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American Morning
Sen. Charles Grassley Discusses AIG; Rep. Barney Frank on AIG CEO's Testimony; Viewers Sound-off on AIG, Congress; Donald Trump on Pulling Out of Mexico Project and Money Lost By Investors; Homeowners Fighting Back; Video Game Sales, Movie Viewership Soar
Aired March 18, 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: Well, we are on the "ROAD TO RESCUE" here on AMERICAN MORNING today. All week, we're taking dead aim at the economy, arming you with the knowledge that you need to get through it successfully.
KIRAN CHETRY, CNN ANCHOR: And we're taking your calls and your iReports, your emails. Real problems, real solutions. The unmatched resources of CNN at your disposal. Your personal finance editor Gerri Willis, she is on Twitter all morning answering your questions.
ROBERTS: Plus, we're talking to the experts and newsmakers in this economic crisis, including Senator Chuck Grassley, the man who said that AIG executives should resign or in the Japanese tradition kill themselves.
Also, House Financial Services Committee Chairman Barney Frank will be with us, along with Donald Trump as well.
The big economic stories that we're breaking down for you today, all aspects of AIG and this is not going to be pretty.
AIG's CEO will be on Capitol Hill today. Edward Liddy took over the giant insurance company when it collapsed into the government's arms back in September. So, essentially, he's working for you and you'll want to hear what he has to say.
Liddy's testimony comes as the Obama administration says AIG will pay us back for $165 million in bonuses that it already paid out but that doesn't mean that it's coming right from the pockets of greedy executives, some of whom already took the money and ran. More on that in just a moment.
Congress may get paid back by simply taxing the hell out of all companies on the government's payroll. The Senate Finance Committee is considering a proposal that would tax executive bonuses at a rate of close to 100 percent. It would apply to bonuses only handed out this year.
CHETRY: Well, all the taxes in the world won't put that money back in your pockets and people are fed up.
Here's what you are saying this morning.
(BEGIN VIDEO CLIP)
JIM MORRISON, CNN IREPORTER: Can somebody tell me why they aren't handing out pitch forks right now, and we are not charging AIG headquarters en masse? Seventy-three of these executives received $1 million or more, and that includes 11 of them who left AIG. So I guess that flushes the argument that they need these bonuses to retain the best and the brightest.
UNIDENTIFIED MALE: They failed their contract. They failed to fire those people who are going to get their bonus, and hire some people who you know are going to get you out of a dump.
KATHERINE, LAKEWOOD, OHIO: My name is Katherine. I'm from Lakewood, Ohio. I think it's really pathetic that the people of AIG should be getting all this money in bonuses when the rest of us is suffering and the fact that we have to give it to them out of our tax paying money. We're the ones that should be getting it, not them.
(END VIDEO CLIP)
CHETRY: All right. Well, while you're doing your best to shame them into giving the money back, the White House and Congress taking notice but also taking some heat.
CNN's Carol Costello has that part of the story. You know, Carol, a lot of our viewers are wondering why it seems that our leaders are just learning about this now. CNN has been reporting on these bonuses since the end of January.
CAROL COSTELLO, CNN CORRESPONDENT: Boy, you're not kidding, Kiran. Voters certainly want answers to those questions and they're not getting any satisfactory explanation from the Obama administration. And, you know, that could make things very difficult for the president down the line.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: American people are outraged.
UNIDENTIFIED MALE: Outrageous.
UNIDENTIFIED MALE: Absolutely livid.
COSTELLO (voice-over): Anger over AIG is palpable. AMERICAN MORNING's phone lines lit up.
JOE, ROCHESTOR, NEW YORK: It's disgusting that they're allowed to continue to do business. Let them go down.
ELLA, DENVER, COLORADO: Everybody else is hurting. Why can't they hurt with the rest of us?
BILL, OHIO: I'm absolutely nauseated and disgusted. I think these people should be tried for treason.
COSTELLO: Lawmakers feel that heat, jostling one another to demonstrate they are angry, too.
REP. STEVE ISRAEL (D), NEW YORK: You can run but you can't hide.
REP. ERIC MASSA (D), NEW YORK: It's money that's being taken out of the back pockets of working men and women all over this country.
REP. CAROLYN MALONEY (D), NEW YORK: Well, we are saying that we are obligated to get this taxpayer's money back.
SEN. CHARLES GRASSLEY, RANKING MEMBER, FINANCE COMMITTEE: Irresponsible.
COSTELLO: Senator Chuck Grassley called for AIG executives to resign or go commit suicide. This kind of collective rhetoric so toxic "The Washington Post" reports AIG offices in Connecticut have hired guards. Sources tell us AIG employees in New York and London are afraid to come to work.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Executives bonuses...
COSTELLO: Analysts say President Obama must calm the rhetoric, or he'll be next on the voter outrage list.
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: He's the new guy in town. His popularity is over 60 percent. But when you look at our CNN polls about how is he doing in terms of his programs for banking, it's -- a majority disapprove.
JIM VANDERHEI, POLITICO.COM: He has to somehow continue to talk to the American people about what's going on with the economy, do it in a way that's realistic. It's not so gloomy that it pulls the markets down or it's not so optimistic that it seems sort of ridiculous or divorced from reality.
COSTELLO: But that now seems an impossible task. How do you convince these voters AIG's survival matters?
UNIDENTIFIED FEMALE: And I think they should just let them fail.
UNIDENTIFIED FEMALE: How did they feel that they could take all this money when other people, you know, don't even have jobs?
UNIDENTIFIED MALE: I would ask them to step into the shoes of the people that their greed has affected.
UNIDENTIFIED MALE: There are people going hungry so he could have a bonus? That's awful. He should be ashamed of himself.
UNIDENTIFIED FEMALE: What will you say to the executives?
UNIDENTIFIED FEMALE: Quit.
(END VIDEOTAPE)
COSTELLO: I think she said it all. And, you know, the verbal shellacking of AIG isn't over. Its CEO, Edward Liddy, will testify before Congress later today and that should be quite ugly. Top of the agenda why AIG forked over up to $1 million apiece to employees responsible for creating those exotic derivatives that tanked the company -- Kiran.
CHETRY: And he has an op-ed out today. He said that this happened before his watch, that he wouldn't have, you know, gone ahead with those retention payments but he wants to certainly explain himself. And he's probably going to get a fair share of heat today on Capitol Hill.
COSTELLO: I know. You know, a lot of people were saying to me yesterday at dinner that, you know, they feel sorry for Mr. Liddy in going to Congress, and I hope he's wearing a bullet-proof vest. I mean they were joking but that's how heated people are about this issue.
CHETRY: Yes, absolutely. All right. Carol Costello for us this morning, thanks.
And AIG is calling these payouts that we've been talking about retention bonuses, claiming that the company needed them to keep the best and brightest around. Well, keep in mind that the company just suffered the worst quarterly loss in the history of the world. Take a look at this.
New York State Attorney General Andrew Cuomo says that 73 AIG executives got $1 million or more. There you go. We just put it up there so you could visualize it a little better. Eleven out of those 73 already left the company. Retention payments, they're gone.
AIG is so far refusing to release the names of the millionaires claiming privacy and a concern for their safety. Of course, some of the newspapers and reporters have been already digging up some of the names of these people.
ROBERTS: We saw a picture of one of them in the local newspapers too. It came a little sheepish. So, retention payments and gotcha. They work well.
Lawmakers on Capitol Hill want you to know that they share your AIG outrage even though they did nothing to stop the bonuses beforehand, leaving you, the taxpayer, as we must always find ourselves in the position of, stuck with the bill. Now, they're getting the message loud and clear.
(BEGIN VIDEO CLIP)
SEN. MAX BAUCUS (D), CHAIRMAN, FINANCE COMMITTEE: Millions of Americans are losing their jobs -- millions. And to some degree they're losing their jobs because of actions taken by some of these firms. At the same time, they're giving themselves bonuses.
I mean, give me a break. What are these people thinking? Which is part of the problem, they're not thinking. UNIDENTIFIED MALE: I think taxpayers are willing to help but when they see the lack of sensitivity on the part of corporate directors and corporate management, probably more corporate management than anything else, by giving these bonuses, doing a lot of other outrageous things, you know, there's just so much that the taxpayers in this country are going to stand for.
(END VIDEO CLIP)
ROBERTS: And we're getting new details this morning on a plan to get the $165 million in bonus cash -- bonus -- you know, I'm just so flabbergasted by this whole thing I can't even talk anymore, get the bonus cash back from AIG.
Treasury Secretary Tim Geithner sent a letter to Congress with the details. Our Christine Romans is here now to spell it all out for us.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: OK.
ROBERTS: So what is he proposing?
ROMANS: Well, he is proposing that he's going to get AIG to pay this money back to the United States government.
Remember, four times now they've gone back and redone the bailout, do-over on the bailout so there's a $30 million -- sorry $30 billion payment to AIG in assistance that is pending.
So, the Treasury secretary says that he is going to deduct the cost of bonuses from that pending $30 billion in aid, and essentially doubling the payment. There will be a $165 million penalty on AIG for issuing the bonuses in the first place so the government getting its money back twice.
Which brings me to this point, that's great, that gets the money back but you still have the money going to the unit. You know, it's the company paying it back but the people in this unit will still get that money rightly or wrongly.
ROBERTS: Here's your money.
ROMANS: Yes, thank you.
ROBERTS: Now, give it back.
ROMANS: And also, where do you get the money to pay the government back, from the government that gave the money in the first place to prevent them from going bankrupt? So, it's our money coming around in circles and that unit still gets its bonus in the end. But the administration clearly hearing the rage on this and trying to figure out how taxpayers are going to be paid back for that bonus money.
CHETRY: So more and more people getting a look at how Washington works, right? ROMANS: And Wall Street. It's Wall Street and Washington colliding, and it's a very ugly mess.
CHETRY: All right. Christine, thanks. We're going to be talking about this throughout the morning.
Also new this morning, the White House saying that Treasury Secretary Tim Geithner didn't learn about AIG's bonuses until last Tuesday and that President Obama didn't hear about them until Thursday. That time line, though, is raising some eyebrows especially since our Mary Snow was talking about AIG's bonus plans as far back as January 28th.
Take a look.
(BEGIN VIDEO CLIP)
MARY SNOW, CNN CORRESPONDENT (voice-over): American International Group is paying bonuses to its financial products unit, that same unit racked up huge losses. A source familiar with the matter puts the figure at $450 million.
(END VIDEO CLIP)
CHETRY: All right. Well, President Obama did not sign that stimulus bill, of course, until February 17th, so that was almost three weeks later, that, you know, it was out there that these bonuses were going to be handed out by AIG.
ROMANS: And we were talking about these bonuses, bonuses for AIG back in December. Remember, John? And I had a long conversation about bonuses in January.
I mean, everyone -- it was so chaotic, everything was so chaotic, trying to rush through all of these different things. This bonus controversy kept kind of getting pushed off. We knew it was happening. We knew it was outrageous, kept getting pushed off but now it just really, really blown up for the administration and for Congress. A lot of questions about who was watching, who was minding the store here.
ROBERTS: You know when you attach the sense of crisis to these things the way the government does. They say they tend to sort of run on and then you look in hindsight and go, whoa, what happened?
CHETRY: Yes. And even though Max Baucus, the Senate Finance Committee chair, said the same thing. He said frankly, it was such a rush, talking about the stimulus bill to get it passed and we didn't have time to address many of the provisions that were modified significantly.
ROMANS: But the American people are asking questions now, how are these people going to ask for more money? Maybe another stimulus, maybe more help for the banks? There's no trust here. The American people have lost their trust that they know what they're doing. ROBERTS: Well, we want the American people involved all morning long. There are six ways for you to get your "AMFix." Call our hotline at 877-MY-AMFIX, 1-877-692-6349. Just leave us a brief voice mail with your thoughts on the hot topics of the day.
Also, check out our new blog "AMFix" when you get to work. Just go to CNN.com/AMFix. You can also get in touch with us through Facebook, Twitter and iReport.
CHETRY: They call themselves home defenders, protecting other people's property from being taken away.
(BEGIN VIDEO CLIP)
DEBORAH FEYERICK, CNN CORRESPONDENT: Are you willing to risk being arrested?
OLIVE THOMPSON, EVICTED HOMEOWNER: Go to jail? Hell yes.
(END VIDEO CLIP)
CHETRY: She's got two jobs, four kids and a house the bank wants back.
(BEGIN VIDEO CLIP)
BERTHA LEWIS, HOMEOWNERS' RIGHTS ADVOCATE: We say, 101 Main Street, we need you there right now. We text the people. We e-mail folks.
(END VIDEO CLIP)
CHETRY: Not my house, she says.
Ahead on the Most News in the Morning.
(COMMERCIAL BREAK)
ROBERTS: Welcome back to the Most News in the Morning. We're continuing our landmark special coverage "ROAD TO RESCUE" taking your phone calls.
Listen to this one.
(BEGIN VIDEO CLIP)
DEBORAH WILLIAMS, MINNEAPOLIS, MINNESOTA: This is Deborah Williams calling from Minneapolis, Minnesota.
And I'm a little upset with us Americans. They're suddenly are complaining about that we're bailing out people that shouldn't have bought houses in the first place. There's a lot of people that lost their jobs that paid on their houses for years that can no longer afford their mortgages. So I think we should be a little bit more kind to people that are losing their houses.
(END VIDEO CLIP)
ROBERTS: You can share your thoughts with us, too. Just give us a call at 877-MY-AMFIX. That's 1-877-MY-AMFIX -- Kiran.
CHETRY: All right. Well, it seems like we all know someone hit hard by the mortgage crisis. Here's some of the latest numbers.
In February, the foreclosure rate went up again, an increase of six percent from January. That's according to Realty Track. But some aren't taking things lying down.
Deb Feyerick is looking at homeowners this morning who are fighting back not only for themselves, but for their neighbors.
FEYERICK: Absolutely. You know, Kiran, I've met dozens of people who are losing their houses. What always strikes me is that these homes may be modest or simple but to the owner they mean everything. And now there's nothing left to lose. They're taking a chance and they're fighting back.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: What do we want?
CROWD: Justice.
FEYERICK (voice-over): From New York...
CROWD: No foreclosures. Save our home!
FEYERICK: To California, in 13 cities and states across the country, homeowners are joining together, fighting eviction in a new way. They're breaking the rules and in most cases they're doing it peacefully.
UNIDENTIFIED MALE: I can see Don (ph) is reclaiming our home.
FEYERICK: Like millions of Americans Olive Thompson got caught up in the subprime fiasco, taking a loan that started low before adjusting two years later to a rate way above what she could afford.
(on camera): Are you willing to risk being arrested?
THOMPSON: Go to jail? Hell yes.
FEYERICK: Because what?
THOMPSON: I put my whole life in this house and I don't think I should walk away from it. It's not my fault.
FEYERICK (voice-over): Thompson, who works two jobs as a nurse's aide to support her four kids, blames the lender who she says lied to her.
What about your kids? If you go to jail, who will take care of them? THOMPSON: Well, they're coming too because we'll all fight them.
FEYERICK: Thompson will not stand alone. A team of people calling themselves "home defenders," trained in civil disobedience. When the sheriff shows up to evict, the teams will quickly mobilize.
BERTHA LEWIS, HOMEOWNERS' RIGHTS ADVOCATE: Here you see all of these cubicles. People are on the phones.
FEYERICK: Right.
LEWIS: And we say 101 Main Street we need you there now. We text the people. We e-mail folks. Word of mouth goes out.
UNIDENTIFIED MALE: Who are we?
CROWD: ACORN.
FEYERICK: The civil disobedience campaign was organized by this sometimes controversial advocacy group ACORN, and its chief executive officer Bertha Lewis.
LEWIS: And time after time, we've seen where a family had just held on for a week, a month, they could have avoided eviction all together.
FEYERICK: The bank now owns her home, so Olive Thompson no longer has any legal right to it. Still, she hopes that she can buy time she may be able to buy back her house at a reasonable fixed rate. For now, her home is watched 24/7 so even if she's at work and the sheriff shows up, Thompson says home defenders will protect her property as long as possible.
THOMPSON: When it goes down, it goes down, but I'll be fighting.
(END VIDEOTAPE)
FEYERICK: Now as part of the quick response, lawyers are also mobilized so even if Olive Thompson were to get arrested, it's likely she'd have to appear before a judge then be released in her own recognizance.
Now, this civil disobedience plan has been in effect for about a month. There have been a handful of protest and in San Francisco, they even managed to save the house. So it is working a little bit.
CHETRY: Oh, that is a fascinating story how they're using all that technology to do that.
FEYERICK: Absolutely.
CHETRY: All right. Deb, thanks - John.
ROBERTS: He said AIG executives should resign or kill themselves. Now, he's toning it down a bit and Senator Chuck Grassley is here next. It's 17 minutes after the hour.
He is going face-to-face with the CEO of AIG this morning. How would you like to be in his shoes?
Congressman Barney Frank, before the big grilling on Capitol Hill. He is with us on AMERICAN MORNING live, ahead on the Most News in the Morning.
(COMMERCIAL BREAK)
ROBERTS: Taxpayers tired of being punching bags letting it all out. So we've got lots of iReports coming in to our Web site, playing a lot of them for us this morning. Many people on Capitol Hill say they share that anger, but one senator's comments stood out.
Let's listen to this.
(BEGIN VIDEO CLIP)
GRASSLEY: 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: That was the ranking Republican on the Senate Finance Committee, Senate Charles Grassley, and he joins us now from Capitol Hill.
Senator, obviously, you're pretty upset about this whole bonus idea.
GRASSLEY: Well, what you just quoted is what I've been saying, the first time back October the 1st, 2008. At that particular time, I was wondering to vote yes or no on what we call the TARP legislation. And I was just expressing what I was hearing from the grassroots, that these folks run these corporations into the ground, they want taxpayers' help. The least they could do is show a little contrition, remorse, and have an apology, and I used the Japanese as an example.
Obviously, I don't want people in the United States to commit suicide. That's not my ethic. I'm pro-life, but on the other hand, we could learn something from the corporate culture of Japan and apply it here in the United States.
ROBERTS: Right. You said, Senator, since making those statements that it was just rhetoric. But it seems that there's a lot of rhetoric going around these days. Congressman Darrell Issa wrote a letter to President Obama in which he said, "Where was this outrage and concern two weeks ago when AIG received another $30 billion?"
And my question is, where was the outrage among members of Congress years ago when things were great and these bonuses were being handed out? Nobody said, boo.
GRASSLEY: Well, the only lever we have in this is the fact that these corporations have come to the Congress of the United States and want a taxpayers' bailout. If it weren't for that, we would not have any leverage on how any individual corporation is being run and we don't pretend to have any leverage on any corporation today in the United States that's not seeking federal help.
But when it comes to the problems with AIG, other financial institutions, it seems to me to be perfectly legitimate that we don't think that they ought to be throwing money around like nothing's going wrong with their management of the corporation.
ROBERTS: But is there anything, Senator, you can really do, other than stomp your feet and say that this is outrageous?
GRASSLEY: We have introduced legislation last night. Senator Baucus and I had a news conference on legislation that would tax this money - 35 percent at the corporate level, 35 percent at the individual level - and try to recoup some of it in case the president of the United States and the secretary of Treasury can't get it back from the corporation.
ROBERTS: So, so far in the House at least, we heard from Charles Rangel. He has no appetite for using the tax code as a punishment. He thinks that that would be unfair.
GRASSLEY: Well, it isn't a question of being fair or unfair. It's unfair what they did to the taxpayers by paying bonuses when they don't have the money to pay bonuses.
So, the question more legitimately that Charlie Rangel could raise would be the extent to which it's constitutional.
ROBERTS: Right.
GRASSLEY: Senator Baucus and I feel that we have introduced a constitutional amendment. We'll leave it up, I mean, the constitutional provision, we'll leave it up to the courts to make a decision. I'm not a lawyer. I'm a farmer, so we leave it up to the judicial branch to make that determination.
ROBERTS: So bottom line here, do you think that the taxpayers will be able to get back this $165 million?
GRASSLEY: If we pass this legislation for sure, unless there's a contractual obligation that can't be abridged through the tax code.
ROBERTS: So, yes or no?
GRASSLEY: Well, I'm saying yes or I would not have put my name on this bill.
ROBERTS: All right. Senator Charles Grassley of Iowa, it's good to talk to you this morning. We hope that you can get that money back. GRASSLEY: Thank you.
ROBERTS: Appreciate it - Kiran.
CHETRY: All right. And still ahead, AIG's Edward Liddy is heading to Capitol Hill today, the CEO, and he's going to be facing Congress. So we're going to find out more about what they plan to ask him.
Also, why are Democratic leaders in Congress now scrambling to strip AIG executives of bonuses? Why didn't they prevent this in the first place? Well, House Democrat Barney Frank joins us live next.
It's 25 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: And welcome back to our special "ROAD TO RESCUE" coverage here on AMERICAN MORNING.
AIG's Edward Liddy is facing a potential firing squad on Capitol Hill today. The CEO, who's been at the helm of the company for the past six months, will be answering questions about the bonus outrage before the chairman of the House Financial Services Committee, Barney Frank. And Congressman Frank joins us live from Capitol Hill.
Great to talk to you this morning. Thanks for being with us.
REP. BARNEY FRANK (D), CHAIRMAN, HOUSE FINANCIAL SERVICES COMMITTEE: You're welcome.
CHETRY: First things first. When he appears before your committee today, what type of assurances are you guys seeking from Mr. Liddy with regard to these bonuses?
FRANK: Well, I don't have a lot of confidence in Mr. Liddy's view at this point. When he said that first he couldn't get the money back because they had contractual rights but also that he was worried about not retaining them, it left me unconvinced he's really going to be trying.
The notion that we want to retain these people, that we want to pay the people who messed it up in the first place so they don't leave, is just backwards to me. I think we would probably be better off if they did leave.
We are going to ask him to fully be cooperative in our effort, but I think the federal government has to take the lead on the lawsuits. We own this company in effect, and we're not asking that these bonuses be rescinded because we have lent money to the company. I believe we are saying as the owners of the company, we do not think we should be paying bonuses or should have paid bonuses to people who made mistakes, who were incompetent.
CHETRY: Right. OK, so, let me ask you about that. You said this yesterday as well, "we own it." We own 80 percent of AIG, but you seem to be caught in this purgatory, the government, where you own and you're paying for bailing out this company, yet you don't have any say in the decisions it is makes.
FRANK: Well, I want to change that.
CHETRY: I mean, what happens if it's fully nationalized?
FRANK: Well, I want to change that. It is de facto nationalizing in the sense of the ownership. I believe when -- understand, this is not, by the way, part of the congressionally voted rescue plan initially. The Federal Reserve has power under a statute that dates from 1932, that most of us weren't aware of. It hasn't been used for many years.
And in September, the chairman of the Federal Reserve, Mr. Bernanke, came to Congress and announced to us. We weren't asked or consulted. We were told that he was lending $85 billion to AIG under this authority. Now, since then, when we have voted, we have learned how to put tough conditions on, and so I do want to reassure people we have...
CHETRY: Well, wait a minute. Let me ask you about that.
FRANK: I'm sorry, may I finish the sentence?
CHETRY: Yes. Go ahead.
FRANK: Because I think people need to know that, is this a recurring pattern or not? We will not see this happening again. We have banks that got money now that are getting money or just got money that want to give it back because we've been too tough. And I'm proud of that.
But we do have this problem where, under that statute from 75 years ago, the Federal Reserve gave the money without any conditions. I still believe that we have a right legally to recover this, because we can assert our ownership rights and say, yes, you may have had a contractual right to a bonus but your rotten performance means you should forfeit it.
CHETRY: All right, so, let me just ask you this, though. When your colleagues in the Senate moved to prevent bonuses in the stimulus bill last month, they made an exception. The Senate made an exception for pre-existing contracts, which, that effectively exempted AIG. So, you talk about these strings that are attached. Why did that happen?
FRANK: Because there is a problem with doing things retroactively legislatively. And you have to hear -- understand the distinction between legislative and legal. No, I don't think the American people want a situation where Congress, whenever it feels a contract shouldn't have been signed, passes a law to abrogate that past contract. That's why I am saying we should assert our ownership rights.
I want to invalidate these contracts and say, look, we are the owners of this company. We did, yes, contracts were signed with you that I wish hadn't been signed. But given how badly you performed, I want to argue that they did not perform under the contract.
The difference would be having a precedent that I don't think the American people want, even if for this situation, we'd all like to see if different, where whenever Congress thinks a contract should be abrogated, it should be abrogated. So, I'm talking about a legislative abrogation of a contract. I'm talking about a lawsuit as an owner of the company saying bonus, we ought to fine you for messing it up.
CHETRY: I hear what you're saying, Congressman. I think people are asking, why now? Why did it get stripped from the stimulus bill in closed-door negotiations between the White House and the House?
FRANK: Well, I'm trying to explain that -- excuse me -- because that provision would not have worked. You could not have legislatively canceled them out. You say you hear me, but you're not -- I mean, look we all wish a lot of things could be different. I wish when the Federal Reserve had initially done this, they'd done it differently.
Subsequently, going forward, we've been very tough. As I said, people want to give the money back. But what happened was, in the stimulus bill wasn't in the committee I was in. I was not in those negotiations. But passing a law, we have a constitutional provision against the abrogation of contracts. That's why, again, I don't think it works to simply pass a law.
We could pass a law tomorrow and say those contracts are no good. I don't think it would hold up in court. What I think can hold up in court for to us say, you do not deserve those bonuses under the contract because you performed so badly.
And by the way, that's one of the things I've been working on for several years. And I hope that we at least learn from this. It's to go after this whole financial incentive system that they have, whereby if you are working in one of these companies, and you take a risk, and it pays off, you get compensated. If you take a risk and it blows up in everybody's face, you don't lose anything. We have to put an end to this kind of one-way street, heads they win, tails they break even.
CHETRY: All right, well, we're going to have to leave it there. And we're of course all going to be listening today as the CEO of AIG comes before your committee.
FRANK: Can I say one important point that I think -- one of the things we're going to demand is the names of these people. They should not be allowed to hide behind anonymity. We will insist on knowing who they are and publishing those names.
CHETRY: All right. Congressman Barney Frank, thanks for being with us this morning.
And by the way, AIG Chairman Edward Liddy will be testifying on Capitol Hill today at 10:00 a.m. Eastern and you can see it live right here on CNN or on cnn.com.
ROBERTS: Thirty-two and a half minutes after the hour.
And here are this morning's top stories. The bulls continue their rally on Wall Street. The Dow up nearly 2.5 percent or 179 points, closing at near 7400. Stocks across Asia closing up as well and in Europe main markets are seeing green arrows.
President Obama reportedly said to sign a U.N. declaration calling for a worldwide decriminalization of homosexuality. The "Associated Press" report also says that President Bush was criticized in December as being the only western government refusing to sign that measure.
And it is that time of year even for President Obama is filling out a final four bracket for ESPN. The president put Louisville, North Carolina, Memphis and Pittsburgh in the final four, all except Memphis are number one seeds.
And we told you about this story on Monday, investors putting hundreds of thousands of dollars, millions actually to a pricey condo development in Mexico using the Trump name. The project went bust, the investors say they lost all of their money. Hear what the other side of that story for us this morning and some other things economic.
We're joined on the phone by Donald Trump.
It's good to talk to you this morning.
DONALD TRUMP, PRESIDENT & CEO, THE TRUMP ORGANIZATION (via telephone): Good morning.
ROBERTS: So you were involved in this project that folded. It was the Trump Ocean Resort Baja. You had licensed your name to be used in association with this project, why did you pull out?
TRUMP: Well, they defaulted, the developer of the site. Which, frankly, is, you know, somebody that I'm quite upset with. I don't know him very well, but they came in and they licensed the name "Trump." They agreed to very high standards and all of the other things that we insisted if we licensed.
Generally, I'll build a deal and do it myself. But in this particular case, we licensed the deal and they didn't live up to what they said they were going to live up to. And we, therefore, quite some time ago, defaulted them and took the name away. We are not the developers of the site.
However, I am, I must tell you, I've been watching your story, and I am looking into it very, very seriously, because I don't like what happened.
ROBERTS: Yes, I mean, on that point, in between the time that you licensed your name to the organization - and I believe you received a sum of money for doing that - a lot of people lost a lot of money.
One of them was Guadalupe Mendoza. She was on our program on Monday. She lost $200,000. She says that she wouldn't have gotten involved in the project if the Trump name wasn't attached to it.
Could we listen for a second to what she said?
(BEGIN VIDEO CLIP)
GUADALUPE MENDOZA, SUING DONALD TRUMP: I personally visited the Trump Ocean Resort Baja Visitation Center, spoke with the staff and everybody there, particularly tons and tons of documents were informing individuals that this was a joint project between the Trump Organization and the Irongate and various principals within that organization.
(END VIDEO CLIP)
ROBERTS: So you've said, Mr. Trump, clearly that you licensed only your name. You weren't part of the development. But she said, it was impossible to know that you weren't involved.
What do you say to her complaint?
TRUMP: I say two things. First of all, a lot of the people that bought here turned out to be fans of Donald Trump, people that respect what I've done and the jobs that we've built over the years. And that's the thing that most troubles me, because I really don't like it. I don't like to see a job that didn't work out. I wasn't involved. I've never even been there.
ROBERTS: Right.
TRUMP: But people tell me it's a wonderful location, it's a wonderful site.
ROBERTS: I believe your daughter was there.
TRUMP: The buildings were going to be beautiful. We had very, very high standards. We had people working on that with the developer.
But what happened, honestly, is the market crashed and they didn't build the job. I am looking into it very, very strongly. In fact, I called some of those people yesterday. I'm looking at it very strongly, because I don't like to see this happen. Especially, frankly, to fans of Donald Trump.
ROBERTS: Right. So what do you think you might be able to do about it?
TRUMP: Well, I don't know. But we're talking to people and we're also talking to the developer of the site. And you can ask them. I am not happy and I am not talking to them nicely, because I don't like to see what happened.
What took place is unfortunate. It was a market crash. But I don't like so much money being spent in order to find out that a job can't be built. ROBERTS: Right. All right. Well, maybe we can stay in touch with you on this and follow what's going on. And if there's some sort of relief that you can provide to some of these people that put faith in your name, we'd love to check back with you on it. TRUMP: Absolutely.
ROBERTS: Thanks, Mr. Trump. Appreciate it.
TRUMP: So long.
CHETRY: Still ahead, your problems and your future on the line. CNN's "Money Team" taking your calls, arming you with tips to weather the economic storm. We have Gerri Willis and Christine Romans standing by. If you're a home owner in danger of foreclosure, you're going to stick around and hear what they have to say.
It's 37 minutes after the hour.
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ROBERTS: The ground swell with national outrage over the $165 million in bonuses paid to AIG executives, money that was taken from the taxpayer coffers and we're getting all kinds of iReports on it.
Listen to what these folks had to say.
(BEGIN VIDEO CLIP)
EARL, CNN IREPORTER: This is Earl in California. Still haven't answered my question. Hire a thousand new IRS tax auditors to go through each individual tax return for AIG, get more of their money back.
(END VIDEO CLIP)
ROBERTS: This week we're trying to help you better understand what got us so deep into this recession, while critics are going off on AIG, few dispute that its collapse could devastate the global economy.
Our chief business correspondent Ali Velshi is here to show us exactly why AIG really may be too big to fail.
(BEGIN VIDEO CLIP)
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Let's just remind people what AIG is. It's one of the world's largest insurers. There are many people who have auto insurance policies, home insurance policies, travel or life insurance policies. As you've mentioned, many people are shareholders in AIG or their mutual funds are, but AIG is much bigger than that. It insures business.
Without insurance, business can't take risk so it insures banks, major airlines. We've talked about this before. The plane that went into the Hudson River insured by AIG, Hollywood movies against their actors or actresses getting injured, offshore oil platforms against hurricanes and things like that.
So it is a very important insurance company, has 74 million clients in 130 countries. So it's a big deal if a company like AIG were to fail.
(END VIDEO CLIP)
CHETRY: All right. Ali, thanks for that.
And Gerri Willis and Christine Romans are here fielding your calls. Welcome, you guys. Glad to have you back.
Our first question is for Gerri and it comes from Dawn. She is asking about mortgages.
Let's listen.
(BEGIN VIDEO CLIP)
DAWN, CALLER: Hi, my name is Dawn.
And I am calling because I took out a mortgage with Countrywide back in 2006. Our home has lost its value of over $150,000, and I have called them numerous times. I have faxed them paperwork to hopefully get our mortgage to where we can control it, and is there any hope for us?
(END VIDEO CLIP)
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: This is a really tough situation and I get a lot of calls like this, particularly with this company actually. What you want to do is call the company again, make your pitch again, but do it in the right place. Ask for the loan origination department. That is the loan modification department.
Now, let me mention something here. A lot of these banks they are not moving right away because they don't know what your house is worth. Part of the problem with this mess in mortgages is they can't value the asset. So, they are reluctant to write a new mortgage. So, whatever detail you can provide them about information about sales in your area, that would be a help.
The good news here is that the president's plan for housing could speak directly to your situation. There's a program for people who are current on their mortgage but their mortgage is large and their home's value has fallen. So, you'll want to check that out.
But I feel your pain and I know a lot of lenders out there are reluctant to do anything at all. You just have to be the greasy wheel that gets the help and really complain.
CHETRY: The squeaky wheel.
WILLIS: That's right.
CHETRY: A little greasy, too, what the heck. WILLIS: Yes.
CHETRY: That wouldn't hurt. All right. Our next question is for Christine, This is about AIG, who knew what and when. Let's listen.
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ED, CALLER, NEW JERSEY: My name's Ed from New Jersey.
I would like to know why, with all the hearings on AIG, that these contractual bonus issues were not disclosed at that time and why our elected officials did not know about this prior to giving the bonuses.
(END VIDEO CLIP)
CHETRY: So we're trying to get at with Congressman Frank as well. I mean, we're overseeing all of this.
ROMANS: Ed put his thumb right on it. I mean, we have been talking about AIG and renegotiating four times now, its bailout. And all along the way there have been hearings, there have been questions, we've known and we've known about these bonuses.
That's the thing. We know there were some bonuses paid out in December. We knew that this $165 million was going to be paid out on Friday. It wasn't until last week, though, that the Treasury Department of the administration really started to push on this. So this has been in the works for some time. The outrage has exploded now.
But he's really touched on it, who knew? A lot of people knew about this. Why didn't they fix this before now? Why did it have to blow up like this?
WILLIS: Here's my question, is this not now a political story? It's more about what did the administration know and when did they know it, right?
ROMANS: I think so. I mean, a lot of people are trying to look beyond this particular outrage and think OK where are we in the financial sector?
CHETRY: Right.
ROMANS: Are we fixing this company?
CHETRY: (INAUDIBLE) that causes the entire company for the spillover. So we're going to be talking about this a lot more but it was really the impetus for what has so many people angry.
Thanks to both of you. Christine and Gerri are standing by. We have more callers asking questions. Our "ROAD TO RESCUE: A CNN SURVIVAL GUIDE." ROBERTS: Stimulus road projects in the slow lane. Think those jobs they call shovel ready are immediate boosts to the economy? Wait a minute or a few months.
(BEGIN VIDEO CLIP)
JIM ACOSTA, CNN NATIONAL CORRESPONDENT: You can literally put your foot into the middle of this bridge. Just like that.
(END VIDEO CLIP)
ROBERTS: When the stimulus shovels go back in the shed.
(BEGIN VIDEO CLIP)
WAYNE KLOTZ, AMERICAN SOCIETY OF CIVIL ENGINEERS: It's not just send a guy out with a pickup truck and a couple of buddies.
(END OF VIDEO CLIP)
ROBERTS: Ahead on the Most News in the Morning.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
ROBERTS: Gerri Willis and Christine Romans back now. They've been answering your questions all morning long. And here's a call from a viewer asking credit card companies to ease up on the juice.
(BEGIN VIDEO CLIP)
ALYSE, CALLER, NEW YORK: My name's Alyse. I'm calling from Northport, New York.
I want to know if there was an immediate reduction in the ridiculous interest rates that are charged on our credit cards, reduced from 30 percent down to a cap of 10 percent, that would be immediate money in people's pockets, no special committees needed.
(END VIDEO CLIP)
ROBERTS: Gerri, we're talking a lot about these outrageous credit card rates and you know...
WILLIS: You know, Alyse, my heart goes out to you. It's ridiculous, the interest rates that credit cards are charging right now.
The reality is those numbers are getting even higher because the credit card companies are desperate for income. So they're charging you more. They're lowering your credit limit right now so you can charge less, pay more for the privilege.
You know, there's some bills in Congress right now to do something about this but they don't go after what is the appropriate level of interest. That's just not a topic that comes up and I think you know, you know that these companies are lobbying Congress all the time.
ROBERTS: So we hear some of these loan companies say OK, so you got credit card debt, let's refinance, let's aggregate everything and put it together. Is that a good idea for some of these people, is there the credit out there to allow them to do it?
WILLIS: Well there are people who do that. Right, you mean roll over your debt into a new car?
ROBERTS: Yes, or roll over your new debt into a loan.
WILLIS: Yes.
ROBERTS: Pay it down, so you end up paying 30 percent, maybe 10 percent or 12 percent.
WILLIS: You're on to something here though. It's difficult to get new loans now because credit is so tight.
ROMANS: Another problem though is sometimes people get a way to get a new loan to pay off the high interest credit card debt but the same problems that led them to the high interest credit card debt just follow them to the next loan. People have to look at why they're running up these bills. It's not just the interest, it's also because we got credit card -
ROBERTS: They get the new loan and the credit card balance goes down, oh, let's start using the credit card again. Vicious circle. Gerri, Christine, thanks.
We want you involved all morning long. There are six ways for to you to get you're AMFix. We hope you get hooked along with us. Call our hotline at 1-877-MY-AMFIX, 877-6926349. Just leave us a voicemail with your thoughts and the hot topics of the day. We'll be back with a lot more.
It's 10 minutes now to the top of the hour.
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CHETRY: Welcome back to AMERICAN MORNING's special "ROAD TO RESCUE."
Many of us are cutting back on pricey vacations and big purchases, but when it comes to entertainment, it's a whole different game. First off, Border's is reporting sales for American history, romance, science fiction and fantasy genres were all up. Video game manufacturer Gamestop Corporation says it expects double-digit sales growth this year and get this, movie attendance is up a staggering 21 percent.
Here's Kareen Wynter.
KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT: John, Kiran, one industry remains unfazed by the bad economy.
(BEGIN VIDEOTAPE)
WYNTER (voice-over): As the recession carries on, Americans are still coughing up the cash to be entertained. Movie box office numbers remain strong and many are finding good entertainment value in their own home. This video game, this says G-4 TV's Adam Saysler is because consumers are getting a lot more bang out of their gaming buck.
UNIDENTIFIED MALE: It's an investment that gives you a lot of return. You spend the money the first time, but you don't use up all the fun that it has.
WYNTER: According to the NPD Research Group, the video game industry earned $1.3 billion in sales in January, up 13 percent from January of '08. Communal games like Wii Fit, Wii Play and Guitar Hero World Tour are just a few of the titles driving up retail.
UNIDENTIFIED MALE: A lot of them are party games. Those have been successful. It really is a way for people to get together for a relatively low cost and have a lot of fun.
UNIDENTIFIED FEMALE: It provides family entertainment, something different. Instead of going to a movie and spending $60 on dinner and a movie.
UNIDENTIFIED MALE: A lot better than, you know - playing checkers or something, stay home, you know, keep the money in my pocket.
WYNTER: When vacation plans got too pricey for this couple, they say buying a new console was the way to go.
UNIDENTIFIED MALE: We have canceled two of our trips that we're going to take this year and in place of that we bought a Wii, it's more of a material good that will last longer.
(END VIDEOTAPE)
WYNTER: Saysler also tells us that games provide another source of escapism as more gamers are finding consolation in their gaming consoles through these tough times -- John, Kiran.
ROBERTS: AMERICAN MORNING, listening to you.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: This is greed, greed, greed.
UNIDENTIFIED MALE: It's ridiculous.
(END VIDEO CLIP)
ROBERTS: Twittering online, on the phone. The CNN money team, live, connected and talking to you. Plus, billboard man. He put his face in the highway to get hired. Now, he's live with a new job?
You're watching the Most News in the Morning.