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American Morning
Dodd Fesses up to CNN; AIG CEO Grilled by Congress; Economy Forcing People Back to Work; Madoff's Accountant Charged
Aired March 19, 2009 - 07:58 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN CO-ANCHOR: All right. It's two minutes to the top of the hour.
We are continuing our "ROAD TO RESCUE" coverage with good news from the Federal Reserve this morning. This morning, this is news that could help your bottom line. The Fed says it's injecting $1 trillion into the economy. It's buying up treasury bonds and mortgage securities. What that means for you, it's pushing mortgage rates down. Real estate trackers zillow.com showing the drop as low as 4.68 percent on a 30-year, fixed-rate loan. Does that mean it's a good time to buy? The CNN money team has some answers for you.
Connecticut Senator Chris Dodd says he's sorry. Dodd doing an about-face and owns up to helping pave the way for those huge bonus payouts at AIG and the senator is making his confessions only on CNN.
President Obama has another town hall meeting today in California. He is pushing the administration's economic agenda and ambitious plans to overhaul health care, engine and education. The president also making TV history with a stopover on "The Tonight Show" with Jay Leno. A full preview is just ahead, Kiran.
KIRAN CHETRY, CNN ANCHOR: All this week, CNN's special event "ROAD TO RESCUE" we're tackling the economy. Of course, a huge story with a huge impact on the country as well as your family.
ROMANS: Gerri Willis and Stephanie Elam and the entire CNN money team are here, ready to go. We want to hear your concerns about the economy. Your outrage definitely, your questions so call our show hotline at 1-877-my-am-fix or you can head to our Web site at cnn.com/AMFix. You can send us an e-mail or join our live conversation on our twitter page.
All right. Well, Connecticut Senator Chris Dodd fessing up to CNN's political unit that he inadvertently, he says, allowed AIG to pay out millions of dollars in executive bonuses. Chris Dodd now admits that he agreed to weaken an executive pay provision in the economic stimulus, but he says he was completely unaware of AIG's plans to award $165 million in bonuses. Dodd says he made the change because the Obama administration asked for it.
President Obama addressed the AIG bonus backlash at a town hall meeting in California on Wednesday and said that the buck stops with him.
(BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I know Washington is all in a tizzy and everybody is pointing fingers at each other and saying it's their fault, the Democrats' fault, the Republicans' fault. Listen, I'll take responsibility. I'm the president.
(END VIDEO CLIP)
CHETRY: CNN's Dana Bash looks at the AIG mystery solved.
DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Kiran and Christine, it wasn't easy but we uncovered an intriguing case here in Washington of who done it.
(BEGIN VIDEOTAPE)
BASH (voice-over): All this outrage about AIG's bonuses, from the White House...
OBAMA: People are right to be angry. I'm angry.
BASH: ... to Capitol Hill.
SEN. MAX BAUCUS (D), MONTANA: The country is angry. Individual Americans are angry. I am angry.
BASH: Yet Congress passed a bill last month that the president signed into law allowing AIG to keep its bonuses. And, for days, no one would fess up about who was responsible for a mysterious loophole that let that happen.
But CNN solved the mystery. It was the Obama Treasury Department and Senator Chris Dodd. Here's what happened. Last month's massive stimulus bill included a Dodd measure to strictly limit executive bonuses, but slipped inside at the last minute, an exemption for bonuses agreed to on or before February 11, 2009.
That allowed AIG to go ahead with its controversial bonuses. On Tuesday, Dodd adamantly denied to CNN that he was responsible for the exemption.
SEN. CHRISTOPHER DODD (D), CONNECTICUT: When I left the Senate, it was not in there. So, when I wrote the language, there was no such language like that. I can't point a finger at someone who offered the change at all.
BASH: But the next day, an official at the Treasury Department flatly contradicted Dodd, telling CNN his office did know, and that it was Obama Treasury officials who pressed him to make the change because they worried that his measure to limit executive bonuses in pre-existing contracts like AIG's would face a legal challenge.
When CNN took that information to Dodd, he reversed course and admitted he did make the change.
BASH (on camera): You did agree to modify this, to put that clause in? DODD: The alternative was losing, in my view, the entire section on executive excessive compensation. Given the choice -- this is not an uncommon occurrence here -- I agreed to a modification in the legislation, reluctantly. I wasn't negotiating with myself here. I wasn't changing my own amendment. I was changing the amendment because others were insisting upon it.
BASH (voice-over): Dodd insisted he made the change at the behest of the administration, but admitted he was wrong in initially denying his role.
(on camera): You were very adamant yesterday -- very adamant that you didn't know how this change got in there, and now you are saying that you -- that your staff did work with the administration.
(CROSSTALK)
DODD: Well, going back and looking at it, obviously, I apologize.
(END VIDEOTAPE)
BASH: Senator Dodd says he is not trying to protect AIG. In fact, he insists that when this was negotiated a month and a half ago, no one believed we would, quote, "Be sitting here talking about AIG and the bonuses" -- Kiran and Christine.
ROMANS: All right. A day after blasting AIG CEO, members of Congress are out to get some relief for taxpayers. In just a few hours, the House is expected to pass a bill that imposes a 90 percent tax on bonus pay for executives earning more than $250,000. It would apply not just to AIG, but to all banks and companies that have received big government bailouts.
On Capitol Hill yesterday, AIG's CEO Edward Liddy stepped into the lion's den, testifying before an angry House panel. Liddy was hired to rescue AIG by the government but, yesterday, he was the target.
(BEGIN VIDEOTAPE)
REP. MICHAEL CAPUANO (D), MASSACHUSETTS: You could have fired these people.
REP. GARY ACKERMAN (D), NEW YORK: Pay the $165 million back.
REP. JEB HENSARLING (R), TEXAS: With all due respect, Mr. Liddy, AIG has failed.
REP. PAUL HODGES (D), NEW HAMPSHIRE: As far as the American people are concerned, I think AIG now stands for arrogance, incompetence and greed.
REP. BARNEY FRANK (D-MA), CHAIRMAN, FINANCIAL SERVICES COMMITTEE: I do ask that you submit those names without restriction. And if you feel unable to do that, then I will ask the committee to subpoena them.
EDWARD LIDDY, CEO, AMERICAN INTERNATIONAL GROUP: I'm just really concerned about the safety of our people, so let me just read two things to you: "All of the executives and their family should be executed with piano wire around their necks."
You have a legitimate request. I want to protect the well-being of our employees.
UNIDENTIFIED MALE: This is so outrageous that you would say we're not going to be victims of our own stupid decisions.
LIDDY: You have generously used the word "you" in that construct. As I mentioned, these contracts were all put together before I was at AIG, so I really do -- I take offense, sir, at the use...
UNIDENTIFIED MALE: Well, offense was intended, so you take it rightfully, sir.
(END VIDEOTAPE)
ROMANS: And it's not only Congress who is upset with the AIG bonuses. You, our iReporters and viewers are. And your opinion is a big part of our special "Road to Rescue" coverage. Here is some of what you're saying.
(BEGIN VIDEO CLIP)
KATY BROWN, IREPORTER: I think it's time that major corporations start being responsible with money, especially if we're going to give them billions of dollars in bailouts.
QUESTION: I'm outraged at AIG and all of the crooks and corrupt people who have stolen money from the -- from the good working people of our country. And I think a fitting punishment would be that if they pay all our income taxes and we withhold ours for a whole year until these robbers pay up in full.
QUESTION: Please, stop this insanity of supporting and sponsoring corporate greed. We have been destroyed as a country.
QUESTION: I say take AIG executives and tar and feather them, and this is Kendra from Oklahoma.
(END VIDEO CLIP)
CHETRY: All right. Well, as we told you at the top of the show, Senator Chris Dodd breaking news to CNN reversing what he'd said a day earlier saying that he is responsible for language in the $787 billion stimulus bill that ended up allowing AIG executives to collect millions of dollars in bonuses. He also says that it was at the behest of the Obama administrations. So as this story continues, President Obama yesterday at a town hall meeting says he'll take some of that heat.
(BEGIN VIDEO CLIP)
OBAMA: For everybody in Washington who is busy scrambling trying to figure out how to blame somebody else, just go ahead and talk to me. Because it's my job to make sure that we fix these messes even if I don't make them.
(END VIDEO CLIP)
CHETRY: All right. So let's bring in our senior political correspondent, Candy Crowley. She's live in Washington for us.
OK, let's just first get to the Christopher Dodd situation. I mean, that was basically really hard reporting on the part of you guys and the political unit to actually he changed his tune from a day ago saying he knew nothing about how it mysteriously vanished from this bill. What gives?
CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: Well, listen, I mean, the generous interpretation here is that a lot of this stuff is done on the staff level and perhaps it is feasible that his staff worked this out, that it didn't, you know, really register with him. And the other way to look at it is nobody wants to take the blame for something that is so crystallized, the public's thought about what has happened to kind of bring this economy down. So you can look at it either way or somewhere in between.
CHETRY: Taking the partisanship out of it, though, it is -- I think the reason that people get so angry about this situation is because, you know, you just -- who can you believe and who can you trust in these situations?
And I'm not just talking about Democrats alone or Republicans alone. But I want to ask you about President Obama. Because, yesterday, he said there is a lot of finger-pointing going on, the buck stops with me. But it speaks to your point, again, about what goes on at the lower levels. Both the Treasury secretary and the president say that they were not aware of this bonus situation despite the fact that apparently things were going on among staffers and also the news media has done extensive reporting about these bonuses.
CROWLEY: Right. Absolutely. And, look, it was President Obama's Treasury secretary. It was the Treasury secretary's department. So, this is, in a real sense, on the Obama administration. But I have to tell you it's a pretty easy give for the president to say, OK, blame me.
And, again, with a 60 percent approval rating that says blame me, it can take the blame. A lot of heat is going towards his Treasury secretary and he also sought to take some of that off yesterday saying he has my complete confidence. So it is easy for the president to step up to the plate because people aren't actually mad at the president or even at Timothy Geithner at the Treasury Department. They are mad at AIG. So as long as AIG remains the big target, there does not seem to be a lot of price to pay, at least for the president and probably for his administration. CHETRY: Right. A lot to tackle and a lot of, of course, time and energy being spent on these AIG bonus talks, when there is so much that we need to work on. So we'll be certainly reporting on that in the coming days as well.
Candy Crowley, great to see you this morning. Thanks -- Christine.
ROMANS: Kiran, coming out of retirement. No, it's not another athlete pining for the glory days. Can't let go. It's real people. Their 401(k) is empty and their savings gone, forced to go back to work to make ends meet.
And our CNN Money team is working hard for you. Gerri Willis and Stephanie Elam answer your questions next. There's still time to do it. We want you to be heard. Call our show hotline, 1-877-my-amfix. It is nine minutes after the hour.
(COMMERCIAL BREAK)
ROMANS: And welcome back to our special "ROAD TO RESCUE" coverage here on AMERICAN MORNING. With the current state of the economy, more and more people are being forced out of retirement. Right now, the number of people over the age of 65 working is actually on the rise. "The Wall Street Journal" reporting nearly three percent spike over the last decade.
Our Carol Costello looking into this one for us this morning. Good morning, Carol.
CAROL COSTELLO, CNN CORRESPONDENT: Good morning, Christine. You know, it's tough out there for pretty much everyone. You know that. But especially for those newly retired, the AARP tells me people around the age of 60 are calling them in droves. They are scared. And they're going back to work.
(BEGIN VIDEOTAPE)
COSTELLO (voice-over): Eva Coffey is 60 and back at work. She drives a school bus and while she enjoys it, it's not what she expected to be doing now.
(on camera): What would your life be like now if everything had gone as planned?
EVA COFFEY, HAD TO GO BACK TO WORK: I would have a big smile on my face. I would be working in the clinics every day. I would be volunteering at the school every day. And I would just be on a daily basis doing my own thing and having a ball.
COSTELLO: In short, Coffey would still be a retired accountant. But she, like a growing number of people between 55 and 65 find herself on the job -- again!
DANIELLE HOLLAND, AARP: Many people have done the right thing. They've saved their money. They've had a plan in place. Yet, here they are going into their golden years, so to speak, and they have to keep working. They have to come back to work. Their retirement plans are kind of like upside down.
COSTELLO: Like Coffey.
COFFEY: This is just my house.
COSTELLO: Coffey's retirement account is in free-fall, losing $53,000 so far. Plan B is worrisome, too. Coffey and her husband own two town homes. Their combined value, though, is down some $400,000.
(on camera): So what is your goal to rebuild? Because, you know, so many people have lost almost half of what was in their retirement funds.
COFFEY: That's what we've done. Yes. We have done that.
COSTELLO: So can you -- you know, I mean, can you possibly make that up?
COFFEY: You can't make it up. But what you can do is you can minimize your loss.
COSTELLO: So in addition to driving a school bus, Coffey plans to get another part-time job. It won't be easy. According to government statistics, the unemployment rate among people 55 and older is the highest its been since 1984.
COFFEY: Thank you, John.
COSTELLO: Still, Coffey is doing the right things. Looking for work and leaving her investments alone.
HOLLAND: The 55 to 60 years old, you will have some time, given the markets, to recoup some of your money. So AARP has been encouraging people to take withdrawals from your 401(k) as a last resort.
COSTELLO: Coffey hopes that's true. For now, she considers herself a survivor. One who still believes in the American dream.
(END VIDEOTAPE)
COSTELLO: You know, in talking to people who have fallen on tough times, it's wonderful to see how optimistic so many of them are. And Mrs. Coffey is one optimistic woman. In fact, I asked her, Christine, if I could call her every day just for a pep talk, because she's not waiting for the bottom to drop out. She has a plan, she's taking charge, and that in itself is settling her nerves and giving her a certain measure of control over her financial life.
ROMANS: And hit twice by the stock market and stock market investments, and then real estate investments, too. It's great that she can remain upbeat and then focus on how to recover from here.
All right, Carol, thanks so much -- Kiran. COSTELLO: Sure.
CHETRY: Well, con man Bernie Madoff, he's in jail awaiting sentencing right now. But prosecutors are now saying that he didn't pull off the biggest rip-off in history by himself. The man who allegedly helped him now facing charges.
And the "ROAD TO RESCUE" starts right here. Gerri Willis and Stephanie Elam are answering all of your money questions at 16 minutes after the hour.
(BEGIN VIDEO CLIP)
QUESTION: This is Lori from Virginia Beach. I'm somebody with a disability who is struggling to make it with eight hours a week disability and help from my family. I think those bonuses are a total outrage.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
CHETRY: Welcome back to the Most News in the Morning. And our special "ROAD TO RESCUE" coverage all week long, the Fed taking a major step to jump-start the housing market injecting a trillion dollars into the economy by buying up treasury bonds and mortgage securities. It's pushing mortgage rates lower which could be good news for your money, especially if you're looking to buy a house for the first time or if you're looking to refinance. We're getting a lot of calls to our a.m. hotline. People are concerned about their mortgage.
So right now we're going to bring in Gerri Willis, as well as Stephanie Elam to answer some questions for us.
OK, so, whose ears should perk up this morning?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Everybody.
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Everybody. I know.
WILLIS: If you own a house, if you don't own a house, if you're hoping to buy a house, if you have a house and you can't afford your mortgage. If you have a house and you can't afford your mortgage, these are going to be really attractive rates.
ELAM: Yes, definitely. I mean, this is giving people a big difference. We were talking about it earlier. If you have a $200,000 mortgage, just this jump down in the 30-year fixed rate, it will save you about $300 a month. For a lot of people right now, that means a lot.
WILLIS: Yes. That's 300 bucks that you could put towards saving for college...
ELAM: And for credit card. WILLIS: You could pay off your credit card debt.
ELAM: Right.
WILLIS: It could be used in a lot better ways than paying for house right now.
(CROSSTALK)
ELAM: Yes.
CHETRY: But let me ask you this question. How do you decide is it worth it for our family personally? Will we definitely get that rate, you know, with our mortgage -- you know, with our mortgage situation?
(CROSSTALK)
CHETRY: Yes. And then also, what about the refinancing? The cost associated with refinancing.
ELAM: Well, sometimes, that's the thing. You've got to sit down and do the math about it because it does cost money to refinance. So you got to take a look. Is this going to actually add more on it? If you're already 15 years into your mortgage, it may not make the best sense either to go ahead and do this. So, well...
WILLIS: Two percent to 3 percent of your loan's value is what you could see in refi cost. It sort of depends on where you are. But I have to tell you. Let me tell you about a Web site this morning that's available for the first time for people in housing trouble. It's out from the federal government. It's called the MakingHomeAffordable.gov. This is the government's Web site if you want to get involved in the president's program for housing help. If you're one of those people out there, you can't afford your mortgage...
CHETRY: Tell me the site again because I know people are going to ask.
WILLIS: OK. MakingHomeAffordable.gov. MakingHomeAffordable.gov. It will help you figure out if you're even eligible for this help because that's the big trouble right now. They're premiering it. Today is the first day this Web site is out. We hope to show you a little demo of it, but we didn't have time because of all the breaking news, but it's really great. A little of it helps you figure out -- can you qualify, will it work for you, explains the term...
ELAM: And it gets you right straight to the source. That's the other thing. People have a lot of questions. Are they going to a lot of different places? This is somewhere you can go get a lot of information...
WILLIS: That's right.
ELAM: ... directly from the site and really know how this will affect you.
CHETRY: That's arming yourself with knowledge. It's what we need to do.
WILLIS: That's right.
CHETRY: Thanks to both of you -- Christine.
ROMANS: You touched on with mortgage rates dropping to near record levels. Is now the time to refinance? We have the low-down on the new rates. What it means to your bottom line. It's 21 minutes after the hour.
CHETRY: The con artist accountant. What did Bernie Madoff's numbers man know about the biggest Wall Street scheme in history?
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: His family had $14 million invested in Madoff securities and, at the same time, he was the auditor, which is an absolutely unbelievable conflict of interest.
(END VIDEO CLIP)
CHETRY: Serious new trouble for the rip-off king's right hand man. How connected was he to the big fraud? Ahead on the Most News in the Morning.
(COMMERCIAL BREAK)
ROMANS: Welcome back to our special coverage, "ROAD TO RESCUE." We continue taking your phone calls this morning. Here's one viewer's thoughts on greed.
QUESTION: My name is Robert. I'm calling from southeastern Illinois. I just -- with the problems with our economy and all of the things in the news with AIG and what have you, I just believe it's the greed of the 1980s. President Reagan's trickle down effect was a good philosophy, did not work. He forgot about greed.
ROMANS: Interesting. You can share your thoughts, too. Give us a call, 1-877-MY-AMFIX -- Kiran.
CHETRY: Well, con man Bernie Madoff, who wants out of jail, and in about one hour from now a federal appeals court will be hearing arguments to decide whether he will remain in a Manhattan jail between now and his sentencing, which is set for June 16th. Madoff was the sole person charged in what they call the largest investment scheme in U.S. history. That is until now. Here is CNN's Randi Kaye.
(BEGIN VIDEOTAPE)
RANDI KAYE, CNN CORRESPONDENT (voice-over): If Bernie Madoff was cooking the books to rip off investors, this man may have been helping him. David Friehling was Madoff's accountant. He turned himself in on charges he rubber stamped audit statements from 1991 to 2008. He's out on bond but has not yet entered a plea.
JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: This is prosecution 101. You try to get the accountant to flip and become the witness who explains everything about how the scheme worked.
KAYE: The 49-year-old accountant is the first person charged in connection with the $65 billion Ponzi scheme other than Madoff. His lawyer isn't commenting but he could get 105 years in prison. Prosecutors say Friehling was also an investor. It's unclear if he was aware of Madoff's Ponzi scheme.
ROSS INTELISANO, CLIENTS LOST MILLIONS WITH MADOFF: His family had $14 million invested in Madoff securities and, at the same time, he was the auditor, which is an absolutely unbelievable conflict of interest.
KAYE: The acting U.S. attorney says Friehling, quote, "helped foster the illusion that Mr. Madoff legitimately invested his clients' money."
(on camera): Who else might prosecutors take down? They're looking closely at Madoff's sons who both worked for his firm. Prosecutors say they received loans from their father totaling more than $31 million. The last loan worth $4.3 million was made just two months before Madoff says he told his sons his business was a sham, which prompted them to call the FBI.
TOOBIN: The existence of these enormous loans from Bernie to the sons suggests that they may be more intertwined.
KAYE (voice-over): And Madoff's wife Ruth may not be in the clear. Prosecutors want to liquidate assets she owned or shared. Those include a $7 million yacht in France named "Bull," $2.6 million in jewelry, real estate around the world worth $22 million, even a $65,000 silverware set. Ruth Madoff may have a tough time convincing prosecutors her husband created the world's biggest Ponzi scheme, but her millions were collected honestly.
Randi Kaye, CNN, New York.
(END VIDEOTAPE)
CHETRY: All right. Twenty-seven minutes past the hour right now. And the top stories this morning -- Connecticut Chris Dodd fessing up to CNN that he helped pave the way for those huge bonus payouts at AIG. After denying it initially, Senator Dodd now admits that he agreed to weaken an executive pay provision in the economic stimulus bill. He says he did it at the request of the Obama administration and was completely unaware of AIG's plan to award $165 million in bonuses to executives.
This morning, we're also learning new details about the tragic death of actress Natasha Richardson. The family announced that she died last night at a New York hospital after she fell during a skiing lesson in Quebec on Monday. According to the Associated Press, there was an ambulance that was sent as a precaution immediately after her fall, but was turned away. At the time, she said she felt fine and was able to get up and walk. Earlier on AMERICAN MORNING, I asked a doctor why she apparently felt fine at first and then later clearly something went horribly wrong.
(BEGIN VIDEO CLIP)
DR. STEPHEN MAYER, COLUMBIA MEDICAL CENTER: She probably had a concussion and passed out temporarily, woke up and felt fine, and she turned the ambulance away, apparently. She felt okay. But that fall, that concussion triggered something that was, obviously, going to end up being devastating.
(END VIDEO CLIP)
CHETRY: All right. He is the director of the Neuro-Critical Care Unit at Columbia Medical Center. And Natasha Richardson was just 45 years old. Christine?
ROMANS: Kiran, all this week, CNN looking at the economic road to rescue. Along the path, taxpayers are being forced to foot the bill for companies struggling to survive. And this morning, there's new information about the AIG bonuses and who knew what and when. Joining me now from Chicago is the chief economist and senior managing director of Mesirow Financial, Diane Swonk, and Lakshman Achuthan, he's the managing director of Economic Cycle Research Institute.
Thanks for joining us. Diane, I want to ask you first. The new details about the involvement of Senator Chris Dodd and the language in the stimulus bill that many say allowed these bonuses to be paid out, a little bit of a mystery yesterday. Now, we're kind of seeing the inner workings of how Washington works and, frankly, how Wall Street works with the way these bonuses were written. Doesn't inspire much confidence in the American people and the whole recovery process, does it?
DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: That's the problem. This is, you know, really small potatoes compared to the overall AIG systemic risk problem. But that said, it's an easy scapegoat for Americans to look out and say, wait a minute, you know, this is just symbolic of everything we mistrust in the government and on Wall Street. I think that's where the unfortunate issue is because it could stop us from moving forward and deal with some of the larger issues we really need to get to.
ROMANS: Your lack of confidence, patience, trust, we keep hearing all of this stuff and we're reading about the AIG bonus situation even though it's reported on frankly even here since January 28th. The American people are very unhappy about this. Does it take our eye off the bigger picture which is stabilizing the financial system, getting money into the system so that we can repair the economy and heal the economy?
LAKSHMAN ACHUTHAN, MEMBER, NYC ECONOMIC ADVISORY PANEL: Absolutely. I mean, look. We have massive bailout and rescue packages. There's a fiscal stimulus, there's the bank bailout, there's the home mortgage rescue plan, on and on and on. And the support, the public support for that is starting to fray a bit and this is really a time when the administration and congress, you know they need to be making the case, explaining why this is important to, you know, help in general a recovery down the road. And instead, we're talking about how well-connected people in the dead of night get hooked up. I mean, this is -- that's the real damage here. Go ahead.
ROMANS: Diane -- I want to ask Diane, quickly, about the Fed. You know, moving off that sort of confidence problem. Moving to the Federal nation Central Bank yesterday, pumping all this money into the system, buying back these securities. Is this a good move right now for the economy?
SWONK: Oh, absolutely. I think the Fed is sort of the, you know, the last resort we've got out there that has got the big guns. I mean, Ben Bernanke, between the one, two punch of the 60 minute interview showing the American public that he's a real guy. I mean, Ben is a real guy. I know him. I hiked with him in Jackson Hole. He is not, you know, Wall Street.
In fact, his anger over AIG, I think really resonated and then to turn around and say, you know, we are going to put our money where our mouth is and we're going to really support lending markets out there. We're really going to get out there. We don't have to deal with the, you know, the waste of Congress, the earmarks of Congress, and the corruption that people are seeing in leadership, they can just act. And I think that's very important to at least have some offsetting influence. They can get the money out the door quickly.
ACHUTHAN: Right.
ROMANS: Thanks so much, Diane Swonk and Lakshman Achuthan. I just have to leave it there. There's so much to talk about, you guys. There's so much news this week. Thanks so much. Kiran.
ACHUTHAN: Thank you.
CHETRY: They made a lot of great points.
ROMANS: I know, really.
CHETRY: In the recession, the economy needs new ideas from fresh faces. How about a college student who is also a CEO? That's right he created a company that lets people give back with every product they purchase. And CNN's Jim Acosta has the story from Washington. And we talk about all the gloom and doom but it may be the right time if you have a great idea and you have a little bit of, you know, an entrepreneurial spirit, go for it.
JIM ACOSTA, CNN CORRESPONDENT: That's right. I wish I could think of one. You're right about that.
CHETRY: But you get up too early so it's too hard, right?
ACOSTA: That's right. Thinking it is a lot of work at this hour. But I did find a CEO we can all root for. Are you thirsty for some good news on the economy? Meet CEO Ben Lewis, he hasn't given himself a million dollar bonus. He doesn't fly in a corporate jet. He doesn't need a bailout. What he does have is a good idea.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Everybody giving ten cents.
ACOSTA (voice-over): He looks like an intern pitching the latest product from corporate America.
BEN LEWIS: I'm Ben. Nice to meet you.
ACOSTA: But Ben Lewis is selling his own brand of bottled water that doesn't come in different flavors. It comes in different causes.
LEWIS: Our whole selling point is not about the water, it's about a movement.
ACOSTA: A dime from each bottle of give goes to charity to help the fight against muscular disorders. Pink is for breast cancer research. Green goes to the environment. Blue children with AIDS. Did we mention that Ben is still a sophomore in college at Penn? How did that happen?
LEWIS: We started making deliveries out of the back of my car with a few good friends of mine and it really just expanded.
ACOSTA: Now, he's got a bottling plant supplying ten retail chains including Whole Foods and he has raised $75,000 for his charities. Which you could say are drinking it up.
DANA RICHARDSON HERON, SUSAN G. KOMEN FOUNDATION: If you have a choice to buy water that's going to benefit a corporation versus water that's going to benefit an organization such as Susan G. Komen for the cure, I think you'll choose Ben's water.
ACOSTA: After all the carnage on Wall Street investors are creating new ideas from new faces. It was only a decade ago when Google was founded by two college students working out of a garage. Is Ben on to something? His roommate, Greg, thinks so.
GREG VAN, BEN LEWIS' ROOMMATE: We need more Google guys and more Facebook guys and we need more Bens. And hopefully America will still be at the top of its game.
ACOSTA: But Ben has got a ways to go. He only has four employees. And has yet to turn a profit. There's a little extra in there for pizza money, that sort of thing?
LEWIS: Hopefully at the end of the day, yes.
ACOSTA: Ben Lewis remembers how he started out selling lemonades so he knows what to do when the economy hands you lemons.
LEWIS: I think it's a great time for an entrepreneur to start a business. I think if you have a good idea and the passion and a unique concept and really the energy behind it, it's, you know, the economy doesn't - ACOSTA: You can make it happen?
LEWIS: You can make it happen.
(END VIDEOTAPE)
ACOSTA: Now, Ben Lewis has picked a controversial vehicle for his cause. Environmentalists worry about the plastic bottles that are piling up fast in the nation's landfills but Ben says he has got all of that figured out with plans to roll out a biodegradable bottle that decomposes he says in a decade instead of a century. And I asked him, Kiran, is he making any time to have fun while he's in college. And he said no. He gets about four hours of sleep a night. So he can relate to our schedule a little bit. But no question about it, in this economy, it's going to take some hard work.
CHETRY: That's right. And I know you got four hours of sleep in college as well but not because you were the CEO of a company.
ACOSTA: Not because I was starting a company. That is correct.
CHETRY: Work, work, work, you were studying for those midterms.
ACOSTA: That's right. Nose to the grindstone.
ROMANS: Let's not talk about what we all were doing in college.
The president breaking form and making TV history. He will be sitting down with Jay Leno for some serious talk on "The Tonight Show." What you can expect just ahead.
(BEGIN VIDEO CLIP)
QUESTION: This is Cedric from Ohio. Let me tell you something. Any time that I have to go to work every day and pay my taxes and then the government gives my money away, this is an outrage, a total outrage. We want that money back. We want it now!
(END VIDEO CLIP)
(COMMERCIAL BREAK)
ROMANS: Just in to CNN, the new numbers to give us a glimpse into the fragility of the jobs market. Stephanie Elam is "Minding your Business" this morning. She is here to break it down for us. Every week we look at this number. Because it tells us how many people lined up for unemployment benefits. And they've been running pretty high.
ELAM: Right. They have and this is a good way for us to track the economy. The new number right now is 646,000 filed for initial claims last week. This is down 12,000 from the week before, but before we start getting excited or as I like to say throw the confetti, we can't do that. Because the continuing -- these are people who continue to file and go back for unemployment benefits has reached a new high of 5.47 million people. So a new number there. Highest on record and that's also up 185 thousand from the week before. So still a lot of people out there still feeling the pain. I realize we did decrease a bit there, but it's still a huge number that we're dealing with.
ROMANS: One of the things that economists keep telling me and sort of take heart when I see these huge numbers is that when you adjust for the size of our population, we still aren't back to the levels of the 1982 recession that was so ugly but they say we're moving in that direction.
ELAM: Varying degrees of ugly, but ugly still.
ROMANS: All right. Stephanie Elam. Thanks, Stephanie. Kiran.
CHETRY: All right. Well President Obama taking his economic plan on the road today. He's in California with a second town hall meeting and, later, he'll be sitting down with Jay Leno on "The Tonight Show." The president is sharing the stage with country music legend Garth Brooks. Of course, we are not expecting a duet. White House correspondent Suzanne Malveaux is tracking the story live for us from Washington this morning. An interesting choice for the president to appear on "Late Night."
MALVEAUX: That's right. Well, hopefully the duet is not singing the blues. Now, the president is taking the show on the road. He is selling the economic stimulus plan, the budget. He is really trying to reach out to folks outside of Washington and convince them that he knows what he's doing, that he gets their concerns but he is also, Kiran, banking on his popularity, maybe even a sense of humor to deliver the message and some believe that this could be a risky strategy.
(BEGIN VIDEOTAPE)
OBAMA: For the Bears to go all the way, baby.
MALVEAUX (voice-over): As candidate Obama, he was a big hit.
JON STEWART, HOST, "THE DAILY SHOW": They're applauding the spirit of cooperation which I...
SEN. JOHN MCCAIN (R), ARIZONA: I thought I might try a strategy called the reverse maverick.
MALVEAUX: Following in the footsteps of many presidential hopefuls, going outside traditional media to attract attention and votes. Like Bill Clinton on Arsenio Hall.
PRES. GEORGE W. BUSH, FMR. PRESIDENT OF THE UNITED STATES: Number seven. Make sure the White House library has lots of books with big print and pictures.
MALVEAUX: George W. Bush on "The Late Show" with Letterman.
RICHAR NIXON, FMR. PRESIDENT OF THE UNITED STATES: Sock it to me? MALVEAUX: And Richard Nixon on "Laugh-In." In 1968, this was considered a real watershed moment for politics and TV entertainment. But Obama's appearance today on "The Tonight Show with Jay Leno" will be the first time a sitting president is in the hot seat on a comedy show, not to campaign, but to answer questions about how he's governing.
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: We don't look at it as a process of demonstrating the president's sense of humor. We look at it as a way of discussing the economic situation that we find ourselves in.
MALVEAUX: On "The Tonight Show," the president's message can immediately reach five million viewers and without the filter of a critical press, but his appearance poses risks.
HOWARD KURTZ, HOST, CNN'S "RELIBALE SOURCES": He has to be very careful about his tone. If he yucks up too much and seems to be having too good a time, there's a contrast there with the pain tat people are feeling right now with the crumbling economy.
(END VIDEOTAPE)
MALVEAUX: So it's actually how President Obama communicates is being scrutinized along with what he is saying because the economic recovery is very wrapped up in how people feel about their future, whether they have confidence in investing or spending again and Americans are really looking to him for cues, but Obama, Kiran, he is not only doing the comedy circuit, he is going to sit down for an interview with "60 Minutes." That is going to happen this weekend and I do imagine that he is going to get some tough questions. Kiran.
CHETRY: Yes, it's funny because the late night shows have also been sort of using all of this outrage over AIG and other economic situations as punch lines as well. So they are certainly talking about it, too. All right. Suzanne Malveaux for us today, thanks so much.
ROMANS: OK. Our CNN Money team working hard for you this morning. Gerri Willis and Stephanie Elam will answer your financial questions next. There is still time for you to be heard. You can call our show hotline 1-877-my-amfix. It is 43 minutes after the hour.
(COMMERCIAL BREAK)
ROMANS: Welcome back to the Most News in the Morning. It's the video of the day so far. Check it out. An underwater volcano erupting, shooting a smoke, steam, and ash thousand of feet into the sky. Just six miles off the coast of Tanga. Locals say the clouds started to rise after a series of sharp earthquakes. Officials say it's not that unusual and people are not, thankfully not at risk. Reynolds Wolf is tracking extreme weather for us now. Hey, Reynolds.
REYNOLDS WOLF, CNN METEOROLOGIST: Amazing video, isn't? Really cool stuff. You know, it's going to take a million years or so -- actually for those volcanoes to form islands and so start saving now and have some great beachfront property before you know.
Take a look at one of the big stories we have in the weather today and some delays we are expecting in places like New York airports and Boston, same story, due to rain and low clouds. You're going to find similar conditions in both Washington, D.C. and in Philadelphia and in Atlanta, Houston and Los Angeles, your biggest issue is going to be fog. Look for about an hour to maybe a 30-minute delay in a few spots. Also scattered showers and storms across parts of the Tennessee Valley, still warm and dry for much of the West Coast. That is a look at your forecast. Let's send it back to you in New York.
ROMANS: All right. Thanks, Reynolds.
WOLF: You bet.
ROMANS: Kiran.
CHETRY: All right. Christine, some real people with some big problems. We're talking to you today. We're taking your calls and we're also online at cnn.com/amfix. And you can join into the coverage. You can call us at 1-877-my-am-fix and we're going to share some of the best phone calls coming up ahead. It's 47 minutes after the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to AMERICAN MORNING. We are on the "ROAD TO RESCUE," helping you make sense of the meltdown. We have Stephanie Elam and Gerri Willis. They are back with more of your financial phone calls. the first one is for you, Stephanie and it's something that we haven't asked yet about the AIG outrage so let's listen.
(BEGIN VIDEO CLIP)
QUESTION: My name is Roger Melson (ph) from San Ramon, California. And I'd like to know if AIG is such a huge company, international, why is the U.S., as usual, stepping up to the plate and footing the entire bill? Why aren't we getting any help from other countries?
(END VIDEO CLIP)
ELAM: It's a question a lot of people are asking about. Really, I know it is American Insurance Group is their full name, for one thing. But also, this is a problem that did start here in the United States and I think that's a huge reason why the United States feels responsible. And they do have a lot of business outside of the United States, that is true. But it's pretty much originating here from the United States. I think some countries, if it's really going to impact their economies, may look at helping a bit for some of those divisions but for overall it's an American problem.
WILLIS: You know, it's interesting though. Because Larry Summers said last week, he advises the president on the economy that we need to get other countries involved in this rescue. So obviously, people out there are hearing that and suggesting it happens.
ELAM: Good idea. I like that.
CHETRY: A question now about home insurance now for Gerri. So let's listen to this call.
(BEGIN VIDEO CLIP)
QUESTION: The problem I'm having is the mortgage company's charging me fines because the insurance company won't insure the property for how much I owe on it.
(END VIDEO CLIP)
WILLIS: Yes. Denise, this is a problem. Because you have to have homeowners insurance if you have a mortgage. That's typically the law. So I'm confused by this, though. Because the problem is typically not that you have -- are asking for too much insurance, it's that you're getting too little because when you go to make a claim, it doesn't cover your claim. Here is what I think you should do. Call the insurance commissioner in the state of California and ask for help.
Because if you're facing this problem, I bet a lot of other Californians are, too. You know, this isn't one of those issues that isn't obvious out there with what is happening in the mortgage industry. There are all of these other things that follow on to your mortgage. It's your homeowners insurance, it's taxes and the devil's in the details here. You know, so many folks, for example, not complaining about homeowners insurance but complaining about taxes because real estate taxes have never come down.
ELAM: They haven't gone down at all.
WILLIS: Even though prices have gone in the toilet.
ELAM: Yes. So...
CHETRY: All right. Thanks, guys. I really appreciate all of your input this morning. A lot of good advice for people out there as well. So keep your questions coming. Christine.
ROMANS: Right. (INAUDIBLE) a lot of news. Just how bad was it for the chief executive of AIG when he faced lawmakers on Capitol Hill yesterday? We'll show you the stuff, the tough, the soft ball and the folksy. It's seven minutes to the top of the hour.
(COMMERCIAL BREAK)
ROMANS: Welcome back to the Most News in the Morning. Everyone likes a good TV grilling and viewers certainly got that when AIG's top boss got questions on Capitol Hill. But wait! There is more! Jeanne Moos has the AIG antics that you didn't see and she is handing out awards.
(BEGIN VIDEOTAPE) JEANNE MOOS, CNN CORRESPONDENT: With cameras snapping like jaws, AIG'S CEO walked into the lion's den, but the den was schizophrenic. Sometimes lion...
UNIDENTIFIED MALE: This is so outrageous.
MOOS: ... sometimes lamb.
UNIDENTIFIED MALE: That you are one of the good guys.
UNIDENTIFIED MALE: It's arrogance.
UNIDENTIFIED MALE: Thank you for working with a dollar a year.
UNIDENTIFIED MALE: This is evidence of cooking the books?
UNIDENTIFIED MALE: Thank you, Mr. Liddy, for your rather thankless service.
UNIDENTIFIED MALE: Do you have anything to say for yourself?
ED LIDDY, CEO, AIG: Yes, sir. I do.
MOOS: The award for tough guy goes to Massachusetts Democrat Steven Lynch, who didn't give an inch, though CEO Liddy only took over to rescue AIG after the shenanigans.
LIDDY: I take offense, sir, at the use...
LYNCH: Well, offense was intended so you take it rightfully, sir. Look, I'm an attorney. Contract attorney. You might want try that with somebody else.
MOOS: Which brings us to the most waved document of the day. The detested AIG bonus agreement. CEO Liddy kept saying the bad apples for the most part were gone from AIG leaving the good ones.
LIDDY: You would be proud of them.
UNIDENTIFIED MALE: Not right now I'm not.
MOOS: There were plenty of folksy expressions at the hearing.
UNIDENTIFIED MALE: Pin the donkey on AIG.
MOOS: And lots of comparisons.
REP. GARY ACKERMAN (D), NEW YORK: It's like snake oil salesmen, selling you jars of snake oil and they don't even have the oil in the jar.
MOOS: New York democratic congressman Gary Ackerman takes the cake when it comes to butter.
ACKERMAN: There is a great company called "I Can't Believe It's Not Butter." You know, at least they have the decency to tell you it's not butter.
MOOS: Only Fabio could have said it better.
FABIO, ACTOR IN COMMERCIAL: I can't believe it's not butter.
MOOS: And couldn't believe how Congressman Ackerman kept spreading the butter analogy.
ACKERMAN: I can't believe it's not waterboarding. I can't believe it's not insurance.
MOOS: The award of multitasking goes to House committee members busy BlackBerrying during the hearing.
The price for most memorable new name for AIG...
UNIDENTIFIED MALE: arrogance, incompetence and greed.
MOOS: The award for most feeble protest goes to the group Code Pink, though they did manage to get yelled at.
UNIDENTIFIED MALE: Signs down!
MOOS: AIG CEO even chatted with the protesters peacefully, but later the committee chairman ordered those signs removed, leaving Congressman Barney Frank to quip:
FRANK: Good thing no one was wearing a T-shirt with the slogan.
MOOS: Little did he know, more than T-shirts would have had to have been removed, which brings us to the most disturbing camera angle of the day.
UNIDENTIFIED MALE: The committee will stand in recess.
MOOS: Now, that's a bonus even an AIG exec could live without. Jeanne Moos, CNN, New York.
(END VIDEOTAPE)
ROMANS: That's not a good angle.
CHETRY: That's why you don't always want that camera to be recording at those things.
ROMANS: I know, I know.
CHETRY: Well, more outrage from you about the AIG bonuses and it's truly showing up in some of our iReports. Check out the house of cards one creative iReporter built.
(BEGIN VIDEO CLIP)
PHIL HANSEN, IREPORTER: This card represent the largest quarterly loss in corporate history. This last card represents $165 million. And it's going to be paid in bonuses to AIG executives. And guess what? Some of them don't even work there anymore. This whole situation has been a continuation of the old. We were promised change by the new administration. Is change here?
(END VIDEO CLIP)
ROMANS: That's incredible.
CHETRY: Pretty cool.
ROMANS: I mean, how long must that have taken him?
CHETRY: I don't know. We have some creative iReporters, that's for sure.
Well of course that was supposed to be AIG chief Edward Liddy's face on the house of cards.
ROMANS: Yes. And I think people are still going to be talking about this all day today. That hearing and what is happening next with these bonuses. Amazing stuff.
CHETRY: All right. Christine, great to have you with us this morning.
ROMANS: It was fun.
CHETRY: We both will be back here again tomorrow. And thanks so much for being with us. Hope to see then.
ROMANS: And right now, here is CNN NEWSROOM with Heidi Collins.
