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Treasury's New Plan; More Companies Seek Bailout Bucks; Obama & the Economy; Interview With Congressman Charles Rangel, Congresswoman Yvette Clarke
Aired November 13, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: And hello and welcome again to CNN. I'm Tony Harris.
Here are a few of the stories we're covering for you today in the NEWSROOM.
Congress testy over the $700 billion bailout. Particular scorn going out to banks and some taxpayer money, but aren't lending to consumers.
The Bush money team switching its bailout strategy. I will talk live to two House members about the direction the bailout is taking.
President-elect Obama walking a tightrope on the financial crisis as he assembles his new administration.
You're in the CNN NEWSROOM.
This economy going from bad to worse. New figures show more than half a million people filing first-time unemployment claims last week. That is the highest level since after the September 11th terrorist attack seven years ago.
And get this -- 3,897,000 people are now collecting unemployment benefits. That is a 25-year high.
A big jump also in foreclosures. Almost 85,000 homes lost to foreclosure last month, and more than 250,000 borrowers received foreclosure filings like bank repo and auction notices. That's one in every 452 homes. Lawmakers now blaming lenders.
(BEGIN VIDEO CLIP)
SEN. CHRISTOPHER DODD (D), BANKING COMMITTEE CHAIRMAN: Lenders who receive public funds should use those funds to lend. Many are failing to do that. CEOs have been directly quoted as saying they intend to use public dollars to acquire other financial firms and widen their capital cushion.
Let me say as clearly as I can this morning, hoarding capital and acquiring healthy banks are not -- I repeat, not -- reasons why Congress authorized $700 billion in emergency funding. The core purpose of this law and the purpose of virtually every other action taken during this crisis is to get lenders back into the business of lending. (END VIDEO CLIP)
HARRIS: Live now to Christine Romans in New York.
Christine, I barely know where to begin here with you here. Really, it just seems like such a mountain to climb here. If you would, talk about the jobless numbers a bit here.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: OK.
HARRIS: The job picture seems to be going from bad to worse. I'm just curious, what do you do here? I mean, are we talking about the need for some kind of a massive infrastructure program? I mean, is the government the only one now that can spend the money necessary to create jobs?
ROMANS: The government's been -- where the job creation has been, that's no sign of a healthy economy when it's the government that is always creating jobs. No, you've got to have policies in Washington. You've got to have policies in Washington that make the economy the kind of place where private industry can create jobs. So that's the issue here.
There's a lot of emphasis on, you know, Washington's got to create jobs. No, Washington creates the environment, creates the policies, creates the regulation that allows the private sector to create those jobs.
One of the things we're watching in this hearing, and I've been watching this for the past couple of hours except when I've been coming up here to talk to you, there's a lot of anger at these lenders. Because look, they're getting $250 billion when it's all said and done to shore up their books and capital.
We own pieces of them, and they're supposed to be lending it out to help things. Right? And they're not.
Congressmen are saying, look, you're not doing this. Senators are furious.
JPMorgan Chase, somebody from there, said, look, we're tightening our lending standards because irresponsible lending is what got us here in the first place. We are lending billions of dollars, but we're not going to lend to people who shouldn't be getting loans. That's an interesting point.
Another interesting point from Goldman Sachs which I found fascinating, the general counsel said, look, we get it. We get it about the anger, about the executive compensation. And I'm telling you right now that executive compensation is going to be down dramatically at all the senior levels this year. We get it.
HARRIS: Is that the response from the one banker that, we're tightening lending standards and that's why we're not lending more? Is that really...
ROMANS: Well, they say they are lending.
HARRIS: Come on.
ROMANS: They're lending to municipalities, they're lending to business, they're lending to people all the time, you know. But the point is that these senators want them to lend more. They want to take that money that we've injected, we taxpayers have injected into them, and they want to lend more. But, you know, these banks are skittish about lending because, look, they lent money -- they went too far on the highs and now they've gone too low with the lows, and, you know, we're waiting for the pendulum to swing back to the middle. And until then, it's very, very painful.
You talked about those jobless claims, Tony.
HARRIS: Yes.
ROMANS: It's hard for people who are watching their neighbors lose a job, who are worried that they're going to lose a job, who are probably going to see hundreds of thousands of more jobs lost between now and the inauguration, maybe half a million more lost between now and the inauguration. Very difficult to watch what's happening on the ground and then sit back and try to figure out what's happening with this TARP, with the bailout, what's happening with the congressional reaction to it. You know, where was the oversight in the first place?
You talk about it's a big mountain to climb. There's...
HARRIS: And when is the TARP going to cover me?
ROMANS: Yes, not smother me but actually cover me, right?
HARRIS: Just cover me. Just cover me. Give me a little support here. Just a little coverage would be nice.
ROMANS: It's complicated. All of this stuff is very complicated. And I think that's why people are so angry, because you don't know who to blame. There's everyone to blame and no one to actually tame the blame all at the same time.
HARRIS: That is a great point. And you're watching your friends lose their jobs. The last thing you want to do is to go out and spend.
The holidays are coming. You remind us that two-thirds of this economy is fueled by consumer spending.
ROMANS: Yes.
HARRIS: And who wants to spend in this environment?
ROMANS: And we know that this could be the first holiday season, Tony, in a quarter century that Americans spend less than the year before. That never happens. Americans always spend more than they did the year before.
HARRIS: Yes.
ROMANS: But they've been spending that money on credit cards and by taking it out of their house. You can't take the money out of your house now, and your credit card is not going to loan you any more. So what are you going to do? You're going to have to pull back. And that hurts, and then the cycle keeps going.
HARRIS: I think we've done a great job of highlighting the problem. God, the solutions...
ROMANS: Where are the solutions? That's absolutely right.
HARRIS: All right, Christine. Appreciate it. Thanks, Christine.
The outrage in all of this, well, homeowners like you not getting a piece of the bailout pie. But more and more companies are asking for a chunk of it.
CNN's Ines Ferre reports on the feeding frenzy.
(BEGIN VIDEOTAPE)
INES FERRE, CNN CORRESPONDENT (voice-over): The list of ailing companies running to Uncle Sam for a handout keep growing. American Express, which turned itself into a bank, is now reportedly asking for $3.5 billion. Expect more to come.
We don't print enough money to bail out every section of corporate America. And at the end of the day, some companies are going to go under, some are going to fail, and some we are going to support. But clearly, the taxpayers are going to be at risk for the foreseeable future.
FERRE: Of the $700 billion approved by Congress, Treasury has spent most of the initial $350 billion on banks and AIG. There's now a scramble for the $60 billion left. Lobbyists in Washington are swarming around the money pot. Congresswoman Marcy Kaptur voted against the bailout bill twice.
REP. MARCY KAPTUR (D), OHIO: Those lobbyists have a lot of money behind them, and that the ordinary citizen on whose back this bailout price tag has been placed have nobody lobbying for them but their members of Congress. And we need to get that workout money out now, down into the communities that are being affected.
FERRE: Critics say the bailouts can't continue.
PETER SCHIFF, AUTHOR, "CRASH PROOF": They're in a bus and they're driving for a cliff. And either we're going to drive off the edge of the cliff or we're going to turn course. If we continue on this current policy path, we are going over that cliff.
FERRE: With the American taxpayer along for the ride.
Ines Ferre, CNN, New York (END VIDEOTAPE)
HARRIS: Bush will discuss the economic crisis in New York later today. According to his prepared speech, the president will say government intervention is not a cure-all. He will call on governments around the world to work on reforms for the global financial system, but not try to reinvent it. The president is hosting world leaders at a financial summit in Washington this weekend.
So what is the new president-elect going to do about this mess? At Senator Barack Obama's first press conference last Friday, he made it clear the Treasury must not reward financial institutions that made bad decisions, and instead help people stay in their homes and avoid foreclosure.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: We will review the implementation of this administration's financial program to ensure that the government's efforts are achieving their central goal of stabilizing financial markets while protecting taxpayers, helping homeowners, and not unduly rewarding the management of financial firms that are receiving government assistance. It is absolutely critical that the Treasury work closely with the FDIC, HUD and other government agencies to use the substantial authority that they already have to help families avoid foreclosure and stay in their homes.
(END VIDEO CLIP)
HARRIS: While Obama is putting together his economic team, he is staying out of the fray, at least for now.
Here's what CNN Senior Political Correspondent Candy Crowley told "AC 360" last night.
(BEGIN VIDEO CLIP)
CANDY CROWLEY, CNN SR. POLITICAL CORRESPONDENT: Barack Obama doesn't want to own the problem. He wants to own the solution. So he has said several times, listen, there's only one president at a time, which is true, but he also doesn't want to get in the middle of this as it's imploding. He would much prefer January 20th come and he be the fix-it man.
(END VIDEO CLIP)
HARRIS: So it's a balancing act for Barack Obama on the economy, not stepping on the current administration's toes while working behind scenes on the enormous problems he will inherit.
Suzanne Malveaux covering the Obama transition team in Chicago.
And Suzanne, let me tee this one up for you. How does President- elect Obama walk this tightrope? SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Tony, it's a very good question, because on the one hand, obviously he's working behind the scenes here to push forward what he believes is the best way to deal with this global economic crisis. On the other hand, trying not to get too far out ahead. But he does have some representatives that he is sending to that economic summit over the weekend with those world leaders and President Bush.
He is not going to be directly involved, but he does have some representatives. And it's a bipartisan group. We're talking about the former secretary of state, Madeleine Albright. She'll be a part of that team, as well as a former congressman from Iowa, Jim Leach. He is a Republican.
These two will be sitting down with President Bush, with those world leaders. Essentially, they are going to be trying to convince them that, look, they have a plan that they believe is going to work. And there are some differences between Barack Obama and President Bush.
One of them in particular, how do you help out the automakers, the big three there? They believe that at the very least, you take a look at that $700 billion bailout package and get some of that money to the automakers. That is something President Bush does not necessarily approve.
Barack Obama also wants to put forward that second economic stimulus package before he gets into office. So all of those things obviously are going to be very important over the weekend, and they'll be discussing it.
HARRIS: Yes. Suzanne, on another note, I understand maybe something of an ordeal to get a high-level job with the new Obama administration.
MALVEAUX: I don't know if I could get a job with the Obama administration. This is what we have got here. This is a...
HARRIS: Yes. And you're pretty qualified.
MALVEAUX: ... questionnaire being sent by the transition team, essentially to people who want to have those cabinet posts, those high-level jobs. And it's seven pages, but it's 63 questions.
It's all about your resume from the last 10 years, domestic help. You know, the background in terms of that so there's not the same problems President Clinton got with illegal folks being employed. Even connections with -- do you have connections to Fannie, Freddie, any of those financial institutions that are involved in all of this mess.
A question, even the diaries, your diary entries, if you had anything that would be embarrassing to the administration made public. That's one of the things that they're looking at, too, Tony. It is extraordinary, it is detailed. It's quite involved.
HARRIS: Boy. If you can't get hired -- anyway, Suzanne Malveaux for us in Chicago.
Suzanne, great to see you. Thank you.
MALVEAUX: Thanks, Tony.
HARRIS: Yes.
What do members of Congress who passed the $700 billion bailout have to say about how it is being spent? I'm going to try to find out.
(COMMERCIAL BREAK)
HARRIS: You know, lots of folks are angry over the Treasury secretary's announcement he is scrapping the original bailout blueprint. The plan changed from buying up the banks' troubled assets to buying stock in banks. Critics say Paulson should be focused instead on getting banks to lend more money directly to cash-strapped Americans.
Secretary Paulson stands by his decision.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: When we went to Congress, illiquid assets looked like the way to go. As the situation worsened, the facts change. I will never apologize for changing an approach or a strategy when the facts change.
(END VIDEO CLIP)
HARRIS: Do Americans have a right to be angry about this?
Joining me from New York is Congressman Charles Rangel. Congresswoman Yvette Clarke is in Washington.
Thank you both for being with me. I appreciate it. Help me, if you would, please.
First of all, I want you to listen to a bit of sound from minority leader -- House Minority Leader Boehner in October when he was on the -- at the House floor pleading for members to pass the rescue plan. And then a question.
(BEGIN VIDEO CLIP)
REP. JOHN BOEHNER (R-OH), MINORITY LEADER: While there's a lot of risk to any member who votes for this, both sides of the aisle, just think about what happens if we don't pass this bill. Think about what happens to your friends, to your neighbors, your constituents.
So I ask all of you, both sides of the aisle, what's in the best interest of our country? Not what's in the best interest of our party. Not what's in the best interest of our own re-election. What's in the best interest of our country? Vote yes.
(END VIDEO CLIP)
HARRIS: Hmm.
Representative Clarke, what was your reaction when you heard the Treasury secretary say yesterday that TARP was now going to be an investment plan?
REP. YVETTE CLARKE (D), NEW YORK: Well, I really wasn't surprised, Tony.
HARRIS: You weren't surprised?
CLARKE: I wasn't surprised at all. It was clear to me when the whole debate raging around this bailout started that we're dealing with something that's totally unprecedented. And while, you know, with all due respect to the Treasury secretary, it was also clear to me that there was not one single answer to this multifaceted problem.
And I really viewed the rescue package as a toolbox that would ultimately be used to mitigate what is happening in the markets. So I wasn't surprised at all.
Well, I'm concerned that, you know, the administration has a record of misleading the public, misleading the Congress, but in my own personal thinking, I knew that they did not have their finger on the pulse of the complete ramifications of what this financial fallout has been about.
HARRIS: All right. Before -- I don't know where to go here.
But Representative Rangel, let me -- because I was a little -- frankly, I was shocked when I heard it yesterday. Representative Rangel, when you heard the announcement of what appears to be, and correct me I'm wrong here, a switcheroo -- some are calling it worse than that, a bait and switch -- what was your reaction?
REP. CHARLES RANGEL (D), NEW YORK: Well, there's no question that we shouldn't be angry, because we did not know whether the original plan was going to work. The Congress gave broad authority to the secretary of Treasury, and clearly his original plan was not working.
The stock market didn't respond. The banks were not lending. And so it appears to me that the only thing we have going for us is that we have a House and Senate that's going to provide oversight to get the questions, to demand the questions that you and the American people are demanding.
You know, this patient is so sick, but just putting money into our banking institutions is not really taking care of the needs of those people that are out of work, going to lose their jobs, going to lose their homes, which is affecting small businesses, which again leads to more unemployment. And so we have to have a broader understanding.
The fearful thing is that all of these programs he's talking about now would only take affect after he leaves office. Where do we go from here?
HARRIS: So, Representative Rangel, what did we really authorize here? Did we just authorize a big pot of money and give Secretary Paulson the leverage to do with it what he decided was fit or right? Is that -- you're smiling. Is that what we did here?
RANGEL: I'm smiling because of the way this was presented to the Congress. First, if we didn't do it the sky was going to fall on our nation and the international community.
Two, the three pages that they originally gave to us said that we could not interfere with executive compensation, that we could not oversight this program as it related to conflict in interest. And we were denied the opportunity for a judicial review. I mean, Jesse James could not have asked for a better deal than that.
And so we really think that we tightened up on it with congressional oversight. And as a matter of fact, even with some of the things the Treasury is doing now, we think they're going beyond their discretion given to them.
HARRIS: Yes.
RANGEL: And when we asked why we were not told in the Congress, is that to tell us, to be telling the world, would adversely the plan. But we are going to really legislate if they don't come clean with this.
HARRIS: Representative Clarke, last question to you. You know what? It looks maybe to the world, maybe just to me, as though Secretary Paulson and the banks were smarter than anyone on Capitol Hill.
CLARKE: You know, Tony...
HARRIS: And they cooked the game here. They cooked the game. They rigged the game.
CLARKE: Tony, it doesn't appear that way to the average American.
HARRIS: Are you kidding me, really? Is that what you believe?
CLARKE: These institutions are faltering. When institutions falter, that doesn't mean that they've cooked the game. That means that they've cooked their own goose and left the rest of us inside of it.
HARRIS: It doesn't look to the American public, in your view, that the banks are being helped, but that Main Street isn't through this TARP?
CLARKE: Well, listen, the TARP itself is a tool that is being utilized to try to -- to abate what has been a precipitous fall in our markets. And all of us are invested in the markets. Those who have 401(k)s, those who have retirement funds, that's a huge swath of America. Not to mention those who are losing their homes.
So we're inextricably linked to whatever happens with these institutions. Ultimately, I think that American people deserve the truth of what is taking place. And quite frankly, I don't think our Treasury secretary nor the administration has gotten to the truth.
HARRIS: OK.
Boy, Representative Rangel, I wish I had more time.
RANGEL: I do too.
HARRIS: Yes.
Representative Clarke -- yes, let's do this again. I appreciate the time we have had together.
Thank you. And let's do it again.
CLARKE: Thank you, Tony.
RANGEL: Thank you for focusing on this, Tony.
HARRIS: Yes, I'm trying to get answers here. I don't quite get it at this point.
Thank you both.
CLARKE: Thank you.
HARRIS: So why don't we do this -- let's bring in an economist, an economist's view of Paulson's altered bailout plan for the country.
Joining me now from Harvard University is economics professor, economist, Jeffrey Miron.
Dr. Miron, thanks for your time.
Would you help me here?
JEFFREY MIRON, HARVARD UNIVERSITY ECONOMIST: Thank you.
HARRIS: I'm feeling as though the American public has been duped somewhat. I'm feeling as though the American public has signed on to a bailout, this TARP, where the Treasury secretary has all the discretion in the world and he is changing the plans as he sees fit. And I don't know what we've signed on for.
Help me here.
MIRON: Well, I think you made a number of good points.
First of all, we don't know exactly what we signed on for because the bill is enormous, the bill is incredibly broad in the scope of powers that it allocates to Treasury. And so it is going to evolve. It's going to change. And to some degree, change, of course, could be sensible.
I don't think that there are that many new facts that came to light, but I think the Treasury began to appreciate as they worked through how they would actually carry out the TARP that it was going to be incredibly hard and slow to carry out. And it was quite sensible that they gave up on it, because I don't think it was well designed from the get-go. The alternative...
HARRIS: So you never liked the idea of the TARP being set up to buy these illiquid assets from the banks?
MIRON: No, because either you bought them at the fire-sale prices that the market would have paid for them -- that doesn't really help the banks one way or the other -- or you overpay for them. And then that's a big transfer to the banks, which may or may not get them to start lending again.
What we've seen is, even when we gave them tons of money, $125 billion in exchange for stock, they still are not lending. Maybe because they don't see good profit opportunities out there right now. And so although we would like...
HARRIS: But that's not good faith. That's not -- the banks absolutely understood that we're giving you this money and we need you to lend, to ease the bottleneck. That's not good faith.
MIRON: Well, I think it's awkward. We got into the situation we're in, in part, because there was too much lending, because people took too many risks, because we weren't more careful about what projects we undertook. And so it would be at a minimum, troublesome to say to the banks, go out there and lend no matter what. What if they...
HARRIS: But you just can't stop all at once.
MIRON: Can't stop all the what? Sorry.
HARRIS: You just can't stop all at once. You just can't freeze up, seize up lending. You just can't stop it all at once.
MIRON: But we should have recognized that that was likely to happen. We should have recognized the only way to get them unfrozen is if the market had more transparency. Transparency comes from letting those institutions that are insolvent go bankrupt. Nothing in the Treasury plan is making that happen. And so people are frozen because they don't know to whom they can lend in a reliable way.
HARRIS: You don't like -- you never liked this plan from the beginning, did you?
MIRON: I never liked the plan from the beginning.
HARRIS: Well, and give me two reasons why this was a bad idea from the very beginning.
MIRON: It was a bad idea from the very beginning because it was not going to produce transparency, as I was suggesting.
HARRIS: Thank you.
MIRON: And it was going to generate more uncertainty and more delay and more confusion for the markets, which is the last thing it needed in this situation.
HARRIS: Well, where do we go from here? You're smart. Where do we go from here?
MIRON: I think the ideal thing is to do basically nothing, to let the process work its way out. It's pretty clear...
HARRIS: To do nothing?
MIRON: To do nothing. We started a recession probably around January of this year. We're something like 10 months into it. It may be another six, eight, 10 months.
HARRIS: I don't have to rehash the iterations of a doomsday scenario here, and you're suggesting do nothing?
MIRON: But I don't think those scenarios are all plausible. In the Great Depression, policy did a number of clearly counterproductive things, was contractionary in some very specific and very harmful ways.
Everything we're trying here now is, in my view, not likely to help, but at least it's in the direction of trying to expand. So I think we're going to see a basically normal recession, and we've had a lot of it already. And we just have to let the markets gradually put themselves together again.
HARRIS: New figures out showing almost 85,000 homes were lost to foreclosure.
MIRON: Right. And there may well be lots more. But again, any attempt to keep housing prices from falling, that's counterproductive, because housing prices are still high by historical standards.
And bailing out homeowners has all the same kinds of negative effects as bailing out banks. It rewards people for not thinking carefully about the risks that they take's, and we don't want more of that in the future. We want less.
HARRIS: I'm not saying you're incorrect or your analysis is faulty. I just wanted to hear you discuss it.
Dr. Miron, I appreciate it.
MIRON: My pleasure.
HARRIS: We're going to have you back.
MIRON: Thank you very much.
HARRIS: All right. So why can't you get a loan? Maybe you have a better idea now about what's being done about it.
(COMMERCIAL BREAK)
HARRIS: Well, a new twist in the bailout that could affect you. Treasury Secretary Henry Paulson said yesterday that the government wants to help institutions that provide consumer credit. That includes your credit cards.
Josh Levs joins me now to explain.
You know, we haven't even talked about this aspect of the secretary's remarks yesterday. What is this all about?
JOSH LEVS, CNN CORRESPONDENT: I know. This bailout thing has become this, like, giant moving octopus with all these different tentacles in different directions.
HARRIS: Yes. Yes.
LEVS: And this one could really affect people when it comes to your credit cards specifically.
And Tony, as you know, here in the NEWSROOM, when we get a new twist in the bailout, we like to do a little bit of this. Schoolhouse Rock-style, right?. We're going to boil it down in simple terms. This is how it works.
Let's go to this first picture. Thanks to great folks in graphics, that's you. We're starting here.
You use your credit card to buy stuff. That's what you're doing there. Your credit card is green.
Now, that card is generally issued by a major lender. Not necessarily a bank. Well, those lenders often do this -- they sell off some of your debt to investors in the form of securities.
Now, why would they do that? Why would they sell it like that? Well, the lenders want to make money right away to make more loans. The investors stand to make money since you're supposed to pay back that debt plus interest when it's late.
Now comes the current credit crunch. Investors aren't buying those securities anymore. They've stopped buying consumer debt.
So there's the lonely -- that -- lonely debt seller. Nobody's coming.
HARRIS: Yes.
LEVS: Treasury Secretary Paulson said about 40 percent of consumer credit is provided through that process that's now stopped. He said it's ground to a halt. Those are his words. So through this plan that they're talking about now, Tony, they could use some of the bailout billions to support lenders that provide the credit to kind of make up for the fact that that process has stopped. Now, how would it affect you directly? Well, it could help make more consumer loans available, increase your credit card options, or it could do this. Take a look at this, our last picture for you. You're looking for a car loan, for instance. That's a form of consumer debt. And it goes through that exact same process.
If you're going to want a car loan, you want that process moving because you need to get credit so you can do it. Of course, if you want more details, lots of intricate stuff, just go right here, cnnmoney.com. We're talking to you about it, consumer debt get bailout attention. Takes you through some of the specifics and if it might apply to you -- Tony.
HARRIS: You know what? No one wants to loan money unless they're absolutely guaranteed that they can get that money back. Unless they have security guarantees up the wazoo, no one wants to loan money right now. That seems to be where we are.
LEVS: And, you know, we're hearing about foreclosures when it comes to homes. People are also defaulting on credit cards, which is one reason that people are afraid of those securities. They won't ultimately get the money. What are they going to do?
HARRIS: Well, we ought to open up the bank of Josh and Tony.
LEVS: You think so? Our own little bank (INAUDIBLE) securities?
HARRIS: Yes, small loans. Come on.
LEVS: I'll think about it. I don't know.
HARRIS: Just think about it.
LEVS: Yes, maybe eventually when the market turns.
HARRIS: Hey, now.
LEVS: Thanks, Tony.
HARRIS: Seven days left to vote for your favorite CNN hero. Go to cnn.com/heroes to see their stories and then vote. And then join Anderson Cooper Thanksgiving night to find out who will be CNN's hero of the year. Vote now at cnn.com/heroes.
At the Republican governors conference, Sarah Palin shared some thoughts about President-elect Barack Obama.
(COMMERCIAL BREAK)
HARRIS: The New York Stock Exchange right now, the big board. You know, we started out in positive territory about, where are we, about three hours into the trading day right now. And quickly we turned negative. But we are certainly off session lows right now. As you can see, the Dow is down 89 points. That will change in a moment. The Nasdaq down 36 points. We will get a check of the market with Stephanie Elam in just a couple of minutes right here in the NEWSROOM. And just how bad is the economy? Chicago mayor Richard Daley says the worst may be yet to come. We listen to his lament over job layoffs.
(BEGIN VIDEO CLIP)
MAYOR RICHARD DALEY, CHICAGO: Huge layoffs are coming in November and December. Next year there's going to be huge layoffs. And all the corporation CEOs are coming to tell me, that's just the beginning. It's not their end result.
This is a very frightening economy. And next year, because it really started in June, only about six months, this is going to be all year. So it's going to be a very frightening economy and each one of them tell me what they're laying off and they're going to double that next year.
So you're talking about huge numbers of permanent layoffs for people in the economy, it's going have a huge affect upon all businesses. Are relying off of each one -- one another. Of course, for cities, counties, states, your revenue is going to keep coming down.
(END VIDEO CLIP)
HARRIS: Well, Chicago's mayor also predicts some local government next year will not have enough to pay their workers.
Financial emergency for hospital in Galveston, Texas. The University of Texas medical branch is laying off 3,800 people. The teaching hospital was already in financial trouble before Hurricane Ike hit in September. It was losing as much as $40 million a month. The storm caused more than $700 million in losses to the hospital.
Former vice presidential candidate Sarah Palin puts her media blitz into overdrive. She met reporters in Miami this morning before an appearance at the Republican governors' conference. Palin criticized journalists for what she called the focus on the past and not the future. Her tone towards her Democratic rival, though, softer.
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN, (R) ALASKA: I wish Barack Obama well as the 44th president of the United States. And if he governs with the skill and the grace and the greatness of which he is capable, we're going to be just fine. And as he prepares to fill the office of Washington and Lincoln, know that this is a shiny moment in American history. Senator Obama has achieved a great thing for himself and for our country.
(END VIDEO CLIP)
HARRIS: Well, in a pair of CNN interviews Wednesday, Governor Palin declared her options for 2012 are wide open. A billionaire oil man, T. Boone Pickens, says the deflated price of natural gas is forcing him to delay plan for a huge wind farm. It appears the credit crunch isn't helping either. CNNMoney.com's Poppy Harlow has our Energy Fix from New York.
Good to see you, Poppy. You know, the wind farm is part of the energy fix we were actually looking forward to. It's the future. At least part of it.
POPPY HARLOW, CNNMONEY.COM: Well, it's not dead yet, but it looks like the Pickens Plan, that we've heard so much about, has really, Tony, hit a major road bump. Wind farms and other alternative energy projects are facing a lot of headwinds right now. Falling energy prices are a big part of that. That means these projects are going to take longer to pay off. The tight credit market, that's not helping either. That makes it harder to finance these projects.
Even billionaire oil man, T. Boone Pickens, he's not immune. His advertisements have been all over the airwaves. I'm sure you've seen them. He's been promoting wind energy and a switch to natural gas in our cars and trucks. Now his push for a big wind farm in Texas has blown cold.
(BEGIN VIDEO CLIP)
T. BOONE PICKENS, FOUNDER AND CHAIRMAN, BP CAPITAL MANAGEMENT: With natural gas prices down where they are now, at $6.50, you can't kick off a wind project because you aren't economic unless you have $9 natural gas.
(END VIDEO CLIP)
HARLOW: Now Pickens says he thinks prices will rebound, but he's not sure when. His company, Mesa Power, issued a statement, Tony, saying, the troubled credit market could cause them to scale back as well.
HARRIS: Hey, Poppy, take this on for me. Is the Pickens' Plan even viable?
HARLOW: A lot of people are asking that question right now, Tony. There's a lot of debate about it. Some think that wind power is not very reliable, right? You have to rely on the wind gods to gust through. Others question whether his plan to switch all vehicles in this country to natural gas is really a viable one. Pickens says, if we don't do something, oil is going to hit $300 a barrel.
One thing that's becoming more clear, take a look at that map of Alaska there. That northern part is where we heard just yesterday from the U.S. Department of the Interior that there is a lot of natural gas. They say in the north slope part of the state, there is enough natural gas to heat 100 million homes for 10 years. That is a lot of natural gas.
The question is, because this natural gas is tapped in water particle, the government says they'll need to do more research to see if we can extract it at a reasonable cost. And, Tony, just like with the Pickens' Project, the higher the price of natural gas, the more sense it makes to invest in a project like this. More detail right there on our Web site. Interesting, though, this billionaire running into some road bumps with his plan.
HARRIS: Yes. This economy. Come on.
HARLOW: I know.
HARRIS: All right, Poppy, appreciate it. Thank you.
HARLOW: You're welcome.
HARRIS: The Pacific Northwest has been facing some rough weather. What's ahead?
(COMMERCIAL BREAK)
HARRIS: Well, no doubt about it. Just too much rain for parts of the Northwest. And this is near Tillamook, Oregon. Two vehicles went into the river after a bridge washed out last night. Look at this. Rescuers pulled two children and a woman from one car. Four adults from the other.
And check this out. Hey, Chad, are you there. Check out this picture we've got for you here.
CHAD MYERS, CNN METEOROLOGIST: OK.
HARRIS: Snoqualmie Falls, Washington. It's coming up here in a second.
MYERS: Yes, it is roaring.
HARRIS: Yes. We've got -- where's -- what is going on here? Obviously, you got a lot of homes that are flooded. Businesses flooded as well. Just a lot of rain for that area in a short amount of time. That's usually when we get this kind of flooding. Is that correct, Chad?
MYERS: Yes. And this is even a little bit unusual, too, because there's a tropical connection to this. Sometimes we call it pineapple express. This actually doesn't comes from Hawaii. It comes from almost from the Philippines.
But there is a tropical moisture express coming in here. And with a storm at this time of year, you'd expect that there would be quite a bit of snow in the mountain. This storm was actually so warm that there was very little snow in the mountains whatsoever. This was an all rainmaker and at least the rain is done for now. And there's some light showers here, but there's nothing here that's going to make any of the flooding worse.
Way up into the hill now, 10,000 feet up, you'll be able to see a little bit of snow on the passes. But we had five and six inches of rainfall yesterday alone in some of these cities out there. The water ran off. And flooding is always so dangerous, Tony, at night, because you just see a little water on the roadway and you think, oh, it's OK, I can make it. But you don't have any idea how deep that water could possibly be because, obviously, it's dark. You don't have any real perspective. You don't really know whether the road is even still there. You know, it looks like it's there, but maybe earlier in the day it got washed out.
HARRIS: That's right. That's right. Good point.
MYERS: Rain showers all the way from New York to Philadelphia. Some of the airports in the Northeast a little bit slow. Other than that -- hey, Tony, in about 16 minutes, this drill is going to go on here in California. Everybody's going to be panicked about an earthquake. It's a drill. There's going to be a big earthquake drill. Those 7.8. Five million people are going to be affected by this drill. We'll keep on it.
HARRIS: Appreciate it. Thanks, Chad.
MYERS: Sure.
HARRIS: In Guyana, more than 900 people died by murder and suicide 30 years ago. But not all of Jim Jones' followers lost their lives. Among them, Tim Carter, who says he will never forget holding his dying wife and their dead baby. Soledad O'Brien has this story. But we want to caution you here, some images could be disturbing.
(BEGIN VIDEOTAPE)
SOLEDAD O'BRIEN, CNN CORRESPONDENT (voice over): Tim Carter saw the airport gunman return.
TIM CARTER, SURVIVOR: It was a tractor trailer that had come from the airstrip, came up and stopped at the kitchen. And these guys jumped out and said, we got the congressmen.
O'BRIEN: Jim Jones told his 900 followers ...
JIM JONES, FOUNDER OF PEOPLES TEMPLE: Congressman's dead. Please get us some medication. It's simple. It's simple. There's no convulsions with it. It's just simple.
O'BRIEN: A third of all the dead were children, murdered at Jim Jones' command. Raked with convulsions. A painful death.
JONES: Die with a degree of dignity. Lay down your life with dignity. Don't lay down with tears and agony.
O'BRIEN: Carter saw his one-year-old son, Malcolm, in the arms of his wife, Gloria.
CARTER: Malcolm was dead. His little lips covered with foam, which is what happens with arsenic and cyanide, is it foams at the mouth. I put my arms around Gloria as she was holding Malcolm and just kept on sobbing. I love you so much. I love you so much. I held Gloria until she died. O'BRIEN: Jim Jones did not drink the cyanide. When almost everyone else was dead, Jones was shot in the head, probably by a trusted aide.
CARTER: I did notice Jones' body on the stage with a bullet hole in the side of his head and I remember thinking, the son of a bitch didn't even die the way everybody else died.
O'BRIEN: Carter lived only because he was sent away on a final errand. He came close to shooting himself that night.
CARTER: I knew that I would never get the sounds and the smells and the sights of Jonestown out of my mind ever again.
(END VIDEOTAPE)
HARRIS: That is such tough stuff. CNN special correspondent Soledad O'Brien joining us now from New York.
Hey, lady, great to see you.
O'BRIEN: Thanks, Tony.
HARRIS: And thanks for the time of day. What surprised you most about doing this special?
O'BRIEN: I think it was pretty interesting to hear what you heard Tim Carter say, the survivors we spoke to all said, that the Guyana had this sort of sticky feel that you couldn't wash off. We went back to Guyana with Tracy, a survivor, a girl who was 12 years old at the time of the suicide and massacre, and she talked about how it was just the kind of heat you could never wash off your body. 12- year-old Tracy Parks' father had brought the family and the guilt that he had.
His wife was killed on the tarmac, along with, as you know, Congressman Neil Ryan (ph) and some others. Just, he could never shake the guilt of brings his family to what he thought was paradise and realizing when they got there and they took their passports and there were armed guards at the entrances saying, armed guards at the entrance to what's supposed to be paradise? Something is very, very wrong. This is very wrong.
HARRIS: As I ask this next question, take a moment and check your microphone. I think it may have fallen or moved around or something. I'm just curious, what it was like for you talking to those survivors? And more pointedly, how did they react, Soledad, to revisiting some of those horrible memories?
O'BRIEN: I was so surprise. I thought, Tony, that, in fact, they wouldn't want to come back. But we had one survivor -- Tracy said she wanted to come. She actually asked us if we were going to Guyana, could she come along? She wanted to remember her mother properly. Her mother was shot in the head and was eventually removed off the plane and she never got to go to her mother's own funeral. So she said, if I could somehow remember my mother. And she also said, I want to go to Guyana and make sure that Jim Jones is dead and that there is nothing there anymore. To sort of have that feeling. She's had a very difficult life, as many of the survivors we spoke to, have issues with drugs and alcohol and nightmare and panic attacks. I mean the list goes on and on, as can you imagine.
HARRIS: Yes. Well, Soledad, you're doing terrific work. I can't wait for this special tonight. And, again, thanks for your time.
O'BRIEN: Thanks, Tony.
HARRIS: CNN Presents "Escape from Jonestown," premiering tonight at 9:00 Eastern right here on CNN.
(COMMERCIAL BREAK)
HARRIS: Well, it's the economy. So now you can forget about that holiday office party this year. The fact is, many companies have decided to cut back on cost and skip them altogether. Where is she? Veronica De La Cruz -- there she is -- joins us now with details on this story from the web.
Good to see you, Veronica.
VERONICA DE LA CRUZ, CNN CORRESPONDENT: Nice to see you, Tony.
You know, it looks like the Grinch, Tony, has stolen the holiday office party.
HARRIS: Yes.
DE LA CRUZ: And we want to go ahead and show you this story. It's on huffingtonpost.com. Workplace consulting from Challenger, Gray and Christmas says one in five companies is scuttling or scaling down its year-end bash.
Viacom, who's quarterly profits have plunged 37 percent, say that it will give employees two paid vacation days instead of invites to lavish VH1, MTV or Paramount parties. American Express, who announced plans to lay off 10 percent of its 65,000 employees, is canceling this year's party -- get this, Tony -- they're canceling this year's party, as well as next year's party.
Companies in the financial sector as well. Morgan Stanley will not be holding events. Hersh, Newscorp and ABC News have announced that they will be nixing their events. And even Women'swear Daily, Tony, reporting that fashion designer Mark Jacobs, who has traditionally held a lavish holiday blowout 18 years in a row, has sent out an e-mail saying because of the current economic climate, the party is off.
Now workplace experts say that canceling the holiday party can be bad for morale. But some employees said that they don't mind. Eric Bolesh, who works at a North Carolina consulting firm says, "you don't want to be eating your steak and thinking that it could have been in your wallet instead."
So we've been watching the web this morning, Tony. And we've been asking you on our Facebook group, are they canceling your holiday party? What are your thoughts on all of this? And Rashid Kabia says, "I know my company has decided to combine the Thanksgiving and Christmas party together."
Horace Nelson, Tony, who works at MTV, his party's been canceled. And he says, "it's a shame, because it's a spectacular shindig, and while they did give us two additional days off over the holiday season, a generous consolation for sure, many of us look forward to it as the spoonful of sugar that makes a year of wage slavery go down."
And one more here from Spencer Allan (ph). He just wrote this. "Our company has canceled our holiday party. They have decided to, instead, take that money and donate it to charity."
So, of course, go ahead and join in on the discussion. Log on to Facebook. Search for Veronica De La Cruz In the CNN NEWSROOM with Tony Harris. I'm also on Twitter at Veronicadlcruz.
And Tony Harris, I say that this year, the party's at your house.
HARRIS: I'll do the best I can. We've got to find some joy somewhere.
Veronica, go to see you.
DE LA CRUZ: Good to see you.
HARRIS: Thanks.
Seven days left to vote for your favorite CNN hero. Go to cnn.com/heroes to see their stories, then vote. Then join Anderson Cooper Thanksgiving night to find out who will be CNN's hero of the year. Vote now. Here is the address again, cnn.com/heroes. Only seven days left.
Who is the greatest rock singer of all-time? And who gets to decide. Why am I hearing ReRe?
(COMMERCIAL BREAK)
HARRIS: That was a good line. Who is the greatest rock singer ever? Oh, you're ready to start a fight here? "Rolling Stone" has published a list and the leader might surprise you. CNN's Josh Levs joins us now.
That's what these lists are about, starting fights. That's really what (INAUDIBLE).
LEVS: I think they do, but especially this one. People are already talking about it. It's in "Rolling Stone" published Friday, but it's already out outline. And here's the thing. A lot of people believe she's the greatest soul singer every, but is she the greatest rock singer? Well, according to "Rolling Stone," Aretha Franklin is. And this is a good excuse for us to play a little bit of her music. Here you go.
OK. So here's what people are talking about. Obviously she's this incredible singer, but is she ultimately a rock singer. Number two they put as Ray Charles. Rock singer?
HARRIS: Wow.
LEVS: I know. And number three is definitely a rock singer. Really the first rock-n-roll mega star.
HARRIS: That everyone would agree is a rock star.
LEVS: At home would agree. Let's listen, number three. Is Elvis Presley. There you go.
HARRIS: Oh, there you go. There you go.
LEVS: There you go.
HARRIS: All right.
LEVS: Still, here's the thing. A lot of people talking about this. Is it rock? Is it not rock? How do you decide what is rock, what is not rock. And there we go, a little bit of "Jailhouse Rock."
HARRIS: Well, if you -- look, if you have any questions about Aretha Franklin, listen to her take on The Stones' "Jumping Jack Flash "and then let's have the discussion.
LEVS: She can do it. She can do anything.
HARRIS: She can do anything.
LEVS: It's just interesting, when you think rock, you don't think Aretha. So is she the number one rock singer of all time? Maybe she is. Don't mind (ph) me. I'm cool with it (ph).
HARRIS: That's why they create these lists, so we can argue and argue and argue.
LEVS: So people buy the magazine.
HARRIS: And buy the magazine.
LEVS: I love it.
HARRIS: All right, Josh, appreciate it.
LEVS: Thanks.
HARRIS: CNN NEWSROOM continues right now with Fredricka Whitfield.
