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American Morning
Pilots Were Distracted by Laptops; Senate Bill May Include Opt- Out Public Option; Former AIG CEO Hunts for Talents; Dead Celebrities Making Money From the Grave
Aired October 27, 2009 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: We're coming on the minute before the top of the hour. Welcome once again to "American Morning" on this Tuesday, October 27th. I'm Kiran Chetry.
JOHN ROBERTS, CNN ANCHOR: And good morning. I'm John Roberts. Thanks for being with us. Here are this morning's top stories, not asleep, just distracted. That claim from two Northwest Airline pilots who overshot their landings by 150 miles last week. So, why couldn't air traffic controllers reach them on the radio for more than an hour? The pilots' side of the story straight ahead.
CHETRY: Also this morning, it is back. The so-called public option now in the bill that's heading to the Senate floor. So, many say it means no republican support but does it mean that some democrats could also not be onboard. We are live in Washington with what democrats are offering and what they are not giving up and what all of it means to your health care.
ROBERTS: And NASA one step closer to launching the largest rocket in the world. If the weather behaves, we could see the new areas one ex-rocket lift off in the next 60 minutes. So, what does this unmanned test really mean for NASA's future? We're live from the Kennedy Space Center this morning.
"We were distracted, not asleep." That's the explanation from two Northwest airline pilots who overshot the Minneapolis airport by 150 miles. The crew of flight 188 couldn't be reached for over an hour on Wednesday night when they roared right past their destination into Wisconsin.
Fighter jets were scrambled but never lifted off. Air traffic controllers fearing the plane had been hijacked. Our Jeanne Meserve is live in Washington for us this morning. And Jeanne, the pilots are claiming they got distracted by using their laptops?
JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: That's right. These are both seasoned veterans with unblemished records but their careers may well be over. During five hours of interviews with the National Transportation Safety Board, they told investigators they weren't asleep. They weren't arguing. They were on their computers.
(BEGIN VIDEOTAPE)
MESERVE: Northwest pilots tell NTSB investigators they did not fall asleep or doze. They just had a 19-hour layover. But they say that they used their personal laptop computers during the flight, a violation of company policy.
The pilots tell the NTSB they looked at the computers during what they called "a concentrated period of discussion of scheduling issues" arising from the merger of Northwest and Delta. The pilots also told investigators that during the discussion they did not monitor the airplane.
They were aware of conversations on the radio but did not listen to transmissions from air traffic control or notice messages from company dispatchers.
They say that they lost track of time. And only when a flight attendant asked about their arrival time did they realize they had flown past their destination.
PETER GOELZ, FORMER NTSB MANAGING DIRECTOR: These pilots were simply not paying attention for a period of time. And is that a serious offense? It is, but not one that put the lives of those people in jeopardy.
MESERVE: Delta, the pilots company of Northwest, says the pilots will remain on suspension until the investigation over, but said in the statement "Using laptops is strictly against the airline's flight deck policies and violations of that policy will result in termination."
MARK WEISS, RETIRED AMERICAN AIRLINES CAPTAIN: You are always supposed to maintain situational awareness and somebody's always supposed to be watching the airplane and flying the airplane. That's your first order of duty, that's your first priority. So there really is no excuse, no reason to allow to it go to this point. It should not have happened.
(END VIDEOTAPE)
MESERVE: The investigation isn't over yet. Monday the NTSB talked with the three flight attendants on the plane to get their version of events. The parent company Delta meanwhile has sent $500 travel vouchers to the passengers onboard the errant flight.
John, back to you.
ROBERTS: Jeanne Meserve in Washington this morning. Jeanne, thanks.
And stick around. In two minutes' time, we will be joined by John Lucich and Ben Berman, two licensed commercial pilots with investigative background. We will get their take on flight 188 and the conduct of the two pilots.
CHETRY: If you have a credit card, and we bet you do, Connecticut Senator Chris Dodd is proposing to immediately freeze the interest rates and the fees until a new law goes into effect next year.
The Senate banking committee chairman is facing a tough reelection bid and the plan seems aimed at reconnecting with voters. Many have questioned his ties to big banks and after he was linked to a loan scandal.
ROBERTS: There's more talk of extending the $8,000 tax credit for first-time home buyers. Democrats are pushing a plan that would gradually phase it out over the next year. Another bipartisan plan would extend the credit through the 30th of June of next year. As of right now the credit is set to expire next month.
CHETRY: President Obama is stepping up the pressure, urging congressional leaders to act quickly to pass health care reform. The president's remarks coming just hours after we learned the so-called public option will be a cornerstone of the Senate's bill.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Now is the time to pass health care. We are not going to wait another year or year after that or year after that. Now is the time to do it.
(APPLAUSE)
(END VIDEO CLIP)
CHETRY: Majority leader Harry has some of his work cut out for him, it seems. Republicans as well as a handful of moderate Democrats are clearly not sold on the plan.
Our Jim Acosta is live in Washington. And so Jim, the reality of this plan is that the public option wouldn't be available to everybody, and you are going to get into that a little bit.
But you know, it is very interesting that we are at this point where the bill that's coming out of the Senate as well as all the ones coming out of the House are going to contain a public option. Is any hope of bipartisan support just over?
JIM ACOSTA, CNN CORRESPONDENT: Not necessarily. I think that it all depends on how things develop over the coming days and possibly weeks. You know, this could drag on a little while.
The president tweeted his thanks to Harry Reid and Chris Dodd who was the chairman of the HELP committee that put forward this bill that's essentially now has a state opt-out. So that's the only difference between what was put forward before and the one that's going to go to the full Senate now.
And for months, the fight over health care reform has boiled down to the fight over the public option. Now Democrats in the Senate are going to find out if this is a battle they can win.
(BEGIN VIDEOTAPE)
ACOSTA: For Democrats, it's a gamble. So it is fitting that majority leader Harry Reid from Nevada would roll the dice and announce the Senate's version of health care reform will include a public option.
SEN. HARRY REID, (D-NV) MAJORITY LEADER: While the public option is not a silver bullet. I believe it is an important way to ensure competition at a level of playing field.
ACOSTA: Even though states would be allowed to opt out of the government insurance program for the uninsured, it is a calculated risk as the Democrats don't have lock on the 60 votes needed to break a filibuster.
SEN. CHUCK SCHUMER, (D) NEW YORK: We are close. We are not there yet. But we are make good progress.
ACOSTA: Liberals did not give Democrats much of a choice with protests like this musical number that broke out at a conference for insurance companies. There are even ads aimed at the president himself.
UNIDENTIFIED MALE: You campaigned on a public health insurance option. We worked hard for it. We worked hard for you.
ACOSTA: The fact is President Obama rarely talked about a public option during the campaign.
OBAMA: I want to immediately provide cost relief, make sure that people when don't have coverage have coverage, and provide this option, government option, people can buy into.
ACOSTA: To this day, the president has not demanded it in part because Republicans may stand united against it.
UNIDENTIFIED MALE: As the public begins to understand that the public option is really a Trojan horse which is going to lead to a single-payer or government-run system I don't think that they are going to be for it.
SEN. RON WYDEN, (D) OREGON: One of the reasons it is so important to get the facts out is I think the American people have been misled about the public option.
ACOSTA: Oregon Democrat Ron Wyden points out people with insurance through their employer would be blocked from accessing the public option, that it is really a program for the uninsured.
WYDEN: When I was having my town meetings people would stand up and rally and say public option or bust. And then I would say, folks, I really appreciate your activism. Are you aware the way these public option bills are written, more than 90 percent of you wouldn't even get to choose them? People were practically falling out of the bleachers.
(END VIDEOTAPE)
WYDEN: Here is another fact -- only 30 million Americans would be able to buy into the public option. Those who already have insurance, roughly 160 million of us, will not.
And the number of people left out of the option would only go higher if entire states are given the option, which is what appears to be the case now to opt out of the option.
And Kiran, just take a look at the governor's race in Virginia that's going on right now. It goes to voters next week. Both candidates in that race, the Republican and the Democrat, say that they would opt out of the public option.
So this public option, all that hue and cry over the summer, may not matter to a lot of states out there if their governors and their state legislators want to get out of it.
CHETRY: Well, the plot thickens and the debate continues. Jim Acosta for us this morning. Thanks so much.
ACOSTA: You bet.
CHETRY: It is eight minutes past the hour.
Also new this morning, a former marine captain who fought in Iraq and later joined the state department is the first U.S. official known to resign in protest over the war in Afghanistan, 36 year old Matthew Hough telling "The Washington Post," "I'm not some peacenik, pot-smoking hippie that wants everybody to be in love," but he says the war is making the insurgency worse.
He says in some cases we are basically sending U.S. troops and asking them to die in Afghanistan for what he says is essentially a far-off civil war.
ROBERTS: The Gay and Lesbian Alliance Against Defamation, or GLAAD, is demanding the NFL punish Kansas City Chief running back Larry Johnson for using a gay slur. Johnson lashed out at reporters in the locker room on Monday.
A day earlier, after the Chief's embarrassing home loss, Johnson blasted his head coach on Twitter in a series of posts that included the same gay slur. The NFL says Johnson's remarks are, quote, "on our radar."
CHETRY: If you bought a "Baby Einstein" video and it turns out your kid is not an Einstein, you can get your money back. Disney is offering cash refunds on those "Baby Einstein" DVDs bought between June of 2004 and September, 2009.
The videos have been the target of critics who claim that the company misrepresented them as educational tools.
ROBERTS: The mystery continues to unfold. How did Northwest Airlines flight 188 travel 150 miles past its destination with neither the pilot nor copilot aware of what the heck was going on?
Coming up after the break a couple of commercial pilots with investigative background join us to talk about what the pilots are saying and what the airline might do.
(COMMERCIAL BREAK)
ROBERTS: Welcome back to the Most News in the Morning.
They claim that they were not sleeping, just distracted by crew schedules on their laptops when they overshot their destination by 150 miles. That's the explanation from two Northwest Airlines pilots that could not be reached by radio for an hour and 18 minutes last week.
So what should happen to those pilots now? Joining us from Washington is Ben Berman, he's the former chief of major investigations at the NTSB and a commercial airline pilot here in New York, John Lusic, a licenses commercial pilot and a former criminal investigator.
Ben, let's start with you. So the pilots say they were on their laptops in the cockpit going over their crew schedules. They became distracted for an extended period of time, it would seem. What does the NTSB say about the use of laptop computers in the cockpit?
BEN BERMAN, FORMER COMMERCIAL PILOT: The NTSB has not taken any policy about laptops in the cockpit exactly. They have been speaking out about other transportation modes, speaking out about use of cell phones while you are driving, texting while driving.
And there have been railroad accidents where the railroad where the engineers were at least thought to have been using their telephones.
And so it has taken strong statements from the NTSB in those transportation modes.
ROBERTS: Right, but would the NTSB think it is a prudent idea to be using laptop computers in the cockpit?
BERMAN: I can't speak for the NTSB. I don't think anyone thinks that it is a good idea to be doing highly distracting things during critical phases of flight in the cockpit.
A lot of airlines are using a laptop as an information tool for use during flight. They are putting a lot important operational parameters and manuals on the laptop. And so you will use it at some point.
ROBERTS: John Lucich, they had not made contact with air traffic control for one hour and 18 minutes, as we said, despite repeated attempts by ACC to contact them. As well Northwest dispatch was trying to get them, sending their messages which were appearing on their consoles.
Can you conceive as a pilot of being so distracted that you miss all of that for an hour and 18 minutes?
JOHN LUCICH, LICENSED COMMERCIAL PILOT: No, absolutely not.
And let me say that I don't believe anybody in their right mind would believe that two pilots should be so engrossed in using a laptop in an -- in an airline -- remember, A-320 airbus, 144 people.
This is more than just 150 miles off. About 125 miles out, ATC is going to contact the airplane and start stepping them down and preparing them for approach control into the Minneapolis airport. They missed that 125 miles out and then missed 150 miles past the airport at flight level 370. That's a long distance and a lot of time.
ROBERTS: They had been trying to contact them for a long time but apparently they were on the wrong frequency. And one of the reports we hear is it was not until one of the flight attendants buzzed them in the cockpit that they sat up and said, where are we?
But Ben, let's go back to you. Richard Cole, the first officer over the weekend, told reporters that the crew's action were "innocuous and did not threaten passenger safety." What do you think of that statement?
BERMAN: I think he's pushing it a little bit. I think it was not really innocuous. It's something that's improper.
On the other hand, I don't really know we can say that passengers' safety was threatened, because our system has a lot of safeguards in it. In other words, there's something that is there to keep them from running into another airplane, there's a collision avoidance system aboard all aircraft that are flying up there.
There are air traffic controllers separating aircraft. The airplane was flying under control of the autopilot on course. So the passengers' lives I wouldn't say would have been threatened in this circumstance but could have been if circumstances were a little bit different.
ROBERTS: What do you think about that, John? Because obviously, there is a high degree of automation in the cockpit. And there are, as Ben was saying collision avoidance systems in there. But is it -- is it the best way to protect the passengers in the plane to not be monitoring your fuel consumption, where you're going, what's going on?
LUCICH: Absolutely. I totally agree with you. Just because we have backup systems in place does not excuse their negligence. And when you miss an airport by 150 miles and fail to contact ATC, in my personal opinion, you're endangering the lives of those passengers because you're not monitoring your fuel, you're not monitoring your location, you're not monitoring other aircraft in the air.
There's no doubt. And just because their safe like the other gentleman said, doesn't mean they didn't do something that they shouldn't be punished for.
ROBERTS: Ben, as you know, both pilots have been suspended and Delta Airlines released a statement which says, "Using laptops or engaging in activity unrelated to the pilots' command of the aircraft during flight is strictly against the airline's flight deck policies, and violations of that policy will result in termination." What do you think is the appropriate action for the airline to take here? Because you did say that they are putting a lot of information on laptop computers. So can you completely prohibit the use of laptops in the cockpit?
BERMAN: Well, no laptops are going to be a very useful tool and in the right place and time. And when allowed by company procedure when they're worked into the company procedures.
And I'm not going to be an apologist for anything. But I do want to say that not all of the information is out yet. And there's an investigation going on by the agency that I used to work for, the NTSB. It's raised a little bit of information, but it's really only conducting its first interviews and at this point there can be some other things that were going on.
I cannot personally understand how the pilots could have been that unaware of their position, even if they are engrossed in looking at their laptops to have missed the point of approach to the Minneapolis airport. That makes me think that there may be something else going on and the investigation needs to look into it and try and find out what that is.
ROBERTS: You know, John, there's a flight -- the cockpit voice data recorder, which may have been recorded over because it's only a 30-minute duration as we're understanding it, it would have taken them that long to turn around and get back. So we may not know from the cockpit voice data recorder exactly what was going on. But there's been a push and the airline pilots union are against this, to put cameras in the cockpit. Little video cameras and record the whole flight, you know, from takeoff to landing. There's been a lot of resistance, as I said, to that. Do you think that this case means that that may deserve another look?
LUCICH: Absolutely. You know, when police officers first got cameras in the cars, the cops fought that because they thought they were there to hang them. They found out that they've saved them and stopped internal investigations before they even started because of the cameras.
I think cameras are going to be a good thing. I think it's going to make people more focused on what they're doing. And there's a lot of investigations. There's NTSB, there's the FAA, there's Delta Airlines and there's Northwest Airlines all conducting investigations as well as the police. You may see terminations. You may see suspension of licenses, and you may see criminal charges if these pilots lied about what they're saying to investigators when they were first questioned.
ROBERTS: We'll keep watching it very closely. John Lucich, Ben Berman, good to talk to you this morning. Thanks so much - Kiran.
BERMAN: Thank you very much.
CHETRY: Thanks, guys. Well, you know, a lot of questions still remain about swine flu and the vaccine. Elizabeth Cohen is going to be joining us, our senior medical correspondent, with a parents guide to H1N1. Still ahead. It's 18 1/2 minutes past the hour.
(COMMERCIAL BREAK)
CHETRY: Welcome back to the Most News in the Morning. Twenty- one minutes past the hour. Get a look at this.
NASA is getting ready to launch its test launch of the new Ares 1-X. This would be the rocket of the future, the future of space flight. What would replace the shuttle.
Well, our John Zarrella is standing live by Kennedy Space Center. We're going to take you there live just ahead.
ROBERTS: Meanwhile, Stephanie Elam joins us now. She's "Minding Your Business" for us this morning. And we're talking a little bit more about AIG and some of these huge firms that took a little bit of taxpayer money to stay afloat.
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: A little bit. Just a little. In particular, AIG, because the main focus here being Hank Greenberg. He's 84 years old. He spent about 40 years building AIG into the behemoth with $1 trillion balance sheet over time. So this is really his baby that AIG became just a large massive company. But he was ousted in 2005 because of a bit of an accounting scandal.
Well, many believe now he's busy creating AIG 2. And this has some people concerned. The reason why he's now with this company C.V. Starr, they are slowly but surely pulling away some top talent from AIG.
There are several top executives who used to work for AIG companies that are now at C.V. Starr. This is really concerning some people because AIG took the largest bailout batch of money ever. $180 billion. That's the largest amount of bailout money ever to one company. They need to pay that money back. And a lot of people think if the top talent is already gone, they're not going to ever be able to do this.
Now, if you take a look at Greenberg's status with this company, he still is the largest shareholder outside of the U.S. government. So, many are saying well, he wouldn't want it to fail because he still has a lot invested in this company. But this is something that many people have been worried about is that if you take away all of the top talent, or if you don't pay them, because remember just last week we heard that the severe punishment for paying 90 percent, not being able to get their pay coming to them.
If this doesn't happen, then these top talented people will leave the company and it's going to make it harder for these companies to pay that money back. But some people are saying this is going to cause a bit of a problem for AIG with all these top guys go to C.V. Starr which he is starting up.
But the lawyer for Greenberg is saying he does want the company to succeed. He's just doing his own thing over here, but it's starting to look a lot like AIG.
ROBERTS: Really speaks to his tenacity, though. He lost his fortune in AIG when it collapsed and now he's back out there at the age of 84 building this other mega-company.
ELAM: Yes. No. There's no doubt about it. And if you take a look at some of the cash payments and the total payments that these people were getting at AIG from 2008 to 2009, cash paid, $34.4 million, down -- down 91 percent. If you look at that total pay, down 58 percent. So these numbers just really show that these people have been taken a hit. And if they could go get that same money at someplace where they don't have to report their financial numbers, there's not -- investors involved, then they can go ahead and do what they want until it looks a little bit more attractive for them.
CHETRY: It's a double-edged sword for the government as they're trying to figure out.
ELAM: Definitely. They're trying to balance it out and talk to them, but it's a difficult one.
CHETRY: All right. Well, thanks, Stephanie. Good to see you. We'll see you again in the next hour.
ROBERTS: Speaking of making money, of course, you know, it's well known that painters often don't become famous until after they die and work that were worth pennies suddenly become worth millions of dollars.
CHETRY: Right.
ROBERTS: Well, it's not just limited to painters. Our Kareen Wynter this morning taking a look at making money from the grave, just ahead.
Twenty-four and a half minutes after the hour.
(COMMERCIAL BREAK)
ROBERTS: Welcome back to the Most News in the Morning. You know Michael Jackson has been making millions since his death, but he's not the only dead celebrity who's raking in the cash these days. In our special series, Michael Jackson, the legend lives on, our Kareen Wynter shows does the secret formula for stars to make more money dead than alive?
KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT: John and Kiran, behind these gates lies some of the greatest stars in entertainment history, including Michael Jackson. And while they rest in peace, some are still earning a tidy income.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: They're in my movie and on my track.
WYNTER (voice-over): He's been dead for decades. But late screen legend Steve McQueen still finds work beyond the grave, inserted into ad campaigns like this one.
(BEGIN VIDEO CLIP)
STEVE MCQUEEN, ACTOR: Good luck.
(END VIDEO CLIP)
WYNTER: Dead celebrities making a living on their iconic images. There's a market worth hundreds of millions a year, says David Reeder of GreenLight. His company advises heirs of celebrity estates on licensing and marketing opportunities.
DAVID REEDER, GREENLIGHT: This one we just finished last month which is using Andy Warhol's personality for Citibank.
WYNTER: GreenLight has brokered deals for clients like Andy Warhol, Steve McQueen and Albert Einstein. Their latest addition...
REEDER: Bruce Lee who we're excited to take the market globally.
WYNTER: A concept can start with something as simple as a classic photo, like this one of McQueen from a 1960s movie set.
(on camera): If I wanted to license something like that, how much would it cost?
REEDER: You know, it could cost you in the six figures certainly.
WYNTER (voice-over): GreenLight is not the only company in the business. From artwork to alcohol, even figurines. CMG Corporation has negotiated lucrative contracts for the estates of Marilyn Monroe, Betty Paige.
UNIDENTIFIED FEMALE: We're talking big numbers.
WYNTER: And the legendary rebel, James Dean.
UNIDENTIFIED FEMALE: He's one of our top clients.
WYNTER: But when it comes to the king of posthumous celebrity earners, that crown belongs to Elvis who dominates "Forbes" annual list of top earning dead celebrities.
ROBERT SILLERMAN, CEO, CKX: Elvis will generate in 2009 between $50 million and $60 million.
WYNTER: Numbers that could easily triple next year with the upcoming launch of an Elvis Cirque du Soleil show in Vegas, says billionaire entrepreneur Robert Sillerman. His company, CKX, owns 85 percent of the rights to Elvis. But Sillerman says Elvis could be dethroned with the late Michael Jackson's huge earning potential.
SILLERMAN: 2010 is going to be interesting. It's going to be the first time that there really is a horse race with Elvis. WYNTER: But GreenLight's David Reeder says an estate's true test lies in a star's staying power, how bankable their image remains over time, like this 20th century pioneer, whose persona still resonate with consumers. From coffee lovers to Colby Einstein (ph).
(on camera): "Forbes" magazine releases its list of top earning dead celebs tomorrow. We will find out whether Jackson clinched the top from Elvis -John, Kiran.
(END VIDEOTAPE)
ROBERTS: For us this morning, thanks, Kareen. And tomorrow Michael Jackson's "This Is It" documentary hits theaters around the world. Sony Pictures paid more than $50 million for the rights to hundreds of hours of never-before-seen rehearsal video. Entertainment correspondent Kareen Wynter has a sneak peek tomorrow, right here on AMERICAN MORNING.
CHETRY: We had a chance to see, some, a preview as well. It's breathtaking. I guess part of the reason is because he looks completely healthy, in top shape, and then we 18 hours after some of that video was shot he was dead.
ROBERTS: He still has all the dance moves down. For people that thought he was an old man walking around on the stage, it puts the lie to those reports. You know he's not in tip top shape, but he's pretty good.
CHETRY: It was amazing. It is amazing. We will see how much money it makes; $50 million for the rights to that. Wow.
Still ahead, we are going to take a look at the stop stories right now.
A very close call taking place at Los Angeles International Airport. Officials there are confirming a taxiing Midwest Express jet and a departing Northwest Airlines flight came within 100 feet of colliding Sunday. The FAA says that the air traffic controllers ordered the Midwest flight to stop taxiing, the pilot failed to follow the order. The runway incursion is now under investigation.
ROBERTS: Allegations that a Chicago bar denied black students and let their white classmates in. Class president at Washington University of Missouri says a settlement with the bar could happen as soon as tomorrow. The students complained to state and federal agencies after six African-American students from the senior class trip were turned away from Mother's Bar, while 200 white classmates were allowed in. The bar blamed dress code violations, including baggy jeans. Of course, the students said they tested that by having a white and black classmate switch clothes and the result didn't change. They let the white student in, and kept the black student out.
CHETRY: If you have a Big Mac attack in Iceland, you may be out of luck. The country's three McDonald's are all closing next week because the Big Mac has just gotten too expensive there. The famous burger will set you back $6.36 in Iceland. The franchise owner partly blames the fact he's forced to import all of his ingredients from Germany. Here in the States, we pay about that for an extra value meal.
When the credit crisis struck last year, the feds pumped tens of billions of dollars into the nation's leading financial institutions, telling us that they were too big to fail. Now after all of the mergers, the bailouts, the biggest of these banks, have actually gotten bigger. And for consumers, there are actually fewer choices.
Now, there is a push for regulations to make these firms pay for the risks that they take with your money. Joining us now to talk this, Neil Ferguson, a professor at Harvard Business School and author of "The Ascent of Money". And also, live from Washington, Dean Baker, co-director of the Center for Economic Policy and Research.
Thanks to both of you for being with us.
So, there's no final plan yet, but what looks like the bill that's in the works right now, looks like this legislation would require these institutions to keep more money in reserve, to make it harder to borrow against their assets, and also to force them almost to come up with their own failure plan, kind of like a living will. That would be the blueprint for breaking the company apart if it failed.
So keeping an eye on all of this, Dean, let me ask you, first, will this work? Is this the right way to go for the federal government?
DEAN BAKER, CENTER FOR ECONOMIC POLICY & RESEARCH: Well, basically you have two paths you could go. We are recognizing that we have firms that are too big to fail. Everyone assumes the government will bail them out, as they did in the most recent crisis.
So the two options here are either you break them up into banks that aren't too big to fail, which many people, including Alan Greenspan, Paul Volcker, many prominent people have endorsed. Alternatively, you try to regulate them to ensure that they don't take advantage of this. That's the route that the administration, the Obama administration, is going.
And whether that can be effective or not, you know, it remains to be seen. The fact is regulation, of course, failed disastrously and that's why we are in this crisis. Can we do better next time? Hard to say.
CHETRY: Neil, the billionaire investor George Soros argued this week that we actually need to wait and regulation now would be counterproductive. He said, look, we have to get to a point of stability first. Then we will start talking about regulation. What do you think?
NEIL FERGUSON, PROFESSOR, HARVARD BUSINESS SCHOOL: It is a big dilemma for policymakers on both sides of the Atlantic because if you say to these large institutions, you must increase your capital, you must reduce your leverage, and at the same time say, and you have to lend more to get the economy going. You are telling them to do two completely contradictory things.
I think George Soros is dead right. It would be a big mistake to rush to any kind of tightening at this point when, frankly the recovery in the United States is still so anemic.
The longer term, I think the nettle has to be grasped. I mean, there is no real choice here. If you have institutions that are too big to fail, at some point or another the taxpayer is on the hook no matter what kind of regulatory framework you create. Here I side with Paul Volcker, and with Mervin King, the governor of the Bank of England. If an institution is too big to fail, it really is too big. And just regulating it is not the answer. We need to move to institutions that are smaller and whose failure does not jeopardize the economic stability of the entire world.
CHETRY: Right. And it is very interesting, Dean. That's another question that some are asking: If they are too big to fail are they too big to exist? I mean, we look at what's happened on Wall Street in the last year. We ended up with now a handful of banks that control a huge percentage of deposits and of mortgages and even credit cards. So, are we in a more dangerous position now than we were before the crash?
BAKER: At the moment we absolutely are. The crisis led to greater consolidation. You have Wachovia taken over by Citigroup -or I guess, that was Wells Fargo taking them over. You had a wave of mergers. So, we already had a great deal of concentration going into the crisis. We had even more concentration.
So the administration is trying to respond to that with this set of regulations. But again, it remains to be seen whether we are going to have regulatory bodies that can effectively contain the power of these large financial institutions. And to my mind, I agree very much, that the safer route is simply break them up. We are not talking about them reducing them to community banks, but banks that can fail. IndyMac was a very large bank, but that failed.
CHETRY: Right. And, Neil, also this implied guarantee, I guess, that these big institutions are backed by the government. Some say it is what is driving salaries up, because there is no real risk of going bust. People get more aggressive, potentially make more money. We have to balance that, of course, though, with what we were talking with Stephanie Elam here, about AIG. When you try to limit compensation, perhaps some of your best workers, and the people that are the brightest minds will go elsewhere. How do you balance that?
FERGUSON: Well, this problem is quite interesting. Because there are two kinds of big institution now. Those that are still losing money and are dependent on the government for their backing and there the salaries clearly can be controlled. Those like Goldman Sachs and JP Morgan that got out of jail as quickly as they could, and paid off the TARP money, but are still enjoying effectively free credit from the Fed.
CHETRY: Right.
FERGUSON: And all kinds of advantages from the implicit guarantee. That's the concentration tendency that I think Dean is rightly talking about. We are in a situation where fewer and fewer institutions control more and more of the U.S. financial market. The situation is actually worse than it was before the crisis. I don't believe that the regulation can solve that problem, because in the end, regulation failed before.
CHETRY: Right.
FERGUSON: And I can't help feeling it will fail again.
CHETRY: So, Dean, quickly, we have to go soon. But what's -- you know, what is the best -- I guess, way for us to go as we try to struggle with all of this?
BAKER: Well, I really think breaking up these large institutions so we can look out and say we don't think they are too big to fail. Again, no one could ever know that because it will depend on the circumstances. But there should not be institutions out there that everyone knows are too big to fail. That's the case today.
CHETRY: I want to thank both of you for your insight this morning. Neil Ferguson, his book out, also, "The Ascent of Money". Very interesting read. As well as Dean Baker, at the Center for Economic and Policy Research.
Thanks to both of you for being with us.
FERGUSON: Thanks for having me.
BAKER: Thanks, Kiran.
It's 38 minutes past the hour.
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ROBERTS: Good morning, South Florida, Ft. Lauderdale. Where it is cloudy and 82 degrees right now. Later on today chance of storms and a high of 87. About 200 miles up the coast, NASA is hoping the weather holds up. There is a launch plan for this morning. A four-hour launch window for the Ares 1-X Rocket. Currently in a hold, and an 8:00 a.m. Eastern launch time has been delayed at least a half hour now.
CHETRY: Yes, it is because the unmanned test flight - it is weather related that they delayed it. But the unmanned test flight could also launch America's next generation of space flight, which makes it so exciting and it is why so many people are watching it.
Including our John Zarrella, here to explain live from Kennedy Space Center.
We knew the shuttle was going to be a thing of the past. Could this Ares rocket be the thing of the future?
Hey, John.
JOHN ZARRELLA, CNN CORRESPONDENT: Hey, John, Kiran, you can't underestimate how huge a day this is here today at the Kennedy Space Center.
The vehicle the Ares 1, 327 feet tall, nearly twice as tall as the space shuttle. Almost as tall as the Saturn V moon rockets. Sitting on launch pad 39B, waiting for that liftoff. Again, as you mentioned, delayed perhaps a half an hour or so, because of some weather concerns.
And this is supposed to be the replacement to the space shuttle, the future of human space flight in the United States, but there are still lots of questions.
(BEGIN VIDEOTAPE)
ZARRELLA (voice over): On launch pad A, the space shuttle, it is the present and soon to be the past. On pad B, Ares 1-X rocket, the future, maybe. Built to replace the retiring shuttle fleet, Ares would be the first vehicle since the Apollo years to take humans out of low Earth orbit perhaps to Mars.
CHARLIE PRECOURT, VICE PRESIDENT, ALLIANT TECHSYSTEMS: It behooves us to build an architecture that can serve a multitude of missions for those next 50-plus years, and that's where this was first envisioned, was to think about space station lunar, and asteroids, beyond.
ZARRELLA: Cloudy skies here, fitting, given the future of Ares is already before it ever flies clouded by uncertainty. The White House has still not decide whether Ares built with a budget as thin as the rocket itself should be the shuttle's replacement. NASA and the rocket's developers have pressed ahead. The pressure is enormous. It is just an unmanned test flight to gather data. But a catastrophic failure could be catastrophic to the program.
JOE OLIVA, ARES 1-X PROGRAM MANAGER: It will be hard for folks to understand that, wow, we just lost the vehicle but got some great data, which is the reality of the situation. But in the end, it is going to be a much harder hill to climb if we are not completely successful.
ZARRELLA: Over the summer the rocket segments were put together in the vehicle assembly building. The upper part of the rocket is made up of dummy segments designed to mimic the real deal. The lower stage, of four segments solid rocket will burn for two minutes, producing 3 million pounds of thrust. The entire vehicle is filled with a web of 711 sensors.
OLIVA: The goal of an early flight test is to get the test off early enough that you can actually use that data to influence, and make course corrections, if you will, to the design on the full vehicle. ZARRELLA: But course corrections might cause further delays. The first flight with humans sitting in a capsule on top of the rocket won't take place until 2015, at the earliest. And at least five years after the last space shuttle flight.
UNIDENTIFIED FEMALE: Booster ignition, liftoff of Space Shuttle Discovery!
(END VIDEOTAPE)
ZARRELLA: Now this flight, when they do get off the ground here, hopefully this morning, it is going to -- as I said about two minutes of powered flight, 130,000 feet into the air. At that point, separation. The first stage falls back in on parachutes and into the Atlantic, where it is recovered and can be used again. Just like solid rocket boosters on the shuttle. Second stage, that dummy stage, will fly off and then fall harmlessly into the ocean.
So, John, Kiran, absolutely huge, important day here at the Kennedy Space Center.
ROBERTS: And, John, the first time in more than three decades, they have tested a new spacecraft like that?
ZARRELLA: Yeah. Absolutely. You have to go back to the Apollo years before they launch anything other than a space shuttle here on these two pads out at the Kennedy Space Center. Goes back to something like 1973, back in the old Apollo days.
ROBERTS: Wow, pretty incredible. All right. John Zarrella watching it for us down there at the Kennedy Space Center.
Now let's check in with our Rob Marciano. He's at the Weather Center in Atlanta, and, Rob, does the weather look like it will be favorable any time within this launch window to get that craft off the ground?
ROB MARCIANO, AMS METEOROLOGIST: Well, it would be easier to say that if there was, you know, some substantial clouds or at least substantial weather happening within the launch site. Here's Kennedy Space Center. There's some blips on the radar screen, but generally speaking there is not a whole lot of activity as far as any sort of thunderstorms that would create precipitation or lightning around - around the site.
So that's not so much the issue, I don't think, as much as any sort of cloud cover in the flight path. So hear you go. We're seeing mid and high-level clouds that are beginning to stream over Central and Northern Florida, and I think that's probably what they're most concerned about because as that rocket gets through some of these clouds, even though they're probably not creating a sort of precipitation, that static electricity that's created, especially if the rock - when the rocket goes through higher clouds, because those are ice clouds and they have a little bit more chance of creating that static electricity that interferes with radio signals and Lord knows what else is on that spacecraft that will be messed with. So I think that's our main concern. It's all part of this bigger weather system, John and Kiran, that's bringing moisture to the Southeast and also up towards the Northeast and that's creating - will create some travel delays below 50,000 feet where most of us fly, but that will be exciting, the launch, if they can get it up today. We're surely keeping our fingers crossed for that -- John and Kiran.
CHETRY: Very exciting. Hope it goes well, for sure.
Rob, thanks so much. Still ahead, a lot of questions remain still about the swine flu virus but also the vaccine. When will it be available? Is it safe? Elizabeth Cohen is going to update us on the latest information, a parent's guide to H1N1 vaccines, still ahead.
Forty-seven minutes past the hour.
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CHETRY: Welcome back to the Most News in the Morning. It's 50 minutes past the hour right now.
Is your child home from school with the flu? Well, there are some brand-new numbers this morning showing how the flu is affecting schools across the country. If you take a look, 70 schools have closed in 15 different states. It affects more than 26,000 kids. A lot of kids home from school.
You know, that number, though, actually dropped pretty dramatically when you take a look at last week, more than 100,000 kids were out of school with flu or flu-like symptoms.
ROBERTS: Well, even though fewer kids are absent this week, there's a new urgency to get them vaccinated against swine flu. Coast to coast, parents are stuck in long lines, waiting for the H1N1 vaccine. The concern is because nearly 100 children have died from swine flu already and many of those children went to the doctor and were told to go home.
CHETRY: So what do you do if your doctor tells you that your child will be OK, but your intuition is telling you something different? Senior Medical Correspondent Elizabeth Cohen has a parent's guide for us this morning.
Good to see you this morning, Elizabeth. And first and foremost, what signs and symptoms are you looking for to even know if it's the flu or swine flu versus just a cold?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Right, to distinguish swine flu from just a cold, you're going to be looking for fever and a cough and a sore throat. Kids with swine flu usually have a fever.
The key, also, is once your child is diagnosed with H1N1, you want to be on the lookout for signs that your child is taking a turn for the worse. I'll tell you, Kiran, I've been on the phone with parents whose kids were sent home from the doctor, told that they would be OK, and those kids ended up in the intensive care unit and almost dying, and the reason why they didn't die is that their parents were vigilant for these warning signs.
So let's go over a couple of them. For example, if your child has a fever, that's not responding to drugs, that's a sign that something could be truly wrong. If a child has very fast breathing, that's another sign that something could be wrong. Also, if a child has blue skin, for example lips, toes, fingers or numbness, you definitely want to be getting help immediately, and if a child gets better and then gets worse, another sign that you really need immediate medical attention.
Now, I want to stress here that the vast majority of children who have H1N1 have a few miserable days and then they're fine, but for a very small percentage some of them end up in intensive care or even dying, and many of these children were perfectly healthy children to begin with - Kiran.
ROBERTS: So, Elizabeth, this is really a case where you have to advocate for your child, but how should you go about it? You obviously don't want to get into a fight with your doctor. What's the prudent way to proceed?
COHEN: Right. You don't want to get into a fight with your doctor, but what you want to point out to the doctor is that you know your child best. And you need to remind yourself of that as well. If you see that your child is not acting normally, you need to point this out to your doctor.
We were talking to actually an infectious disease specialist at the Mayo Clinic, Dr. Gregory Poland, and he stressed you need to be an advocate for your child. You are the one who spends day in and day out with that child. You know when something's really wrong.
CHETRY: Right. And - and just a quick, quick update on the H1N1 vaccine for people that are getting nervous and they're seeing video of people waiting in long lines, what's the - you know, what's the protocol right now?
COHEN: The protocol is is that if you can find H1N1 vaccine, you should go get it. If you're in one of those high-priority groups, or even if you're not and you just want it, you should go get it. It is very difficult to find. They are no longer sort of making promises about when it's going to be around, so if you can find it, you should get it. If not, just wait, and we're told it will be here at some point in larger numbers.
ROBERTS: Elizabeth Cohen this morning with some good tips for us. Elizabeth, thanks so much.
So the latest on Northwest Airlines Flight 188, they were in the cockpit. They were using their laptop computers, going over crew schedules. That's how they got distracted enough that they flew well past Minneapolis.
Is it possible to get that distracted while you're flying? Our Deb Feyerick puts it to the test. She gets in the simulator this morning.
Fifty-four minutes after the hour.
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ROBERTS: Hey, I just want to update you on our news that we're talking about with John Zarrella just a couple of moments ago. NASA has come out of the hole. They have now reset the launch of the Ares 1-X rocket - there it is live in the launch pad - for 8:29 this morning, so we may indeed see this thing take off.
Exactly one week to go now until crucial midterm elections, President Obama heads to Virginia today mounting a final push in the state's critical governor's race. Before squeezing in a little campaigning, the president held his sixth war strategy session yesterday on the deadliest day for American troops in Afghanistan in four years. But still, the president is calling for patience, saying he will not rush his decision on whether to send in more troops.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I will never rush the solemn decision of sending you into harm's way. I wouldn't risk your lives unless it is absolutely necessary.
(END VIDEO CLIP)
ROBERTS: Kate Bolduan live at the White House for us this morning. And, Kate, what are you hearing about a timetable for the president's decision on whether or not to send more troops to Afghanistan?
KATE BOLDUAN, CNN CORRESPONDENT: Yes. Hey, there. Good morning, John.
Well, the White House says, simply, it's coming and they say the decision and the announcement will come when the time is right for the president. A White House official, however, indicating to me that the meeting yesterday, that sixth meeting of the president and his national security team, he said that meeting was in the latter part of the - latter part of the review phase, giving a little bit of indication that this decision process seems to be winding down.
And White House Press Secretary Robert Gibbs aboard Air Force One yesterday, being asked the same question by reporters, said that the decision and the announcement could come at any moment. However, he said that he didn't know or wouldn't say if that announcement could come before or after the presidential runoff - the presidential runoff in Afghanistan. As you know, that runoff is November 7th. Days later the president leaves for - for a trip to Asia.
So those are two kind of bookends or at least scheduling points that people are definitely keeping an eye on. You heard it there, John, the president, well not - well not naming names, definitely seeming to push back on criticism as he says he's not going to be rushing this review and he says that definitely pushing back on people who seem to be saying that he is dragging his feet.
ROBERTS: At the same time, Senator John Kerry has really jumped into the spotlight here when it comes to Afghanistan. He was there last week. And this week he's getting involved in the debate over whether or not to send those troops in.
BOLDUAN: Yes, he sure did. In what was billed as a major speech yesterday, Senator Kerry, the chairman of the Senate Committee on - the Senate Foreign Relations Committee came out to say that he thinks that General Stanley McChrystal, the top commander on the ground in Afghanistan, he thinks that his request for tens of thousands, possibly 40,000 troops being committed to Afghanistan, he says that's too much, too far, suggesting that, really, he thinks that General McChrystal's request is too ambitious for the realities on the ground. Listen here.
(BEGIN VIDEO CLIP)
SEN. JOHN KERRY (D), MASSACHUSETTS: Deploying additional troops wouldn't result in sustainable gains if the Afghan security civilian and governance capacity isn't there, and right now, as our generals will tell you, in many places - too many places - it isn't.
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BOLDUAN: Instead, it seems Senator Kerry is advocating a more middle of the road approach, a smaller counterinsurgency strategy, with the possibility of committing more troops and deploying more troops along the way, John.
ROBERTS: All right. We'll see which way it goes. We should know pretty soon.
Kate Bolduan at the White House for us this morning. Kate, thanks.
