following the story for us. He's in Miami this morning.
Good morning, John.
JOHN ZARRELLA, CNN CORRESPONDENT: John, you know, it is impossible to understand for any of us the torment that John and Reve Walsh have been going through for the past 27 years. Six-year-old Adam Walsh abducted from a Sears store outside the Hollywood mall back 27 years ago. His head was found two weeks later. The rest of his body was never recovered. The Walshes and police always believed that Ottis Toole, a pedophile and killer, was responsible. Well, yesterday afternoon, Hollywood police finally said in fact it was Toole. Closure for the Walshes.
(BEGIN VIDEO CLIP)
JOHN WALSH, ADAM WALSH'S FATHER: For 27 years, we've been asking who could take a 6-year-old boy and murder him and decapitate him? Who? We needed to know. We needed to know. And today we know. The not knowing has been a torture. But that journey's over.
(END VIDEO CLIP)
ZARRELLA: Toole died in prison 10 years ago, twice confessed to the killing but recanted both times. Of course, John and Reve Walsh have dedicated their lives since to helping missing and exploited children. In fact, their work led to the establishment of the Center for Missing and Exploited Children.
John?
ROBERTS: John Zarrella for us this morning. John, thanks so much for that.
Carol?
COSTELLO: Well, she still hasn't spoken about it publicly, but Caroline Kennedy's interest in the soon to be vacant Senate seat in New York is the talk of the state and the talk of much of the country. Alina Cho joining us now.
We have news of the big endorsement for the former first daughter. Tell us about it, Alina.
ALINA CHO, CNN GENERAL ASSIGNMENT CORRESPONDENT: Well, Carol, Harry Reid, you know, he's the Senate majority leader, the most powerful Democrat in the Senate, and in an interview yesterday in Las Vegas, he made it clear Caroline Kennedy is his choice to take over Hillary Clinton's job. (BEGIN VIDEO CLIP)
SEN. HARRY REID (D), MAJORITY LEADER: We have a lot of stars from New York -- Bobby Kennedy, Hillary Clinton. I mean, Caroline Kennedy would be perfect.
(END VIDEO CLIP)
CHO: Now, Kennedy was also praised yesterday by the "Big Apple's" former three-term mayor, the still popular Ed Koch, who had said she is just as qualified as anyone in the Senate. The current mayor, Michael Bloomberg, is said to be supporting her as well.
But not all the buzz surrounding the possibility of another Kennedy in Washington has been good. At least one popular lady of "The View," Joy Behar, aired her views on Kennedy's qualifications during yesterday's broadcast.
(BEGIN VIDEO CLIP)
JOY BEHAR, "THE VIEW" CO-HOST: We fought a war to get away from royalty and yet we have the Bush royal family, the Clinton royal family, the Kennedy royal family.
(END VIDEO CLIP)
CHO: Now for her part, Senator Hillary Clinton has stayed mum on Kennedy's qualifications or who she supports for her job. When it comes to who should replace her in the Senate, Clinton says it is entirely up to New York Governor David Paterson.
Carol, by all indications, David Paterson is going to take his time. But the big question, you know, there are a couple questions, but one of the big questions is Caroline Kennedy, of course, intensely private, perhaps one of the most private members of the Kennedy family, if not the most private -- how will she handle the glare of the Senate if she is indeed chosen.
The other question, of course, the big one, is about her experience. Does she have any other than being the daughter of a former president? Her cousin, Kerry Kennedy, Carol, as you know, was on our air yesterday saying she's done a lot of things. And one of the big things that she has done is raise $70 million for New York City public schools. And as you well know, as a senator, you have to be able to raise money.
COSTELLO: That's right. And the Democratic Party likes that, too, when you're able to raise lots and lots of cash. Alina Cho, thanks.
CHO: You bet.
ROBERTS: The bad news, you're laid off. But we've got some good news for you right here on our special "Layoff Survival" series all week long. Gerri Willis tells us what you must do the day that you get the news. Plus, Barack Obama makes a choice for his education secretary, tapping the leader of Chicago's public schools. What will it mean for his education policy?
It's 37 minutes after the hour.
(COMMERCIAL BREAK)
ROBERTS: Well, your boss just dropped the axe. You're out of a job. Devastating news that not only means that you've lost your paycheck, but also your benefits. And this morning, we're talking about your rights when it comes to those benefits, with our personal finance editor Gerri Willis in our next segment of our ongoing special series, "Layoff Survival Guide."
Good morning to you.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey, good morning guys. Good to see you. You know, health care is one of the most important benefits you have. Let's face it. If you have to pay for say getting your appendix removed out of pocket, it will cost you more than $16,000. My producer Mica found that number this morning. And for people who are unemployed with no income, that would just even send you into bankruptcy.
So, what can you do if you're unemployed? You want health care. Well, first things first. If you can get on a spouse's plan through something called special enrollment, that's your very best outcome. Because it will cost you least amount of money. Special enrollment means you don't have to be in open enrollment to get on your spouse's plan. You can do it at any time within 30 days of losing your eligibility for coverage.
The program that most people know about, COBRA, this is a federal law that allows you to continue your present benefits. But the devil is in the details here. It is expensive. Let's take a look at what you pay presently. These are averages for what people pay presently on individual policies. Almost 5,000 over the course of the year. 13,000 for a family policy.
Now, let's look at what you pay under COBRA. This is where you pick up all the cost yourself. Instead of having your employer pay about three quarters of your cost, instead you're force to pay most of them yourself. Those numbers are -- let's see. We just showed you the numbers for COBRA. That's 5,000 for the individual policy. 13,000 for the family policy. This is multiples of what you would be paying if you had employer-sponsored coverage.
And COBRA is available to people in companies with 20 or more employees. It last about 18 months. There's something called mini- COBRA, if you're in a smaller company. A lot of states have that. So there's also something to opt into. And of course, if you meet the income requirements, you can also sign up for Medicaid or SHIP. And I just have to give you one phone number here, that you're going to want to call if you have problems with your benefits. The Department of Labor has a toll-free number. If you're worried, you're concern, you don't know what to expect, 866-444-3272. 866-444-3272. It's the number you want to call if you're unemployed, your worried about your benefits. There are lots of deadlines here people need to pay attention to. And the devil is on the details here. Go to dol.gov.
ROBERTS: I have a sense of that phone would ringing off the hook.
WILLIS: I think so, too.
ROBERTS: All right. Gerri, thanks for that some good tips.
WILLIS: My pleasure.
ROBERTS: By the way, Gerri is going to be blogging throughout her show, or throughout this show. Just send her questions. Go to cnn.com/am. And she'll be online in just a moment. Get ready to do that.
And tomorrow, how to survive the long haul. It could take months or longer before you're back to work. Gerri will tell us what you need to know to stay afloat. It's 42 minutes now after the hour.
COSTELLO: Good news about credit cards. New power in your pocket?
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I have no desire to use any credit cards for a while.
(END VIDEO CLIP)
COSTELLO: Losing the fine print, dropping the hidden fees. A new plan to force credit card companies to change the way they treat you. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: 45 minutes after the hour now. Welcome back to the "Most News in the Morning."
You know, right now, holidays are primetime for credit card companies. But with today's economy they're getting warm and fuzzy, if you can believe it, to try to get your money.
COSTELLO: They certainly are. If you watch television lately and seen the commercial. But Americans are spending less and are defaulting on their credit cards more. That is a bad recipe for credit card companies. But to make up for all of those defaulting, the credit card companies must persuade those of us who are spending to keep charging even in a tough economy. And they're turning off the charm to do it.
(BEGIN VIDEOTAPE)
COSTELLO (voice-over): It's in the air, credit card love.
UNIDENTIFIED ANNOUNCER: 52 smiles, two contented sighs.
COSTELLO: At a time your tax dollars are bailing out credit card companies, they're tweaking their ads to persuade you to use plastic so they can make money.
UNIDENTIFIED MALE: I'll go with cash back and a jolly good rate.
COSTELLO: Maybe Santa doesn't realize that Capital One got a $3,555,199, 000 bailout from the feds. But it's acting like it didn't actually need the money. It told CNN it bought a bank with its own cash and banked the bailout money to make other loans. Those warm and fuzzy ads, they're not fooling many consumers these days.
UNIDENTIFIED MALE: Kind of like the big casino. The dealer always wins.
UNIDENTIFIED FEMALE: They might seem nice and sweet now, but they're willing to change without even telling you.
UNIDENTIFIED MALE: I have no desire to use any credit cards for a while.
COSTELLO: And that's why ad experts say warm and fuzzy isn't really working anymore, and it's why Congress and the Federal Reserve are about to come down hard on credit card issuers.
I can't go to the floor of Congress or to the supermarket that someone does not come up and tell me, I always paid on time. I never went over my limit. Why did they raise my rate to 25 percent? This is unfair.
COSTELLO: While Congresswoman Maloney's credit cardholder's bill of rights is stalled in the Senate, the Federal Reserve is expected to take action by requiring credit card companies to skip the small print and clearly list when a payment is due. And by ending double cycle billing, which means consumers can no longer get hit with new higher rates on their old balances.
And if approved by the fed, there will be no more universal default. A policy which allows credit card companies to increase the interest rate on one card if a customer misses a payment on another card. Consumer group say that new rules would be a good first step and it just may make those warm and fuzzy credit card commercials easier to stomach. And that would be --
UNIDENTIFIED MALE: Priceless.
(END VIDEOTAPE)
COSTELLO: The banking industry isn't all that happy about the fed's expected action. The American Banker's Association says the new rules will result in higher prices and less available credit, and say goodbye to low introductory offers and zero balance transfers. Credit card companies will no longer be able to afford that for consumers.
And the fed, by the way, is supposed to vote on all of this on Thursday. So we'll know if those new rules going to effect hopefully by Thursday afternoon.
ROBERTS: There's no question that these card companies are getting warm and fuzzy. I was asleep the other night and the phone rang. It's about 9:00 at night. Hi, thank you for using our company for your credit card. We just want to know if you're happy. Is there anything we can get you? A cup of coffee, you know. And I suppose to go something like that. Remind you you got 668 points. You can get more if you use our credit card.
COSTELLO: Exactly. They're all offering like free cash, like you can really get free cash from a credit card.
ROBERTS: But definitely behind it was please, please, please use the card a little bit more than you have been.
COSTELLO: Charge, charge, charge, but don't do it.
ROBERTS: 49 minutes now after the hour. We'll be right back.
The new catch phrase heard everywhere.
(BEGIN VIDEO CLIP)
JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT (on camera): So what?
(END VIDEO CLIP)
ROBERTS: Just say so what?
(BEGIN VIDEO CLIP)
BUSH: So what if a guy threw a shoe at me?
(END VIDEO CLIP)
ROBERTS: From the stock market to flying shoes, Jeanne Moos with the most unusual way to fight back. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
ROBERTS: "So what?" It's the new buzz phrase that seems to be catching on more and more these days as celebrities, politicians and pop stars deal with those tough or unwanted questions. CNN's Jeanne Moos takes a look at all of that for us this morning.
(BEGIN VIDEOTAPE)
MOSS (voice-over): It's the season, all right, the season of --
BUSH: So what? UNIDENTIFIED MALE: So?
BUSH: So what if a guy threw a shoe at me?
MOOS: Easy for him to say. He didn't get a black eye like his spokesperson did in a scuffle to subdue the shoe thrower. But lately, it seems what's being thrown around is -- so what?
UNIDENTIFIED FEMALE: So what if he was? So what if Obama was Arab?
MOOS: An Obama impersonator...
UNIDENTIFIED MALE: (INAUDIBLE)
MOOS: ...even raps "so what."
UNIDENTIFIED MALE: So what, I'm half black and half white? So what? I fist-bump with my wife. Man, I can do whatever I like.
MOOS: But it was Vice President Dick Cheney, we first noticed in an ABC interview replying to a question about how three quarters of Americans say the Iraq war is not worth fighting.
DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: So?
UNIDENTIFIED FEMALE: So?
MOOS: And then the other day, President Bush was justifying invading Iraq by saying Iraq is where al Qaeda said it was taking a stand.
UNIDENTIFIED FEMALE: But not until after the U.S. invaded.
BUSH: Yes, that's right. So what?
MOOS: So what? That comeback that sounds like a put down. Something kids say. Something "The Sopranos" gang says over a dead horse.
UNIDENTIFIED MALE: You cooked that (BLEEP) horse alive.
UNIDENTIFIED MALE: No, I did not. But so what!
UNIDENTIFIED MALE: So what!
MOOS: So what. So passive-aggressive. Congressman Barney Frank used it, telling "60 Minutes" how he answered a newspaper reporter who asked him if he was gay.
REP. BARNEY FRANK (D), MASSACHUSETTS: Yes, so what?
UNIDENTIFIED FEMALE: Yes, so what.
MOOS: There's even a gay blog called so.gay.so.what. There's a marketing firm named "So What," that took its name from a Miles Davis piece entitled "So What." Pink made a hit out of her song "So What."
(SONG PLAYING)
So, if there's another 500-point swing in the stock market --
(on camera): So what?
(voice-over): If you feel like you can't trust anyone these days --
(on camera): So what.
(voice-over): If the excess cheer of the holidays has you down --
(on camera): So what? Jeanne Moos, CNN, so what? New York.
(END VIDEOTAPE)
ROBERTS: Cell phone jam at the inaugural, when millions try to connect at the exact same time. It happened last New Year's eve.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: That could be what our wireless network looks like.
(END VIDEO CLIP)
ROBERTS: Where does that leave emergency responders?
Plus, little sister selling her big brothers on eBay?
(BEGIN VIDEO CLIP)
UNIDENTIFIED CHILD: It's the whole spirit of Christmas.
(END VIDEO CLIP)
ROBERTS: It's the whole spirit of Christmas?
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I agreed to it. Reluctantly, but I agreed to it.
(END VIDEO CLIP)
ROBERTS: They're all here live on AMERICAN MORNING to explain. You're watching the "Most News in the Morning."
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
BARACK OBAMA (D), PRESIDENT-ELECT: We know that in the long run the path to jobs and growth begins right here in America's schools. Our nominee for secretary of education and my friend, Arne Duncan.
(END VIDEO CLIP)
COSTELLO: And there you have it. Welcome back to the "Most News in the Morning." Barack Obama naming Arne Duncan, the head of Chicago public schools, as his nominee for secretary of education. What is that likely to mean for the president-elect's education policy?
Joining me now, former secretary of education to President Reagan and author of the "American Patriot's Almanac," CNN contributor Bill Bennett.
Good morning, Bill.
BILL BENNETT, CNN POLITICAL CONTRIBUTOR: Hey, Carol.
COSTELLO: So what do you make of Arne Duncan as a choice for education secretary?
BENNETT: I know Arne Duncan. I like Arne Duncan. I think it's a pretty choice. Again, what I tell my team, you know, Republicans, conservatives, we lost, we didn't win this election. So, you got to look at it through that lens. And looking thorough that lens, it's pretty good. He is a reformer. He's a serious guy. He wants to do a lot of the right things. And I think he's got a great opportunity.
He's not been, you know, a product of the education school system. He's another Harvard guy, part of that Ivy League crowd that Barack Obama is gathering. But he's done some interesting things in the school system I once called famously at the time, the worst school system in the United States of America. I don't think it -- I don't think it is anymore. But it certainly was then. It's still not a gem.
COSTELLO: Right, right. Well, I can't think of any big city whose school system is a gem right now, can you?
BENNETT: Well, there are some very good schools -- there are some very good schools in some of the systems, but not a system-wide.
(CROSSTALK)
COSTELLO: It's a tough job. You know, during the press conference, though, when Barack Obama, you know, announced his nominee, "No Child Left Behind" was not mentioned at all. Will that be first on Arne Duncan's agenda?
BENNETT: It may be because the reauthorization of "No Child Left Behind" is coming up. I think it will be a hot issue. What I hope he does, Carol, is take a look at the research. The research now which is pretty -- pretty clear, pretty unequivocal about what works and what doesn't work in American education. And the really stunning research that's been done lately points to the quality of teachers as the single most important thing that matters in the school. Not class size, not expenditure, but the quality of the teacher.
COSTELLO: Well, let's talk about quality...
BENNETT: I think it will be a debate -- sure.
COSTELLO: I just want to talk about that for a second because, you know, the big criticism is that the teachers union prevents bad teachers from leaving the system. Will Mr. Duncan be able to push bad teachers out of the school system across the country despite the unions, which, of course, helped Barack Obama get elected?
BENNETT: It's very hard to do. And you got it exactly right. When the Democrats gathered in convention, 10 to 15 percent of the people there were members of the teachers union or married to someone who's in the teachers union.
It's been estimated that if you got rid of the 10 percent at the bottom of the teaching profession, you would improve American education dramatically. But it is the single hardest thing to do. If you talk to any principal or administrator, they will tell you getting rid of those incompetent teachers is almost impossible.
I should say that while you're doing that, i think we should reward our good teachers and pay them more. If we can just do both sides of this, I think we'll dramatically improve.
Will we look to Arne Duncan to do that? I doubt it, because of the power of the teachers union. I think this appointment will also shed a lot of light on the big city systems. Chicago still has close to a 50 percent drop-out rate. And one of the interesting things about Chicago, Carol, is that 40 percent of the public school teachers in Chicago send their kids to private schools, as do the Obamas. So you're going to (INAUDIBLE) as well.
COSTELLO: All right. Bill Bennett, thanks for joining me this morning and shedding some light on this choice. And good luck to Mr. Duncan as well.
Thanks, Bill.
BENNETT: You bet. Good luck. I know the job. It's a tough one.
COSTELLO: Indeed, it's a tough one.
BENNETT: Good luck to him, indeed.
Thanks, Carol.
