Return to Transcripts main page
American Morning
Republican Senator Suggests AIG Execs Resign or Commit Suicide; Outrage Grows over AIG Executive Bonuses; Stimulus Cash Goes Local for Maryland Cities and Towns; Business Booming for Ohio Cafe Offering No Price Menu
Aired March 17, 2009 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN ROBERTS, CNN ANCHOR: Here's what's topping our agenda this Tuesday morning, the stories that we'll be breaking down for you in the next 15 minutes.
Experts now warning that taxpayers like you who currently own 80 percent of AIG probably will not get your money back. That's because the insurance giant has shelled out close to $100 billion to cover banks who made bets and lost on risky mortgages.
A rally going global. Most Asian markets are up today. Japan's Nikkei average rose more than three percent after the Dow nearly held steady yesterday, lost only seven points but anything less than a triple-digit loss is pretty good these days, right?
A brand new CNN/Opinion Research Corporation poll out just minutes ago, it's gauging the feeling on Main Street about where our economy is headed. Forty-five percent say we're on our way to a depression within the next year, but 54 percent say it won't get that bad, at least not that soon.
This morning an unprecedented television event that we're calling CNN's "Road to Rescue." We're devoting the entire week to the money meltdown that has affected all of us.
KIRAN CHETRY, CNN ANCHOR: Well, they say that knowledge is power, and not only are we exposing the problems but we're trying to arm you with the information you need to solve them. The CNN money team is here to help you as well.
Christine Romans and Gerri Willis up and taking your calls. They're also live on Twitter answering your questions.
ROBERTS: We've also got a team of reporters spanned out across America breaking down the big stories only CNN can from coast to coast. It's your house, your job, your future and we are covering it all this morning.
But first this Tuesday it's getting ugly. The venom directed at AIG executives who are getting $165 million in bonuses even though they helped get us into this economic mess. Listen to Iowa Senator Chuck Grassley on WMT radio in Cedar Rapids.
(BEGIN VIDEO CLIP) VOICE OF SEN. CHARLES GRASSLEY (R), IOWA: I would suggest the first thing that would make me feel a little bit better towards them, if they follow the Japanese example and come before the American people and take that deep bow and say "I'm sorry," and then either do one of two things, resign or go commit suicide.
(END VIDEO CLIP)
ROBERTS: Now remember, AIG lost $62 billion last quarter. That's the biggest quarterly loss ever on the watch of these folks who are getting all this bonus money.
Carol Costello joins us now live from Washington. It's like somebody burning down their house and you say nice job with the matches. Here's a few dollars in your pocket as a bonus. My God.
CAROL COSTELLO, CNN CORRESPONDENT: Yes, it's harsh out there, isn't it? You know, some political analysts fear public anger has reached a tipping point. Voters are beyond angry and they'd be even more leery of government bailouts and that for a second could make things much more difficult for President Obama, although he and many others are trying to force AIG to give those bonuses back.
(BEGIN VIDEOTAPE)
COSTELLO (voice-over): America has declared war on AIG, from the president...
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This outrage to the taxpayers who...
COSTELLO: ... to Congress.
REP. BARNEY FRANK (D), MASSACHUSETTTS: People who screwed this thing up enormously.
COSTELLO: To New York's attorney general, to taxpayers, and the time for tact is over.
UNIDENTIFIED MALE: Makes me feel disgusted.
UNIDENTIFIED MALE: It makes me angry, certainly.
UNIDENTIFIED FEMALE: Well, they can change the law. They do every day.
UNIDENTIFIED MALE: If you're a CEO of a company like that, you shouldn't be able to drive a limo. You should ride your (EXPLETIVE DELETED) on the subway like everybody else does.
COSTELLO: Public outrage has intensified ever since word leaked out that some AIG executives will receive $165 million in bonuses, despite the fact you, thanks to a $170 billion bailout, now own 80 percent of AIG. How can that be?
AIG says there's nothing it can do. It's bound by pre-existing contracts that if voided would lead to serious legal as well as business consequences for not paying. And while that may be true, there are plenty who say bull.
REP. CAROLYN MALONEY (D), NEW YORK: The autoworkers had a contract, too. They're being asked to modify it. Why in the world was AIG executives and workers not asked to modify their contracts, particularly those that caused the problem?
COSTELLO: Because experts say those executives knew AIG would not be allowed to collapse because the government believes AIG's failure would tank the whole economy. By contrast, the auto unions voluntarily modified their contracts because the government made it clear bankruptcy was an option.
BARRY E. ADLER, NYU SCHOOL OF LAW: Federal money should be conditioned on elimination of old claims, whether that's done in bankruptcy or through a nationalization process. Before the federal government pours money into a troubled company that it deems necessary to save, the government should make sure that that money goes where it's intended.
COSTELLO: So what can the government do? Well, it can wield the "shame weapon." The New York attorney general now wants names so he can publicly determine who is getting a bonus and whether they were involved in conduct that led to AIG's demise. And Congress will hold hearings on Wednesday. The star attraction? Edward Liddy, AIG's government-appointed chairman.
(END VIDEOTAPE)
COSTELLO: And I think it's safe to say, John, he is in for a rough time. Here's another idea floating around out there. Congresswoman Maloney plans to introduce legislation that would tax any bonus compensation at 100 percent. Don't know if that will fly. On the bright side, Democrats and Republicans have found something finally they can agree on. AIG executives, both sides say, should be ashamed of themselves.
ROBERTS: Well, I don't know if Congresswoman Maloney's legislation will fly but there's certainly a lot of people out there who look at this AIG thing and say, OK, so these are retention bonuses so that they can keep the best and the brightest. And if the folks who drove the economy into the ground are the best and the brightest, might do better without them.
COSTELLO: You know, I asked an economist why some of these executives weren't ashamed to take the money and she told me probably tongue in cheek that these people know they're toxic. They can't get a job anyplace else so might as well take the money because it might be the last big money they'll ever make.
ROBERTS: I'm sure we're going to hear a lot more about this. Carol Costello for us this morning. Carol, thanks so much.
COSTELLO: Sure.
ROBERTS: Kiran?
CHETRY: All right. Well, our new "AMFix" hotline is ringing off the hook, mostly about angry calls over AIG. And a lot of viewers are asking, why does it seem the little guy is always making concessions and the fat cats won't give back a dime?
Well, Christine Romans and Gerri Willis join us now. And, Christine, you, you know, are this in this world, meaning you cover it a lot. Are we missing something here or is this utterly outrageous?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: I really can't find anybody who wants to defend what happened here. I mean, I'm going to be really honest with you. When I talk to people on Wall Street, they're just like, they can't believe that it's happening. But the landscape has changed so much, it's shocking. I mean...
CHETRY: Yes. Let's listen to one of the calls.
ROMANS: Let's listen to Trudy in California.
(BEGIN AUDIO CLIP)
TRUDY, CALIFORNIA: Trudy from Los Angeles, and I know that AIG says that they can't do anything about the bonuses because of contracts. As far as I know, teachers, state employees and county employees in California had contracts that were able to be switched up.
(END AUDIO CLIP)
ROMANS: Trudy, a lot of you are challenging this idea that AIG and the United States government are somehow helpless to break or renegotiate these contracts after the fact. Let's listen to Tony in New Jersey. He had something similar to say.
(BEGIN AUDIO CLIP)
TONY, NEW JERSEY: Tony, New Jersey. If we had to take the automobile companies and have them break their contracts and pay the workers less, then AIG should get no more money until they break their contracts.
(END AUDIO CLIP)
ROMANS: A lot of you saying they want these contracts broken. Now, when we've seen contracts broken other times, Gerri, especially when you're talking about unions, usually both parties are agreeing to renegotiate something to prevent something bad from happening. This has already happened. Some of this money is already out the door.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Can I tell you...
CHETRY: The airline pilots who have had to take pay cut after pay cut after pay cut, otherwise they don't have anymore work.
WILLIS: Can I tell you the Twitters... ROMANS: Yes.
WILLIS: ... people are crazy. Let's boycott the company. We never want to do business with AIG again. And as you know, they're in a lot of consumer lines.
ROMANS: Sure.
WILLIS: So that's something that can work. But I have a question about these AIG bonuses. Originally it was bonuses for fantastic performance. Now, oh, no, no, no, it's a retention bonus.
ROMANS: Right.
WILLIS: I mean, come on, guys, what is this?
ROMANS: This is the dirty little secret of how a lot of big business works quite frankly. I mean there are bonuses. You and I think a bonus is something that you're paid out in order to do something well. But a lot of these are guaranteed compensation and I say guaranteed compensation is not a bonus. But we've been talking about this frankly for six or seven years about guaranteed compensation is called a bonus.
A bonus is a bonus, you know. These are -- this is retention compensation.
WILLIS: It is a lot of words, right? I mean, not very meaningful but I think for the American taxpayer, it's so frustrating because we know at the end of the day it's our money that's going to pay these people at AIG who put the entire economy at risk.
ROMANS: And even if they can reel that back either by this law to try to tax it by 100 percent or whatever, you know, there are most of the scenarios that you can envision the people still get the money, that the company in the future somehow pays the government back. So we could get our money back but people could still get --
(CROSSTALK)
WILLIS: A long time from now when we're older and we're not living in our house anymore.
CHETRY: We're still doing it for another multibillion-dollar bailout, right? More money.
All right. Well, we'll continue to follow that with you two this morning. Thanks so much, Christine and Gerri.
Also, we want to hear from you right now. Gerri is tweeting with the viewers. The tweeting...
WILLIS: Continues.
CHETRY: Yes, that's right.
WILLIS: There's a lot of tweeting. Keep talking to me.
CHETRY: Rocking robin, tweet, tweet.
UNIDENTIFIED FEMALE: That's cute.
CHETRY: Well, anything on the economy is fair game. From AIG to questions and concerns about your mortgage, I know we've gotten a lot of those, as well as job searches. Join the conversation at "AMFix" -- John.
ROBERTS: It shows there's as much tweeting as it is maybe the shriek of an eagle over this AIG stuff. My goodness.
(LAUGHTER)
Cities and towns across the country are eager for a slice of the stimulus pie. So how are your tax dollars being spent? We'll take a look at one state breaking it down dollar by dollar.
And a quick reminder: Call our AMFix hotline. It's your place to sound off about the hot topic of the day. Call the show at 1-877- my-amfix. That's 1-877-692-6349.
Also, check out our new blog "AMFix" when you get to work, CNN.com/amfix. We're on Facebook and Twitter, too, keeping you posted on the big stories throughout your day.
It's coming up now on ten minutes after the hour.
(COMMERCIAL BREAK)
ROBERTS: Welcome back to the Most News in the Morning. All this week we're breaking down the economic meltdown as only our CNN team can and our "Road to Rescue" coverage. The CNN money team answering your questions on the show today. Find links to our Twitter and Facebook pages at CNN.com/amfix or call us 1-877-my-amfix, that's 877- 692-6349.
With Gerri and Christine standing by, who wouldn't want to contact them?
And comedian Jay Leno pledging to do what he can for people during these hard times. We reported here last week that "The Tonight Show" host is holding a free show for out of work people in Detroit. Now he's doubling his effort in taking on ticket scalpers.
(BEGIN VIDEO CLIP)
JAY LENO, HOST, "THE TONIGHT SHOW WITH JAY LENO": Last Monday, we announced we're doing these free shows in Detroit, part of the comedy stimulus package. The tickets were released today. Everyone gone -- 18,000 seats like that. So, we are adding another show on Tuesday night, the next night.
And I want to thank Pepsi has picked up all, you know, so many sleazeball corporations out there. It's so nice to see a nice club. I called them up I said I'm doing two shows at the palace.
If you're unemployed, you don't have to be unemployed, just having a hard time. If you're in the Detroit area and you'd like to come, parking's free. Go up to the concession stand, get a soft drink, free. We'll give you, I don't know, some kind of treat, bag of Doritos or something.
(END VIDEO CLIP)
ROBERTS: It's great. You know in these hard times that somebody is actually putting out like that, it's a good thing, Kiran.
CHETRY: It's wonderful and wow, 18,000 tickets just like that.
All right. Well, President Obama's stimulus bill totals a whopping $787 billion. We've talked about this number, but from that $150 billion is slated for local infrastructure as well as energy projects. Maryland's slice of that, $4 billion, and the state's governor is trying to make sure that people know exactly how this cash is being spent.
Our Jim Acosta is on the story live from Washington. You know, the tolerance seems to be dropping precipitously for not knowing what the government is doing with our money given all of these billion- dollar bailouts we've been talking about.
JIM ACOSTA, CNN CORRESPONDENT: That's right, Kiran. But we found something surprising out in Annapolis, the catch of the day there, not the crabs but stimulus money.
You heard of the few governors who criticized the stimulus as a waste of money, but consider what Governor Martin O'Malley is doing in Maryland. He's so determined the stimulus will work he's letting the skeptics see for themselves.
(BEGIN VIDEOTAPE)
ACOSTA (voice-over): What you're looking at is a stimulus feeding frenzy, a standing room only crowd of mayors, county executives and business leaders from across Maryland, all jammed into this packed meeting at the state capitol, all vying for a piece of the stimulus action.
MAYOR JIM EBERHART, PERRYVILLE, MARYLAND: Believe me, the economic issues have come to small town America.
ACOSTA: Take Jim Eberhart, mayor of Perryville, Maryland, population 5,000. His town has sewer projects ready to go or as they say in stimulus speak, shovel ready. Eberhart just needs the money.
When you say shovel-ready, you mean shovel-ready.
EBERHART: I mean we have plans and specifications. We are ready to award a contract and we're ready to put people to work.
ACOSTA: It's Maryland response to the question, where do I get my stimulus? Come to a workshop, state officials say, and they'll tell you.
IZZY PATOKA, MARYLAND STIMULUS WORKSHOP LEADER: What we hear a lot is people that have never needed help from the government ever in their lives, today in this economy, now need help.
ACOSTA: Maryland's Democratic Governor Martin O'Malley started the workshops to answer Republican critics who called the stimulus wasteful, arguing that businesses create jobs, not bureaucrats.
GOV. MARTIN O'MALLEY (D), MARYLAND: I think it's sour grapes from the same bunch that rallied around George Bush while he wrecked our economy. And I think the best response to that is openness, transparency, performance measurement and a government that works.
ACOSTA: But there's a catch. Maryland has to spend its $4 billion in stimulus money right away. Not everyone can move that fast.
SCOTT ROBUCK, CFO, STAVROU COMMUNITIES: Unfortunately, none of our projects are shovel-ready. You have to start construction within a year, so to get your architects, engineers and everyone in line by the end of the year is going to be tough.
ACOSTA: O'Malley hopes this process will convince a bailout weary public to give the stimulus a chance, and, he says, the country may just need another one.
(on camera): There's some talk in Washington of perhaps a second stimulus. Do you think something like that would be a good idea?
O'MALLEY: I think that a second stimulus is needed.
(END VIDEOTAPE)
ACOSTA: Now, talk of a second stimulus we all know has stalled in Washington but states like Maryland warned they're seeing their tax revenues falling fast. Without a stimulus part two, Americans may have to get used to more painful budget cuts at the state level.
And, Kiran, what does that mean? Well, I asked Governor O'Malley about this and he said when the stimulus was passed, he said, basically no layoffs across the state of Maryland. Now, he is looking at a very different picture.
State tax revenues have fallen faster than they anticipated in the state of Maryland and this is also the case in other states like California. Now, layoffs are back on the table for state employees, Kiran.
CHETRY: Tough situation for sure. All right. Jim Acosta for us this morning. Thanks so much.
ACOSTA: You bet.
ROBERTS: Well, you see a menu with no prices. It's got to be bad news, right? Well, at one cafe in Ohio, you decide what you think a cup of Jo or a muffin or a sandwich is worth. Do you think that sounds crazy? Wait until you hear what the owner has to say about the new state of his business.
There he is. He's joining us, coming right up.
(COMMERCIAL BREAK)
ROBERTS: Welcome back to the Most News in the Morning on this St. Patrick's Day. All this week, we're breaking down the global recession with our "ROAD TO RESCUE" coverage.
But we're not just looking at the problems. Also, we're talking to people who have solutions. Yesterday we told you about an Ohio cafe where business is booming with a "pay what you want" menu. Well, Sam Lippert is the cafe's owner, and he's here live this morning to tell us how it's going. Sam, it's great to see you. Thanks for being with us today.
SAM LIPPERT, OWNER, JAVA STREET CAFE: Well, thank you.
ROBERTS: So you run the Java Street Cafe. You actually own the Java Street Cafe there in Kettering, Ohio. And you've got a menu that's got no prices on it. People pay what they think the food is worth. How did you come up with that idea?
LIPPERT: Well, actually, that was thanks to my girlfriend. She is from Bulgaria, and she says it's a common practice in certain cafes in Europe to allow the patrons to decide how much to pay for their meal.
ROBERTS: So, in terms of paying for something, if somebody gets a sandwich or maybe a bowl of soup or something like that, typically how close to the old menu price would they get in what they pay?
LIPPERT: Well, sometimes people shoot a few dollars over, and sometimes it's a few dollars under. And, you know, at the end of the day it works out for me.
ROBERTS: So, does anybody try to game the...
LIPPERT: So, you know, it works out even.
ROBERTS: Yes, so, does anybody try to game the system. You know, they'll get a big meal that would be worth $10, $12 and then give you 50 cents for it?
LIPPERT: Well, you know, they have to look me in the eye and say that that's what they think is fair. And, you know, that's a big incentive. When someone's at the counter and you say, you get to pay what you think is fair, very few people are going to take advantage of that situation.
ROBERTS: Interesting. So, let's just set the stage for people here. You bought the cafe in April of 2008. In the early going, business was up 10 percent over the previous owner. Then what happened when the recession really took hold? LIPPERT: The bottom just fell out. I mean, I was still matching the previous owner's sales, but that was not where this business needed to be in order to make it.
ROBERTS: All right. So, why did you think that taking prices off the menu would be a boon to your business?
LIPPERT: Well, I figured in the current times, people need a reason to go out and treat themselves. You know, you've got everybody saying, well, if you need to save money, don't buy a cup of coffee out, stop buying lattes, you know, don't go out and buy lunch, take your lunch. And I'm trying to give people incentive to actually go out and eat or go out and get a cup of coffee, because they get to pay what they feel is fair.
ROBERTS: Now, we should point out to people, too, you're not the typical cafe owner. You're an engineer by trade. You went to school at MIT. You took all of your 401(k) savings out to buy this cafe. It looked like business might be going under. But since you adopted this no-price menu, how's business been?
LIPPERT: Things have picked up. My sales and customer count are up on a given day between 50 to 100 percent. And I'm starting to look at being able to bring some of my part-time people on full time, and maybe being able to add a couple of new employees.
ROBERTS: Wow, that's great news. It's called the Java Street Cafe. It's in Kettering, Ohio. If you ever go through Kettering, make sure you drop by and see Sam Lippert. Sam, thanks for being with us this morning. Appreciate it.
LIPPERT: Thanks for talking to me.
ROBERTS: Great to hear a success story -- Kiran.
CHETRY: All right. Well, "ROAD TO RESCUE," it's a CNN survival guide. If you've got a question about finding a job or refinancing your mortgage, our personal finance editor, Gerri Willis, is on Twitter all morning answering your questions and you can link to our twitter page at CNN.com/amfix.
Also, millions of Americans are waking up without medical insurance this morning. The costs are on the rise. More and more people are skipping out on that doctor visit but at what price to their health?
It's 24 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: And welcome back. We're hearing lots of anger and frustration from you about the AIG bonuses. Here's an iReport from David in Washington.
(BEGIN VIDEO CLIP) DAVID WHITE, IREPORTER: Stop the AIG bonus payments. If you're feeling anything like me right now, you're pretty livid about these $165 million in bonus payments. Rewarding failure to AIG's top executive employees, that, I find to be unconscionable.
(END VIDEO CLIP)
CHETRY: Well, keep those iReports coming. And just ahead, our Web site -- to our Web site CNN.com/am. If you go there, you have a chance to talk to Gerri Willis as well as Christine Romans. They're going to be trying to answer your questions this morning, John, using Twitter.
ROBERTS: Oh, yes, a lot of understandable outrage there this morning about AIG. All this morning the CNN money team is taking your comments and questions as we continue our "Road to Rescue" coverage. We're getting Twitter followers by the hour. How would you say that together, twitter followers? Wow.
WILLIS: It's a tongue twister.
ROBERTS: Our new show hotline is ringing off the hook as well. Let's turn now to our personal finance editor, Gerri Willis. Let's listen to one of the phone calls that came in today. This one from Jack in New York. He's asking about mortgages.
(BEGIN VIDEO CLIP)
JACK, NEW YORK: This is Jack from Brooklyn, New York. My biggest complaint of this economic problem is that people who took out mortgages, knowing that they were never able to pay them back, knowing that they had no income to support the mortgage seem to get off scot- free.
(END VIDEO CLIP)
ROBERTS: There you go, so rewarding people for bad behavior, I guess, is the complaint.
WILLIS: Yes, I hear this a lot. People, particularly people who always paid their mortgage, are really upset, really angry that other people are getting off the hook. But I have to tell you, I've met a lot of these people. I've talked to them one on one. People who got some of these toxic mortgages, many of them had no idea about the bells and whistles on the mortgage. They didn't know where that mortgage interest rate could reset to. There's a lot of culpability here, a lot of people to point fingers at.
ROBERTS: Yes, but there's certainly lots of people, though, who took those advantages of no credit, no problem, you know, and got the mortgage; 1,500 calls, by this morning. Just incredible.
WILLIS: Crazy.
ROBERTS: What are you hearing on Twitter this morning or seeing on Twitter? WILLIS: Wow, just fantastic response there. A lot of you out there you're saying hey, I can't pay my mortgage. Maybe my home's dropped in value by $100,000. We heard from one viewer by 40 percent. We heard from another.
Also interesting, there are some people out there who feel like they're in pretty good shape. One fellow that I was twittering with, he says I got a good job, I make good pay but I feel torn by whether I should save for myself or spend money and try to help the economy.
My answer to that is that you should really look after yourself first. Nobody else is going to do it for you. Set aside some savings if you can, if you have the opportunity, if you're fortunate enough to have that good job now.
ROBERTS: And we'll see if, you know, people saving creates this pent up demand that some people we've been talking about when the economy does start to come back we'll see a real boost, you know, sort of like almost like a bubble of money going out there.
WILLIS: Well, I think there's -- everybody has got a shopping list, right? Everybody's got something they'd like to buy if they could, if only they could.
ROBERTS: Yes.
WILLIS: So, hopefully that will help.
ROBERTS: All right. What's on your shopping list?
WILLIS: I have a long shopping list.
ROBERTS: I don't really want much, you know. There's no price on happiness, so you can't buy that.
WILLIS: Oh, oh, oh, my heart just goes out to you. Yes, well, that's the right attitude, though. Right?
ROBERTS: There you go. Gerri, thanks.
WILLIS: My pleasure.
ROBERTS: Our "ROAD TO RESCUE" coverage continues all morning. Gerri answering your questions at "AMFix" Twitter page. You can send her questions too. The twitter page is "AMFix," by the way. Find the link at CNN.com/amfix.
It's now 30 minutes after the hour, and here are the big stories that we're watching right now.
"Resign or kill yourself." That's what one Republican senator suggested AIG execs do on a local talk radio show. Republican Senator Chuck Grassley said they should take a page out of the Japanese businessmen's handbook and apologize, then either step down or commit suicide. The White House hitting back at former Vice President Dick Cheney. Press Secretary Robert Gibbs said, "I guess Rush Limbaugh was busy," when our Ed Henry asked him about comments that Cheney made on "STATE OF THE UNION WITH JOHN KING." Cheney said Obama's terror policies had left the country less safe. Gibbs later dialed back his comments saying the president takes the job of keeping Americans safe very seriously.
And breaking news this morning, Pope Benedict XVI talking about the fight against AIDS in Africa before his first visit to the continent as the leader of the Catholic Church. He said condoms are not the answer and will only makes things worse. The Vatican encourages sexual abstinence to fight the spread of disease -- Kiran.
CHETRY: All right. All this week, CNN is focusing on the "ROAD TO RESCUE." These are tips to get you through the economic nightmare and restoring confidence is key to any recovery. It depends on you feeling good about going places like the mall or the car dealership and consumer confidence right now is at an all time low.
Joining me now to discuss this is investment adviser Ryan Mack and financial adviser Jill Schlesinger. It's hard for me to say this morning. Sounds Irish. It's O'Schlesinger this morning.
JILL SCHLESINGER, FINANCIAL ADVISER: Exactly.
CHETRY: Had you on the show yesterday when we're talking about this. But we have some new information out today. One, Jill, we're expecting to get some new numbers out today, both on the housing market and inflation. Economists are saying that it looks like it's going to be a continuation or a deepening of the worst real estate slump in 70 years, and of course the ripple effect that we're seeing in communities on tax revenue, et cetera, what are you looking for in these reports out today about signs that things may be turning around?
SCHLESINGER: I am not looking for any signs that things are turning yet and I think it's a little bit early to go there. I think people are just feeling like gosh, the market went up last week and is it really done and I think the answer is no, we're not done yet, and the signs that we will be looking for is that housing will steady and we are not there yet. There is still a contraction in housing.
We also have to remember, Kiran, we doubled prices from 2000 to 2006. That kind of rapid rise is going to take some time to reverse, and so I don't think that's going to happen immediately. I think we're going to be going through the rest of this year looking at the housing numbers.
CHETRY: Right.
SCHLESINGER: On the inflation front I think we're going to get confirmation that prices have not been rising that dramatically. That's good news. It's not good news if you're selling stuff and you want to charge more but it's good news for consumers because things aren't rising in price. Oil prices down from the top, obviously, pretty dramatically but I think the reality is people want things to get better, we're not there yet.
CHETRY: And Ryan, I want to ask you about the growing outrage this morning over AIG getting paid bonuses. Well, now, we're hearing that Wall Street reportedly looking for ways to side-step federal caps on compensation. We're getting word that officials at Citigroup, Morgan Stanley, some of these other banks that took bailout money are now talking about increasing base salaries, trying to side step bonus restrictions. Is Washington powerless here?
RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: Well I don't think they are. There is new proposed legislation to make sure that a lot of these additional retention awards are as much as 95 percent taxable so that they can make sure this money goes back to the American people. You know, in Detroit right now I have a lot of good buddies and friends working on the line and got their contracts renegotiated for a lower price.
And now at the end of the day, individuals at AIG, not only do they get to keep their six-figure salaries, but in the end, $170 billion, that the taxpayers who are working on the line gave them but in addition to that, they get another $165 million.
You're talking about consumer confidence. This actually makes the individuals who are working on the lines say you know what? Those who have and those who do not have as much as those who have are very discouraged, and what's almost the incentive to work hard, to go out, try to get additional education, try to go out and try to get retrained and make sure we can put in more productive hours that, makes people more discouraged.
CHETRY: Right.
MACK: So I think when we're talking about too big to be responsible that's something that we have to draw the line, is this too big to fail is one thing but too big to be responsible is another thing that we have to stop.
CHETRY: I think he hit the nail on the head. Jill, you talk about the potential for class warfare even as a result of this AIG fallout. Explain what you mean.
SCHLESINGER: There's a disconnect. People do not understand that Wall Street people are paid a very low base salary relative to what their total compensation is. Now I know everyone is out there saying $200,000 is in a low base salary but if you had the idea that you were going to get paid $700,000, that's what you've been paid for the last ten years, the base salaries were always low relative to bonuses. This is a legacy effect. When Wall Street firms were partnerships, the partners took low base salaries and split all the profits. Then all of these companies started becoming publicly-traded companies but the system never changed.
I don't think this is a side step of actually the T.A.R.P. situation. I think this is economic reality, if we want to pay people to stay in these jobs and work hard and make money for us, we're going to have to change our compensation structure. CHETRY: But wait, the bonus, the very nature of a bonus is you get rewarded when things go well.
SCHLESINGER: No.
(CROSSTALK)
SCHLESINGER: Hold on a second. Wait a second. Wait a second. That is a misnomer in Wall Street parlance.
CHETRY: Then don't call it a bonus. Call it pay.
SCHLESINGER: OK. I understand...
MACK: If I could say something here...
SCHLESINGER: No wait a second. Wait a second. Ryan, Ryan, you got to speak.
(CROSSTALK)
MACK: ... getting bonuses...
SCHLESINGER: Ryan, that is not -- you know that's not how Wall Street works.
MACK: People don't mind that people are making money. I used to be a stock trader. I made a lot of money being a stock trader, and I loved the bonuses.
SCHLESINGER: The way the bonus system works, that is not true. You know that's not how it works. People's compensation was different.
CHETRY: Jill, it's a hard sell when the company is not even...
SCHLESINGER: Of course it is.
CHETRY: ... the company would not exist if the federal government wasn't propping it up, and the people are getting bonuses anyway. That is so hard to swallow for most people.
SCHLESINGER: I am not suggesting that AIG people managed this company well. I am saying across Wall Street, the bonus structure that had been in place for the last 50 years is one that is changing. If Main Street has to understand that...
MACK: The bottom line is if you're taking...
SCHLESINGER: Are you going to interrupt me every time or I can get to actually speak?
MACK: If you're taking taxpayer dollars more money, you get no more bonuses, that's it.
SCHLESINGER: Ryan, hold on a second, Ryan you interrupted me, Ryan. Can I speak?
MACK: If you take your $30 billion. You're getting all my money, that's it.
SCHLESINGER: Ryan...
CHETRY: All right. Jill, go ahead.
SCHLESINGER: Ryan, how about letting me speak, buddy. Come on now.
CHETRY: Last word, Jill.
SCHLESINGER: These are contractual obligations. I will be very surprised if the government is able to claw these back. I am not suggesting that we should be proud of this, but when you have a contract, those guys...
MACK: What about the UAW contracts? They just got their salaries reduced the other day, what about those contracts?
SCHLESINGER: Ryan, we gave the TARP.
MACK: There was no outrage then but there's outrage now.
SCHLESINGER: You know what, Ryan, this is the last time we're going to speak together. What about we actually...
MACK: Those contracts? This double standard is the one that's destroying consumer confidence. We have...
SCHLESINGER: Ryan, are we going to have a conversation? Or are you going to yell at me? Is this productive?
MACK: This double standard is what's causing the lack of consumer confidence in America and the people are...
SCHLESINGER: This is not and I think you are painting a...
MACK: ... you have these contracts with AIG and oh, we got to keep these contracts?
CHETRY: All right. You know what, Jill...
SCHLESINGER: We're done.
CHETRY: Let me ask you this. Why is it that these contracts seem to be different, as Ryan is pointing out. Pilots' union have gotten together and renegotiated in an effort to keep their company afloat, the UAW as well. What does it seem, at least to the everyday Joe that Wall Street is exempt?
MACK: Double standard.
SCHLESINGER: Ryan, you want to keep interrupting me. We cannot have this conversation ever again. But let me be very clear. I am not sitting here and protecting AIG's behavior. There are bonuses that were promised to people when these guys came in. We had a contractual obligation. Why they were not renegotiated, how do I know that?
I'm just saying that the reality is the government did not put strings on this money. Shame on the government. Shame on the government for doing that. They didn't say you know what? We don't think those bonuses should get paid out and frankly that's...
CHETRY: All right. You guys, we have to leave it here. It was a very lively discussion. And we'll see you back here tomorrow same time, same place. Ryan Mack and Jill Schlesinger, thanks so much. Thirty-seven minutes after the hour.
(COMMERCIAL BREAK)
ROBERTS: All week long in our "ROAD TO RESCUE" coverage, we are focusing on some of the creative ways that people are dealing with the tough economy. First to South Carolina where the jobless rate is the second worst in the nation at 10.4 percent. But when this man got laid off, he started a local news Web site. His new office a table at a coffee shop.
Arizona has one of the worst foreclosure rates in the country. With 32,000 homes being foreclosed this year alone, the city of Phoenix is starting a new plan to cut that number down a little bit by giving anyone who buys a home under foreclosure a $15,000 bonus.
The jobless numbers in Wisconsin aren't better, coming in at almost eight percent. But this Milwaukee man finds a way to rise above the crowd investigating a billboard to advertise his services to potential employers. He already has a few solid leads.
And there's plenty of encouraging news in these tough times. Stories of people helping their communities and themselves, find out how to impact your world and the "Road to Rescue" at cnn.com/impact.
CHETRY: Well a quick reminder call our AMFix hotline at your place to sound out about the hot topics of the day, call the show 877- MY-AMFIX, 877-692-6349. And also you can check out our new blog, it's AMFix, when you get to work cnn.com/amfix. We're also on Facebook and Twitter, keeping you posted on the big stories throughout your day. It's 42 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to our special "ROAD TO RESCUE" coverage. It's 45 minutes past the hour. All morning long we're hearing you sound off on the money meltdown. We have Christine Romans and Gerri Willis. They've been answering your questions on the phone and online. And we want to take a phone call right now. This is Karen in Florida. Let's listen to what she said when she called in to the hotline.
(BEGIN AUDIO CLIP) KAREN, MIAMI: Hi, my name is Karen. I'm from Miami, Florida. I've been unemployed for about a year now. I have an advanced degree. But I was just listening to your program, and the Cobra benefits you can only apply, have that extension and that assistance after September, 2008, and unemployment in the state of Florida is one of the worst in the states.
(END AUDIO CLIP)
CHETRY: She's asking about COBRA benefits, wanting to extend her health benefits even though you don't have a job, if god forbid something happens. What are her options?
WILLIS: All right. Let's talk a little bit about what cobra is. And she's right. Congress changed this recently. So there are some improvements for you out there but I want to go over the details. Once you're laid off, you have 60 days to elect cobra, you're extending your employers' health care and you're paying for the privilege, believe me.
You have 44 days to make that first premium payment. You should know that 65 percent of cobra costs are covered for nine months by the federal government so you're getting some help here. You have to be laid off between September 1st, 2008 and December 31st, 2009. I had to read this. Because this is so freaking complicated all the time, you really need help and the devil is in the details. We talk about his all the time.
I know that sometimes we skip over all the bells and whistles but what you need to do if you've been laid off for a year is you're going to have to find some other kind of coverage and you're going to have to go to Medicare, S-CHIP programs for kids. There's lots of possibilities out there but they're all expensive.
CHETRY: All right. Gerri, thanks, hopefully that clears things up for Karen in Florida. We want to go to Sue in Ohio right now. She has a question for Christine.
(BEGIN AUDIO CLIP)
SUE, OHIO: Hi. My name is Sue, I'm calling from Ohio. My question is, if I work for the Ginnette Corporation and I am still employed but our concern is if our company goes under, are our pensions guaranteed or will we lose our pensions?
(END AUDIO CLIP)
ROMANS: OK. Just like your money is guaranteed in the bank by the FDIC, your pension is supposed to be guaranteed by the government. I mean, some 40 million, I think of these pensions are guaranteed by the government. First thing to do is call your HR department and find out if indeed you are guaranteed by the Pension Benefit Guarantee Corporation, and if you are, and your company did not put enough money away for a rainy day in case something happened then you will be covered. You might not be covered all the way, right, Gerri? I think there's a monthly limit of some $4,300, which is... WILLIS: Unless you're the CEO of Ginnette, you're probably going to be covered because the limits are so high and one other thing to think about here, you're lucky. There's a guarantee behind your retirement for people who are in 401(k)s, we're all kind of struggling to regain that lost ground so you should take a breath. You're in good shape.
ROMANS: There's good information at AARP.com, that's you know, and also you can look on government Web sites for more information, too, but go to your HR department.
CHETRY: Thanks so much, you two. We'll checking in with you throughout the morning as well. Forty-eight minutes past the hour.
(COMMERCIAL BREAK)
ROBERTS: It's nine minutes now to the top of the hour. Welcome back to a special "ROAD TO RESCUE" edition of AMERICAN MORNING breaking down issue number one, the economy. You heard a pretty heated discussion between Jill Schlesinger and Ryan Mack just a little while ago. Well, Jill is going to take a little more time to explain her position. She's going to be writing up a blog post for us, and you can read it on cnn.com/amfix.
Well one of the biggest worries facing Americans these days is the soaring cost of health care. Let's bring in our senior medical correspondent Elizabeth Cohen. Forty-eight million Americans, Elizabeth have no health insurance. How do people on these declining budgets because of this economic downturn manage to afford insurance or keep up with, you know, doctor visits, hospital payments, whatever they're facing?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Well, John, sadly, the answer is that they don't keep up with going to the doctor. There's a new survey that is just out. CNN has an exclusive on it. This survey found that 10 percent of Americans do not seek medical care when they are sick or injured due to the high cost of that care. That number comes to us from Deloitte LLP, which has clients in the health care industry.
That survey interestingly enough was done in October before things got as bad as they are now. Things could even be worst. Take a look at these number. Every time you have a one percent dip in the unemployment rate, you have 1.1 million more people becoming uninsured. So for every one percent increase in the unemployment rate, 1.1 more people become uninsured and therefore probably even more people now are voiding going to the doctor because well they are not insured and they can't pay for it.
ROBERTS: So this has big effects down the line, too, doesn't it?
COHEN: Oh, certainly. If you don't go to the doctor for the little things, those little things become big things. If you don't get the preventive care that you're supposed to get, little things again become big things. This is an interesting number, John. For everyone got colonoscopies or who were supposed to, or more people got colonoscopies who are supposed to, we could save 10,000 lives in this country. So more people got colonoscopies could save 10,000 lives. But these days, a lot of people can't afford a colonoscopy, they don't have the insurance.
ROBERTS: Yes, absolutely. And even some insurance companies are declining care as well because of the economics. Thanks very much. Elizabeth Cohen for us this morning. 53 minutes now after the hour.
(BEGIN VIDEOTAPE)
CHETRY (voice-over): From experienced attorney to selling sofas.
UNIDENTIFIED MALE: I still wear a tie. I still wear a jacket.
CHETRY: Surge of white-collar professionals showing up in retail.
UNIDENTIFIED MALE: It's an adjustment psychologically.
CHETRY: Going where the jobs are, no matter what you've done before.
Plus, the drum beats louder about AIG. Stop the madness. Stop the bonuses, but is it even possible? You're watching the most news in the morning.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
CHETRY: Welcome back to a special edition, "ROAD TO RESCUE," of AMERICAN MORNING. All morning long, we've been hearing from you. Two thousand phone calls we've gotten so far with your ideas, your opinions and your questions. This viewer from New York called our hotline to give us a piece of his mind.
(BEGIN AUDIO CLIP)
Chris: This is Chris from New York City. Basically, I think our problem is all the embezzlement and all the fraud that's been going on over the years that has gone unnoticed.
(END AUDIO CLIP)
CHETRY: There you go. We want to hear from you, 877-MY-AMFIX, 877,692-6349. So how far would you go in this economy to land a job? One father of three decided to literally put his face out there for perspective employers to see. And if you're anywhere near Highway 45 in the Milwaukee area, well then you can't miss his skills. Reporter Mike Anderson from affiliate WISN has his story.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: They've been very supportive.
MIKE ANDERSON, WISN-TV CORRESPONDENT: Mark Hauer is 45, married with three children and hasn't worked in six months. His wife's grandmother is letting the family bed down at her farmhouse in Kewaskum until something breaks. But mark is past the time of waiting for a break. Heading into the weekend, he posted a billboard right next to Highway 45. His services are for hire.
MARK HAUER, UNEMPLOYED BUT UNDAUNTED: I've tried so many different things and with the sea of people out there today that are looking for work, how do you stand above the crowd?
ANDERSON: The billboard certainly does stand above the traffic. It's only been up a couple of days but the billboard is already driving traffic to Hauer's Web site.
HAUER: I've got three solid interview responses with a potential fourth coming up this week. But I also had opportunities where people have contacted me from afar, just to say, wow, I'm inspired by your story.
ANDERSON: His story is as long as his resume. Hauer's expertise is in sales, service, production and procurement management. He is looking for a position as general sales manager or director of operations. Part of the problem with his search is that he has been told he is overqualified for a number of jobs currently out there. His most recent job was assisting U.S. troops in Iraq for a contractor in a detainee camp.
HAUER: I came back from Iraq six months ago approximately and, at that point in time, the economy had already collapsed.
ANDERSON: Hauer could have chosen the least expensive digital billboard but he chose to go for it and put a chunk of the family savings in a big one, a bet he thinks he'll win.
HAUER: I'll either go from zero to hero in achieving my purpose or it's something that we can chew on.
(END VIDEOTAPE)
