Return to Transcripts main page
Governor Tim Kaine and President Obama Push Stimulus Plan in Virginia; Congress Works out Details of the Plan
Aired February 11, 2009 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN NEWS ANCHOR: It is Wednesday, February 11th. Here are the stories we're following for you this hour in the CNN NEWSROOM.
An outbreak of severe storms possible today from the gulf to the Great Lakes, a day after a tornado kills eight people, and shreds homes in Oklahoma. Congress and bank CEOs show us how you're spending the bailout billions. It is one of several hearings we're following on Capital Hill for you. Your money and your health at risk.
Good morning, everyone, I'm Tony Harris, and you are in the CNN NEWSROOM.
Let's go. Happening right now, bank executives on the hot seat, facing tough questions about how they're spending your tax dollars. Live pictures now from Capitol Hill. The CEOs of eight of the nation's largest banks testifying before the House Financial Services Committee. Lawmakers want to know, what they've done with billions in bailout money.
(BEGIN VIDEO CLIP)
REP. BARNEY FRANK, (D), FINANCE SERVICES CHAIRMAN: And in the interests of getting the system working again, I urge you strongly to cooperate with us. Not grudgingly, not doing the minimum, but understanding that there is a substantial public anger. And alleviating that public anger, not with mumbo jumbo, but with reality is essential if we're going to have the support in the country to take the right steps.
JAMES DIMON, CEO, JP MORGAN CHAE & CO: We stand ready to do our part going forward. In March of 2008, at the request of the U.S. government, we worked regularly to prevent an uncontrolled collapse of Bear Stearns. In September of 2008, we were the only bank prepared to acquire the assets of Washington Mutual after the FDIC seized that institution. Taking together these two transactions saved nearly 40,000 jobs, and prevented further market instability.
(END VIDEO CLIP)
HARRIS: We are keeping a close eye on the hearing, and we will bring you updates as developments unfold.
The treasury secretary's bailout overhaul plan is getting the old Bronx cheer. One Wall Streeter calls it shock and uh! Timothy Geithner is answering to the Senate budget committee. Live pictures. His remake of the Bush team's federal bailout program is drawing negative responses. Congress, Wall Street and economists want to know, where are the details? Most complain the new plan is nothing but tweaks of the old one. We will keep our eyes and ears on this hearing, as well and drop in on it live when the hearing makes some news.
Geithner's partner in the financial rescue, Fed Chairman Ben Bernanke, has been on the Hill, too. That same question keeps popping up. Where is the money going? And why can't the government be more forthcoming?
(BEGIN VIDEO CLIP)
REP. CAROLYN MAHONEY, (D), NEW YORK: What I keep hearing from my constituents, they want to know what happened to these guarantees. They want to know not just that it went to AIG, but then what did it AIG do with it? And tracking that. And is that information available? Can you make that information available?
BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE: Congresswoman, I think these numbers that get thrown around like $7 trillion and $9 trillion and $12 trillion. I think they're adding apples and oranges and grapefruit together. They're adding all kind of incommensurate quantities into one big number.
MAHONEY: Well, they were adding the stimulus plan, and TARP plan and the Fed window. Let's not use numbers. Let's say the Fed spending. The Fed spending, what happened to it? Is that available now? I'm told there have been suits and it's not available to the public.
BERNANKE: First of all, I want to insist the Fed does not spend. We lend.
MAHONEY: Lend. Lend and guarantee.
BERNANKE: We are repaid -- we are rapid, without exception. We are going to provide as much information as we can, but there is a good reason. The one in particular that you mention is why don't we reveal the overnight short-term loans we make to banks? And in the recent period, almost every big bank and many of the medium and small banks in the country have borrowed from us for short periods. And we could give that list, I suppose.
The risk we have is during periods where fewer banks borrow, being put on that list is some sort of -- saying to the market, I had to go to the Fed, maybe there is something wrong with me, and that causes trouble for the bank. So if we have to give that information -- and we will if Congress insists. But if we have to give that information, it will destroy that program, and have a significant adverse effect on the liquidity provision and stability of the financial system.
(END VIDEO CLIP)
HARRIS: Oh, risk, risk, risk. It's all we hear. How much risk is involved in all of this?
Apologies from former heads of British banks bailed out by the government. They appeared before committee investigating the banking crisis. The ex executives apologize for not anticipating the financial turmoil that led to the bank rescues.
(BEGIN VIDEO CLIP)
DENNIS STEVENSON, FORMER CHAIRMAN, HBOS: We are profoundly, and I think I would say, unreservedly sorry.
UNIDENTIFIED MALE: I could not be more sorry for what's happened. We are extremely sorry.
(END VIDEO CLIP)
HARRIS: Back to the hearing on Capitol Hill right now with the CEOs of the big U.S. banks. How can they defend themselves when lawmakers are fed up and taxpayers are frustrated by the bailout?
Joining me to delve into that, Susan Lisovicz at the New York Stock Exchange and there he is, CNN's Richard Quest in London.
Good to see you both. Let's get started here.
Richard, to you first. It feels like Wall Street and Main Street are on a collision course here. And aren't we really seeing that intersection with the House hearing this morning? What do the bankers have to tell the committee, the American people, and the markets today?
RICHARD QUEST, CNN NEWS ANCHOR: They don't have to tell them anything.
HARRIS: Oh, Richard!
QUEST: No, now just a minute. Just a minute. Out of the gates already, and you're frothing at the mouth. The truth is, no matter what they say, it will never be acceptable. Because what the public wants is revenge. We saw that yesterday, in Britain, with the bankers before the Houses of parliament.
We -- I mean, if there was the modern equivalent of public flogging and stocks in the street for us to throw vegetables, we would be happy, we would be delighted. But there isn't.
And what we need to do, as financial journalists, is try and explain, this is the equivalent, this is the financial equivalent of the Australia fires. And they're putting the fires out, one at a time. And yes, money may be sloshing everywhere. But eventually, you've got to get it under control.
HARRIS: All right.
Susan, jump in here, because it seems to me that these CEOs, yes, on one hand, have to come with their mea culpas, but they also have to provide a road map as to what they are doing to help the situation.
SUSAN LISOVICZ, CNN NEWS ANCHOR: Well, you know, if we're going to use the analogy gee of the Australian wild fires, we could also say that is mass murder occurring, and that's what you're seeing in this economy, and in the greater economy. It's not what the executives can say, and they're saying it across the pond, by the way, mea culpa, I'm sorry. But it's what they do.
HARRIS: Well, what -- are they going to do?
LISOVICZ: They have to start making money. They have to start lending money. And is they have to stop hoarding money. Now, they are saying that -- like, bank of America, for instance, Ken Lewis said the company loaned -- let me see here, it made a billion dollars in new credit available to a number of new customers in the last quarter, that the bank made more than $1.5 billion in new loans across all categories.
But what you're seeing is, there's no Question about the federal reserve reported just last week, that two-thirds of the loan officers it talked to, two-thirds of them, had tightened its lending conditions over the last three months. That was an improvement, believe it or not, from October.
But, you know, Wall Street doesn't work moderately. It's extremes. Give loans, if you breathe, you've got a loan. Now, given the circumstances, of course, any bank is concerned about its repayment. You've got to find that middle ground, and that is what the bailout is supposed to help.
HARRIS: All right.
LISOVICZ: Getting money to businesses and counselors alike.
HARRIS: Susan and Richard, stand by. I'll come to you with a question in a moment.
I want to acknowledge, to the right of your screen, you see president Obama visiting a construction site in Springfield, Virginia, with Governor Tim Kaine. We will get to that event in just a moment when the two begin to make their remarks.
Back to Richard.
Richard, it seems the bankers have to first of all apologize for the mess. Then they have to justify paying out these big bonuses to the execs while the institutions they are running are tanking. You've got to follow with some kind of an explanation, don't you, with justification for that?
QUEST: There is nothing like a red herring to get the press, the public, and people up in arms. And the bonus issue is the classic red herring. Yes, it's nasty, it's unsavory, and it's rather unpleasant in terms of greed. But it's irrelevant in terms of getting us out of this mess. It's an issue for the future, Tony. It's an issue for what happens next. Not how we got necessarily --put this fire and deal with this problem at the moment. The bankers...
HARRIS: Well, the issue -- yes, go ahead, Richard.
QUEST: The bankers know that they have got us into the sewer up to our necks and beyond. But they are the only ones who can get us out of this mess at the same time.
And remember one other thing, Tony. People like you will not think the unthinkable. You don't want to hear about further public ownership of private companies like banks.
QUEST: You don't want nationalization.
QUEST: You don't want government taxpayers' money to be spent anymore.
QUEST: In the billions and tens and hundreds. So what do you want?
HARRIS: Well, what we want -- what we want is for these banks to unwind these assets, so we know what is good and what is bad. And then place these assets on the market to create a market for them, so we can start to move some of this stuff. That's what we would like to do. We would like transparency of the books. Can we start with that?
QUEST: And if it was that easy, it wouldn't have been done. Remember what the famous British Prime Minister John Major once said, if there were easy answers, they would have found it. Valuing those assets is a lot more difficult than valuing your particular wallet or how much your car's worth. Would you put money into distressed assets?
HARRIS: Absolutely -- not without knowing what I'm buying...
HARRIS: Well, then you've got to...
HARRIS: Susan, jump in here. You've got to unwind this stuff at some point. Someone does.
LISOVICZ: There are two different issues in a sense. I agree with Richard completely. $4 billion that Merrill Lynch or nearly $4 billion that Merrill Lynch paid out in bonuses is real money. But it is an asterisk in terms of the losses that Merrill Lynch took last year. Or even in the quarter, it was $15 billion in the quarter. Something like approaching $40 billion for the year. The hard issue, yes, is valuing those assets. Think of it this way. You bought your house for a million dollars. It's a great House. You love it. But you need to sell it. But somebody wants to buy it. The only person who wants to buy it is going to pay you $50,000. That's the problem with these assets. And that's why it's such a devil of an issue for the government to step in, to be the auction ear.
Yes, it's going to back stop these -- these toxic assets, so to get risk-takers to come in. But how much will the government commit? Because we're -- you know, taxpayers are going to go crazy. But then the private equity money won't come in, either. It is a huge issue. Yes. and the people who understand it best are working in that industry right now. And that's one of the reasons why you don't want those people to leave the industry. That's the argument, Tony.
HARRIS: Well, I've got to go. But the Wall Streeters need to stop whining here about what they're not getting from Tim Geithner. And they really need to step up to the plate, it seems to me, and be a part of the solution, Richard.
Part of the solution, Susan. I love you, Susan.
Richard, I'm going to deal with you later.
Richard Quest in London for us, Susan Lisovicz at the New York Stock Exchange, thank you both so very much.
ANNOUNCER: You're watching CNN, your severe weather headquarters.
ROB MARCIANO, CNN METEOROLOGIST: At least three tornadoes touching down yesterday in Oklahoma. One of them deadly. At least eight people killed and dozens others injured in Lone Grove, that's the hardest-hit area, 90 miles south of Oklahoma City. Lots of twisted wreckage and splintered homes and buildings. Rescuers are combing through the rubble right now, looking for anyone who might be trapped.
Hi, everybody, I'm Rob Marciano in the CNN Severe Weather Center. We have the potential for seeing severe weather again today, Tony, and mostly east of the Mississippi River. This is a fast-moving storm, it is a strong storm. Flooding rains right now across parts of Missouri, Oklahoma City towards Ardmore, and to the west of Ardmore, where Lone Grove is, it will be dry today but it will be windy, and that may hamper rescue and recovery efforts there.
The line of thunderstorms that was weakening, now getting a little bit of juice from the Gulf of Mexico. This is why this storm's prediction center has issued a slight risk for severe weather, pretty much everywhere to the east of Mississippi, notably across the Tennessee Valleys. This is going to strengthen into an area that is still recovering from the ice storm a couple of weeks ago. So thunderstorms that could potentially have straight-line winds on top of a low pressure area that is winding up, and expanding its wind field. And just the winds around this low could be gusting at 60 miles per hour, so that may well be doing damage as we go through the afternoon and off towards the north and east. And the northeast tomorrow, Tony, will get some wind, as well.
HARRIS: This is that classic springtime pattern of warm air meeting colder air, and then we get this outbreak of storms?
MARCIANO: It is. It's a springtime pattern. We're in the month of February, so this is certainly -- this is very rare. As a matter of fact, Jacqui Jeras will be up in a few minutes to talk about the climatology of where these storms are typically found and how exactly rare it is to have not only a tornadoes, but a deadly tornado in the month of February in Oklahoma.
HARRIS: Yeah. Rob, appreciate it.
MARCIANO: You got it.
HARRIS: President Obama taking part in a little show and tell to push his economic stimulus plan. The president visiting a construction site in Springfield, Virginia. The White House says the trip is designed to highlight the jobs created by the stimulus.
The governor of Virginia, Tim Kaine, is speaking now. Let's listen in.
TIM KAINE, GOVERNOR OF VIRGINIA: To be constructed to my left, a facility to serve 8500 people, at one point, an $8 billion construction project, doing important security work for the nation. This project was sited at Fort Belvoir, and we're so glad to be here with the commander, Colonel Blitch (ph) in the BRAC round that was completed in 2005, and it was a huge get for Virginia and Fort Belvoir to have the NGA here.
But the significant concern about it was obviously transportation infrastructure. We have been trying to complete the Fairfax County parkway for years. But because of declining state and federal transportation revenues, while we are currently under construction on two phases behind us, there are two phases that are not funded. And the absence of funding for those phases means that we cannot serve as well as we should the agency and the other Belvoir operations. Residential neighborhoods in the surrounding area will find traffic congestion more intense in this I-95 corridor. And then there are a whole series of small businesses in this area that will also find traffic difficult in and out of their businesses, if we cannot complete this project.
The stimulus package, with the infrastructure spending that will put Americans back to work, and focus on key transportation projects, will give Virginia the kinds of money that we could use to complete the Fairfax Parkway, serve this agency, and serve the neighbors. And just in terms of its economic effect right here on this project, we could add hundreds of on-site construction jobs. We could add up to 2,000 indirectly related jobs in the aggregate, equipment, fabrication and utilities industry that support construction. About $70 million of economic effect locally will improve direct interstate access for these businesses and residents, and will serve this national critical agency.
That's just an example of what one project can do that could be funded under this stimulus plan.
I'm very proud to have the president here in Virginia, where transportation challenges in northern Virginia are huge. They're quality of life issues. They're economic development issues. And if we can use construction to stimulate the economy and get people in the short-term, we can also build that platform for greater economic growth and success, as these projects are completed.
And so it's my hope that Congress will act promptly to pass this plan. The projects will be of critical assistance in Virginia and a tough time economically, and of critical assistance to a nation that needs to put people back to work.
And with that, I'm very, very pleased to introduce the president of the United States, President Barack Obama.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Thank you, everybody. I am extraordinarily pleased to be here with Virginia's governor, an exceptional leader and a great friend of mine, Tim Kaine.
Not far from where we're standing, back in Washington, we continue to have a debate about our economic plan, a plan to create or save more than three million jobs in the next few years, and had that conversation. But I am here today, because you -- from that debate to see why enacting this plan is both urgent and essential to our recovery. To see that the time for talk has passed. And that now is the time to take bold and swift action.
We have passed a version of the American Recovery and Reinvestment Plan through the House. Yesterday, we passed a version through the Senate. Now we've got to get a final version to my desk, so that I can sign it, and so that here in Virginia and across the country, the people can use it.
In Virginia, the unemployment rate has surged to its highest level in more than a decade, and it might have been a lot worse, were it not for the leadership of Governor Tim Kaine, and former governor, now Senator, Mark Warner. Unemployment claims have doubled in recent months, compared to last year. Nationwide, we have lost 3.6 million jobs since this recession began. Nearly 600,000 this past month alone.
These are the people I talk to in Elkhart, Indiana on Monday, which has lost jobs faster than any place in America, with unemployment rate of 15 percent. They are the people I met yesterday at Ft. Myers, Florida, which has been among the places hardest-hit by the foreclosure crisis. These are the folks looking for work, and these are the folks who want to work.
At the same time, look around us. Look at this construction site right where we're standing. We're surrounded by un-met needs and unfinished business, and our schools and our roads and the systems we employ to treat the sick, and the energy we use to power our homes. And that's the core of my plan. Putting people to work, doing the work that America needs done.
We're here today, because there is a lot of work that needs to be done on our nation's congested roads and highways, crumbling bridges and levees, and crowded trains and transit systems. Because we know that with investment, we can create transportation and communication systems ready for the demands of the 21st century and because we also know what happens when we fail to make those investments. We have seen the consequences of a bridge collapse in Minneapolis. We have seen the consequences of levees failing in New Orleans. We have seen the consequences every day in ways that may be less drastic, but are nonetheless burdens on local communities and economies, time with family lost because of longer daily commutes. Roads held back by streets that can't handle new business. Money wasted on fuel that is burned in worsening traffic. These are the problems that people of northern Virginia understand acutely.
Governor Kaine understands it acutely. And your government has worked valiantly to relieve these transportation pressures, while at the same time facing enormous budget pressures.
What's worse, now states are facing acute new responsibilities during this recession? Local governments are seeing more people filing unemployment claims, signing up for Medicaid, requesting government services. And all the while, people are spending less, earning less, and paying less in taxes. So across the country, states need help. And with my plan, help is what they will get.
My plan contains the largest investment increase in our nation's infrastructure since President Eisenhower created the National Highway System half a century ago. We'll invest more than $100 billion and create nearly 400,000 jobs rebuilding our roads, our railways, our dangerously-deficient dams, bridges and levees.
Here in Virginia, my plan will create or save almost 100,000 jobs, doing work at sites just like this one. Where we're standing, that could mean hundreds of construction jobs. And the benefits of jobs we create directly will multiply across the country. For example, this kind of infrastructure project requires heavy equipment. Caterpillar, which manufacturers the machines used in this project, has announced some 20,000 layoffs in the last few weeks. And today, the chairman and CEO of Caterpillar said that if the American Recovery and Reinvestment Plan passes, his company would be able to rehire some of those employees.
Tomorrow, I'm going to East Peoria, Illinois, to visit a Caterpillar manufacturing plant to talk to these workers, because what's at stake here are not abstract numbers, or abstract concepts. We're talking about real families that we can help and real jobs that we can save.
My plan will also give tax cuts to three million Virginia workers and their families, and will provide an additional $100 per month in unemployment benefits to nearly a quarter million workers in Virginia who have lost their jobs. And extend benefits to 46,000 more workers who aren't currently eligible. So we're at the doorstep of getting this plan knew Congress. But the work is not over. When we do, the challenge will shift to administering successfully this endeavor of enormous scope and scale. There are those who have expressed the opinion that we won't be able to do it, who say this plan is too big to be implemented effectively and efficiently. And the fact is, there is a certain amount of skepticism, much of it justified, by what we're accustomed to seeing in Washington. So I understand these concerns. But I'm confident that we can do things differently and better.
As president, I expect to be judged and should be judged by the results of this program. That's why I refused to allow even a single dollar in it this legislation to be spent on earmarks. And that's why we're going to put information about every dollar that's spent, including money spent on projects like this one, on a new website called recovery.gov. So the American people can see where their money is going.
And that's why I will appoint an oversight board that will be charged with monitoring my plans as part of an unprecedented effort to root out waste and inefficiency. And this board will be advised by experts, and not just government experts, not just politicians, but citizens with years of expertise in management, economics and accounting. We're going to do more than has ever been done before to make certain that every tax dollar is spent wisely and on its intended purpose.
So we're going to hold the federal government to new standards of accountability. And just as we demand new accountability for ourselves, we are going to demand this kind of accountability from the states and cities, as well. And I know Tim Kaine and other governors and mayors around the country would expect nothing less.
So much depends on what we do at this moment. It's not just about the future administration. It's about the future of our economy, and our country.
HARRIS: Well, OK. We've been having those kinds of fits and starts with the signal there from Springfield throughout the comments from Governor Tim Kaine and the president. But as you can see, the president in Springfield, Virginia, highlighting the infrastructure project at the core of the Recovery and Reinvestment Plan.
OK. The president is back.
OBAMA: I want to thank you for the support of this plan that is so urgent for the people he represents, and for the people I've met throughout this great state and throughout country. Thank you, very much.
HARRIS: OK, once again, the president wrapping up remarks there from Springfield. Again, just sort of highlighting the kinds of infrastructure projects that are really at the center of the Recovery and Reinvestment Act, also known as the $800 billion-plus economic stimulus package. The president asking the House and that to work diligently to merge the two versions of the bill and get reconciled bill to his desk for signature as soon as possible. The House and Senate conferees are at work today. We will get an update from Capitol Hill in just a couple of minutes.
Millions of Americans, young and old, find themselves out of work and searching for a new job. But personal finance editor, Jeri Willis, has some thoughts.
And we're also keeping an eye on a number of hearings going on on Capital Hill right now. We will check in and get you updates on all of the activity on Capitol Hill in just a moment.
HARRIS: Let's make a deal. Negotiators say they could agree on a final version of the massive stimulus bill as early as today.
Senior Congressional Correspondent Dana Bash is on phone from Capitol Hill.
Dana, really, by today? Is that possible?
DANA BASH, CNN NEWS SENIOR CONGRESSIONAL CORRESPODNENT: Their cautiously optimistic. I think we should stress the word cautious. I'm sitting in the hall of the capitol down the hall from Senate Majority Leader Harry Reid's office. And there is a huge meeting going on, it's even going on for 24 hours. The White House has said the budget director said many some of the key centrist Senators who really hold a lot of power between the House and Senate on the president's stimulus package.
I can tell you, talking some of the Senators going into this meeting, Tony, it looks like they are now working on an overall spending bill that's lowered a little bit, about $789 billion. But I'm cautioned that this number could change as these talks continue.
One other interesting note is, you know, we've been talking about the issue of education, and that House Democrats were not happy that the Senate sliced some of their education funding, particularly nearly $20 billion in school construction. Well, they're trying to figure out a way to keep that money, keep it - change it a little bit in terms of how it will be spent on schools. So that gives you a sense of some of the things (INAUDIBLE) going on in these intense, intense negotiations. I got to tell you, they've been going on all night through last night and into this morning.
HARRIS: Boy, that's kind of encouraging that the deal could be struck. There is a possibility that it could be struck today, and that it could come in with a lower price tag.
All right, our Congressional correspondent, Dana Bash, for us. Dana, appreciate it. Great news, thank you.
The jobs picture is bleak, but it's particularly difficult if you are on the extremes of the labor market. That is, you're young and fresh-faced or your experienced with the wrinkles - the scars, really, to prove it. Gerri Willis...
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: And up comes my picture.
HARRIS: No. No. That's terrible timing. I mean, our personal finance editor has tips to land that next job.
Gerri, what is your advice for - let's start with teens looking for a job?
WILLIS: Yes, the problems are at both ends, and teens are hit hard here with this economic crisis. The past year was one of the worst for teen employment. Maybe if you're a parent, you know about this. Teens are also finding a lot of competition, because there's so many displaced workers out there that are taking jobs they might have.
Now, good news here, there are websites that specialize in part- time or hourly work. And here's a few of them: Snagajob.com; Teens4hire.com; and this is my favorite, groovejob.com. So there are places to go on the web that can really help you out.
HARRIS: OK, Gerri, what do you tell older job hunters, more experienced job hunters?
WALSH: Well, the AARP, they are on it. They have a website to help people.
But let me tell you about the problem here. Nine percent of people over the age of 50 who lost their jobs during the past 12 months, that's nearly double the rate from April, 2008. And think about how it compares with the broad employment outlook. You know, we've got well over seven percent here unemployment. So, you know, obviously, seniors are having a much worse time.
Now, this new website can help you figure out if your family qualifies for public benefit programs, plus you also get tax assistance, information on job training and search for scholarships, if you're looking for re-training. What you can do, as well, even if you're over 50. The website address is AARP.org/realrelief. On that site, you'll also find a link to companies that really just want to hire older workers. And it's not just, you know, greeters at big box stores, OK. There are other jobs, too. Check out retirement.com. This service let's you search for job opportunities with companies that have age-friendly hiring practices.
HARRIS: What is your thought on this? We hear reports now that the schools are loaded. The evening classes are loaded with people who are going for retraining. Should older people think about going back to school?
WALSH: Well, look, you know, even if you don't want a degree, maybe you don't want to spend four years. Many colleges let older folks audit or even take classes for re-reduced or no tuition. You heard it right, free. So, to find out about the options available in your area, inquire at the admissions office in your local college. You've got to go ask. You can't be shy here, you really got to go out and knock on some doors.
Don't forget about scholarships. Some offer scholarships specifically for seniors. Check your scholarship eligibility with Sally Mae's (ph) website, that is collegeanswer.com, and fastweb.com.
Now, if you've got questions, send them to me at Gerri@CNN.com. We would love to hear from you. And as you know, we answer those questions every Friday.
HARRIS: Outstanding. Thanks, Gerri. Good to see you.
WILLIS: My pleasure.
And as the most serious credit crisis in decades rocks your finances, CNNmoney.com has some advice and answers. Just check out our special report, we update it all the time, "America's Money Crisis." Again, that's at CNNmoney.com.
Coming out of retirement to win it all! Stump wins top honors at the Westminster Dog Show. The 10-year-old Sussex Spaniel is the oldest-ever Best in Show winner. Turn up the music!
HARRIS: We want to take you to Capitol Hill right now. Bank executives are taking some tough questions from members of the House Financial Services Committee. And let's take you to that hearing now. We've got a couple that we're following, but there is a pretty good exchange going on right now, led by Maxine Waters. Let's listen in.
FRANK: Next we have Governor Castle.
REP. MICHAEL N. CASTLE (R), DELEWARE: Thank you, Mr. Chairman.
Gentlemen, this all seems to come in waves, and I sort of see another tidal wave behind the mortgage foreclosure and other waves, and that's the area of credit cards. There are many economists and others who believe that with the breakdown of the economy, that we're going to have multitrillion-dollar losses as far as credit cards are concerned, and this could actually lead to a situation in which we have bankruptcy in the industry. And a lot of this obviously relates to the unemployment rate and people just not having the ability to pay, who had the ability to pay before.
My question, and perhaps I'll ask Mr. Dimon and Mr. Lewis (ph), this question is, are you prepared for that? Or perhaps you disagree with the premise that this is going to happen, but there are many who do speculate in the next few months to a couple - two or three years, that we're going to have significant problems in the credit card industry. And I don't know what your level of preparation for that is.
UNIDENTIFIED MALE: All right. The - it's clear that - this year in particular, this is going to be the year of consumer credit losses, because it's so intertwined with the performance of the economy. With regard to credit card losses, the general rule of thumb is, add a percentage point to the unemployment rate to get your loss rate, at least in our mix of portfolios. And so clearly, this is going to be an awful year for the credit card industry, and for all credit card portfolios. There is no doubt about it. And because we - you know, the more optimistic views are unemployment at eight or eight and a half percent and that would cause very high loss rates in the credit card portfolios.
CASTLE: Are you prepared to manage that?
HARRIS: OK, once again, let's start of give you a - maybe a bit clearer reset of the hearings going on right now on Capitol Hill.
Top left, the treasury secretary, Timothy Geithner, is answering to the Senate Budget Committee on his remake of the Bush team's federal bailout program. As you know, Wall Street didn't respond well to the speech yesterday. Most of the comments about the speech negative.
Top right, the bank executives facing those questions on how they're spending your tax dollars. Jamie Dimon there from JPMorgan Chase, am I correct on that?
And then on the bottom of the screen there, another House hearing on the deadly salmonella outbreak that is linked - has been linked to peanuts. We will follow all of this for you, and bring you updates on each and every one of those hearings.
All right. Now it's time to get to Josh Levs. Does all of the talk about your money on Capitol Hill ever really sort of confuse you? It seems like every day there is some new term being thrown around. Josh Levs is here to tell us what we need to know and how we need to understand and cut through all of this sometimes mumbo jumbo, the financial-speak, Josh.
JOSH LEVS, CNN CORRESPONDET: It's like alphabet soup up there right now. It's incredible. You listen for ten minutes, and hear 20 acronyms, none of which seem to make sense. So we're going to try to end that process and make sense of it for you.
And we're going to start off with three terms you should know. If it you get these concepts down, you're off to a good start. And they involve trillions of dollars that are going to shape our economy. Let's start with this. This one you probable heard a lot about : TARP, the troubled asset relief program. Now, basically what it boils down to is $700 billion with the goal being to create liquidity so banks can lend, businesses can stay solvent, and Americans can stay in their homes. And now, Tony, liquid assets, basically means they can be traded more easily, converted to cash. Originally, a lot of people know, this was supposed to be for mortgage-backed securities, but was quickly changed and used for other spending, especially capital investment in banks.
And now, Tony, we're looking at the word TARP, this happened.
I love that. It has a new name. Oh, good job, guys. Now under the financial stability plan. Now, I know that one's kind of complicated. Next one you're going to hear is very simple. We're going to go to this one word, "Toxic." Now, a lot of people wondering, do I have toxic assets? This is what they boil down to. A toxic asset is a security backed by mortgages that a bank just cannot sell. That's all you need to know on that one.
All right now, one more piece of this alphabet soup here, another important one flying around Capitol Hill today, TALF. Another acronym, this one stands for term asset backed securities, loan facility. But ignore that. Pretend you never heard it. I just have to tell you, to be official. What's going on here is this, the government is saying it's going to lend up to a trillion dollars to private investors to buy certain high-rated securities. And the goal is, is to credit and spending going again. And once again, Tony, we have that the cool sound. And that's because TALF is now - TALF is now the consumer business lending initiative. It took on a new name too.
I know it's a lot to remember. You can get all that here at CNNmoney.com. And in the coming days, Tony, we'll do a whole bunch more of this.
HARRIS: Appreciate it. Need to. There is a lot. Josh, appreciate it. Thank you.
They call themselves rescue capitalists. Financiers who put money in risky investments no one else will touch, like those toxic mortgages on the bank's balance sheets that Josh was just talking about. The Obama Administration wants private investors to buy up these bad assets. That's exactly what Lynn Tilton does for a living. She is a CEO over at Patriarch Partners, a private equity investment firm.
Lynn, good to see you. Thanks for your time.
LYNN TILTON, CEO, PATRIARCH PARTNERS LLC: Thank you for having me on the show.
HARRIS: So, Lynn, make some sense of this. What would make this program that was outlined by Timothy Geithner yesterday work? What would make these assets attractive to groups and individuals like you?
TILTON: I think it's going to come down to three things. The first and the most important is the structure of the vehicle that will hold them. The second is the transparency into the assets and the ability to price them. And the third is the motivation of every party to play with future up side. So you have to - you have to entice the banks to sell, the private sector to buy, and you've got to give the taxpayer back so far the up side for taking the risk of lending.
HARRIS: Lynn, thank you for that, because you were getting in the weeds awfully early on me on that. Thank you, you cleared that up nicely. Well done.
TILTON: You told me to be clear. HARRIS: Thank you.
TILTON: And for your mind-set. So we talked about it during the break.
HARRIS: Because I'm pretty slow here.
TILTON: I did not say that.
HARRIS: What do you want from the bank CEOs today? What do you want to hear from them?
TILTON: Look, I mean, I do not place my faith in the bank CEOs to rescue America. I think we should be taking our money, and actually investing it directly into industrial America, with senior- secured loans.
TILTON: It's the back-bone of this country. I've been calling for a federal provisional bank to temporarily lend to our industrial base. It's hemorrhaging jobs every day. I don't want to wait for the trickle-down effect for the banks to start lending to companies they think are high risk.
HARRIS: So, Lynn, you're not for necessarily this idea of this public-private partnership, this bad bank proposal, or am I hearing you incorrectly?
TILTON: No, I think that should be one of the multi-pronged strategies.
TILTON: But I don't want to wait for the banks to lend to struggling America, to the industrial base that's hemorrhaging jobs, to save this country. I want us to have part of the TARP plan be...
HARRIS: Well, but if they don't, they're not in the lending business. They may be in some other aspect of the banking business, but they're not in the lending business, if they don't do that.
TILTON: Well, I mean, what are they lending to? If they only want to lend to high-quality credit, whether it's the consumer or whether it's companies right now, you find me that high-quality credit. I mean, everyone has been credit-starved for the last six months. Revenues are dropping 30 to 40 percent across industries. Tell me what's a quality credit right now? I want to keep people working in America. I want to sustain jobs. That means sometimes we have to lend to something based on what it will look like after it gets cash.
HARRIS: That's interesting. But don't we have to - I don't know. I'm listening to this debate back and forth, and part of what I hear at the core of it is that we've got to get the banks lending again. And apparently the banks won't start lending again until they can get these assets sort of - bad assets, sort of walled off if we're going to move forward in that area. If you believe that needs to happen. And doesn't there need to be that mechanism where the banks, first and foremost, unwind these assets so we know what is good, what is bad, so that perhaps people like you jump in.
TILTON: People like me will jump in. But how long does it take for us to buy these assets, take them off the books, and get the banks lending again? If we lose 600,000 to 750,000 jobs a month and this program takes six to 12 months to execute, what happens in the meantime?
So what I'm saying is, this is one of the multi-pronged, you know, approaches that we should take. But frankly, I don't want to depend in the short-term on this program working or banks lending to the kind of companies that we need to save today. America is built on its manufacturing base. Most of the jobs are in middle market companies, in the manufacturing arena. They are starved. We need to feed them today, or every month we're going to be looking at these horrendous job losses and saying, what's happening, I thought we made the right moves. We will not have made the right immediate move. We are in a state of emergency right now.
HARRIS: Lynn, come on back and talk to us again, soon.
TILTON: I would love to.
HARRIS: That was fun. Thank you.
Gas prices up another penny a gallon overnight. You are now paying an average of $1.94 for a gallon of regular, two cents more than Monday and according to AAA, a 14 cents - actually, 14 cents more than you were paying just 30 days ago. We're back in a moment.
HARRIS: Pretty shocking development in the Bernard Madoff story. Let's get to our national correspondent, Allan Chernoff. He is in New York.
Allan, this is - you know, you got to go a ways to be shocked in this story.
ALLAN CHERNOFF, CNN NATIONAL CORRESPONDENT: Exactly, Tony. I was just thinking that. Shocking, should we really be shocked with anything in this case?
New papers just released by the Massachusetts secretary of the commonwealth, saying that Bernard Madoff's wife, Ruth Madoff, withdrew $15.5 million from their brokerage account at Comad (ph) Securities, which is a firm partially owned by the Madoff firm. And what's particularly interesting here is that the withdrawal of $10 million occurred on December 10th. That's important, because the very next day Bernard Madoff was essentially admitting to two FBI agents that he had run a massive ponzi scheme, by his estimate, taking investors out of $50 billion. So, very interesting that we hear now that his wife, apparently, was making major withdrawals just as Mr. Madoff was essentially turning himself in. Now this, of course, all according to the criminal complaint, Mr. Madoff making his admission.
We also should note one other item regarding Mr. Madoff, today had been a court-set date for Mr. Madoff either to be indicted or have a hearing where he would hear the charges against him, a probable cause hearing. Well, once again, that has been pushed back by 30 days. Originally, it had been scheduled 30 days ago, it was pushed back, now pushed back again. What's happening here is that the federal investigators, the prosecutors, they're continuing to look into Mr. Madoff's activities and so they've asked for the delay. Mr. Madoff's attorney has granted that.
Tony, that's where we stand right now. Bernard Madoff, as you know, charged with securities fraud, potentially carrying a 20-year term in prison. But of course, this all just charges, nothing proven just yet.
HARRIS: OK, Allan, appreciate it.
Allan Chernoff for us in New York.
Your job, your money, the economy, issue number one: Your Congressional members are tackling the TARP, which has a new name, and the stimulus today. We're checking in on the hearings live in the NEWSROOM.
HARRIS: Let's see, just a couple minutes ago we mentioned to you gas prices are up 14 cents from a month ago. Also going up by two cents, postage stamps. Beginning May 11, it'll cost you 44 cents to mail that birthday card. The postal service blaming it on rising production costs. Save yourself some money, plan ahead and by those forever stamps at today's price and you can keep using them no matter how high the rates go.
Speaking of stamps, there is a new one out featuring Abraham Lincoln. So what's the big deal? Well, let's do this - where's the music on this? There we go. Let's take a trip to CNN.com's iReport desk, check in with our man. Tyson's Corner is the destination. Producer Tyson Wheatley is there.
So, Tyson, good to see you. A new stamp. I actually know what the big deal is, but why don't you explain to everyone else?
TYSON WHEATLEY, PRODUCER, CNN.COM: This is a big week for our 16th president, Abraham Lincoln, of course. We are celebrating - well, he was born 200 years ago this week. And to commemorate, the U.S. Postal Service unveiled four new stamps. Let's go ahead and take a look at this video that we got into iReport. This is from Kris Hazelton. And you're going to love this, because she actually spotted Honest Abe picking up those new stamps at a local post office in Estes Park, Colorado. And the Abe in this video is actually David Tabel (ph), and he's a local newspaper columnist and not a bad Lincoln impersonator. I want to show you just a little bit of this. Just take a listen.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Mr. Lincoln has appeared on over 50 U.S. postage stamps, more than any other person in history. That has to be quite an honor, doesn't it, Mr. President?
ABRAHAM LINCOLN IMPERSONATOR: Certainly does. It's the kind - the only kind licking I would ever tolerate.
(END VIDEO CLIP)
WHEATLEY: All right. So we got a big kick out of this. The 42 cent stamps depict Lincoln as a rail splitter, a lawyer and a politician, and as president. And yes, in case you were wondering, David did pay for those stamps with a $5 bill.
And you know, Tony, we're doing something special for Lincoln's birthday on iReport.com and we want our viewers to be a part of it. And it's really cool actually. We're inviting you to help CNN create one of Lincoln's most famous speeches, his second inaugural address and delivered way back in 1865. Here's how you do it. Just go to ireport.com, then we want you to turn on your camera and in your best reading voice channel your inner Abe. And we've been getting a lot. I just want to share a couple examples real quick. Let's take a listen.
(BEGIN VIDEO CLIP)
DORSU LIU, CNN IREPORTER: The progress of our arms upon which all else chiefly depends is as well known to the public as to myself. And it is, I trust, reasonably satisfactory and encouraging to all. With high hopes for the future, no prediction in regard to it is ventured.
JESSICA FRANK, CNN IREPORTRE: On the occasion corresponding to this four years ago, all thoughts were anxiously directed to an impending civil war. All dreaded it, all thought to avert it.
(END VIDEO CLIP)
WHEATLEY: All right, Tony, so here's what we're going to do. We're going to take your readings and we're going to add them all together and recreate Lincoln's address. And it's going to be part of CNN's special coverage tomorrow ,"FROM LINCOLN TO OBAMA," all day - well not all day - well, you know the details on that. But, it's hosted by Soledad O'Brien and it is going to be pretty cool.
HARRIS: Absolutely. I can actually share those details. Tyson, good to see you. Thank you, sir.
And again, you're going to be right here, as Tyson mentioned, tomorrow as CNN celebrates the Lincoln bicentennial with a day-long coverage, "FROM LINCOLN TO OBAMA," beginning at 9:00 a.m. Eastern time.