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American Morning
Foreclosure Fix Deciphered: Who Does It Help?; Giant Swiss Bank To Lift 'Veil Of Secrecy' On U.S. Tax Dodgers; Obama's First Foreign Trip, Canada, Trade, Recession Are On The Agenda
Aired February 19, 2009 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: Coming up on 8:00 here in New York. A look at the top stories this morning.
The case against the Iraqi journalist who threw his shoes at former President Bush, is delayed now until March 12th. Muntader al- Zaidi was greeted by cheering crowds in the Baghdad courtroom. Zaidi told the court that he was protesting the U.S. occupation of Iraq. If the Iraqi cabinet rules Mr. Bush's visit was unofficial, Zaidi could face a lesser charge.
Secretary of State Hillary Clinton is expected in Seoul, South Korea within the hour. This will be the third stop on her tour of Asia. And the visit comes after U.S. officials cited evidence that North Korea might be preparing to test fire a long-range missile. Also just hours, Pyongyang said it was ready for an all-out confrontation with South Korea. Accusing the country's president of inciting hostility.
Kansas Governor Kathleen Sebelius is a leading contender to become the next Health and Human Services secretary. The two senior White House officials say President Obama is still looking at the credentials of other possible nominees. The job is still vacant after former Senate Majority Leader Tom Daschle stepped aside. Questions were raised after he failed to pay more than a $100,000 in taxes.
Well, it's your home and it's your future, and it's the focus of our coverage this morning. President Obama's new multibillion-dollar mortgage rescue plan. The goal -- to stop the nation's economic spiral by getting to the root of it. It could help millions of responsible borrowers lower their mortgage payments. Though, there are complaints this morning that the plan misses the mark and leaves out many people.
So, who gets what? The administration says 5 million people whose mortgages are Fannie Mae and Freddie Mac guaranteed will have a chance to refinance. Another 4 million will be able to modify their home loan terms. Who gets nothing? Well, homeowners who are under water more than 5 percent may be out of luck for one part of the plan. However, we did learn some new details when we talked to the HUD secretary today. They may qualify for a different part of that plan.
Yesterday, Mr. Obama, in Mesa, Arizona, talked about how hard of a place -- that was hit by the mortgage meltdown.
(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The plan I'm announcing, focuses on rescuing families who played by the rules and acted responsibly. By refinancing loans for millions of families in traditional mortgages, who are under water or close to it, by modifying loans for families stuck in subprime mortgages they can't afford, as a result of skyrocketing interest rates or personal misfortune, and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments.
But I want be very clear about what this plan will not do. It will not rescue the irresponsible by throwing good taxpayer money after bad loans. It will not help speculators
(APPLAUSE)
It will not help speculators who took risky bets on a rising market and bought homes not to live in, but to sell. It will not help dishonest lenders who acted irresponsibly, distorting the facts
(APPLAUSE)
Distorting the facts and dismissing the fine print at the expense of buyers who didn't know better, and it will not reward folks who bought homes they knew from the beginning they knew they would never be able to afford. So I just want to make this clear. This plan will not save every home.
(END VIDEO CLIP)
CHETRY: The best money team on television is here to answer your questions. Senior Business Correspondent Ali Velshi with us now, with more on this as well.
So, you had a chance to look over some of the finer points and we're supposed to get more details on March 4. But, right now, as it stands, what do you think overall of this plan?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: I think it will go some way in the right direction, but two things that President Obama just said which really worried me. He said it is not going to reward the unscrupulous and the irresponsible. Completely rewards the unscrupulous and irresponsible. We may have to in order fix this.
But the bottom line is there were many people who speculated. There were many people who got into mortgages they couldn't afford, and there are many lenders who put them there. This will deal with that. The interesting thing about this proposal is it focuses on mortgage affordability. Somehow refinancing your loan, if it's Freddie or Fannie Mae guaranteed, if it's underwater by 5 percent, which isn't much, but most mortgages right now are underwater and it helps by brining -- another part of it helps by bringing your monthly payment down between 31 and 38 percent of your income.
CHETRY: You're saying most mortgages are only underwater 5 percent? VELSHI: No, most mortgages are underwater. That is what I'm saying. The 5 percent doesn't affect most people. It's not broad enough. That is part of the problem. This will go some way in the right direction, but not enough.
But where the outrage is -- and we're getting a lot of it here -- I wish the president hadn't said that, because it does reward irresponsible behavior. There's nobody in this country that had a gun to their head to take a mortgage. So I'm not entirely sure why he said that.
He also said something else in the speech yesterday, where he said, we're doing something to fix the American dream.
JOHN ROBERTS, CNN ANCHOR: Hold, hold on here.
VELSHI: This was part of the American dream.
ROBERTS: You're painting with a very broad brush here.
VELSHI: Right.
ROBERTS: There's a lot of people who went into homes with 80 percent of their money down, they got into areas like Phoenix where home prices dropped 40 percent. They are now underwater.
VELSHI: I'm not disputing --
ROBERTS: How is that irresponsible?
VELSHI: I'm not disputing that it is very necessary and that there are lots of people who are very, very legitimately underwater and in mortgage problems. And I think they should be helped. But the president said this does not reward irresponsible and unscrupulous behavior. Along with all those people who were not unscrupulous and irresponsible, many, many people are getting saved because of irresponsible --
ROBERTS: Just want to put a finer point --
CHETRY: Right.
VELSHI: Right, right, right. No, you're absolutely right.
CHETRY: You do bring up a good point, though. Because these are -these lenders that gave out the liar loans, as they call them, no paperwork, no proof of income, they are getting subsidized now by the federal government.
VELSHI: Absolutely.
CHETRY: To the tune of billions of dollars to make it worth their while.
VELSHI: That is very frustrating to people who didn't do anything wrong. That's the problem. ROBERTS: Now, all this does is it lowers people's payments.
VELSHI: Correct.
ROBERTS: But the loans are still underwater. And there have been plans that have been floated. Hillary Clinton floated a plan like this during the election campaign that would give those mortgage holders a haircut. It would actually reduce the value of the mortgage and there's a provision to do that in bankruptcy court, which Barney Frank is going to be taking up next week.
VELSHI: Yes, it's not part of the plan, but the president said he would like to consider making it part of the plan.
ROBERTS: Should that have been part of this plan?
VELSHI: Well, that's a big stick to the lenders. That's the one that says, if you don't voluntarily modify these loans to make them more affordable to people, we will allow them to go to bankruptcy court, and potentially have a bankruptcy judge lower the actual value of the mortgage.
That is something that really scares the lenders. The thought here is that if they have that threat above them, they may voluntarily do it. There are many banks that have been given the chance to modify loans for people who are in legitimately trouble, that have not done so.
CHETRY: There's a lot of people in real estate that are also upset by that provision of providing $1,000 of some sort of incentive if you keep their payments going. And a lot of people are saying, wait a minute, I'm doing this every day. Where is my thousand dollars?
ROBERTS: I did that every day. Where' s my $1,000?
VELSHI: Remember, this is before the bailout, the first TARP. This is exactly the feeling. They say, why are we bailing them out? But then people came around to the realization that while it may look unfair to do so, the bottom line is we need these housing prices to stop dropping. We need some solution, but it does seem a little bit --
ROBERTS: Now, we've got Ali is here this morning, not just to talk to you from the set but both Ali, and our Personal Finance Editor Gerri Willis, are taking your questions all morning on the Internet. All you have to do is just send them in. Head to AMERICAN MORNING's home, on the Web, at CNN.com/AM. And be sure to tune in to CNN on Tuesday night, 9:00 o'clock Eastern. President Obama will make his first address to the nation on the state of the economy. You can join in by logging onto Facebook. To find out more, go to facebook.com/cnn.
Well, secret no more. Swiss banking giant UBS agrees to release names of American account holders whom authorities suspect of hiding money from the IRS overseas. Stephanie Elam is "Minding Your Business" and she joins us now with more on this story.
This is a crack in the secrecy of Swiss banking here, unusual.
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Yes, they referring to it as "pulling back the veil of secrecy" on what is going on.
With the largest Swiss bank, we're talking about here. UBS is a behemoth, a very large bank and what is happening here to the tune of $780 million, fines and restitution that UBS is going to pay because they have helped, as they've now admitted, hide taxpayers from the U.S., some of their money overseas now.
So, UBS has said that they will no longer go ahead and offer banking services to U.S. customers with undeclared accounts. Now, along with this, this is the interesting part here, they've agreed to turn over account information. This is unprecedented move coming out of the Swiss, as we all know, a lot of people like to put their money over there. Keep it safe. Know that it's fine. They're taking 250 to 300 names, their identities and their accounts, but there is fear in Switzerland, that this could really affect UBS. And maybe make it go away.
CHETRY: Swiss banking, yes.
ELAM: Because of the fact this is what it's banked on. It's banked on that veil of secrecy.
ROBERTS: Yes. So, what's the gun that the IRS is holding to their head to get them to do this?
ELAM: Well, they are trying to -- they'll say they'll go after charges. But if they follow allow through and go through all of their obligations they won't continue to seek more damages from UBS for this. But what is interesting is the Swiss Financial Advisory, is basically saying this could change the way things are done. This bank could go away if this goes through. So they are letting out just a limited number of names right now, to sort of stop the bleeding at this point.
So, yeah. This is a story to watch. We're not done.
VELSHI: Did he just break a sweat on his upper lip?
(LAUGHTER)
CHETRY: Excuse, where's he going to put his money now?
(LAUGHTER)
(CROSSTALK)
VELSHI: My money, my foreign investments are all under an assumed name.
CHETRY: Your money is all under that mattress in your office.
VELSHI: That's it, yeah.
ELAM: I'm telling you, if you do have any of that money out there, IRS is saying, pay up, bring up now.
ROBERTS: There you go.
ELAM: Let us know.
VELSHI: It has, by the way, just for those watching, it has for some time been illegal to not to disclose your world income on U.S. tax returns. So --
ROBERTS: Yes.
VELSHI: So, if you're a U.S. citizen, this has always been a problem for you.
CHETRY: Right.
ROBERTS: Thanks. Ali, great to see you. Thanks for coming in.
VELSHI: (INAUDIBLE)
CHETRY: Thank you.
Well, President Obama is making his first foreign trip since being sworn in. He is on his way to Canada. The Canadians are thrilled. Ali and John haven't stopped smiling all morning.
(LAUGHTER)
We're going to tell you what's on his agenda.
Also, has the case of the mystery fireball in the sky been involved? You remember this, right? New information on the white blaze that had everyone stumped. But we'll tell you what evidence astronomers just found on the ground. It's 10 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to AMERICAN MORNING. It's 12 and a half minutes after the hour.
New this morning: The woman who was savagely attacked by her friend's pet chimpanzee is said to still be in critical but stable condition this morning. Doctors said it took four teams of surgeons hours to even get her to this point and her vital signs are improving. The officer shot and killed the animal and that escaped his owner's Stanford home on Monday. It is now undergoing tests, the dead chimp, to see if it had rabies.
Nadya Suleman, the now infamous octuplet mom, making news again, and for the wrong reasons. The mother of 14 may soon be out of her home. Reports say that her family is now facing foreclosure. Reports say that with the grandmother of eight babies owing more than $23,000 in mortgage payments. Suleman has 14 children and is seeking donations.
Back in the saddle. Police say they found Lance Armstrong's one- of-a-kind bike that was stolen after a race over the weekend. He posted a picture of it on Twitter after it --
(LAUGHTER)
Police say it was in good condition and the person who turned it in did not give details of how -- I meant that, you know, they positively identified that bike, as positively Lance Armstrong's. John is over there laughing at me.
Two University of North Texas astronomers think they found pieces of that flaming debris. You may have remembered this video streaking through the sky. It was not Lance Armstrong's bike, by the way. It caused near mass hysteria near Dallas on Sunday. They say the samples are about the size of pecans. The astronomers say they caused such a fireball because they expanded and then broke into pieces --John.
ROBERTS: We should also point out that the bike did not test positive for any performance enhancing substances.
(LAUGHTER)
President Obama can expect a warm welcome from Canadians when he touches down in Ottawa later on this morning.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Everything he touches is going to be golden. Hopefully that includes touching Canada.
(END VIDEO CLIP)
ROBERTS: It is the president's first foreign trip since taking office last month. The U.S.-Canadian summit expected to focus on jobs, trade and energy issues. Our Suzanne Malveaux live at the White House for us this morning.
This is the president's first meeting with the Canadian Prime Minister Stephen Harper. What should we be looking forward to today, Suzanne?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, John, obviously, we will take a look at the body language, the expressions, some of the words that they use. Prime Minister Harper had a close relationship with President Bush. They were ideologically in sync, but President Bush wildly unpopular in Canada. That is exactly the opposite of President Obama; national polls showing about 82 percent approval rating.
Now, when these two sit down today, obviously, they have a lot on their plate. Number one is going to be about the economy. They are the two largest trading partners in the world here and one of the things that we talk about here is saving GM and Chrysler out in Detroit. Well, that's a concern in Ontario as well. They have plants over there. They have to prove that they can actually -- that they are solvent companies, those plants, and then they can get more than $3 billion from the Canadian government.
The Canadians are also looking at this $787-billion economic stimulus package that was just passed because of a small clause in there, a "Buy American" provision that says these projects using federal dollars, they have to use U.S. steel and iron to actually make some of those bridges, repair those things. Steven Harper wants to take a look and say, is there an exception here for Canada? Because we've heard President Obama talking about he doesn't want a trade war necessarily, and he doesn't believe in protectionism.
So all of those things, John, obviously, very important and on their plate.
ROBERTS: All right. Looking forward to it. Suzanne Malveaux for us at the White House, thanks so much -- Kiran.
MALVEAUX: Sure.
CHETRY: First lady Michelle Obama opening the doors of the White House to nearly 200 schoolkids. They were there to celebrate Black History Month. They had music to listen to and also an important message from the first lady.
(BEGIN VIDEO CLIP)
MICHELLE OBAMA, FIRST LADY OF THE UNITED STATES: Like Barack and I, the admiral didn't rise to his position because of wealth or because he had a lot of material resources. See, we were all very much kids like you guys. We just figured out that one day that our fate was in our own hands. We made decisions to listen to our parents, and to our teachers, and to work very, very hard for everything in life. And then, we worked even harder any time anybody doubted us.
(END VIDEO CLIP)
CHETRY: The first lady's staff says this is just the first of many events for children at the White House. And how exciting for them, not only to get that visit, to get to talk to Michelle Obama, but also to hear, to really experience black history, for those kids firsthand like that.
ROBERTS: Absolutely. To be able to go into the White House and do it, too. Can you imagine? It's really an indication, though, looks like they are going to throw open the doors of the White House and invite the community in, which is a terrific thing for the first couple to do.
Attorney General Eric Holder caused quite a stir in his "nation of cowards" comment. Here is what he said when talking about his views of race in America.
(BEGIN VIDEO CLIP) ERIC HOLDER, U.S. ATTORNEY GENERAL: Though this nation has proudly thought of itself as an ethnic melting pot, in things racial, we have always been, and I believe continue to be, in too many ways, essentially a nation of cowards.
(END VIDEO CLIP)
ROBERTS: So what do you think about it? Was the attorney general out of line? We'll go live to Washington for some expert opinion.
And where bullets fly in broad daylight just miles from our border; violent confrontations that authorities say are getting way too close for comfort to American towns. It's 18 minutes now after the hour.
(COMMERCIAL BREAK)
ROBERTS: A reporter ducking fire on a wild shootout between drug lords and authorities south of our border. This morning, very real fear that a drug-fueled war in Mexico could spill over into the United States, kidnappings and killings, and all.
ATF agents on this side of the border say drug lords are better equipped than the Mexican military and there's not much there that's stopping them. CNN's Samantha Hayes has a look at their operations and what the U.S. is doing to stop them.
SAMANTHA HAYES, CNN CORRESPONDENT: John and Kiran, Mexican drug cartels have developed an intricate network using cities like Atlanta as major distribution hubs and bringing with them a brand of violence rarely seen this far away from the border.
(BEGIN VIDEOTAPE)
(Voice over): The live grenade tossed into this club near McAllen, Texas, just a few weeks ago, didn't go off but federal agents who investigated matched the weapon to other grenades used in violent attacks in Mexico.
WILLIAMS NEWELL, SP. AGENT IN CHARGE, ATF, PHOENIX: Their purpose is come to the United States and take over. The way they take over is very violent. We're seeing signs of people being tortured and brutally beaten all across the United States, not just along the Southwest border.
HAYES: In an affluent suburb of Birmingham, Alabama, last August, five people were tortured and murdered in this apartment in a dispute over missing drug money.
GREGORY BORLAND, ASST. SP. AGENT IN CHARGE, DEA, BIRMINGHAM: What's new about it is it's at a level that we've never seen before. And quite frankly, the violence is just shocking.
HAYES: Also alarming is the level of organization. Mexican cartel activity has been reported in places all across the country from Miami to such unlikely destinations as Boise, Idaho and Anchorage, Alaska.
BORELAND: It's almost like the legitimate commercial world. There's every distribution model out there.
HAYES (on camera): It's corporate?
BORELAND: It is. It's extremely corporate.
HAYES (voice-over): Federal authorities say it works like this. The drugs are moved in bulk across the Mexican border to hub cities, like Atlanta, where it's broken down in warehouses, shipped to other cities, then broken down again, where it's sold on the street. The cash goes back to the hub cities, where it's packaged and shipped back to cartel leaders in Mexico.
RODNEY BENSON, SP. AGENT IN CHARGE, DEA, ATLANTA: As we put the pressure on, as availability decreases, as purity decreases, we're seeing continued violence as a result of that. We're seeing people wanting their money paid on time and things like that.
HAYES: And when it's not paid on time, the cartel crack down on their own people. Last year investigators found a man bound and tortured in the basement of this suburban Atlanta home, startling neighbors.
BORLAND: It's among us. People make themselves feel better by saying that's not part of my world. And one of my job is to say, no, it is a part of your world.
HAYES (on camera): As they try to stay one step ahead, federal agents say their best hope of stemming the flow is to work with the Mexican government in its efforts to crack down on drug cartels south of the border -- John, Kiran.
(END VIDEOTAPE)
CHETRY: Samantha Hayes for us. Thanks.
Well, big buzz over Attorney General Eric Holder's comments calling America a "Nation of cowards". Listen to his controversial remarks in context now.
(BEGIN VIDEO CLIP)
HOLDER: Though this nation has proudly thought of itself as an ethnic melting pot, in things racial, we have always been and we, I believe, continue to be, in too many ways, essentially a nation of cowards.
(END VIDEO CLIP)
CHETRY: So was the attorney general on to something there, or was he out of line? We're going to discuss it ahead. It's 24 minutes after the hour.
(COMMERCIAL BREAK) CHETRY: Welcome back to AMERICAN MORNING. We're at 27 minutes after the hour.
Breaking news as world markets react to the president's $75 billion plan to turn the tide of foreclosures. Stocks across Asia are mixed on the news, and in Europe, markets are only making modest gains, halfway through the trading day. Here at home, Dow futures right now up around 73 points.
State senators in Sacramento, California, debating through the night on a crucial election bill. If that bill passes, it will likely finally clear the way for a vote on the state's budget. Democrats have been trying to get one Republican to break an impasse. The budget stalemate forced Governor Arnold Schwarzenegger to declare a fiscal emergency. He also mailed out 10,000 layoff notices.
Disgraced Texas banker Robert Allen Stanford is missing. Federal investigators say they don't know where he is. Meanwhile, panicked American investors are being turned away from Antigua this morning. Some traveled there by private jet trying to get their money back from a bank that Stanford owned. The fed says he ripped off investigators to the tune of $8 billion.
ROBERTS: President Obama's new housing rescue plan is the focus of a lot of our coverage this morning. We are looking at the fine print to find out what's in it for you. We're also answering your questions this morning. Our Personal Finance Editor Gerri Willis has been checking out web site. Got a lot of e-mails and she's here with some of them.
What do you have?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Right, I've got a lot of e-mails. A lot of you out there losing your jobs wondering what's in this program for you.
Michael in Illinois says, "I'm a worker in the Caterpillar plant in Decatur, Illinois, and will be laid off in mid-April. I'm current on my mortgage, but I'm worried about being able to make the payments. Are there any programs out that will help me with my mortgage?"
Well, Michael, I got to tell you, to have a mortgage, you have to have a job, to have an income. Even if you're trying to get a new mortgage, lenders will require that you have income to keep that mortgage. What you need to do is get another job, or have somebody else in your household have income. Then you might be eligible for some of these programs, but you really got to have income to be able to pay your loan.
Let's move on to Eve in Florida who asks, "I can't sell my home, because nobody is buying, because they can't get a loan. With this new plan will the bank be forced to change their attitude and start refinancing loans for people like me?"
Well, there could be good news for you. The administration has said that people -- banks that got money from TARP, from the federal government, to help them make ends meet, they have to play in this program. They are required to refinance, modify loans, be involved in this. So you may well have more leverage with your lender now that this program is going to go into effect beginning March 4th.
Lance asks, "What about people who have a mortgage with one source, and a second mortgage loan with another at a high interest rate?"
Let me explain what Lance is talking about here. Lance has a first and second mortgage, maybe a home equity line of credit in addition to his regular mortgage. Well, there could be good news for you as well. The federal government has indicated that they will have more leverage with servicers, they will be paying the money directly to participate in successful refis, so I think there will be more leverage there too with lenders.
ROBERTS: But the program itself only covers first mortgages, doesn't it?
WILLIS: It does but the problem is you can't get the first mortgage refi'd, because you have a second. This has been the problem, one of the big sticking points in this whole problem has been the holders of those second mortgages, the home equity line of credits, they don't want to participate in a loan modification. So they hold up the whole process. So, now with the kind of pressure that's coming to bear on lenders, generally, they may be willing to work more with the other lenders and they are going to be being paid for the privilege.
ROBERTS: You've done so many stories on the housing crisis and one of the things that we have been pointing out this morning, dealing with this housing rescue plan is it will only cover people whose mortgages are worth five percent more than the value of their homes or people whose homes are underwater, so to speak, by five percent. How much of America does that represent compared to how many homes out there are underwater?
WILLIS: I think you made a very good point in your interview with Sean Donovan, the secretary of Housing and Urban Development. It doesn't cover everybody, not by a long shot, when you consider that housing prices have gone down 20 percent, 30 percent, 40 percent in places like California, Florida. The middle of the sun belt states, there have been large, large losses. So I think there will be a lot of people who will not be covered.
CHETRY: It's interesting though because that's where he said they would possibly be covered under the second part of the plan, the loan modification.
ROBERTS: So maybe there is some help there. All right.
WILLIS: Yes, there is a second part that should be some assistance to those folks.
CHETRY: We all got to do, everyone has to do their homework. If they're in trouble, you need to read up on this. And we're going to get more details hopefully by the beginning of March. Gerri, thanks so much for your input.
Well, Attorney General Eric Holder caused quite a stir when he used "nation of cowards" in a speech. Well here is what he said when he was talking about his views of race in America.
(BEGIN VIDEO CLIP)
HOLDER: Though this nation has proudly thought of itself as a ethnic melting pot, in things racial, we have always been and, I believe continue to be, in too many ways, essentially a nation of cowards. So race-related issues continue -
(END VIDEO CLIP)
CHETRY: We're going to talk more about the words of the attorney general. We are going to be joined in a few moments by Michael Eric Dyson. He is a cultural critic and a sociology professor. He's going to weigh in on some of the thoughts behind what the attorney general was saying. We'll be right back.
(COMMERCIAL BREAK)
ROBERTS: Thirty-five minutes after the hour. This just in to CNN. New numbers on jobless claims and wholesale inflation announced just moments ago. Stephanie Elam here "Minding your business." What do we got?
ELAM: Let's go ahead and start the jobless claims. I think most people want to hear about that, unchanged for the week. So we're looking at 627,000, the number holds steady from the week before and they were expected to have dipped, actually, to 615,000 but holding steady at that number there. Also want to take a look just to get our check of inflation today. Taking a look at the producer price index. PPI.
Well it shows us that it was up 0.8 percent. So up eight-tenths there. It was expected to go up 0.2 percent. It did drop almost two percent in December. Core PPI. That's finished goods, that takes out volatile prices like food and energy and things like that. That was up 0.4 percent and it was expected to have gone up to 0.1 percent. So that is an idea of how we look on the inflation as far as wholesale prices are concerned and taking a look at jobless claims holding steady.
ROBERTS: All right. Thanks very much.
ELAM: Sure.
CHETRY: All right. Well there is a lot of talk this morning about some comments made by America's first black attorney general. He is being applauded by some and blasted by others. In his first major speech since he took office, Holder used some provocative language to talk about race relations in America.
(BEGIN VIDEO CLIP) HOLDER: Though this nation has proudly thought of itself as a ethnic melting pot, in things racial, we have always been and, I believe continue to be, in too many ways, essentially a nation of cowards.
(END VIDEO CLIP)
CHETRY: So is holder right? Joining me now from Washington is Michael Eric Dyson, sociology professor at Georgetown University. He's also the author of "April 4, 1968, Martin Luther King Jr.'s Death and How It Changed America." He also wrote 16 books on race relations. Thanks so much for joining me this morning. Great to talk to you.
SOCIOLOGY PROF. MICHAEL ERIC DYSON, GEORGETOWN UNIVERSITY: Always great to be here.
CHETRY: So "a nation of cowards," pretty strong language there. What did you make of what the attorney general said?
DYSON: Well I think that attorney general Eric Holder is a highly intelligent, extremely articulate and a very thoughtful man, a very considered and well regarded. I think what he is trying to do is provoke a conversation about race in America that though Mr. Obama has ascended to the heights of American political office that, on the other hand, millions of African-American people and others don't enjoy the kind of interactions with each other that should be par for the course.
The deep and profound segregation of America suggests as Mr. Holder said in his speech that the patterns of interaction between black Americans and white Americans and others really mimics patterns set 20, 30, 50 years ago. So what he's trying to say is that we got to come to grips with this behemoth called racial segregation and racism and then deal with it forthrightly. I think it's a wonderful call, a refreshing note sounded by just a man from the attorney general's office.
CHETRY: Yes, and I've been reading you know various reviews and there's understandably so, very divergent opinions about it. There is some who say that while maybe he is right, and there are some points to be made that this is a time we should really be celebrating race in our country, given that both blacks and whites elected the first African-American president and we saw this enormous show of unity around the inauguration, a feeling that we were heading into a time that we haven't seen in our nation's history. So why this speech at this time?
DYSON: Well, first of all, we've had quite a bit of celebration. But as Mr. Obama has said about trying to deal with the economy, there's no time for celebration. There is time for hard work and rolling up your sleeves so to speak, showing the elbow necessary to get the work done, it's the same thing about race.
I think that Mr. Holder as attorney general is living up to his name. He is the holder of our consciousness. He is the holder of our consciousness. He holds us to a higher standard, and if we are Americans, we want to be first in everything. All this is suggesting let's be successful in race relations as we have been successful in other areas.
I think this is perfectly the time to get into a serious conversation, while people are celebrating the enormous achievement of Mr. Obama becoming the first African-American president. This is the time to examine the context in which he emerged, the barriers that remain and the obstacles that keep other Barack Obamas and other Eric Holders from emerging.
CHETRY: Michael, I want to get to some of the other things he said. He talked about the need to have frank conversations about the racial matters that continue to divide us. You know, there's a lot of people both black and white who say they fear they can't have frank conversations for fear of being thought of as a racist. How do you find a safe place to have any type of discourse that way?
DYSON: Well, you got to talk about it, first of all. Openly and honestly. In my classes at Georgetown, we try to deal with this situation. Classrooms and lecture halls and kindergartens for that matter. Every area of American society, on the sports field. On the same day that Mr. Holder made those comments a cartoon appeared in the "New York Post" suggesting an implicit relationship between a chimp and a president.
So the reality is we still lack a great deal of integrity and background and honesty about race and perhaps if we had more forthright conversation about race we wouldn't have to have these subterranean discourses that really are more malevolent. When we're up above --
CHETRY: OK. So let me ask you this, could a Caucasian be comfortable saying, "Hey, I saw that cartoon and I didn't think that they were referring to Obama, it didn't bother me," in a mixed-race room and not feel that they're not going to be dubbed a racist?
DYSON: Well, no, but they might be ignorant. They don't have to be racist, but they could be unaware of the incredible intensity of passion and feeling and emotions that black people feel when since historically there has been a great deal of relationship drawn between Africa, between chimpanzees, between monkeys and black people.
So, no, that's a perfect time for us to educate white brothers and sisters and others who are unaware of those stereotypes. Openness doesn't mean that you're going to be right. Just because you're willing to be honest doesn't mean that we have to say that you're right. It means that we're willing to expose our ignorance and give that on the altar of conversation so that all of us can be better by it.
CHETRY: Michael Eric Dyson, great to talk to you this morning. Thanks so much for joining us.
DYSON: Thanks for having me. ROBERTS: "Slumdog Millionaire" has earned major praise in multiple Oscar nominations here and it's expected to clean up on Oscar night on Sunday but it's infuriating people in India. Why many residents are refusing to see the film. We'll tell you. 41 minutes after the hour.
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ROBERTS: The Oscar buzz is building this morning for "Slumdog Millionaire." And while the rags to riches story is a favorite among critics and moviegoers worldwide, not everyone is singing its praises in India. Our Sara Sidner is live in New Delhi for us this morning. Sara, what is going on there?
SARA SIDNER, CNN CORRESPONDENT: John, you know, it's been talked about, dissected and people love it, people hate it and everything else in between. But it has not lived up to all the hype when it comes to ticket sales.
(BEGIN VIDEOTAPE)
SIDNER (voice-over): In India, "Slumdog Millionaire" and its 10 Oscar nods is big news here. Ask people on the street and you're likely to hear this.
DK SHARMA, DELHI RESIDENT: Definitely, it will win the Oscar of several. This time definitely.
SIDNER: Ask the film critics in India to rate it and you'll get a resounding thumb's up.
SHUBRHA GUPTA, FILM CRITIC: I think all film critics have been uniformly positive which doesn't happen very often, I have to say.
SIDNER: Despite the praise and awards, though, the movie is definitely not a blockbuster in India.
MAYANK BORA, DELHI RESIDENT: I'm not really so thrilled about it as well. I'm not really trying to make --
SIDNER: But the movie has managed to spark emotion whether people have seen it or not. In one part of the country, protest erupted by those who live in slums. They say the movie title "Slumdog" should be changed as the word degrades the already downtrodden. Others were annoyed with the film's content.
UNIDENTIFIED MALE: They've just shown the poor part of India. They haven't shown the real India in this movie so that is kind of annoying, you know, for some people and for me as well.
SIDNER: And of course, there were some who enjoyed every minute of it.
UNIDENTIFIED FEMALE: It's really nice, fantastic. I encourage everyone to go see it. SIDNER: Despite the opinions on the movie, the film's music is a huge hit here.
UNIDENTIFIED MALE: Music is doing very good. It's number three on charts.
(END VIDEOTAPE)
SIDNER: The music is selling like hotcakes here. Everybody loves it and they're hoping that the Indian composer brings home an Oscar. John.
ROBERTS: And I'm thinking picture of the year as well. Sara Sidner for us this morning in New Delhi. Sara, thanks so much.
CHETRY: This just in now. Secretary of state Hillary Clinton is now in Seoul, South Korea. Clinton is talking to reporters saying that U.S. and its allies are worried there could be a crisis in North Korea when it comes time to replace its secretive leader Kim Jong-il.
South Korea is the third stop on Clinton's tour of Asia. And the visit comes after U.S. officials cited evidence that North Korea might be preparing to test-fire a long-range missile. We now turn to our Jill Dougherty. She joins us on the phone with more on what Secretary Clinton's comments may mean. Very interesting about the comments on a possible succession crisis to replace dictator Kim Jong-il, Jill.
Looks like we're having a little bit of trouble connecting with Jill Dougherty. She is following this story for us and as soon as we hook up with her again, we will bring it to you. Meanwhile, we're going to take a short break. It's 47 minutes after the hour.
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ROBERTS: Returning now to Secretary of State Hillary Clinton's trip across Asia. Clinton was asked to sing while she was visiting Indonesia. Have a listen.
(BEGIN VIDEOTAPE)
HILLARY CLINTON, U.S. SECRETARY OF STATE: I think we would like to --
UNIDENTIFIED FEMALE: Maybe to hear you sing a little bit?
UNIDENTIFIED FEMALE: Just a little bit.
CLINTON: Here is the problem. OK. You see all of these people? If I start to sing, they will leave.
UNIDENTIFIED FEMALE: No.
(END VIDEOTAPE) ROBERTS: There you go. She always has got the right answer, doesn't she? She's now in Seoul, South Korea, the third stop of her tour of Asia, talking to reporters saying that the U.S. and its allies are worried that there could be a crisis of succession in North Korea when it comes time to replace its secretive leader Kim Jong-il.
We don't know, though, if there actually there is a crisis or if this is just some attempt by the secretary of state to get Kim Jong-il to try to pop his head up above the radar screen, the tree line and see exactly what the situation there is because it's so difficult to know. From here by the way, she is heading on to China for big talks with the leaders of China, Wen Jiabao, and Hu Jintao.
CHETRY: We know she's a smart woman but she proved it one again by choosing not to sing.
ROBERTS: When people say hey why don't you dance a little bit?
CHETRY: Well, we are always on top of this latest medical news here in AMERICAN MORNING. And today, we're answering your burning questions. We're "Paging Dr. Gupta," CNN's chief medical correspondent in Atlanta. Let's dive right in.
Our first e-mail is from a little boy, his mom and dad wrote it for him. This is from a four-year-old Dodge and his parents wrote -- well he wanted to write -- maybe he did write it. He's so smart he wants to know what an uvula is, maybe he is smart enough to write it himself.
"What is an uvula and why do I have one in my mouth?"
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: You know Dodge is very good for AMERICAN MORNING's demographics. Let's me start by saying that, bringing down the age of the viewers certainly. You know, a lot of people do ask what an uvula is. Here's a curious little boy here. The medical answer is that's the little thing that hangs down the back of your throat. A lot of people see that, that's the uvula there.
Doctors surprisingly don't know exactly what the purpose of the uvula is. It does seem to have some immune function many experts believe but it also helps in forming sounds. For example, when you sing or when you talk, maybe that's why the secretary of state didn't want to sing, maybe her uvula wasn't adequate. It also helps with swallowing commonly blamed for snoring as well. And in serious case, it can actually cause something known as sleep apnea or at least be a contributing force. Here's a word for you, uvulapalatopharyngoplasty. Doctors sometimes do that to actually help with snoring if the problem is getting to be too bad.
CHETRY: Right. I got it. The uvula is used to drive your spouse crazy at night when you're trying to sleep. All right. Well, a follow-up question and another question for you today. This one from Kate in New Jersey. "My 10-year-old is overweight and our doctors suggested that he start taking statins. Is he too young to begin this type of medication, even if it is safe?" GUPTA: You know, it's one of those things that, obviously, is concerning. You never hardly think about a child that young taking a medication like statin. So for the most part, most children are not going to need this. There are going to be other ways of combating high cholesterol but the American Academy of Pediatrics has weighed in on this particular issue, sort of keeping in mind now with the childhood obesity problems. We're starting to see blood vessels in 10-year-olds that are similar to blood vessels in 35-year-olds.
So with that in mind, there's a couple of sort of guidelines, if you will, if your child has LDL cholesterol level, that's the bad cholesterol, of 160, at least, plus two risk factors, such as being overweight or having diabetes or some other risk factor, statins might be an option. Also 190 and no risk factors might be an option as well. We're not used to hearing LDL levels that high in children that young but we're seeing it more and more and that's why you're starting to get some of these guidelines.
CHETRY: So if they lose the weight, chances are they're going to see a drop in their cholesterol?
GUPTA: That's right. And again, there's a lot of other ways to try and combat cholesterol without taking medications. That goes for children and adults alike but especially in children, as far as the safety goes, you know, we just don't have any long-term data in using statin medications in a child that young. So it's really hard to answer that question and give you a long-term answer especially.
CHETRY: All right. Sanjay, great to see you as always. If you have a question for Dr. Gupta, we want to hear from you. Go to cnn.com/am and send us an e-mail or your question in an i-report. It's 53 minutes after the hour.
(BEGIN VIDEOTAPE)
ROBERTS (voice-over): How to walk. Think you already know? Well, they thought so, too.
UNIDENTIFIED FEMALE: Boom, boom, boom.
The key in walking great is always like making big stride.
ROBERTS: Boot camp for models. Where the heels can be held.
UNIDENTIFIED FEMALE: One, two, three, four. Concentrate.
ALINA CHO, CNN CORRESPONDENT: OK. I'm concentrating.
UNIDENTIFIED FEMALE: Concentrate! It's not easy to be a model.
ROBERTS: Ahead on the Most News in the Morning.
(END VIDEOTAPE)
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ROBERTS: Fifty-six and a half minutes after the hour. The life of a fashion model. Expensive clothes, extravagant parties and international trips. And some trips seen around the world. Our Alina Cho attended a sort of boot camp for the catwalk and is here to explain.
CHO: You're talking about those catwalk tumble.
ROBERTS: You got to avoid those heels.
CHETRY: You're back in one piece.
CHO: I did make it back in one piece. You know, you guys, models make it look so easy. You know but walking on the catwalk as I found is no easy feat. Earlier this week, I got a lesson from one of the toughest modeling boot camp instructors out there, even got some tips from super model Heidi Klum. And what I learned is that modeling is not for mortals.
(BEGIN VIDEOTAPE)
CHO (voice-over): It happens just about every fashion season, a catwalk tumble. Go to YouTube and you'll find the best of the trip- ups. Even super model Heidi Klum isn't immune.
HEIDI KLUM, SUPERMODEL: In a dress that is under my shoe. So I stepped on the dress and I couldn't go any further.
CHO: Klum took a fall while taping this Diet Coke ad. What is a model to do?
KLUM: Boom, boom, boom. The key in walking great is always like making big steps.
CHO: Big strides. I wanted to find out for myself so I signed up for a high heel boot camp.
KLUM: One, two, three, four.
CHO: My instructor Anastassia, a veteran catwalker. This Ralph Lauren muse even has a how-to video on modelenia.com.
KLUM: One, two, three, four.
CHO: We met up at Milk Studios in New York for a one-on-one lesson.
ANASTASSIA KHOZISSOVA, MODEL: Concentrate.
CHO: I'm concentrating.
KHOZISSOVA: Concentrate.
CHO: Lesson one, balance.
KHOZISSOVA: Your feet straight, shoulders straight. This is it. Head up.
CHO: Once that's down, we get to the walking.
KHOZISSOVA: Your movement always comes from the hips.
CHO: Easier said than done. I've never been afraid of a high heel, so I thought boot camp would be a breeze. It's hard.
KHOZISSOVA: Well, fashion is hard. Everything. It's not easy to be a model.
CHO: Anastassia's explanation for why models fall? Too much heel toe on slippery runways.
KHOZISSOVA: I go like this.
CHO: Right.
KHOZISSOVA: And I'm falling.
CHO: So what's the key?
KHOZISSOVA: If you want to be great professional model, it's a job.
CHO: And like any other job -
KHOZISSOVA: Of course, practice makes perfect.
CHO: Practice makes perfect. Klum adds don't obsess.
KLUM: I want to look powerful and I want to look sensual. I want to look sexy. I think more about those things. I think I'm like I don't think oh, I can't fall! Oh, my god, I can't trip!
KHOZISSOVA: Give me your best shot. Come on. No bouncing.
CHO: After an hour, how did I do?
KHOZISSOVA: That's almost perfect.
(END VIDEOTAPE)
CHO: Yes! Not so fast. Anastassia told me I still need a few more sessions, that's for sure. Now, when you're at a fashion show, keep in mind, you watch these models that looks effortless, guys, but it is far from easy.
John, you say I like to walk on stilts. No stranger to high heels They actually provided high heels for me and they said you know what wear your own. Yours are higher!
ROBERTS: Your high heels are the tallest high heels I've ever seen.
CHO: What do you do when you're 5 feet, 2 inches? ROBERTS: You got to use oxygen when you wear those because you're up there on those shoes.
CHO: Very funny.
CHETRY: You really do suffer for fashion.
CHO: That's right. Listen, and Fashion Week especially.
CHETRY: It pays off. Good job.
CHO: Thank you.
ROBERTS: Well done.
CHETRY: Well thanks so much for joining us this morning. We're going to see you back right here tomorrow.
ROBERTS: And right now, here is CNN NEWSROOM with Heidi Collins.
