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House Bailout Hearing: Neel Kashkari Speaks on State of Economy; Wildfire Rips Through Santa Barbara, California; Will Hillary Clinton be Named Next Member of Obama's Cabinet?

Aired November 14, 2008 - 10:00   ET

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

BETTY NGUYEN, CNN ANCHOR: A wildfire roars through the California canyons, dozens of homes gutted. We have a live report just ahead.
Foreclosures forgotten? Well, this hour, House hearings on a bailout.

And meeting behind closed doors. Barack Obama and Hillary Clinton discuss a possible position on his team.

It is Friday, November 14th, and a lot of news to tell you folks.

I'm Betty Nguyen in for Heidi Collins. And you are in the CNN NEWSROOM.

First up, one-on-one meeting with the president-elect. And he is the one who set it all up. Barack Obama and New York Senator Hillary Clinton talking about a possible future role for her in his new administration?

Well, CNN's Suzanne Malveaux has that from Chicago.

All right, Suzanne. You've got the goods on this. What have you heard?

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, Betty, two sources, Clinton sources who I spoke with this morning confirmed that this meeting did take place between Senator Hillary Clinton and Barack Obama here in Chicago late afternoon.

It was at the invitation of Barack Obama. And one source saying that Hillary Clinton was made aware that Obama wanted to know if there was any kind of interest and there was a discussion on what kind of role, if any role, that she would have in the administration.

Now, these two sources could not say whether or not they talked specifically about the secretary of state position. But one of those sources said, look, Hillary Clinton went to this meeting because she thought it was kind of silly. She had been hearing all of these rumors about secretary of state. She was, quite frankly, surprise by these rumors. And so, when she got this invitation from Obama, she decided to accept. The two of them sitting down to talk about this.

And Betty, it doesn't necessarily confirm that there was any kind of offer or interest on the Obama side. It might have been to actually squelch the rumors. We really don't know.

The last time this happened there was a lot of buzz about her considering being the vice president, perhaps the running mate of Barack Obama. She heard a lot about that, and the Obama team never approached her about that. There was some ill feelings, some bitter feelings about that. So this might have been just simply a courtesy on behalf of the Obama team to say, look, what are you interested in? Are you interested in anything, any kind of role at all in this administration, Betty.

NGUYEN: Well, Suzanne, if they were going to quash some of these rumors, then you think that would have been a phone call. But she actually flew out there. If anything, that just increases the rumor mill.

MALVEAUX: It certainly increases the speculation. Obviously there's been some buzz, some talk from people, from sources who are close to the transition team about who would they look for Secretary of State. We have heard the name, Senator Hillary Clinton, but we've also heard some other names, Senator John Kerry, for instance, also New Mexico Governor, Bill Richardson, as some other possibilities. But yes, it does kind of raise the interest.

I think, however, it really was a courtesy, if you will, to have these two leaders sitting side by side to talk at the very least about whether or not there's any interest in her having some sort of role, if any, in this administration -- Betty.

NGUYEN: Well, if nothing else, Suzanne, it's definitely kept us very busy today.

Thank you for that. Do appreciate it.

Well Barack Obama and Hillary Clinton may have a future together, but what about their past? We'll delve into that a little bit later throughout the day.

And in the meantime though, look at this. More than 100 homes destroyed. A devastating wildfire ripping through one southern California city. Thousands now fleeing the area. CNN's Chris Lawrence is there among the destruction in Santa Barbara, California.

OK, we heard at least a thousand homes have been threatened. What do you know about those destroyed?

CHRIS LAWRENCE, CNN CORRESPONDENT: Yes, Betty, you said it, at the moment, the number that we're hearing from some fire officials is that more than a hundred homes have been destroyed by this fire. You know I've seen fires that burned for days and days that didn't do the kind of damage that this one did in just a matter of hours. More than a hundred families at sundown yesterday, last night, had a home and literally within eight or nine hours, they did not.

Now that the sun is coming out, you can take a look behind me. You can see. We were watching that home right on top of the hill burn for most of the night. When we first saw it, it was completely engulfed in flames. We watched it burn. Now that the sun is out, you can see it has been reduced to nothing but rubble, burnt right down to the foundation. And we saw dozens and dozens of homes just like it. I saw with my own eyes just home after home literally engulfed in flames so quickly. The firefighters were up against a tough spot. There weren't many places for them to carve out a break and stop the fire so quickly with embers to shooting, you know, a hundred feet at a time.

And again, this area has not had a major fire in 30 years. So there's all that time for the brush to grow and that fuel to really build up. So when this fire did ignite, it took off like that. Betty.

NGUYEN: When talking about those destroyed, are these multi- million dollar homes that sit on - perched there on the edge of hills there? I mean what kind of homes are we talking about?

LAWRENCE: Some people call this the American Riviera. You know you're talking about multi-million dollar homes that sit on - some of them sit on top of the hills with a sweeping view of the ocean. Oprah Winfrey has a $50 million mansion in this area, actor Rob Lowe, Michael Douglas. Some very big celebrities have homes in this area. It's also mixed in with some more moderate homes as well.

You know in the middle of the night, we talked to one of the firefighters who talked about the frustration of trying to stop this fire.

(BEGIN VIDEO CLIP)

CAPT. TOM HIMMERRICH, SANTA BARBARA COUNTY FIRE DEPT.: A lot of the brush and the trees and stuff are right up next to the structures. This one happened so fast that nobody had any advanced warning at all. So there's really not much some people could do or the homeowners could do in this case.

(END VIDEO CLIP)

LAWRENCE: And again, now that the sun is up, the helicopters are out there getting a better bird's eye view of the area, putting water on it. And again, we want to reiterate even though the winds have died down, the area is a bit cooler. There's still homes being threatened.

NGUYEN: All right. Some 2,500 acres already burned. Chris Lawrence joining us live.

Thank you so much for that, Chris.

All right. So will they get any relief from Mother Nature?

They definitely need as you said the winds have died down but what about some rain, Reynolds?

REYNOLDS WOLF, CNN METEOROLOGIST: Not much rainfall expected out there in the west. Betty, let me show you something pretty interesting. If you come back over here, let me show you the national map. You'll notice we got plenty of rain in the eastern half of the country and also the center. But when you get out to the west where you desperately need the rainfall, you have absolutely nothing.

High pressure has been building up over parts of the great basin. And when you have that wind that's coming in out of the north and coming in to the north east and compressing right in those canyons and in those high mountain passes, well that air compresses, it begins to heat up.

As it heats up, it further dries a lot of the foliage you have in parts of southern California, including Santa Barbara county. Now, that is where we currently have a red flag warning in effect. The low humidity that we are going to have later on today is a little more moist right now. Winds nice and strong but into the afternoon we can expect those winds to ramp up once again, possibly some gusts topping 50 to 70 miles per hour and that's through Saturday.

You heard Chris also talked about how many of the homes are kind of trying to stagger up on the hill. You have some that are built on lower elevations. But then higher hillsides they go, the higher the house, the better the view of the ocean or the landscape. The problem is, if you have any fires that hit lower in the valley, well, heat has a tendency to rise, of course. And as those flames rise ever higher on the hillside, almost like smoke or heat up a chimney, you're going to see more of those flames begin to fire up.

That is a look at our forecast out west. We'll be talking about a lot more, plus the shuttle launch to deal with. That's coming up.

Let's send it back to you, Betty.

NGUYEN: All right. A lot going on today.

Thank you, Reynolds. We do appreciate it.

Let's watch the numbers for you right now and give you a little sign of economic relief perhaps. Well I don't know. Look at that number, already in negative territory, down 78 points. But there on the left-hand side of your screen, the House hearing on the economic bailout, that is underway. You see Congressman Dennis Kucinich at the microphone right now. We're going to be monitoring this and then bringing you a lot more throughout the morning. But in the meantime, let's find out how the stocks are doing, because they really roared back yesterday.

Today, as you saw there in negative territory, so not sure if that is ever going to get in positive territory. But we can always hope, we'll keep our eye on that.

CNN's Christine Romans joins us now from New York.

Some rather sobering numbers on the retail front, Christine. We've been looking at those. Pretty bad.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, let me give you the good news in them first. We had a record drop in gas prices in the month of October. I mean really a stunning drop in gas prices. And that's something that helps everyone. It's almost a stimulus. You can feel it in your pocket every week when the gas prices stay low. Some states less than $2.00 a gallon. So with that tumbling gas prices also came tumbling retail sales but it wasn't just gasoline that went down, it was you know lower sales across the board for almost everything you can imagine.

In fact, retail sales fell in October by the most ever, down 2.8 percent. The largest one-month drop on record. They've been keeping numbers since 1992. it's now four months in a row of lower retail sales, sales at the mall, sales at the gas pump and elsewhere. And that's telling us that the consumer is feeling the heat from tumbling stock prices, from tumbling home prices and also from a weak jobs market. Just this morning, Betty, we heard that Sun Microsystems is going to lay off up to 6,000 people, That's about 18 percent of its workforce. We know it's not just that industry, but it's a lot of different industries that are laying off people.

Citigroup, "Wall Street Journal" reporting, another 10,000 jobs loss expected there. We know that the job loss has been coming. That's one of the reasons people aren't going to the mall, frankly.

NGUYEN: All right. CNN's Christine Romans watching it for us as well as we take another look at the Dow down 99 points.

Slumping sales though, they have the big three automakers really pleading for help. And a talk is growing on Capitol Hill for an emergency loan. We're going to take you there shortly.

In the meantime, President Bush and other world leaders they are seeking an economic fix. They're meeting in Washington this weekend. 20 presidents and prime ministers representing the world's wealthiest and major developing countries. President Bush says he hopes the so- called G-20 leaders can find some common ground on what action to take.

In the meantime, military history is being made this hour. Here is a live look. The first female to rank four stars. We're going to show you the general is being promoted.

(COMMERCIAL BREAK)

NGUYEN: Gay rights activists are preparing to take to the streets staging at least 150 rallies this weekend in support of gay marriage. The demonstrations are in response to a gay marriage ban passed by California voters last week. Now supporters of same-sex marriage have filed lawsuits challenging that ban. Voters in Arizona and Florida also approved amendments barring gay couples from getting married.

A history-making moment at the Pentagon today. This is a live look right now. For the first time ever a woman is becoming a four star general. Obviously we're looking at the introductions right now. But Ann Dunwoody is officially shattering the military's glass ceiling during a ceremony at this hour. And CNN's Pentagon correspondent, Barbara Starr, is live at the Pentagon.

Boy, this is a milestone.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: A milestone indeed, Betty.

We're watching, there is General Dunwoody, the Army leadership making these introductory remarks. A piece of real military history today. General Dunwoody now becoming the first female four-star in the history of the United States Military. Just a few moments ago, Defense Secretary Robert Gates referring to it as shattering the brass ceiling for the U.S. military. General Dunwoody, by all accounts, a very modest officer in the U.S. Army, fifth generation serving in the U.S. Military.

One is told that all of this spotlight on her today does make her uncomfortable. She just wants to be known as a soldier. But it does highlight, of course, the years of progress that women in the military have made over the years. Still worth noting even today that women in this country technically prohibited from serving in combat positions. They may not be in front line infantry, armor, those types of artillery, those types of front line combat position even General Dunwoody her remarkable career. She has served in combat support roles. But today, it really is a different story, the reality on the ground.

I think even General Dunwoody would say more than 100 young Army female service members have lost their lives in Iraq and Afghanistan because, of course, today so many places where the U.S. military fights, there are no formal front lines that follows the letter of the law passed by Congress. Reality on the ground, women serve in combat these days.

NGUYEN: And something General Dunwoody said, that I really enjoyed reading, it says well I may be the first, I know I won't be the last. What a day for her.

STARR: Indeed.

NGUYEN: Thank you, Barbara.

Speaking of days, there are only six left to vote for your favorite CNN hero. Go to cnn.com/heroes to see their stories and select your hero. Then join Anderson Cooper on Thanksgiving night to find out who will be CNN's hero of the year. Vote now at cnn.com/heroes. Again, you only have six days left.

So the person who can fix this financial crisis may be a hero in your eyes. But right now they're on Capitol Hill. You're seeing a live picture as the house is holding a hearing on what to do with the whole bailout situation. And are we headed in the right direction? Do some tweaks need to be made? We'll be watching that and bring you live reports as well.

Promising on the trail. Delivering in the White House. The president-elect's health care plan. (COMMERCIAL BREAK)

NGUYEN: You're seeing some pictures out of California. Man, what a mess these fires have created so much damage on the left-hand side. You see a home that is engulfed in flames. 100 homes already destroyed. Over 1,000 threatened. Evacuations are underway. And the winds are not helping the firefighting effort at all. We're staying on top of these fires in Montecito, California. Also in the Santa Barbara area as well, 2,500 acres on fire at this hour. Stay tuned for that.

In the meantime, no milk from China. The Food and Drug Administration is now stopping all import of Chinese milk products. Fierce over melamine contamination forced the import ban. The FDA lists dozens of products, including cheese, ice cream, pudding, pet foods that could be tainted by the chemical. Well back in September more than 53,000 Chinese children got sick after drinking contaminated infant formula.

Let's talk about campaign promises right now. Because President- elect Obama said he had a health care plan to help the more than 45 million uninsured Americans and to make it more affordable for the rest of us. So can he pull it off? Well CNN medical correspondent Elizabeth Cohen is here to take a look.

You've been crunching the numbers, looking at the plan. What have you got?

ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Absolutely. The minute he was elected, I started crunching.

NGUYEN: You went to work.

COHEN: Right. Exactly. Because this is a doozy of a problem we have in this country. And it's got a doozy of a price tag. We wanted to see - let's do a reality check -- how much is this going to cost, what Barack Obama wants to do? We decided to take a look at three elements of his plan, just three. The first one is Barack Obama wants to insure all children. We wonder what would that cost. We asked experts. This is the price tag to do that. They say it will cost somewhere between $6 and $9 billion to insure all of America's uninsured children. The reason there's a range is because the plan doesn't have all the details that we need. But that's how much it would cost to insure all of America's children.

NGUYEN: $6 to $9 billion. OK.

COHEN: $6 to $9 billion. Now let's take a look at a second element of Barack Obama's health plan and that is to help small employers insure their employees. Because a lot of small employers aren't doing that right now. That is going to cost about the same amount, about $6 billion. So again, another huge high price tag item. Let's take a look at a third one. A third one is better health information technology. Like when you go to your doctor, I bet they use charts, right? They still have these old paper charts.

NGUYEN: Right, find the file.

COHEN: Well, it's so archaic. Everyone knows it needs to get better. But to improve all those things, that's really expensive. That's even more expensive than the other ones. That, all of these are annual costs. That would cost about $10 billion per year. So, as you can see, this plan, it may indeed be a great plan. It is going to be expensive.

NGUYEN: All right. So all the math on this, when you add them all up, what does that take you to?

COHEN: All right. Let's get a grand total here. The grand total would be somewhere between $52 to $106 billion, somewhere between those two numbers.

NGUYEN: $52. That's a big range.

COHEN: It's a huge range. And the reason why is Obama hasn't given all the details for his plan. So it's hard to come up with a real price tag. It's like saying I want to build a house but we don't know if it's a two-bedroom or a six-bedroom house. But that's how it will cost. It is obviously a huge number.

NGUYEN: All right. Huge number right there. A lot of in between room. How is he going to pay for this?

COHEN: Well, he said two things about how he's going to pay for it. First of all, he said that President Bush gave a tax cut to some of America's wealthiest people and that he would roll that tax cut back. So that would increase money in the federal coffers. Also, he said health care is bloated. The expenses are bloated. It's inefficient. Everybody agrees with that. So Obama says let's make it more efficient and that cost savings will come down to the consumer eventually. Not everyone is sure that that would eventually happen. But he said let's make health care more cost efficient and that will help.

NGUYEN: All right. Elizabeth Cohen, breaking down the numbers.

COHEN: That's right.

NGUYEN: If only our technology would work.

COHEN: That's right. We need $10 billion investment in this board alone.

NGUYEN: Right. We don't have the John King magic wall.

COHEN: No, not quite.

NGUYEN: All right. Thank you, Elizabeth.

NGUYEN: On Nebraska's safe haven law it is under review today during a rare special session at the state legislature. The law allows parents to drop off their unwanted children at hospitals and the state without fear of prosecution. You can just drop them off, get rid of them, as some people would say. It's designed to protect newborns from being abandoned. But several teenagers have been dropped off in the state in recent weeks.

(BEGIN VIDEO CLIP)

TOM WHITE (D), NEBRASKA STATE SENATE: What you've seen is an extraordinary cry for help from people across the country. That shocked me. Nebraska can't afford to take care of all of them.

TODD LANDRY, NEBRASKA HEALTH AND HUMAN SERVICES: The real purpose of this special session, I believe, is to make sure we get back to that intent of protecting newborns and infants. I think three days is the right amount of time.

(END VIDEO CLIP)

NGUYEN: Well, a new safe haven law setting age limits could take effect as soon as it's passed and signed by Nebraska's governor.

Meantime, Happy Birthday Prince Charles. The British monarch turns 60 years old today. But he's been celebrating all week long. He's already gone to comedy show in his honor, starring Robin Williams and John Klees. That's pretty good and a black-tie dinner. And today a 41-gun salute in Hyde Park. That was a gift from his mother, Queen Elizabeth. And to top it all off, if we all could have birthdays like this, week-long birthdays. Rod Stewart is coming to Prince Charles' home to sing a couple of songs.

All right. Let's take you back now live to the Pentagon where we see the very first female four-star general. She was just pinned. Her name in Anne Dunwoody. As they say, she is breaking the brass ceiling there. This is a woman who is not only very proud of her accomplishments, but she's very modest about it. Hasn't really done any interviews. She wanted to wait until today to speak to the press. And there is the pinning right there of Ann Dunwoody. Again, breaking the brass or camouflage ceiling, whatever you want to call it. But she is the first woman to achieve the four-star general rank.

We are also watching this for you today. I want to try to get you to some live pictures. But a House hearing is under way. There it is. And that they're trying to do is talk about this bailout plan and whether or not it's going to work, what needs to be done in order to make it work. We're following that for you.

(COMMERCIAL BREAK)

NGUYEN: Let's take you live now to Washington and that House bailout hearing. We're seeing now Dennis Kucinich, congressman there, speaking. He's at the microphone. We're going to be hearing shortly from the interim Assistant Secretary for Financial Stability, Neel Kashkari. And when that does occur we'll obviously bring that to you as well. But a lot going on there on the hill as they discuss the bailout plan and what it will take to get the U.S. out of this financial crisis.

Well more proof that Americans are keeping a tight grip on their wallets. Retail sales are slumping just as the holiday season began. Let's get you the numbers for October. They are down 2.8 percent. That is the worst monthly drop on record. And on Capitol Hill, as I mentioned, lawmakers are keeping an eye on that $700 billion rescue package that they approved. Is it helping and is the money going where it's supposed to? That's a big question today.

There is some new developments on the transition front for President-elect Barack Obama. He remains behind closed doors in Chicago, but sources tell CNN that he met face to face with former rival senator Hillary Clinton yesterday. They talked about a possible role in his administration. But there's no word on which job, but there has been talk that she could be named Secretary of State. Meanwhile, the Obama transition team announced today that the President-elect will meet with former opponent, Senator John McCain. The two will meet on Monday in Chicago.

Barack Obama, Hillary Clinton all lovey dovey right now but it sure wasn't that way during the campaign for the Democratic presidential nomination. We'll get to that story in just a moment. Let's take you back now to this House hearing dealing with the $700 billion bailout plan. Let's take a listen.

(JOINED IN PROGRESS)

UNIDENTIFIED MALE: Do you solemnly swear to tell the truth, the whole truth and nothing but the truth?

UNIDENTIFIED MALE: I do.

REP. DENNIS KUCINICH (D), OHIO: Thank you, sir.

Let the record reflect that the witness answered in the affirmative. Mr. Kashkari I asked if you can keep your opening remarks to five minutes in length. Your entire written statement will be included in the record of this proceeding, and we're very grateful for your presence. Please begin.

NEEL KASHKARI, INTERIM ASST. TREASURY SECRETARY: Thank you, Chairman Kucinich.

KUCINICH: And please pull the mic a little closer.

KASHKARI: Thank you, Chairman Kucinich, ranking member Isiah (ph), members of the committee. Good morning and thank you for the opportunity to appear before you today.

I would like to provide you with an update on the Treasury Department's actions to stabilize our financial markets and restore the flow of credit to our economy. We have take actions with the following three critical objectives.

Number one, stabilizing the financial markets. Number two, supporting the housing market by avoiding preventable foreclosures and increasing mortgage finance, and three, to protect the taxpayers. We have acted quickly and in coordination with the Federal Reserve, the FDIC and our colleagues around the world to help stabilize the global financial system, and it is clear that our coordinated actions are having an impact.

Before we acted, we were at the tipping point. Credit markets were largely frozen, denying businesses and consumers access to vital funding and credit. Financial institutions were under extreme pressure and investor confidence in our system was dangerously low.

We recognize that a program as large and as important as this demands appropriate oversight. We are committed to transparency and oversight in all aspects of this program and continue to take strong action to make sure that we comply with both the letter and the spirit of the requirements established by the Congress. Including regular briefings with the Government Accountability Office, the Financial Stability Oversight Board and the Inspector General. And we are committed to continuing to meet all of the reporting requirements established by the Congress.

As the markets rapidly deteriorated in October, it was clear to Secretary Paulson that the most timely, effective step to improve credit market conditions was to strengthen bank's balance sheets quickly through direct purchases of equity. Working with our banking regulators, we have now approved literally dozens of applications from banks across the country. And we will very soon post the term sheets so private banks can participate.

We feel very strongly that healthy banks of all sizes, both public and private, should use this program to increase lending in their communities. With a stronger capital base, our banks will be more confident and be better positioned to play their necessary role to support economic activity.

Further in support of this goal, just two days ago, our banking regulators issued a statement underscoring the responsibility that banks across our country have in the areas of lending, dividend and compensation policies and foreclosure mitigation. Treasury commends this action taken by the banking regulators an believes it is critical to focus on the importance of prudent bank lending to restore our economic growth so that we do not repeat the mistakes, the poor lending practices, that are a major cause of our current economic problems.

On housing we have worked aggressively to avoid preventable foreclosures to keep mortgage financing available and to develop new tools to help homeowners. Here, I will briefly highlight three key accomplishments.

Number one. In October 2007, Treasury Health established the Hope Now Alliance, a coalition of mortgage servicers, investors and counselors to help struggling homeowners avoid preventable foreclosures. Through coordinated industry-wide action, Hope Now has significantly increased the outreach and assistance to homeowners. Hope Now estimates that nearly 2.5 million homeowners have been helped since July 2007. And the industry is now helping about 200,000 per month avoid foreclosure.

Number two. We acted earlier this year to prevent the failure of Fannie Mae and Freddie Mac. The housing GSE's that touch over 70 percent of mortgage originations. These institutions are systemically critical to financial and housing markets and their failure would have materially exacerbated the recent market turmoil and profoundly impacted household wealth. We have stabilized the GSE's and limited systemic risk.

And three. Just three days ago, Hope Now, FHFA and the GSE's achieved a major industry breakthrough with the announcement of a streamlined loan modification program that builds on the mortgage modification protocol developed by the FDIC and IndyMac. The adoption of this streamline modification framework is an additional tool that servicers will now have to help avoid preventable foreclosures. And potentially hundreds of thousands of struggling borrowers will be helped to stay in their homes.

On Wednesday, Secretary Paulson outlined three critical priorities and related strategies for the most effective deployment of remaining TARP funds. Number one, further strengthening the capital base of our financial system. Number two, supporting the asset-backed securitization market that is critical to consumer finance. And number three, increasing foreclosure mitigation efforts.

These priorities are necessary to reinforce the stability of the financial system so that banks and other institutions critical to the provision of credit are able to support the economic recovery and growth and to help homeowners avoid foreclosure.

In conclusion, our system is stronger and more stable than it was just a few weeks ago. Although a lot has been accomplished, we have many challenges ahead of us. We will focus on the goals outlined by Secretary Paulson and develop the right strategies to meet those objectives. Foremost among these will be to ensure that the financial system has sufficient capital to get credit flowing to businesses and consumers.

Thank you for this opportunity. And I'd be happy to answer your questions.

NGUYEN: And we've been listening to the interim Assistant Secretary for Financial Stability, Neel Kashkari, speaking there to the House, as this hearing is underway regarding that $700 billion bailout plan.

He says that the system is stronger and more stable than it was just a few weeks ago and they are working to ensure that the financial system has enough cash flowing so that it can help businesses and consumers out there. He went on to say that the program has helped some 2.5 million homeowners since July, and that thousands of others will be helped as well.

So, we'll continue to follow this here at CNN. But if you'd like to watch this hearing live, all you have to do is go to CNN.com/live and you can watch it as it plays out live.

In the meantime though, we have a lot more to tell you about. Barack Obama, Hillary Clinton. They are all lovey-dovey right now. But, it sure wasn't that way during the campaign for the Democratic presidential nomination.

CNN's Randi Kaye has a look at that.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT (voice-over): If it's true and President-elect Barack Obama is considering Hillary Clinton for secretary of state, my, how far they've come. Remember this?

SEN. HILLARY CLINTON (D), NEW YORK: Well, that hurts my feelings.

UNIDENTIFIED MALE: I'm sorry, senator. I'm sorry.

CLINTON: He's very likable. I agree with that. I don't think I'm that bad.

SEN. BARACK OBAMA (D), PRESIDENT-ELECT: You're likable enough.

CLINTON: Thank you so much. I appreciate that.

KAYE: That was back in January at a New Hampshire debate. Not long after Clinton welled up at the diner and ran way with the primary. It got a whole lot uglier from there.

After Obama took South Carolina a few weeks later, Bill Clinton compared the victory to Jesse Jackson's primary victory there years earlier. Critics said the former president was injecting race into the race. Then Clinton accused Obama's campaign of playing the race card for political gain.

The gloves really came off in February just days before the Ohio primary. The Obama campaign had sent out mailings attacking Clinton on universal health care and the North American Free Trade Agreement. That prompted this, a visibly angry Clinton in Cincinnati.

CLINTON: So shame on you Barack Obama!

KAYE: In April, at another debate, Mrs. Clinton didn't hold back on Obama's relationship with William Ayers, an accused domestic terrorist who said an interview published on September 11th, he wished he'd set off more bombs years ago.

CLINTON: If I'm not mistaken, that relationship with Mr. Ayers on this board continued after 9/11.

KAYE: They were just getting warmed up. Two weeks later, Clinton unloaded about Obama's former pastor, Reverend Jeremiah Wright, during an interview on FOX.

CLINTON: I think it's offensive and outrageous.

KAYE (on camera): In June, Obama sealed the nomination and promised to help Clinton pay off her debt and all was honky dory. Kind of. Both sides needed some time to thaw out.

(voice-over): Then this show of unity in Unity, New Hampshire. He was the candidate, she was his ally. He needed her.

OBAMA: I know firsthand how good she is.

KAYE: By the time the Democratic convention rolled around in August, Clinton was on board big time.

CLINTON: We are on the same team. And none of us can afford to sit on the sidelines.

KAYE: Come January if Clinton joins Obama's administration, she won't be sitting on the sidelines either.

Randi Kaye, CNN, New York.

(END VIDEOTAPE)

NGUYEN: Let's talk about some severe weather right now. Devastating wildfires just ripping through Montecito, California, this morning. Look at those pictures. That's near Santa Barbara. Now, the growing fires have destroyed more than a hundred homes so far. Fire officials say roughly 1,000 more homes are threatened by the wildfires. At least three people, including one firefighter suffered burns. More than 500 firefighters are trying to hold back this 2,500 acre blaze.

(WEATHER REPORT)

NGUYEN: Well, Endeavor 7 astronauts, they are waiting to carry important new parts to the International Space Station. They've got a new bathroom, the all-important bathroom. And a kitchenette on board. Not too shabby. The shuttle is scheduled to lift off at 7:55 p.m. Eastern.

Updating you now on a story that we did tell you about a little bit earlier. Police say three teenagers drowned in a river west of Chicago. Search teams were dispatched overnight to look for the high schoolers. A witness said one of the teens fell in the river when their paddle boat overturned. Two others jumped in to help but never surfaced. The teens were on a school-sponsored leadership retreat. Police say the teens took those paddle boats out on the river while chaperones were likely asleep.

Well, another bad day for the economic reports. We're going to tell you about that and how Wall Street is responding.

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NGUYEN: OK. So, gift cards, as we talk about the holidays. That fail-safe present for people who are never sure what to get. Well, now some gift cards are anything but safe as more companies go belly up in the struggling economy.

Christine Romans reports.

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ROMANS (voice-over): Still holding onto that gift card from the Sharper Image or Bombay Company? Too late. Out of business. How about Linens-N-Things. Better move fast. It's closing shop and liquidating.

Consumers will lose $100 million this year on worthless gift cards from restaurants and stores that have gone belly up. It's tough out there for retailers. Mervyns is going out of business for good. Comp USA has closed most of its stores. Starbucks is shutting down about 600 stores. Circuit City has filed for bankruptcy.

Tod Marks writes a blog for consumer reports called, "Tightwad Tod."

TOD MARKS, CONSUMER REPORTS: What I would suggest people do, if they have a gift card from a Circuit City or another store that happens to be in Chapter 11 right now, I would say, run, don't walk to that store and buy something quickly because you just don't know when the plug may be pulled.

ROMANS: For now your Circuit City gift card is safe. A judge Monday, said the retailers could continue to accept them and even issue more cards while it reorganizes. And the big retail trade lobby says, have no fear.

ELLEN DAVIS, NATIONAL RETAIL FEDERATION: Most gift cards in this country regardless of if the retailer has declared bankruptcy, are perfectly safe and can be redeemed.

ROMANS: In many cases, the bankruptcy court allows retailers to accept gift cards even though the company is in Chapter 11.

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NGUYEN: Well, a Consumer Report says a quarter of all gift cards are never redeemed in the first place. You're not using them, folks. Another reason why, if you've got them, you should absolutely spend them.

The people have spoken and they want change when it comes to energy and transportation. CNNMoney.com's Poppy Harlow has our Energy Fix from New York.

Hi, Poppy.

POPPY HARLOW, CNNMONEY.COM: Hey there, Betty. Well, yes. They sure have spoken. From Missouri to California, to Honolulu. Voters approved ballot measures last week that will bring some big changes to their communities.

In Missouri, while the presidential vote still has not been called, voters approved more alternative energy measures by a 2 to 1 margin. The proposal calls for 15 percent of energy in that state to come from renewable sources by the year 2021. Now, the power grid is not the only place you're going to see changes. There's a group that advocates for more mass transit. They say $75 billion in new transportation projects were approved across the country last week. Many of them fund mass transit.

Here's one, a $10 billion project that will link San Francisco to Los Angeles. Take a look there, pretty cool, by high-speed rail. The 220-mile-per-hour rail line is expected to help Californians save a whopping 12 billion barrels of oil per year. In Seattle, voters approved a nearly $18 billion plan that provides an additional 34 miles for light rail in Seattle, and expanded bus service there. Honolulu voters approved a more than $4 billion light rail project as well, Betty. So, they are spending money.

NGUYEN: Yes. Talk about of. I've been following you here, $4 billion here, $10 billion there, another $18 billion there. These are expensive projects considering that we are in an economic crisis. Hello?

HARLOW: That's exactly right. A $700 billion bailout, right? This tax-on top of that.

Now, despite the weak economy, it seems voters are voicing their concern about a return to $4.00 gas. A possible selling point for this, jobs. The California Light Rail Project. That is expected to create some 450,000 new jobs. But, the project -- of course they come at a cost. Some are financed with sales tax or property tax increases. Others are funded by bonds and perhaps some voters factored in what it would mean to their wallet if they were able to drive less. But, they approved it. There's more information right there, CNNMoney.com -- Betty.

NGUYEN: All right. Poppy Harlow. Thank you so much.

HARLOW: You're welcome.

NGUYEN: Smugglers nabbed. Caught carrying guns and drugs onto airplanes using their federal badges as cover.

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NGUYEN: All right. So air safety in the hands of criminals? We have new details about members of the Federal Air marshal Service.

More from CNN Homeland Security correspondent Jeanne Meserve.

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JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Sean Ray Nguyen (ph) and Burleigh Sholar (ph) pled guilty to smuggling cocaine and drug money onto planes. They got past security using their Federal Air Marshal's badges.

According to prosecutors, another Federal Air Marshal used his position to lure a young boy to his hotel room where he sexually abused the boy. He is now in prison for possessing child porn. UNIDENTIFIED MALE: It's very disturbing.

MESERVE: Yet another Air marshal is in prison for hiding C-4 explosives, grenades, AK-47 rifles and a rocket-propelled grenade launcher in his luggage. He told investigators the weapons, stolen from the Military, were for his work as an Air Marshal Firearms instructor.

The head of the Federal Air marshal Service says these cases are not representative of his agency.

ROBERT BRAY, CHIEF, FEDERAL AIR MARSHAL SERVICE: There were possibly few bad apples in the bunch. But I think overall, our workforce is very professional. And the vast majority of our people are great people.

REP. TED POE (R), TEXAS: A few bad apples are a few too many. Because of the nature of the business, because you cannot ever take a chance on an Air Marshal, there shouldn't be any bad apples. .

MESERVE: Court documents show some of the Air Marshals have previous records for arson, carrying concealed weapons and other crimes. But, somehow they got top secret clearances.

Officials acknowledge that after 9/11, when the number of Air Marshals was being increased quickly, mistakes were made. But, the agency claims background checks and vetting have improved.

BRAY: I think now we have a very strong, robust process that we have a great deal of confidence that brings good people on board.

MESERVE: That doesn't allay the concerns of everyone flying planes.

DAVID MACKETT, AIRLINE PILOTS SECURITY ALLIANCE: I'm not sure I have the airline security that I expect to have for me, myself or my passengers.

MESERVE (on camera): Although Air Marshals convicted of felonies are fired, some of those charged with lesser crimes like drunk driving kept their jobs. (INAUDIBLE) officials those employees deserve due process. But critics say, the public deserves better.

Jeanne Meserve, CNN, Washington.

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NGUYEN: World leaders meet to work on solving the financial crisis. We have a live report from the summit coming up.

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NGUYEN: Just six days left to vote for your favorite CNN Hero. Here's what you do . You go to CNN.com/heroes to see their stories. And then you vote, of course. Join Anderson Cooper Thanksgiving night to find out who will be CNN's hero of the year. Vote now, CNN.com/heroes. Again, just six days left.

TONY HARRIS, CNN ANCHOR: Do you have your ticket?

NGUYEN: Got it. Ready to go.

HARRIS: I'm telling you, that's a great show. Last year it was unbelievable.

NGUYEN: Just wait until you see who's in the lineup this year.

HARRIS: I'm sorry. I need to button up my jacket.

NGUYEN: Yes, you need to get together. In the meantime there everybody, I'm Betty Nguyen. Join us again Monday morning starting at 9:00 a.m. Eastern.

CNN NEWSROOM continues with my good friend Tony Harris.

HARRIS: About ready to go?

NGUYEN: Looking good.

HARRIS: All right, roll it.