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QUEST MEANS BUSINESS

Ireland's Government Buys Up Bad Loans From Banks; NASA to Study Toyota Vehicles

Aired March 30, 2010 - 14:00:00   ET

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


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Taking a haircut on a bad bank, Ireland cleans up its act by facing its problems head on.

Houston, we have a problem. Toyota looks to NASA for help with its accelerators.

And on the mend, Chrysler's Chief Exec Sergio Marchionne tells that this day is their defining moment.

I'm Richard Quest. A busy hour ahead, I mean business.

Good evening.

Ireland tonight has performed radical and painful surgery on its banking system. The moves involve extensive life support and extremely severe haircuts for Ireland's banks. We have the prescription for keeping the crippled financial system in business.

This is what has been announced in Dublin today. The system is to be completely purged of as much as possible anyway of toxic waste. The government has created a special company that will soak up the noxious loans it has been called the bad bank or the NAMA, N-A-M-A, taking loans agreed in the good times, which couldn't be recovered when the property market crashed.

Now, the point is these non-performing loans, the National Asset Management Agency, of NAMA, will pay Ireland's banks around $11.4 billion for an initial portfolio of 12,000 loans. Now, so far today, they believe that only 20 percent of the loans, although all the loans have been- eligible loans have been sorted out. Only 20 percent will have been transferred.

Look at that, the loans valued at $108.7. By the time it is all over $108 billion is expected will have been removed from the books in the banks of Ireland. Now, those banks won't get anything like the amounts they lent in the first place. The original valued sum. The Irish government says they are now worth just a half of that figure. Around 47 percent is the average discount that NAMA is paying the banks. That is the haircut I mentioned. It leaves out banks with massive loans that they didn't have this for that 47 percent discount.

The Finance Minister Brian Lenihan said a short time ago, the government knows it must lend them a hand, if it wants to survive.

Jim Boulden has been watching events for us.

Jim, I mean, on one level, an extraordinary discount, that NAMA is taking on these bank loans at 47 percent. But is it necessary for this drastic action to be taken?

JIM BOULDEN, CNN INT'L. CORRESPONDENT: Well, yes, obviously the Irish government was facing a dual problem. One is how to fix the banks, and at the same time as it has been cutting its budget deficit and telling workers that they are going to have to suffer. Then many of them had retaliated by saying that the banks were getting too sweet of a deal, if that haircut had come in around 30 percent, which is what originally what we thought it was going to be. Then the markets said 35 percent. Now, you see this whopping 47 percent. So, it seems the government is listening to the public and the public outrage.

QUEST: And there is only about 20 percent of the non-performing loans transferred today. So, we have still got more to come. Is there a real risk? Not just theoretical risk that NAMA is going to be left with all these bad loans and they are going to-they may have to make a profit or a really bad thumbing up over it all?

BOULDEN: Well, what happened, is they said that if NAMA takes these loans and then the loans are defaulted on then NAMA, the government, the taxpayers will takeover some of these assets themselves and some people say that the Irish government, the taxpayers could become one of the world's largest owners of hotels and pubs and buildings. So that is one of the possibilities there as well, Richard.

QUEST: It is all being done by ECB sale and repo agreements, and basically getting the stuff back in ECB cash. But, Jim, I do wonder, why is Ireland, when many banks, many countries have got this, why is Ireland led the way on this point?

BOULDEN: Well, the banking system itself started to fall apart long before others did and the Irish government at the time decided that they would actually nationalize, as they did last year, Anglo-Irish Bank, which was a big step there, and then pumping money into the other two. And then, you know, for the last six months, they have been debating this NAMA.

And let me tell you some of the quotes I heard from Brian Lenihan, as well, some interesting. He said, "The detailed information that is emerged from the banks in the course of the NAMA process is truly shocking. He said at every hand's turn our worst fears have been surpassed. He also said that the banking system engaged in reckless property development lending and in too many cases there were also shoddy banking practices. He said the banks played fast and loose with the economic interests in this country.

So, you can see this is why this government felt like it needed to take these steps. But it has taken the unusual steps of buying these assets, these toxic assets, because other countries, like the U.S., have chosen not to do it that way.

QUEST: Finally, Jim, we are about to look at the price of what happened to bank shares and how they performed. There was one suggestion by the minister, we might as well just get rid of all the banks, wasn't there?

BOULDEN: Yes, well, I mean, they did actually talk in detail in this press release about why not just close down the Anglo-Irish Bank? And he said that itself would cost something like more than $100 billion. So he said that is not possible.

QUEST: Not possible. We'll show you why. Now, Jim Boulden, talking to us, brining us up to date on that.

Look at what happened to banks stocks in Ireland. And this will put you into the perspective as to the situation. Now let's begin with this Allied Irish Bank, down more than 8 percent, third day of heavy losses. Allied Irish will need around $10 billion of fresh capital, according to the Irish finance minister. The asset sales will begin immediately. The state will probably have to inject capital. This is the one that is, you know, when all is said and done the vast amount of money that has got to go into Allied Irish, the shares down 8 percent. And the reason, not because they are being saved, but because, of course, the haircut they are taking on their debt.

The bank of Ireland-now this is interesting, this actually rose, as you can tell, up 3.5 percent. That is because the Irish finance minister said that it was confident that BOI would be able to raise the amount that they will need to repair their balance sheet. Also, factor in, the Bank of Ireland, the clarity of the position, is what is given that-also the shares have been beaten up fairly substantially. That is the market down 20, end of the day, down a third of a percent. And the losses were limited thanks to-it was basically the Bank of Ireland, up nearly 4, at 3.5 percent, that causes that loss to be fairly muted. We need to talk about other countries and how this all fits together.

Good evening, Philip.

PHILIP COGGAN, CAPITAL MARKETS EDITOR, "THE ECONOMIST": Hello, Richard.

QUEST: Let's talk about this with Philip Coggan.

Philip, if the--capital markets editor at "The Economist"-the steps that Ireland took, were dramatic. They are certainly unprecedented by other countries standards, in terms of getting rid of bad debts. Is it the right way forward?

COGGAN : Well, you've just explained, expertly, why it creates so many problems. Pay a high price to the banks and the public complains they are getting a good deal. Pay a low price to the banks and they have to write off so much capital the state has to come in and inject the capital anyway.

QUEST: But it does get the bad debts off the banks books.

COGGAN: It does but into some new arrangement, NAMA, the business that dare not speak its "nama".

(LAUGHTER)

You end up with this thing lingering on for years. Now, in the U.S. in the `90s, you had the Resolution Trust Corporation, you eventually managed to flog off the properties that were owned by the savings & loans, but of course the U.S. was expanding its economy in the 1990s. Ireland has a problem the economy has been shrinking.

QUEST: So, let's forget Ireland, because it is a relatively small situation. But is this bad-good bank, bad bank, we know it has done for Northern Rock, to clean up their balance sheet in the U.K. Is this something that banks in the U.S. and in the U.K. and in Europe are looking at-or the governments, I should say?

COGGAN: They are desperate to avoid it really. They would much rather do what they've done so far, which is inject some capital, lower interest rates, so banks can make a turn by borrowing very low, short term and lending long term, hope that the economy will recovers and it sort of gets everybody else out of the problem.

QUEST: But that doesn't? Or does that solve the problems of the bad loans? Other than the wing and a prayer, that the loans become good again?

COGGAN: Exactly. They call it "extend and pretend", "delay and pray". The hope is that these loans, particularly on commercial property, particularly the private equity firms borrow huge amounts of Ireland's (ph) companies, that they will be good enough, for long enough, for the economy to recover.

QUEST: And Ireland's situation was just so what, powerless that it couldn't withstand that?

COGGAN: The banks were so big it was all in construction and property, so-and their economy plunged, so they took the hit very quickly.

QUEST: Now, what's your gut feeling, though, with the banks? In Europe, the U.S., and in the U.K., as well? I mean, do they need to do more to strengthen their balance sheets. Either-I know they have all raised their tier one capital to 10, 12 percent, but either to do that more in that line, or to get rid of their debts?

COGGAN: I think they need to recognize the problem that they have in some sectors like commercial property and private equity. Until they've done that properly, then we won't know the full extent of the deficit.

QUEST: But do you think they are going to recognize that problem, that means getting rid of the debts?

COGGAN: It does. Or it means injecting new capital.

QUEST: More?

COGGAN: Yes. To make sure they have enough capital to see them through the crisis. In Japan, we know, the longer they put it off, the worse it got for the economy.

QUEST: Many thanks, indeed. Many thanks indeed, for joining us.

Now, European stock markets ended the day looking rather sorry for themselves. Let's begin it in London where the banking sector dragged the FSTE lower. RBS shed more than 3 percent. The government controlled bank has just been fined $43 million for illegally colluding with rivals on loan prices. When I heard that news this morning, I rather felt it was slightly like the taxpayer paying the taxpayer.

In Paris, ALCATEL, Lucent the worst performer. (UNINTELLIGIBLE). Shares in the automakers also fell heavily. In Frankfurt the steelmaker ThyssenKrupp was the big loser. And don't forget there has been an iron ore deal in Asia, which of course, ought to be the lead story.

To the markets in New York. The Big Board is open at the moment. Well, really, frankly, let's not talk too much about it. Just barely changed. Not even 1.-well, just almost unchanged, 10,896, and change.

Now, that the way things are looking. News headlines now and Fionnuala Sweeney is at the CNN News Desk.

(NEWSBREAK)

QUEST: When we come back after the break, we looked at one European country, Ireland, reeling from recession. In a moment, with unemployment nudging 20 percent, Spain runs the risk of being labeled the next Greece. The finance minister talks to us in just a moment.

(COMMERCIAL BREAK)

QUEST: There is not quick fix for the Spanish economy, according to the latest forecast from the Bank of Spain. Spain's on track for another year of declining output, after a vicious decline last year. It is forecasting the economy to shrink by 0.4 percent this year, driven by continuing property slump, high private debt, cautious consumers. Now, growth should return in '11, but even then, compared to what other countries are going to experience, it will be just 0.8, of 1 percent, according to the central bank. It is betting a rebound in exports will lead the rebound. They are expected to grow by 5 percent in 2010.

It is a little bit more difficult though, of course, in Spain, because there can't be a competitive currency devaluation, since the country is part of the Euro Zone. So, competitiveness becomes one of the big questions. Spain is feeling the hangover from years of unsustainable spending. Rising taxes and cuts in government spending are needed to cut the ballooning budget deficit.

John Defterios asked the Finance Minister Elena Salgado, if some of these austerity measures might be too tough for a nation still in the grip of recession.

(BEGIN VIDEO CLIP)

ELENA SALGADO, FINANCE MINISTER, SPAIN: No, I think, Spanish people they are, very, very concerned also. Because we think-we know for sure, that we have to reduce our deficit. If we want a sustainable growth for the future. Our debt level is quite low, but nevertheless, we are all public opinion, now we have convinced that to reduce the deficit doing these things (ph).

JOHN DEFTERIOS, CNN ANCHOR, MARKETPLACE MIDDLE EAST: It is fascinating because your deficit is high, on an annualized basis, but you long term debt is not, but everybody keeps on talking about contagion and it spreading to Spain.

SALGADO: Well, this is something that we deny every time, because our debt level is 20 points lower than the average in the European Union. And this is going to continue like that because we have had a very, very robust growth in the last year. We have had a surplus in our finances and we will continue being very, very austere, in which it relates to the debt. So, we will continue having our debt level be lower the average in the European Union, much below.

DEFTERIOS: This was a construction collapse, which really exacerbated the recession in Spain. Do we see a floor under the property sector at all now, in commercial, and even residential property. Because the consumer debt levels are very high as you know.

SALGADO: Yes, I think we see some recovery. Of course, is not going to come back to the percentage of the GDP that it was, because it is not sustainable.

DEFTERIOS: Some would argue that it is a good thing.

SALGADO: Yes, but it is not sustainable. Of course, because we had more than 10 percent weight in the GDP, related with average of 6 percent in the European Union. So we have to tend to this 6 percent.

DEFTERIOS: What are your thoughts about the IMF role now, going forward, do you think that in fact they'll reach into national policy and start to govern how much should happen, if they are required to step in like they have into Greece? This is the greatest concern it seems?

SALGADO: Well, I think the first thing you have to take into account is that we belong to the IMF and we are Europe, the first financer of the IMF. So, if the IMF is coming into Europe to give some help it is not an extraordinary thing. It is something this could be quite normal.

DEFTERIOS: Why all the sensitivity then, Minister, because as you know there was great, great resistance over the last 30 days, to the concept.

SALGADO: Yes, even Spain, we have said that we should have preferred a more European decision, in the sense that more of a European solution, and the IMF has only the role of giving technical assistance. But nevertheless, you know, Europe, is also a question of balance. And there are opinions in one way, there are opinions on the other side, so, I think the final outcome is quite a balanced outcome, and it gives confidence to the market.

DEFTERIOS: Final question for you. Does Portugal, and then Spain, become the next targets, and Ireland, for the speculators in the market. That is what the second wave of concern seems to be within the EU at this stage?

SALGADO: Well, I hope not. And anyway, even if we are attacked by the speculators, we will resist because of our foundations of our economy are very, very strong. And our situation is very good, related to the market. So, I think, if they come we will resist.

(END VIDEOTAPE)

QUEST: That is Spain's finance minister talking to John Defterios.

In just a moment, on this program, another European voice on the Greek crisis, the Polish Finance Minister Jan Vincent Rostowski, on why the IMF was the only way forward, and why European leaders should be looking to the East.

(BEGIN VIDEO CLIP)

JAN VINCENT ROSTOWSKI, POLISH FINANCE MINISTER: We're very pleased that in 2009 we were the only country in the European Union to grow and we grew at a perfectly respectable 1.7 percent. But the other countries of Central and Eastern Europe also turned out to be far more resilient, both politically an economically, to the crisis, as you said, people feared a year ago.

(END VIDEOTAPE)

QUEST: And the U.S. Congress is calling in the big guns to finally put Toyota's safety issue to rest. Can NASA help and how much is it going to cost? In a moment.

(COMMERCIAL BREAK)

QUEST: Now some breaking news to bring you here on CNN.

After 12 long years, Pablo Emilio Moncayo is a free man. Red Cross officials in Columbia announced a short time ago the captive has been turned over by FARC rebels. A military helicopter sent to retrieve the captive is now on its way back with Moncayo.

We'll have more on this story as it develops. But a bit of background, just to point out to you. Moncayo has been the longest held in captivity by the FARC rebels, for some 12 years, longer than any other hostage. So, obviously, this is going to be extremely important and we will follow it closely when we get more details.

Toyota is taking the first steps toward restoring an image-excuse me- that took decades to acquire; and just a couple of years to ruin. The company was roundly criticized, you know this, for the way it responded to reports of safety problems.

First of all to Tokyo, Kyung Lah reports on what the carmaker is doing to win back customer's trust.

KYUNG LAH, CNN INT'L. CORRESPONDENT (on camera): Toyota Motor Corporation dubbed this day, quote, "radically reshaping operations". Toyota Motor invited in news cameras to tour its test facility; a facility that is going to focus on quality. It also unveiled its new global quality task force. A number of officers appeared before a camera. These-each of these executives will be representing a different region of the globe, where Toyota has operations.

And the cameras were invited in to look at these executives, to look at these testing facilities, because Toyota wants consumers to see that it is trying to address its safety issues, all those safety issues that lead up to the 8 million cars being recalled around the globe. There was the criticism from U.S. regulators that Toyota was, quote, "safety deaf". Well, Toyota says it is now listening. Each region will have more of a voice. Toyota says it will be more transparent, they are hiring third party experts, and they will pay more attention to the customer.

The U.S. quality officer told reporters that decisions will be made closer to the consumer.

STEVE. ST. ANGELO, NORTH AMERICAN CHIEF QUALITY OFFICER: We should be able to get faster decisions, more effective decisions, and an optimum decision for all the regions.

We will be able to share the different concerns, globally, and help each other so our countermeasures may be quicker, more effective, and the bottom line, is that we are going to protect the customer. We are going to ensure that the customer's safety, and that safety of the vehicle is number one, for Toyota.

LAH: But analysts say the jury is still out on whether or not this really means true change for Toyota.

KOJI ENDO, SR. ANALYST, ADVANCED RESEARCH: Is that a really good thing, or a bad thing? They still do not know. And probably they are still trying to do a number of things to come up with the right remedy, so to speak. So, again, yes, I think this is a very big show and again, the conclusion, or the result, are not yet to come.

LAH: Endo believes that it will be at least six to 12 months before Toyota's restructuring actually proves that Toyota's quality problems have been addressed.

Kyung Lah, CNN, Tokyo.

(END VIDEOTAPE)

QUEST: Now, that is the way it is seen from the Toyota point of view, but if anyone tells you that sorting out Toyota's quality issues isn't rocket science, well, they are wrong. And the U.S. government has proof of it. It has drafted in experts from NASA to try to figure out what's behind reports of the uncontrolled accelerations in the Toyota cars.

Well, why NASA? You'll want to know. Because basically, Toyota can't necessarily find the problems that everybody has reported, or there have been widely reported. Toyota found no evidence of electronic malfunctions and is blaming mechanical faults. Watchdogs have complained alleging unintended acceleration causing 52 deaths. But it must be admitted that has not been proven.

So, when in doubt, you call on the people who really know about these sort of things, NASA. Who will do tests on the electronic systems. It will cost and about nine scientists from NASA will be involved. It will cost $3 million, we are lead to believe. Nine scientists will be working with the safety watchdog. And they will be determining, one of the things, not just what might have gone wrong, but whether more investigation needs to take place.

NASA has a long and proud history of obviously investigations, research on airbag, stability control, car seat safety. It is also, of course, been one of those areas of space and science where there have been great spin offs from the-like the science into everyday life.

I'm joined on the line now from NASA Langley Research Center in Hampton, Virginia. Keith Henry is with us. He's a spokesman for NASA's research facility.

Mr. Henry, what is it, do you think, that you hope NASA can achieve, or can assist in this investigation?

KEITH HENRY, NASA LANGLEY RESEARCH CENTER: Well, we will have a team of engineers who have a specialized knowledge of electronic systems and the effects of external interferences to electrical systems who will take an unbiased, independent review of all the information that the Department of Transportation provides to us, and that Toyota provides to us, through the DOT.

And we'll use the same sort of-as you were saying earlier, very well, I thought-the same sort of engineering, technical engineering approach that we take to all of the problems that we look at. And this unit, by the way, is the NASA Engineering and Safety Center. It was a unit that was formed after the Shuttle Columbia accident to make sure that we had a unit like this ready to take on very tough, technical questions. And they'll look at it with the same way that they'll look at shuttle problems, and space station problems, and Hubble space telescope problems-

QUEST: Right.

HENRY: -aviation problems and everything else.

QUEST: It is a fascinating dimension to this, isn't it? Because one thing we do know about NASA is once you get your teeth into something you don't let go very quickly. So if there is something to be found it is a fair bet you guys will find it.

HENRY: Oh, yes. In fact, the main problem sometimes is to get our guys to stop analyzing and say, OK, OK, enough, enough. But you are absolutely right about that.

QUEST: What-will it be restricted to accelerators, or to total systems, or to what has happened? Or is it too soon to say, the full parameters of the investigation?

HENRY: Well, as you may know the Department of Transportation today announced two studies. And one is a broad ranging, longer-range study, that they are doing association with the National Academy of Sciences. The one that we are helping with is a more focused shorter term, that is focusing on the Toyota acceleration problem, at least that is the way it is defined up front. Now, that could-that could be broadened a little bit over time. But right now that is the focus.

QUEST: Right. Any idea when you hope to have a result?

HENRY: Well, we want at least initial results by the end of summer and the whole thing is supposed to be over by the end of six months, but that is, you know, it doesn't have to be over then, if we are still doing things that both parties like.

QUEST: Keith, come back and talk more, and whenever it is, we are always happy to talk to you about what the results will be.

HENRY: Very good.

QUEST: Keith Henry joining us from NASA's research center.

Now, still ahead, in a moment, tough talk from the head of Chrysler on the fate of the car industry. You are going to hear, on this program, from the chief executive, Sergio Marchionne.

And hopes for the hybrid, GM's chairman, also on tonight's program, with what's at stake with the Chevy Volt. The CEOs talk to QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS. This is CNN.

Well, U.S. car maker Chrysler says it's sticking by its goal of breaking even this year in terms of operating results. And to do so, it must hit its target of selling more than a million vehicles in the United States.

CNNMoney.com's Poppy Harlow has been talking to Chrysler's chief exec, Sergio Marchionne, in New York -- Poppy joins me now.

Look, there -- this was quite a deal, wasn't it, when Sergio Marchionne took over Chrysler, through numerous iterations...

POPPY HARLOW, ANCHOR, CNNMONEY.COM: Certainly.

QUEST: It had failed to succeed.

Why was he so optimistic now?

HARLOW: It was fascinating. Sergio Marchionne was the keynote speaker here at the Auto Forum in New York just this afternoon. And it was fascinating, Richard, to hear how optimistic he is. He talked about the fact that there are many naysayers, who say transatlantic tie-ups between fiat and Chrysler, for example, are destined to fail. He said that is simply not the case, that they are moving forward full steam ahead.

He talked about the fact that this is a company with $5 billion cash on hand.

But clearly, this is still a company in peril. This is an automaker that owes U.S. taxpayers, Richard, $13 billion.

So after that keynote address, we were able to speak with him, with a horde of reporters around him, and ask him a few questions about the state of Chrysler, because he called this the defining moment for that automaker.

Take a listen.

(BEGIN VIDEO CLIP)

HARLOW: I wanted to talk about a little bit more the defining moment that you mentioned. And you said, "This is our moment."

So for Chrysler, what does that mean for -- for the buyer in this country?

What is this defining moment?

SERGIO MARCHIONNE, CEO, CHRYSLER GROUP: I think we need to really -- really -- look, this industry, for a long period of time, has been moved away from the main -- main objective of making cars that people like and making money on it, as crass as that sounds, into peripheral activities that have covered up the sins of the industry for a long period of time.

I think that this is our moment. Our moment is to go back in and start making cars that people like and to make -- sell them at a profit. I know it sounds incredibly trivial, but it's that simple. If we ignore that objective, we're going to blow this opportunity all over again.

HARLOW: So...

MARCHIONNE: And I don't want to.

HARLOW: So what is the car that we see roll off your pipeline that excites the American buyer, something they haven't seen from the domestic or the foreign automakers?

MARCHIONNE: Well, to begin with, as you -- as you well know, we've got a new -- a new car coming out in July, the Grand Cherokee, and I think it is going to represent the best of Chrysler technology and quality in a product. So I invite everybody to go look at it.

And that commitment is being made a whole -- across the whole product range. The very first car that's coming out, which is Chrysler's own invention, with the help of Fiat, is a new C-segment sedan, which will come out at the end of 2011.

HARLOW: And the bureaucracy, you said, crippled this industry.

It's gone?

MARCHIONNE: Ours.

HARLOW: Your bureaucracy is gone?

MARCHIONNE: This is -- we live in a very simple world. We're met -- we're all metal bashers. We make cars.

(END VIDEO TAPE)

HARLOW: Isn't that interesting, Richard?

He says, "We live in a very simple world."

I don't know if anything about dealing with an automaker and bankruptcy is simple, but there you have it. He's optimistic. He says the bureaucracy that weighed down his company is gone. And he thinks that having this tie-up between Fiat and Chrysler will really, really help sell more fuel-efficient cars in this country.

We'll see -- Richard.

QUEST: Yes. And NHTSA has put $13 billion of the IOU on the back burner for the moment -- Poppy, let's talk about...

HARLOW: Right.

QUEST: -- Toyota. We've -- you've -- we've just been hearing a moment or two ago...

HARLOW: Sure.

QUEST: -- from how NASA is getting involved in the brake problem. And we've heard from Kyung Lah.

But in New York, of course, they must be trying to put on a very brave face on a difficult situation.

HARLOW: They are. This is the first time, again, at that Auto Forum today in New York, that we heard from one of the top officials at Toyota. Jim Lentz is the president of Toyota USA.

And I asked him -- again, a group of reporters around him, but I asked him, do you have the fix that is needed?

Because that's the question, are the recall problems over for Toyota?

NASA announcing the investigation into unintended acceleration today, as well.

He welcomed that investigation, but he addressed the issue of the recall specifically.

take a listen to what he said.

(BEGIN VIDEOTAPE)

HARLOW: Are there any electronics issues, because there are scientists out there that are -- are showing otherwise?

So the big question, are there any?

Are you sure no electronics issues?

JIM LENTZ, PRESIDENT, TOYOTA MOTOR SALES USA: You say other scientists have shown otherwise. To date, they have not. Dr. Gilbert had a theory. We also demonstrated that Dr. Gilbert's theory works on seven other models. So just rewiring a car doesn't prove that there's an electronics issue.

There are others with theories, but no one yet -- and we'd love if they come up with something. It's not in our best interests to not find a problem if there is a problem.

(END VIDEO TAPE)

HARLOW: All right, so, Richard, he seems to be welcoming more investigations into what's going on at Toyota. But he clearly says it's not an electronics issue.

The question, I think, outstanding, Richard, can they win customers back or not?

That's what Toyota has to do now.

QUEST: Poppy Harlow is in New York.

Before you go, Poppy, you tried out a new car, didn't you?

HARLOW: Yes.

QUEST: Which one?

HARLOW: I did. I test drove the G.M. Chevy Volt this morning, the electric/gas hybrid car. I've got to say, it was -- it had a lot of kick, Richard, I'll tell you that.

QUEST: Oh, good lord, the thought of Poppy Harlow in a car with a lot of kick. It's -- anyway, many thanks.

Poppy Harlow, who is busy getting the thumbs up from Harlow -- the Harlow thumbs up.

All right, listen, never -- Poppy Harlow has given her thumbs up to some extent to it, but at the New York Auto Show, what did the General Motors vice chairman, Bob Lutz, think of their brand new electric hybrid vehicle, the Chevy Volt?

It's ride -- a lot is riding on the rollout of this car.

(BEGIN VIDEO CLIP)

BOB LUTZ, VICE CHAIRMAN, GENERAL MOTORS: I think we have it saved anyway. But I certainly think it's going to reestablish our reputation for advanced technology. And I think every automaker on the planet is going to be adopting this kind of technology, that is, an electric vehicle, but where the range is extended so that you don't get stuck...

UNIDENTIFIED MALE: Right.

LUTZ: -- if you -- if you deplete the battery.

(END VIDEO CLIP)

QUEST: A very worthwhile point.

Tomorrow, Poppy will take us on a view of that Chevy Volt test drive. The markets -- a lot's been happening in the markets lately. Well, perhaps you and I have been talking about Greece, Toyota and maybe the euro and other things. Actually, stocks have not been performing that badly, or at least they haven't gone down the toilet.

Stephanie Elam, as you can see, has joined me from the New York Stock Exchange -- Stephanie, the Dow's gained nearly 1000 points in recent weeks. We were told the year was going to be sluggish.

Do you think it's looking better than we thought?

STEPHANIE ELAM, CNN CORRESPONDENT: It probably is looking better than people thought it was going to look, Richard. But there's one thing we've got to -- we've got to point out, that we get -- we're kind of having this tortoise sort of rally where it's just sort of slow and steady is winning the race. And that's what we've seen over these last few weeks.

In fact, stocks have risen six out of the last seven weeks, as investors are really focusing on signs of the economic recovery. And the Dow getting closer to that 11000 mark once again. We haven't been there since 1999, partying like it was 1999 back then.

But the major averages now hovering around the flat line. We're now back in positive territory. We were down a little bit.

Really hurt today by energy and bank stocks. They were declining. And this was probably mainly due to the fact that investors are making some adjustments to their portfolio before the quarter winds down. After all, that happens tomorrow.

Now, earlier in the day, we did get some data that was on the economic front about consumer confidence. It rebounded in March after falling sharply in February. And this bounce back is in line with what economists were expecting.

Consumers, they appear to be feeling a little bit better about the jobs market, but they are probably still going to proceed with caution until jobs outlook really turns around. We will be looking at that on Friday when we get the big March jobs report that will tell us whether or not we did as we expected, 190,000 jobs -- Richard.

QUEST: And as the week wears on, you and I, hopefully, will talk more about the various machinations and sectors of the market, because this market has, as you say -- but, remember, don't forget, of course, the tortoise and the hare. Oh, I can't remember that. You -- that analogy. I think you remember it. Maybe -- maybe it lost something in the translation -- slow and steady versus fast and furious. The slow and steady gets there in the end.

ELAM: Exactly.

QUEST: Yes.

Many thanks, Stephanie Elam at the New York.

Now, when we come back, the euro has taken a bruising in recent months, after being exposed to the weaknesses of Greece. There are still nations eager to join the exclusive club and we're talking to the minister from Poland, in just a moment.

(COMMERCIAL BREAK)

QUEST: If you thought we could say and bring an end to our discussion of Greece, I'm afraid it is not to be. The latest efforts by Greece to stay in credit has met a lukewarm reception from the markets. It offered $7 billion worth of new bonds on Monday. It needed the money to pay back earlier borrowings, rolling over debt.

Demand was much lower than previous. Investors were demanding higher returns if they're going to lend money, even though the E.U. stitched together its emergency agreement.

Greece owes more than $360 billion.

So why, with the euro in such problems, would anybody want to join?

CNN's John Defterios has been speaking to Jan Vincent-Rostowski, the Polish finance minister, and asked him about the bargaining that went on at the meeting last week over the Greek safety net and whether it was right, whether the Europeans have been right to draft in the IMF at last.

(BEGIN VIDEOTAPE)

JAN VINCENT-ROSTOWSKI, POLISH FINANCE MINISTER: Poland, right from the beginning, felt that IMF needed to have a very important role in this procedure, in this process, in helping Greece to get out of its problems, because the IMF has the experience. It also has the money and it has the willingness to act.

And so we thought that we should have signaled quite clearly back the February back of -- we said this very clearly, that the IMF should be involved. And it took a little bit of time to get there. But we're there at last and we're happy about that.

JOHN DEFTERIOS, HOST, "MARKETPLACE MIDDLE EAST": Is it realistic for some of these governments like Greece and like Spain and like Portugal to ratchet down budget deficits of 11, 12 percent, down to 3 percent in a four year window?

VINCENT-ROSTOWSKI: I think that's a serious problem. And I think that's one of the reasons why the IMF, which, while nobody doubts its toughens, is -- also, nobody doubts its realism -- is maybe -- will have a lot of com -- be an important contribution to make in exactly this discussion.

DEFTERIOS: In terms of bartering those -- those cuts, then?

VINCENT-ROSTOWSKI: No, in terms of setting something that would be a realistic path, while, at the same time, a very demanding one.

DEFTERIOS: But a year ago, going into this crisis, there was this great concern that Eastern Europe would actually bring down Western Europe. But it's been quite to the contrary. You grew last year as an economy. But we had forgotten about the vibrancy that the low labor costs could even provide and the foreign direct investment that's been going into Eastern Europe.

VINCENT-ROSTOWSKI: We're very pleased that in 2009, we were the only country in the European Union to grow. And we grew at a perfectly respectable 1.7 percent. But the other countries of Central and Eastern Europe also turned out to be far more resilient, both politically and economically, to the crisis than, as you said, people feared a year ago. The overall vibrancy of Central and Eastern Europe, it remains and we'll once again be seen as a key advantage -- competitive advantage for the whole of Europe.

And I think this 2020 strategy that we're building at the moment has to ensure that it -- the whole of Europe has to ensure that it takes advantage of the potential for fast growth.

DEFTERIOS: Looking at what's happened to the Eurozone and the sluggishness of it, is there any rush by Poland to join the Eurozone?

Is there any necessity?

One would argue, it's more competitive outside the zone.

VINCENT-ROSTOWSKI: Joining the Eurozone is our strategic objective. We're talking of 2015 as a realistic date, but it's not a target date. We set a target date in 2008. The world crisis came along and blew us off course, understandably. It was a rather big economic crisis. And we're now in no particular hurry to set a date.

But as a strategic aim for Poland to join the Eurozone, in the not too distant future, that remains.

(END VIDEO TAPE)

QUEST: The Polish finance minister talking to John Defterios.

The weather forecast -- now, you'd probably -- I don't know where it is and what -- what it's been like where you are. Wet, windy and unpleasant it's been in London over the weekend and into the week.

Guillermo is at the World Weather Center, where I believe if it's been bad here, there are others far worse.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes, there is, especially in Scotland. We have red alerts in many, many spots. I'm not talking about the islands in the extreme north, I'm going down into Grampi (ph) and Tayside (ph), Central and Fife and even into Yorkshire.

But I think that the more we go to the north, it's going to be worse. First, the with snow you'll see tonight. You already have evidence of that. But tonight, we don't depict here the snow with white. This is precipitation, both rain and snow.

In Northern Ireland, the same thing. But as we go to the south, it's going to get not so much -- not so bad.

Now and it's going to linger until tomorrow. It's gradually going to improve. But we are dealing with the winds. Its starts with snow and then it continues with winds. You see the evidence is all the way down into Spain, in fact. Our business travelers, I'm talking to you guys. You know what?

The accumulations are going to be significant here in the north, in Lothian and Borders, for instance. But we are going to feel the effects all the way into the south. And I'm including here Portugal, Spain, the cold air is coming your way. France is going to be windy, as well. Paris is posting delays. Germany is going to be Wednesday. I think that the worst, again, it's going to be closer to the north in Northern Ireland and in Scotland, with the snow and with the winds.

But I was reading something interesting, Richard. It said the U.K. Authorities are saying that it's more likely to snow in Easter than in Christmas. So it seems that's going to happen and it's happening.

Well, we are going to see, also, Zurich there in the Alpine Region with some snow. As we go to the south, we keep the winds.

You see the European continent, the weather is not nice. The only spot is in Crete, in Antalya, Greece, perhaps. It's in Cypress, where things are getting better; a spot here in Ukraine improving. And temperatures look fine now, but when you add the wind, they feel cold.

And I'm very sorry, guys, Richard, I'm going back to you.

And three days from now, things are going to look a little bit better.

QUEST: So you say.

Tomorrow, when we will have a second or two more, I want to discuss the concept of April showers.

ARDUINO: Oh, right.

QUEST: If it's spring, why is it -- yes, April showers. We'll talk about that.

ARDUINO: I'll get ready.

QUEST: Since it's the start of the month.

Guillermo.

Now, they say success breeds success. And in football, Spain has gone from winning the European championship to being the favorite for glory at the World Cup this summer. It's an unaccustomed position for the Spanish. And it's also making them the darling of the advertisers.

(COMMERCIAL BREAK)

QUEST: Now, if there is one ray of hope for Spain's economy, it could come from their football team. The national size (ph) has been to the World Cup a dozen times. It's always returned home empty-handed, at least of trophies.

Well, this year, FIFA has given Spain the number one ranking.

And as our correspondent, Al Goodman, briefs us, even before the first World Cup ball is kicked, the Spanish team is cashing in.

(BEGIN VIDEOTAPE)

(VIDEO CLIP IN SPANISH)

AL GOODMAN, CNN SPAIN BUREAU CHIEF (voice-over): After decades of disappointment, sponsors are banking on Spain's football team, now a favorite to win the World Cup in South Africa. Banesto Bank has signed on as a sponsor and it's using the big event to push its financial products.

RAMI ABOUKHAIR, BANESTO MARKETING: It is the first time that the Spanish team has really the opportunity to win in the World Cup and we want to be part of it.

GOODMAN: And being part of it means to do promotions. For example, offering a free team jersey to customers who charge a certain amount on their credit cards.

This English client doesn't have a card, but she'll still root for Spain.

JENNY COOMBER, ENGLISH TEACHER: Yes, I guess -- I guess I kind of have to. My husband's Spanish. So if Spain plays England, I guess I'll -- I'll cheer for England.

GOODMAN: But bank executives were moved by her story.

COOMBER: Well, it's my husband's lucky day. He'll be happy when he comes home from work this afternoon. OK. Very nice.

UNIDENTIFIED MALE: OK.

GOODMAN: Chevrolet, a well known brand in America, is almost brand new in Spain, but it hopes to boost market share by sponsoring the team for the first time, finding a catch phrase is part of it, says Chevrolet executive, Joachin Torres.

(on camera): It sounds like what?

How would it sound in the stadium?

JOACHIN TORRES: In the stadium?

GOODMAN: Yes.

TORRES (singing): Ole, ole, ole, ole.

GOODMAN: And you expect -- the fans are supposed to say...

(singing): Ole, ole, ole, ole, Chevrolet.

TORRES: It must be perfect.

GOODMAN (voice-over): The ad shows star players driving Chevrolets, which they're not giving away for free.

(on camera): Even if the Spanish team loses and comes home early, disappointed from the World Cup, sponsors like Chevrolet and others say they will have already gotten a lot from their relationship. Of course, it will be even better if Spain wins it all.

(voice-over): The turning point for merchandising came two years ago, when Spain won the European Football Championship.

JESUS SAMPER, SANTA MONICA RIGHTS MANAGER (through translator): Until 2008, Real Madrid and FC Barcelona were seen as the only big football showcase here. Now, Spain's national site is even a bigger draw.

GOODMAN: Ranked number one by FIFA, Spain's team has raked in $80 million from sponsors in TV rights. With so much attention now on the team, they just need to remember to kick some goals and win.

Al Goodman, CNN, Madrid.

(END VIDEO TAPE)

QUEST: All right, I can't resist it.

(singing): Ole, ole, ole, ole.

I'll have a Profitable Moment for you after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment.

Ireland has now become the serious grand experiment of getting bad loans off bank books. A massive new government agency called NAMA owns billions of dollars of non-performing loans and hopes that someday they might actually be sold off at a profit a long way in the future.

The banks involved have taken sharp haircuts. On average, for every dollar they lend, they're getting just over 50 cents back. A 47 percent cut is a huge loss. It's not surprising that bank shares plummeted in Ireland over recent days.

Ireland has rightly come in for great praise for the way it's dealing with this issue, whether other German or French banks come up with a plan for properly valuing their assets, even though the major transatlantic banks have repaired tier one capital to respectable levels to rights issues (ph), there's still a huge amount to be done -- getting lending starting again and restoring confidence in the system.

Until it is, there will be question marks over banks' performance. Northern Ireland has started the process.

And this is QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I do hope it's profitable.

"AMANPOUR" is after the news headlines.

END