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American Morning

Dow Hits 12-Year Low; New York Attorney General Investigates Seven Former Merrill Lynch Executives Over Bonuses; Clinton in Geneva, U.S. Extending an Olive Branch to Tehran?; Obama on Health Care Crisis; Spring Breakers Warned to Stay Away from Mexico

Aired March 06, 2009 - 07:00   ET

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


KIRAN CHETRY, CNN ANCHOR: It's a minute before the top of the hour. We have a lot going on this morning. And we are breaking down the stories that will affect you. Leading our top stories, your bottom line, huge losses on Wall Street rippling across the globe this morning.

Stocks in Japan and Hong Kong ended the week with red arrows after the Dow closed at its lowest point since April of 1997. Down to 6500.94 points. Markets in Europe mixed right now.

So will that mean another bad end to another bad week on Wall Street?

Our Christine Romans is here tracking the markets for you.

Plus, Hillary Clinton's invitation to Iran. Secretary of state says that Tehran officials should have a seat at the table for an upcoming summit on Afghanistan. So what are the implications of possibly dealing Iran into the fold now? We're going to hear from our foreign affairs correspondent Jill Dougherty. She's on the road with the secretary of state.

Also a lot of questions and a lot of outrage. New York's attorney general going after seven former bosses at Merrill Lynch. A source tells CNN that the executives are subpoenaed over $3.6 billion in bonuses paid out just before Bank of America picked up the company. Bank of America rescuing a sinking ship after getting a bailout of its own.

Our Deborah Feyerick has the latest on this outrageous case, and our source is starting to name names.

But we begin this hour with more bad news for Wall Street. At the close of the bell, the Dow bleeding more red, plunging to a new 12-year low closing below 6600 points and this comes after news that GM's survival could be in doubt and more bank stocks could be taking a beating. Shares in Citi now less than $1.

The negativity moving to Asia. Shares in both Japan and Hong Kong taking a tumble and main markets in Europe as we said mixed this morning.

Christine Romans joins us now with more on the situation. You know, I know that even the president has implored people not to take a look day-to-day and worry about the Dow, but you just can't help wondering what's going on when you see it plunge this low.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: And let me tell you what's going on here. What's going on is you have -- investors were concerned about how we're getting out of this mess, how long it's going to take. They're concerned about the economic data that continues to show that it's worse than many economists have thought.

We're going to get a jobs report today that's likely to show the jobless rate rose and hundreds of thousands of people lost their jobs in the last month. Economists personally telling me that the risk in the jobs report is that it's worse than we think, not better than we think. And you have this concern that there isn't a magic bullet, that there isn't a recipe for getting out of here that we know quite yet and that we're going to keep chugging along, and barely getting by in the economy.

That number you just saw, 6,600, that's how much wealth has been lost out of the average 401(k) plan since the beginning of the year. So even as we've been well into the process of trying to fix it, we are still losing money in our 401(k) plans. We're still -- wealth is disappearing in this country and it's got people very, very unnerved.

About the jobs report something really important here, job loss is beating the foreclosure prices now and this is something that we're going to really watch this year. We've got some foreclosure numbers yesterday, some default numbers that were just incredible. Some 11 percent of all mortgages in this country are late, either late or already in foreclosure. Eleven percent, that's a record. We've never seen that many people.

This is not just some people who made bad decisions now are in trouble. This is a widespread problem, people who can't pay their mortgage.

JOHN ROBERTS, CNN ANCHOR: Now, remember, the assurances last fall people were saying, OK, there's a subprime mortgage crisis out there but it only involves a very small slice of the total mortgages in this country. Now, it's growing.

ROMANS: It is growing and it's affecting all different kinds of mortgages because the job loss problem has kicked in there. Used to be it was bad mortgages. You had the wrong mortgage for your situation. Now you have a job loss that's feeding the problem here.

So it's a really sticky situation and what Wall Street is telling us is that they don't see a way out of it here in the near term and that's why the Dow is down 17 percent since the inauguration, and the S&P has just been decimated over the past year.

It didn't start on this president's watch. Let me be clear. They inherited a real tough problem, but Wall Street says we're still in that problem.

ROBERTS: And that was getting very troubling. Christine, thanks.

ROMANS: Sure.

ROBERTS: The new unemployment numbers are due out at 8:30 this morning. We're going to be all over that story breaking it down and delivering the expert analysis that you need.

Among those millions of Americans who can't find a job, Patty Lewis' husband. Patty is becoming familiar to a lot of you now. She's a CNN iReporter from Philadelphia who is facing foreclosure on her home. She says President Obama's mortgage relief plan is leaving her family high and dry.

(BEGIN VIDEO CLIP)

PATTY LEWIS, IREPORTER: The plan, I will tell you, is just a joke. They are not giving the attention to those people that are most in need, the people that are unemployed that lost the income and can't get it back for the life of them.

Yet we can give billions and billions and trillions of dollars to every bank known to man to bail them out, but you know what? When it comes to the average Joe Shmo American citizen that may have fought for their country and lived good and give to others, guess what? We're the forgotten people.

The fact of the matter remains that if you are unemployed and if you have a mortgage, you're going to face foreclosure. OK? So, let's get this right. I am totally fed up and I'm mad as hell and I can't take this anymore.

(END VIDEO CLIP)

ROBERTS: Patty is on a mission to help save American homeowners from foreclosure. She's going to join us live at the bottom of the hour and believe us, her story is worth hearing.

From the poor house to the penthouse now, a source telling CNN several that seven former Merrill Lynch executives have been subpoenaed by the attorney general of New York State. Andrew Cuomo wants to know about billions of dollars and bonuses that were paid out just before Bank of America bought out the company last year. Our Deborah Feyerick joins us now with new information about this probe. What are you finding out, Deb?

DEBORAH FEYERICK, CNN CORRESPONDENT: Well, John, you know, you would think this information would be pretty easy to get but, in fact, that's the opposite is what the attorney general is finding. But picture this, you run one of the world's best-known investment firms. It loses $27 billion in a single year and is about to be taken over by another bank. So, what do you do?

Well, if you're John Thain who headed up Merrill Lynch, you apparently ask for a $40 million cash bonus. And you don't call it a bonus, you call it a strategic transition payment. The transition, of course, being the Merrill Lynch takeover by Bank of America which rescued the troubled company using $45 billion in taxpayer bailout money. Now, all of this is according to a source with knowledge of Merrill's final days. The $3.6 billion in early bonuses are the focus of an investigation by New York State Attorney General Andrew Cuomo looking to see whether the bonuses were, in fact, legal. So far, Thain has refused to answer specific questions about those bonuses. Bank of America has said it had little involvement in the bonus payouts.

(BEGIN VIDEO CLIP)

KENNETH LEWIS, CEO, BANK OF AMERICA: We urged the Merrill Lynch executives that were involved in this compensation issue to reduce the bonuses substantially, particularly at the top. I will remind you though, that they were a public company until the 1st of this year. They had a separate board, separate compensation committee and we had no authority to tell them what to do, just urge them what to do.

(END VIDEO CLIP)

FEYERICK: Now while Bank of America says they had no authority, investigators did find evidence, according to a source, that during the takeover talks, Bank of America and Merrill agreed on a $5 billion bonus cap. The attorney general subpoenaed Bank of America, demanding a list of everyone who received a bonus and how much that bonus was worth. Bank of America responded, filing a motion Wednesday that compensation information like names and bonuses be kept confidential. Lawyers for the banks say it would hurt the bank and put them at a severe competitive disadvantage.

By the way, John, while privately ex-Merrill boss John Thain was allegedly lobbying for that $40 million cash bonus publicly, he later said that he would request no bonus for the good of the bank, and his deputies also asking for large sums. Four people all together reportedly asking for over $100 million in bonuses, knowing they had lost $27 billion and the bank, their firm was going to be taken over.

ROBERTS: You know, it seems every day, Deb, we learn something new that legitimizes the public outrage out there over all of this.

FEYERICK: No question about it. Just the fact that he would dare ask for that kind of money, it's astonishing.

ROBERTS: Incredible. Deb, thanks for bringing that story to us. Keep digging -- Kiran.

CHETRY: All right. Well, a developing story now. The White House appears to be extending an olive branch of sorts to Iran. Secretary of State Hillary Clinton wants to set up talks to discuss the future of Afghanistan. And in a NATO meeting yesterday, she made it clear that there was a place at the table for Iran.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, U.S. SECRETARY OF STATE: We have presented this idea, which is being discussed, nothing has been decided, as a way of bringing all the stakeholders and interested parties together. If we move forward with such a meeting, it is expected that Iran would be invited as a neighbor of Afghanistan.

(END VIDEO CLIP)

CHETRY: In just a few weeks, President Obama is expected to meet face-to-face with Russian President Medvedev in London and they'll be discussing Afghanistan. This morning Hillary Clinton is also paving the way for those talks, and she's meeting with Russia's foreign minister in Geneva.

Our Jill Dougherty is live in Switzerland this morning with more on all of this for us. Very interesting comments coming from the secretary of state regarding Iran.

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT: Yes, really fascinating. You know, they've been talking about engaging with Iran and the question was how would they do it? And now if this conference takes place as they hope, you could actually see Secretary Hillary Clinton at this big conference along with her Iranian counterpart.

Now the Iranians haven't said whether they're coming or not, but the whole idea would be a very big as they call it big tent meeting on March 31st about Afghanistan. It would bring together a lot of the top diplomats from around the world, and they would be discussing how to proceed with Afghanistan. It would be chaired, they think, by the U.N., but again, not too many details are known.

And, you know, the question, Kiran, is there have been a lot of critical comments by the administration about Iran, about its nuclear program, about allegedly supporting terrorism, et cetera. But here you have some possibility of working with them. Why? Because actually back in 2001 at the beginning of the Afghan war, the Iranians were consulting with the United States. They were talking with the U.S. ambassador and were actually quite helpful in these consultations about fighting the Taliban and fighting al-Qaeda. So Secretary Clinton has talked about that, and that's the idea at this conference to talk to them.

CHETRY: All right. Jill Dougherty for us this morning in Switzerland with the secretary of state, thanks.

ROBERTS: Promises to fix what has so far proven to be unfixable. After years of false starts, can President Obama really repair our nation's crumbling health care system. Our team of experts weighing in this morning.

It's ten minutes now after the hour.

Murder on the beach. Is this any place for spring break?

(BEGIN VIDEO CLIP)

GARY TUCHMAN, CNN NATIONAL CORRESPONDENT: What stops somebody from driving by and shooting us while we're walking?

UNIDENTIFIED MALE: Well, I don't know.

(END VIDEO CLIP)

ROBERTS: New warning for college kids, what's really going on south of the border. You're watching the Most News in the Morning.

(COMMERCIAL BREAK)

ROBERTS: Twelve minutes after the hour. We're back with the Most News in the Morning.

President Obama grabbing on to a political third rail, health care reform. Plaguing the administrations for decades, the president is pledging to cut costs and insure the uninsured all during the White House health care summit.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The status quo is the one option that's not on the table and those who seek to block any reform at all, any reform at any cost will not prevail this time around.

(END VIDEO CLIP)

ROBERTS: We're turning now to our panel of health care experts. Karen Tumulty is a senior writer with "Time" magazine. She was at the summit yesterday. Dr. Christina Johns, an emergency room specialist at Children's National Medical Center in Washington, and Paul Keckley from the Deloitte Center for Health Solutions.

Paul, start us off here. The president said yesterday that the health care system in America is more Thelma and Louise, that it is Harry and Louise, it's headed for a cliff. Why haven't we been able to do anything about this? I mean, it's been plaguing successive administrations from Teddy Roosevelt on.

PAUL KECKLEY, EXEC. DIR., DELOITTE CENTER FOR HEALTH SOLUTIONS: Well, because it's a complex system, John, and complexity lends itself to incremental reforms, probably not as fast as people might logically think otherwise. And second, most people have not seen a real reason to change the system until now, and our surveys now, the majority believe that systemic reform is needed.

ROBERTS: Right. And, Karen, you were in that meeting as we mentioned yesterday. You brought a personal story too of your brother, Pat, who suffers from Asperger syndrome. You know, we've seen so many of these covering the White House over the years. Do you get a sense that something is actually going to get done here?

KAREN TUMULTY, SR. WRITER, NAT'L POLITICAL CORRESP., "TIME" MAGAZINE: Well, you know, I covered health care reform the last time they tried it 15 years ago and I was struck yesterday in the East Room of the White House by the fact that this was the exact same cast of characters back 15 years later. But what was different was that they were all in the same room so I think that's a promising start. You know, whether it gets us there, I don't know. ROBERTS: All right. Dr. Johns, you know, as we said, you work at an emergency room there at the children's medical center. The ERs these days are coming under more pressure. As the ranks of the uninsured grow, more and more people are using emergency rooms as their primary source of medical care...

DR. CHRISTINA JOHNS, PEDIATRIC EMERGENCY MEDICINE SPECIALIST: Right.

ROBERTS: ... putting extraordinary burdens on the system. What do you want to see come out of this summit?

JOHNS: Well, you know, what I really want to see is I want everybody to realize that we're all going to have to give a little to hopefully gain a lot. There needs to be change coming from every aspect, from doctors, from the insurance company, making our transactional costs easier. From legislators, from patients, everybody's got to do their part so that we can have a stronger, healthy nation.

ROBERTS: So, Paul Keckley, it would seem that at the root of all -- I mean, there's a lot of moving parts. As you said, it's an incredibly complex issue but the one big thing that people agree needed to be attacked is to get down the number of uninsured Americans. And the president says that he is going to finally this year try to break the stalemate on that and the thing he wants to do is he wants to create a public plan that would parallel the private plans that are out there. Is that the best way to go about this, do you think?

KECKLEY: Well, he's also said that he wants to put all options on the table, so there's fear in the private plan community that if the government created a program, it might undercut the ability of the private plans to compete. So I think they're wary of that. But I don't think that the specifics of the plan tell us what that might look like yet.

ROBERTS: Karen, the president also saying that those who seek to block any reform at any cost will not prevail this time around, but he's suggesting that he might be willing to modify the plan that he campaigned on. And if you put those two things together, you know, could this break this log jam that has existed for so many decades?

TUMULTY: Well, one thing that I'm really struck by is the president's flexibility. He put out a very detailed plan during the campaign, but unlike Hillary Clinton 15 years ago, who put together a detailed plan, brought it to the Hill and said OK, you guys pass this, what the president is doing is he's really putting Congress in the driver's seat here, and I think that that is, you know, that is an example of lessons learned. And I also think that the political will is there in a way that it wasn't, because business is feeling the problems of this health care system in a way they weren't 15 years ago.

ROBERTS: Last quick word to you, Dr. Johns, if we don't do something about this now where are we going to be five years from now? JOHNS: I'll tell you, I think we're going to be in a really sticky wicket. We're going to see people who need health care not being able to get it. We're not going to be working on our front door issues of tackling issues and access to primary preventative care, dealing with obesity, that's becoming an increasing problem. I'll tell you this is crisis. We need action. We need it now.

ROBERTS: Dr. Johns, Karen Tumulty, Paul Keckley, good to talk to you this morning. Thanks for stopping by. Appreciate it.

JOHNS: Thanks, John.

TUMULTY: Thanks, John.

CHETRY: Seventeen minutes past the hour. A lot of going on in the next few hours. Here's what new this morning.

CNN's chief medical correspondent, Dr. Sanjay Gupta, is now out of the running to become President Obama's surgeon general. Sanjay says that he withdrew his name because of family and career, and he also talked about it with our Anderson Cooper.

(BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN ANCHOR, "ANDERSON COOPER 360": Sanjay, we're certainly happy that you're going to stay at CNN. What made you decide to withdraw your name?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Well, you know, let me say first of all it was a very, very, very hard decision, tough decision. Certainly, you know, I was very flattered, honored and humbled even to be considered for this.

For me, I think it really came down to personal issues, you know, where my third daughter is coming any day now, Anderson. You've actually talked about my other daughters and they were born on your show and, you know, how much family means to me. And I came to grips with this idea that I probably have to live for years away from them, sort of commute back and forth. And this job of ours, you know, you and I have traveled all over the world, it takes us away from the people we love, I think too much already. So I think that was just going to be too hard.

(END VIDEO CLIP)

CHETRY: All right, and we're going to hear from Sanjay a little bit more throughout the course of our show today.

Also happening right now, police in Cleveland, Ohio, searching for a man they say shot and killed four children and his new wife. They're now scouring the area for 33-year-old Davon Crawford. Police say that a fifth boy was shot and is in "very critical condition." The four children who were killed said to range in age from 3 to 14.

Well, once known as client number nine, disgraced former New York governor, Eliot Spitzer, could be taking clients of his own. He's moving into real estate investment in Washington.

"The Wall Street Journal" reporting that Spitzer bought an office just one block from the Mayflower Hotel. That's where investigators say that he had a rendezvous with a high-priced prostitute and that eventually led to his downfall.

It's 19 minutes after the hour.

(COMMERCIAL BREAK)

CHETRY: Welcome back to the Most News in the Morning. Twenty- two minutes past the hour.

It's a story we've been following for weeks and many of our reporters have put their safety on the line to bring it to you. And it's one that you have to see if you have a child that's heading out on spring break this month.

Many of Mexico's postcard beaches are actually being stained by blood. Unimaginable drug violence keeping many students away this year. There's been kidnappings, murders, executions and they can happen at any time, anyplace, many times in broad daylight. Destinations like Rosarito Beach, once popular with spring breakers now virtually abandoned. And with more on the madness that's been going on in Mexico, here's Gary Tuchman.

(BEGIN VIDEOTAPE)

TUCHMAN (voice-over): Spring break on Mexico's northern pacific coast.

UNIDENTIFIED FEMALE: Totally relaxing, what we needed after finals.

TUCHMAN: Where it feels like heaven, unless you make the drug traffickers angry. Then it feels like hell. When you hear police siren, Rosarito Beach, Mexico, these days your heart jumps, because in the past half year the small city of 100,000 has seen at least 30 people killed by the drug cartels, none of them tourists. But this very popular spring break location has very few tourists right now.

(on camera): You're all on a cruise now. But if they said you could stay in a hotel here for a night or two, how many of you would want to do that? Raise your hand.

UNIDENTIFIED FEMALE: Knowing what we know now, probably not.

UNIDENTIFIED FEMALE: And the fact that the beach is completely empty.

TUCHMAN (voice-over): What they know now is this, in this town and nearby cities like Ensenada and Tijuana, roughly 200 people have reportedly been murdered in the last six months.

UNIDENTIFIED FEMALE: My mom freaked out about me going to Mexico. TUCHMAN: What did she say?

UNIDENTIFIED FEMALE: She said that she was really worried about kidnappings and drug lords.

TUCHMAN: Alerts and warnings have been issued about traveling to Mexico by the U.S. State Department, the ATF, even colleges.

(on camera): The good people of Rosarito find themselves living along a lucrative drug trafficking route. Among the 30 people murdered over the past few months, seven police officers all shot gangland style. It's not a job for the faint-hearted.

(voice-over): The mayor of the city says about 75 cops in Rosarito were either fired last year for working with the cartels or killed. About 150 more have now been hired. They're being paid better salaries and given lie detector tests to help make sure they stay honest.

UNIDENTIFIED MALE: Beginning of January of this year, we have no killings at all.

TUCHMAN: And in the larger city of Tijuana, they were saying the same thing.

(on camera): But the relative quiet is now over. At around the same time we were riding in the police car, authorities announced they had made a horrifying discovery near this bullring about 20 minutes north in the city of Tijuana, we're only 100 yards away from the California border. They got a call from two joggers who said they saw something terrible right here. Right under that graffiti on the ground, police arrived. They saw three bodies without heads, without hands, and a note that said "snitches."

(voice-over): The Tijuana newspaper had a picture of the scene on the front page, with the headline "The Wave of Violence Returns." Eighteen miles away within the city limits of Rosarito, there still hasn't been a killing since the beginning of the year. The mayor thinks tourists should be comfortable coming back, and he's hoping for bigger crowds next week when spring break starts to peak although he himself has to be accompanied by armed guards when he travels throughout the city.

(on camera): What stops somebody from driving by and shooting us while we're walking?

UNIDENTIFIED MALE: Well, I don't know. I guess nobody can. If somebody wants to kill you, they'll kill you. I know that for sure.

TUCHMAN (voice-over): The mayor says he has no plans to step down because of fear. He's too busy trying to protect and promote his very empty city that so many are now too scared to visit.

Gary Tuchman, CNN, Rosarito Beach, Mexico.

(END VIDEOTAPE) ROBERTS: Assault and making criminal threats, those are the charges facing R&B artist Chris Brown this morning for his alleged abuse of girlfriend Rihanna. We've got new details about that troubling night and the text message that may have started it all.

And when it comes to the president's mortgage fix, one iReporter told us it made her mad as hell. What else does she have to say? You're going to want to hear it.

CNN iReporter Patty Lewis joins us live this morning. Stay tuned for that.

(COMMERCIAL BREAK)

ROBERTS: Twenty-nine minutes now after the hour, and here are this morning's stop stories.

Lawmakers scrambling to keep parts of the federal government running this morning after the Senate postponed a vote on that $450 billion spending bill. It's a setback for the president even though he wasn't in office while the bill was being crafted. Republicans argue that the bill is too expensive and loaded with so-called pork barrel projects like the now infamous $2 million for pig odor research which people in places like Iowa would tell you is a critical issue.

More help for homeowners facing foreclosure. The House has approved a major change to bankruptcy law that would give judges new power to rewrite home mortgages. The measure allows them to reduce the principal owed on the mortgage for a primary resident. Passage in the Senate could be much tougher, though.

And we're waiting for the Labor Department to release the latest jobs report for February. The forecast not looking good. And that's where the Dow is set to open at its lowest level since April of 1997 this morning.

Nobody breaks down the new jobless numbers like CNN's money team. We'll have them for you the second that we get those numbers right here on the "Most News in the Morning" -- Kiran.

CHETRY: All right. Well, your responses to President Obama's $75 billion mortgage fix have been pouring in to us here at AMERICAN MORNING. In fact, iReporter Patty Lewis' story really stuck out.

She says that she and her husband had been in their home for 30 years, that their money is running out. Her husband's out of work and they're already getting foreclosure letters, and Patty says that it could take months for relief from the president's plan to actually trickle down to her, and it's months she says her family does not have.

(BEGIN VIDEO CLIP)

PATRICIA LEWIS, IREPORTER: The fact of the matter remains that if you are unemployed and if you have a mortgage, you're going to face foreclosure, OK? So let's get this right. I am totally fed up and I'm mad as hell and I can't take this anymore.

(END VIDEO CLIP)

CHETRY: And joining me now is iReporter, CNN iReporter Patty Lewis. Patty, thanks so much for joining us. You have a really good way of expressing yourself, let me say that. And you're really a case, a good example of what a lot of people are going through now. So you guys have lived in your house, you've been in this home for years. You didn't buy a home you couldn't afford at the time and then your husband, you said, lost his job in 2008 due to outsourcing.

LEWIS: Right.

CHETRY: And you guys you have been struggling ever since. What's your biggest frustration right now as you try to navigate this situation and avoid foreclosure?

LEWIS: Well, I'll tell you, Kiran, first of all, thank you for having me here today. I really appreciate this and for you putting attention to this issue that affects hundreds of thousands of people in our situation. Frustrations are so many mixed emotions daily that you know, one minute you're optimistic because you're thinking maybe you'll find a job, you know, then you get angry when you hear that, you know, they've come out with a plan that you're not going to fit into and helping people that really don't need the help.

CHETRY: Let me ask you about that point, Patty. Explain why your family is not going to be helped by some of the big plans that have been put out there...

LEWIS: Sure.

CHETRY: ... by mortgage companies and by this administration. Why are you guys not going to fall under any of the guidelines?

LEWIS: OK, and just to reiterate that this is not just my personal opinion, I have spoken to Donna from "Money" magazine last night they did a brief report on me and got all the facts, and she basically agreed, and many experts I've talked to agreed that people in our situation, not just me, that if you lost your job 13 months ago and you've lost the main income, you know, let's say you lost $70,000 income and even with me being disabled I might get $20,000.

OK. How can the government possibly fit us into this plan? Because in order to qualify for this plan, which is broken up into two categories, they both say that you need to be able to afford to pay the mortgage. OK. And how can that be done unless they're going to relieve, you know, $150,000 of principle for people. It can't be done.

CHETRY: Right, so playing devil's advocate here. There are people who would say even if we were in good times and we're obviously all, this economy is in a very rough spot right now. No one's arguing that, we couldn't afford to or it's not the government's job to bail out or to pay the mortgages of people who lose their jobs. What do you suggest the government does for people who have lost their jobs and can't pay their mortgage?

LEWIS: Well, you know what? I'm not a politician, and thank god for that, because if it was up to me, I would say everybody's mortgage is paid as of today. You know, but I actually don't have the answer to that question. But what's so frustrating is seeing that they can throw billions and billions and billions of dollars out to the banks and the automotive industry and AIG, within days, but yet when this plan comes out and I called up my lender I was told 60 to 90 days before they decide they were even going to take place in it.

CHETRY: Right. And you tapped into that frustration as well the message from the administration yesterday when this plan came out, when details of the plan came out to people - call your lender, get all your documents together and get ready.

LEWIS: Absolutely.

CHETRY: You say you've been going through this for months now, every two weeks you called them and -

LEWIS: Yes, I did.

CHETRY: And you guys have tried everything. You cashed out your 401(k), that kept you guys afloat for a few more months.

LEWIS: Everything.

CHETRY: So what kind of a response have you gotten from your lender about trying to help you in any way, shape or form?

LEWIS: The only letter I got from my lender was last week they offered me five percent for seven years and my mortgage right now is 6.1. So I'm not one of those adjustable rate victims. I have a fixed rate for 16 years at 6.1, but after seven years they're taking me up to 7.9, plus they added principal in there. So it only actually would save me like $96 a month, which when you've lost your large income, that's no assistance to me at all.

CHETRY: I hear what you're saying. It's a really tough spot, and you were able to articulate it very well, which is why we're glad that you're with us. You also started up a Web site, helpsavehomeowners.org that people can check out as well. We wish you the best of luck, Patty. Thanks so much for joining us this morning.

LEWIS: Thank you very much and thank you for having me.

CHETRY: Well, it's 35 minutes after the hour.

(BEGIN VIDEOTAPE)

CHETRY (voice-over): From adored superstar to alleged felon, shocking assault allegations against Rihanna's boyfriend, Chris Brown.

UNIDENTIFIED MALE: You are ordered not to annoy, harass, molest, threaten or use force or violence against anyone.

CHETRY: Inside the new report, what police say happened to one star at the hands of another. Ahead on the most news in the morning.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

CHETRY: Top videos right now on cnn.com, most popular, CNN NEWSROOM anchor Tony Harris is bad. He's really bad. Michael Jackson bad. Yesterday an inspired Tony decided to do a little M.J. impersonation on set. Let's listen.

(BEGIN VIDEO CLIP)

TONY HARRIS, CNN ANCHOR, "NEWSROOM": Hey, come on now.

(MUSIC PLAYING)

HARRIS: Hang on for a second. Hang on. There's a little something there. Hang on a second.

Hey, come on now!

(END VIDEO CLIP)

CHETRY: You know what, this should make all of us very afraid because sometimes we do things when we don't know on we'd not like the world to see. Poor Tony but hey, he has Michael Jackson down pretty well.

All right. Well, a school paper did a story on sex in Portland, Oregon, and parents are not happy about it. It's an article that actually talked about students having sex on campus, even naming the most popular locations. Some of the parents were outraged. The newspaper staff, though, saying as journalists they can write what they want.

Also finding love online in Iran. An Islamic cleric says his matchmaking Web site has resulted in more than 2,000 marriages. The Iranian law restricts singles from interacting in public. So the site offers an easy alternative. At first, people were skeptical he says but ultimately because he's a cleric they have faith in him. Those are the most popular stories right now on cnn.com.

ROBERTS: Thanks, Kiran. This morning, R&B star Chris Brown faces more than four years behind bars for allegedly beating his girlfriend, Rihanna. There are new and ugly details about what happened that night. But even with the pictures and those brutal details, prosecuting the 19-year-old singer might not be that easy. CNN's Brooke Anderson has the latest for us this morning from Los Angeles.

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BROOKE ANDERSON, CNN ENTERTAINMENT CORRESPONDENT: John and Kiran, a somber Chris Brown made his first court appearance to face charges he beat up his girlfriend, R&B star, Rihanna.

CHRIS BROWN, R&B SINGER: Yes, ma'am.

ANDERSON (voice-over): Chris Brown's arraignment was put off until next month. At that time, he will enter a plea to two felony counts, assault and making criminal threats. Earlier in the day, the court released an affidavit from an L.A.P.D. detective with shocking details of the alleged assault that left Rihanna bruised and bloody.

According to the affidavit, the altercation began after Brown and Rihanna left a pre-Grammy party in a Lamborghini. They argued when Rihanna discovered a text message on his cell phone from another woman. Brown pulled the car over and tried to push her out but a seat belt kept her fastened inside. Brown then shoved Rihanna's head against the car window and punched her in the left eye, the affidavit says.

He drove off, continuing to punch her in the face with his right hand while steering the vehicle with his left hand. The assault caused her mouth to fill with blood and blood to splatter all over her clothing and the interior of the vehicle. The report further states Brown bit her ear, put her in a headlock, and threatened to kill her. Brown has publicly said he's sorry for what happened, and he received a warning.

UNIDENTIFIED MALE: You are ordered not to annoy, harass, molest, threaten or use force or violence against anyone.

ANDERSON: The order does not bar him from seeing Rihanna.

UNIDENTIFIED MALE: The one issue that arose in court concerning her rights is whether or not the court should issue a stay away order in this case. Rihanna requested that no such order be issued.

(END VIDEOTAPE)

ANDERSON: That may add credence to reports the couple has reconciled, since the incident. Now if true, it may complicate the district attorney's efforts to prosecute the case -- John, Kiran.

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CHETRY: Dora the Explorer rows up, flowing hair, a move to the big city, and parents are angry.

UNIDENTIFIED FEMALE: She likes Dora because Dora's a nice little kid.

CHETRY: Tween Dora is coming. Too grownup for little girls?

Oh, men!

CHETRY: Ahead on the Most News in the Morning.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROBERTS: Forty-five minutes now after the hour. Let's fast- forward to stories that are making news later on today. Charter boat operators promising to continue the search for NFL players and their friends who went missing last week in the Gulf of Mexico. The Coast Guard officially called off the search on Wednesday. The lone survivor, Nick Schuyler could be released from the hospital as early as this weekend.

Also, today at 8:30 a.m. Eastern, the Labor Department releasing critical jobs report for February. On the heels of that announcement, the joint House and Senate economic committee will hold a hearing to examine the numbers. That begins at 9:30 a.m. Eastern.

And are we alone, NASA attempts to answer the question tonight with its latest launch at precisely 10:49 p.m. Eastern. The Kepler II will blast off into space. Its mission to explore strange new worlds, to seek out signs of new life and new civilizations and other life planets in our galaxy. And that's what we're following for you this morning.

CHETRY: All right. John, thanks.

Well, if you have a young daughter, there's no doubt you know the name, Dora the Explorer. Kids love her cartoons. Moms and dads love the characters, bilingual lessons but toy maker Mattel is now upsetting some parents who say that Dora is growing up too fast.

Our Carol Costello is looking into the Dora drama for us this morning. It's going to be the new tween Dora, right? And she's not going to be that little boxy girl in shorts anymore with her little backpack on.

CAROL COSTELLO, CNN CORRESPONDENT: No, with the pudgy stomach but you know, little girls really kind of lose interest in Dora when they hit the age of eight years old. So Mattel is trying to find a way to keep girls interested in Dora longer. So they plan to do that by unveiling a new Dora tween doll. As you said, Kiran, that has some parents worried.

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COSTELLO (voice-over): Dora the Explorer is beloved by the preschool set.

UNIDENTIFIED FEMALE: She goes on adventures.

UNIDENTIFIED MALE: She goes on adventures.

COSTELLO: Yes, she also loves her Dora game.

UNIDENTIFIED FEMALE: It's a long path.

COSTELLO: Her Dora dolls and can't get enough of Dora's TV show.

SWIPER: Oh, men! COSTELLO: Dora is so widely admired for her spunk, her curiosity and her intellect, Dora's TV show won an NAACP image award. Merci's mom heartily approves.

GINGER DEARWENT, DAUGHTER LOVES "DORA THE EXPLORER": I think she likes Dora because Dora is a nice little kid and I like Dora because Dora's bilingual.

COSTELLO: But controversy looms on the Dora the Explorer horizon. Mattel plans to unveil a new more grownup Dora tween doll this fall, and gave parents a hint at what she'll look like in a press release. A silhouette with long flowing hair and long legs. Mattel also says tween Dora has moved to the big city and has a new fashionable look. That worries some bloggers who say Dora will soon be Bratzed out, sexualized like the Bratz dolls and become obsessed with boys like Barbie.

Others are organizing petition drives saying no makeover for Dora. The "St. Petersburg Times" parenting blog Whoa Momma is demanding doll maker Mattel listen to their concerns.

SHERRY ROBINSON, WHOA MOMMA BLOGGER: They want a doll that doesn't just, isn't just concerned about the physical beauty, you know, some of the concerns that folks have always had about Barbie.

COSTELLO: Mattel and Nickelodeon are listening and want to assure parents tween Dora does not remotely resemble Barbie. In fact she's the anti-Barbie.

LEIGH ANNE BRODSKY, PRESIDENT, NICKELODEON PRODUCT DEVELOPMENT: The reason for this doll line is to offer an alternative to moms who want their girls to stay little girls a little longer.

COSTELLO: And Mattel says tween Dora will still use her brain, but as an older girl she'll use her adventurous spirit to solve mystery with her new friends.

UNIDENTIFIED FEMALE: It's not about the fashion as much as it's about Dora being able to go a little bit incognito so she can solve these mysteries that are embedded into this web.

(END VIDEOTAPE)

COSTELLO: It's sort of like a modern-day Nancy Drew. How will she do that? Well your child can hook up the Dora tween doing doll to a computer and take Dora into a virtual world where she can change her appearance to solve those Nancy Drew type mystery. As for how the doll looks and I wish Kiran, I could show you but they're not going to unveil it until like September but I did get to see the tween Dora doll.

The tween-age Dora is about 12 inches high. She does have long, brown hair with bangs and a head band. She is thin. She is tastefully and fashionably dressed. I would not say she's sexy or sexualized but she is attractive. She's a cute doll, but she's not wearing like a little mini skirt or anything like that and her hair is not as flowing as it was in that silhouette.

CHETRY: OK. That's good news. So she's not going to be wearing a skirt, she's wearing shorts?

COSTELLO: Well, she's wearing a tunic with leggings and platform heels. That's her outfit.

CHETRY: Well, it's hard to go on a jungle on a vine in platform heels. I mean take it from us, right. Well, some people say look, with all of the problems going on, with all of the problems in our economy, why are we worried about Dora? But the thing is, you know, Carol, we have our whole entire lives as women to worry about how we look, right? We just want our little girls not to have to worry about it so soon.

COSTELLO: That's exactly true. And Mattel says that parents shouldn't worry about it. They made Dora cute but certainly not sexy and beautiful. And keep in mind, the Nickelodeon show, Dora will remain like a little five-year-old kid. It's just this tween doll they're experimenting with that to keep girls interested longer and hopefully parents will like the doll when it's unveiled in the fall.

CHETRY: We shall see. If they buy it, right?

COSTELLO: Right.

CHETRY: Carol Costello, thanks so much. It's 50 minutes past the hour.

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ROBERTS (voice-over): Leading man at the capital.

BRAD PITT, ACTOR: Thank you, Mr. Speaker, for opening up the doors for us to come in.

ROBERTS: Pitt stop. Everybody swoon, now.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: It really is an honor to have him here. A real treat for me as well.

ROBERTS: What happened when Mr. Pitt went to Washington? Ahead on the Most News in the Morning.

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(COMMERCIAL BREAK)

ROBERTS: From Hollywood's red carpet to the halls of power.

Welcome back to the Most News in the Morning.

Actor and housing advocate Brad Pitt making rounds in Washington, pushing his charitable housing efforts for New Orleans, meeting with both President Obama and House Speaker Nancy Pelosi. Helping New Orleans clean up from Hurricane Katrina and building sustainable low income homes for the city, both huge passions for the actor since the deadly 2005 storm and since he spent so much time there shooting his latest movie. Zain Verjee taking a look now at the politics of Pitt's D.C. visit.

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ZAIN VERJEE, CNN CORRESPONDENT (voice-over): And the nominee for movie star lobbyist of the week, Brad Pitt.

PITT: Thank you to the Speaker for opening up the doors for us to come in and discuss the rebuilding effort, the current rebuilding effort going on in New Orleans and how we've expanded this idea of affordability and sustainability because we think we have a model that works.

VERJEE: Speaker Pelosi complimented his work and gushed.

PELOSI: It really is an honor to have him here and I know for some of my staff and for bragging rights to my children and my grandchildren, a real treat for me as well.

VERJEE: He also made a guest star appearance at the White House. For a long time, actors and politics have gone hand in hand. Bono in debt relief in Africa and George Clooney just at the White House, urging action on Sudan. Angelina Jolie testified on the Hill on the Darfur crisis. She is shooting a movie in Washington, D.C. right now and leaving the rounds to Brad.

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VERJEE: So the cameras flash and the star exits stage right and the Washington Hollywood connection looks stronger than ever -- John, Kiran.

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ROBERTS (voice-over): Guess where we found the former fat cats from Countrywide?

UNIDENTIFIED MALE: It's outrageous.

ROBERTS: Buying up bad loans.

UNIDENTIFIED MALE: The executives that created this mess are now poised to make a fortune cleaning it up.

ROBERTS: Plus new job numbers just minutes away, and nobody breaks it down better for you than our own CNN Money team. You're watching the Most News in the Morning.

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ROBERTS: Coming up on the agenda here on the Most News in the Morning, in the next 20 minutes, new outrage over the octu-mom and how she ever became pregnant with eight children. It's causing lawmakers in a couple of states to consider whether or not the assisted- reproduction industry needs to have new regulation.

About 20 minutes from now we're going to be talking with Dr. Jamie Grifo from the New York University Medical center's IVF Clinic. He's got some ideas on it, and we'll hear from him all about that.

Meantime, Countrywide Mortgage was the big villain in the subprime housing crisis which set off a chain of events that has the economy in crisis. Now, as CNN's Kara Finnstrom tells us, the company's former executives stand to make millions more from the mortgage meltdown.

KARA FINNSTROM, CNN CORRESPONDENT: John, Kiran, when Americans began looking for whom to blame for the housing crisis, Countrywide found itself front and center.

(BEGIN VIDEOTAPE)

FINNSTROM (voice-over): Countrywide will be remembered for the risky loans that made its executives rich, but then defaulted in vast numbers causing the company to collapse and some say contributing to the nation's mortgage crisis. Now about a dozen former Countrywide executives have formed a company called PennyMac. They are buying up delinquent home mortgages on the cheap. For so much less than face value, PennyMac can renegotiate the loans and still make a profit. PennyMac says it's helping families avoid foreclosures and the company also stands to make millions.

UNIDENTIFIED MALE: It's perfectly legal. It just doesn't seem to pass the smell test.

FINNSTROM: Financial analysts and consumer groups are speaking out.

JAMIE COURT, CONSUMER WATCHDOG.ORG: It's outrageous that the executives that created this mess, knowingly putting people in loans they couldn't afford, are now poised to make a fortune cleaning it up.

FINNSTROM: Stanford Kurland, a former second in command at Countrywide heads PennyMac. Kurland left Countrywide more than a year before it collapsed. He is now named the numerous lawsuits against Countrywide for its lending practices. Kurland declined our interview request but told "The New York Times" he left Countrywide before the country began making its riskiest loans and should not be blamed for what happened as a result.

As for his new company, PennyMac released this statement.

"Penny Mac's business model depends on our ability to help borrowers stay in their home. And we've put together a team with the experience to do that. With this goal, we've developed loan programs that avoid foreclosure by addressing the borrowers ability to pay their mortgage. We have offered help to hundred of families in the past year and we are eager to help as many as we can."

ADLAI WERTMAN, USC MARSHALL SCHOOL OF BUSINESS: The question is how do we feel about trusting them? FINNSTROM: USC business professor Adlai Wertman and many other experts believe companies like PennyMac that buy a bad loan and service them and keep taxpayers from footing the bill, they turn out to be an important part of solving this housing crisis.

WERTMAN: It's exactly what we should be doing and what the private sector should be doing. We just have to make sure that they are doing it in a manner that's fair to all parties involved.

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FINNSTROM: How to insure that? and whether there should be greater oversight or perhaps new regulations for companies like PennyMac is now a growing debate -- John, Kiran.

CHETRY: Kara Finnstrom for us. Thanks so much.