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Automotive Industry Hearing; Traveling Tips for This Holiday Season; Al Qaeda Video Insults & Warns President-elect Obama; Mandatory Recount for Minnesota Senate Seat
Aired November 19, 2008 - 10:55 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: Quickly want to take you back to Capitol Hill now where we are just beginning to hear from some of the automakers. Let's go ahead and listen in to Richard Wagoner, of course the Chairman and CEO of General Motors.
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G. RICHARD WAGONER, CHMN. CEO, GENERAL MOTORS: -- more than $30 billion of goods and services from more than 40 -- from more than 2,000 suppliers in 46 states. Our pension program covers nearly 475,000 retirees and spouses and our health benefits extend to about one million Americans. We have more than a million registered stockholders and 70 million of our vehicles are registered to U.S. citizens, 22 million of them purchased in the last five years.
As the recent news coverage has made abundantly clear, many people have a picture of GM that hasn't kept pace with the hard work that our people have been doing. Since 2005, we've reduced our annual structural costs, or fixed costs, in North America by 23 percent, or $9 billion, and expect to reduce them by about 35 percent, or $14 to $15 billion, by 2011. We negotiated a landmark labor agreement with the UAW last year that will enable us to virtually erase our competitive gap. We've addressed pension and retiree health care costs in the U.S. on which we've spent $103 billion over the last 15 years.
As a result of these and other actions, we're now matching or besting foreign competitors in terms of productivity, quality and fuel economy. And by 2010, we will match them on labor costs as well.
On the product side we're building vehicles that consumers want to buy, like the Cadillac CTS, "Motor Trend" magazine's 2008 car of the year, and the Chevy Malibu, the 2008 North American car of the year. We've made huge progress in developing advanced propulsion technologies like 20 models in the U.S. next year that will get at least 30 miles per gallon on the highway, six hybrids on the road now and three more next year, more than three million flex fuel vehicles, the world's largest hydrogen fuel cell test fleet and the upcoming Chevy Volt extended range electric vehicle.
In short, we moved aggressively in recent years to position GM for long-term success and we are well on the road to turning our North American business around. Last October following the negotiation of a new labor agreement with the UAW, our stock price climbed to almost $43 per share based on analysts views that we had finally overcome the cost competitiveness gap with foreign manufacturers. Since then, our industry has been hit very hard by the global financial market crisis. And the recent plunge in vehicle sales threatens not only General Motors' on going turn-around, but our very survival.
In response we moved quickly to keep our company on track. Since June we further reduced North American manufacturing capacity, put parts of our company up for sale, suspended dividend payments, reduced head count and eliminated raises, bonuses, 401(k) matches and health care coverage for many of our employees, all designed to improve GM's liquidity by $20 billion by the end of 2009. These actions affect every employee, retiree, dealer, supplier and investor in our company.
Mr. Chairman, I do not agree with those who say we are not doing enough to position GM for success. What exposes us to failure now is not our product lineup nor our business plan nor our long-term strategy. What exposes us to failure now is the global financial crisis which is severely restricted credit availability and reduced industry sales to the lowest per capita level since World War II. Our industry needs a bridge to span the financial chasm that is open before us.
We'll use this bridge to pay for essential operations, new vehicles and power trains, parts from our suppliers, wages and benefits for our workers and retirees and taxes for state and local government. But if the domestic industry were allowed to fail, the societal costs would be catastrophic. Three million jobs lost within the first year, personal income reduced by $150 billion, government tax loss of more than $156 billion over three years, not to mention the huge blow to consumer and business confidence. Such a level of economic devastation would far exceed the government support that our industry needs to weather the current crisis.
In short, helping the auto industry bridge the current financial crisis will not only prevent massive economic dislocation now, it will produce enormous benefits for our country later.
Thank you very much. I look forward to your questions.
REP. BARNEY FRANK (D-MA), CHAIRMAN, FINANCIAL SERVICES COMMITTEE: Next, Mr. Robert Nardelli from Chrysler.
ROBERT NARDELLI, CEO, CHRYSLER: Thank you, Mr. Chairman, and members of this committee. I certainly appreciate the opportunity to be here today.
We're asking for assistance for one reason, to address the devastating automotive industry recession caused by our nation's financial meltdown. With credit markets frozen, the average working American can't get competitive financing to purchase or lease vehicles. Our dealers, many of whom are in the room with me today, don't have access to market competitive funding to place wholesale orders for new vehicles which result in the constriction of cash inflow to all of us as auto manufacturers.
At the same time, Chrysler has billions of dollars in cash payment obligations to pay wages, to pay suppliers, to fund health care and pensions, all in the range of $4 billion to $5 billion a month. Therefore, without immediate bridge financing support, Chrysler's liquidity could fall below the level necessary to sustain operations.
Independent research firms have quantified the fallout of a domestic automaker bankruptcy to the overall economy, and the impact would be devastating, as Rick mentioned. This is not a good option for Chrysler, and more importantly, for the auto industry or the broader economy, for the following reasons.
One, we believe retail sales would plummet. The fact is, in February of 2007, when Daimler announced the sale of Chrysler, our sales fell off 37 percent. Our existing inventories would need to be heavily discounted. We have over 400,000 units in the field worth about $1 billion
Given our common supplier base, the bankruptcy of any one automaker could threaten the viability of all automakers. Our factories would likely be idle for a significant period of time while we renegotiate contracts with literally thousands of suppliers and our primary lenders. The overall amount and cost of financing the restructuring would be significantly higher in a Chapter 11 process than the working capital bridge that we're requesting here today.
And finally, we cannot be confident that we'll be able to successfully emerge from bankruptcy. That's why as an industry, we're requesting a $25 billion working capital bridge to survive this liquidity crisis.
We're willing to provide full financial transparency and welcome the government as stakeholders, including an equity holder. We're fully prepared to comply with the current conditions and policies under the recently enacted Emergency Economic Stabilization Act. Furthermore, our private equity owner, Cerberus Capital Management LP, has made it clear that it will forego any benefits from the upside that would, in part, be created from any government assistance that Chrysler LLC may obtain.
Mr. Chairman, being new to the auto industry, I recognize the need to challenge the status quo and to seek significant change. Change is the only constant we know at Chrysler today and throughout our businesses.
Chrysler is making those changes. And since 2007, we have reduced 1.2 million units of capacity, or 30 percent, of our installed base. We've identified over $1 billion in non-earning assets to sell, and we're more than 75 percent towards achieving that goal.
This year we reduced our fixed costs $2.2 billion. And unfortunately, by the end of the year, we will have furloughed over 32,000 employees.
It is equally important that the lack of liquidity to provide loans and leases to customers and financing to dealers in addressing this issue immediately. It's imperative that our affiliate financial companies receive access to competitive liquidity and financing capacity.
At Chrysler, 75 percent of our dealers rely on Chrysler Financial to support their business, and 50 percent of our customers finance their vehicles through purchases through Chrysler Financial. Normally these loans and leases are securitized and sold into secondary markets to generate fresh liquidity and finance capacity. Today, there is virtually no secondary market and, therefore, no way to raise capital. With immediate financial assistance, the lifeblood of the U.S. economy will continue to flow and Chrysler will be able to continue to pay at its current levels.
Mr. Chairman, Chrysler really is the quintessential American car company. Seventy-three percent of our sales are in the U.S., 61 percent of our vehicles are produced in the U.S., 74 percent of our materials are purchased in the U.S., and 62 percent of our dealers are based in the U.S.
Chrysler has a strong pipeline with a product renaissance coming in 2010. In September, we revealed three electric drive vehicles, one for each brand. And one of those will be produced in 2010.
Thank you very much.
FRANK: Now, Mr. Alan Mulally of Ford.
ALAN MULALLY, CEO, FORD: Thank you, Chairman Frank and members of the committee. I appreciate the opportunity to be here representing the Ford Motor Company.
As you know, the auto industry has been heavily affected by the turmoil in the financial markets. Much of the recent commentary has suggested our companies need a new business model. I completely agree. In fact, we at Ford are well on our way to transforming our company and building a new Ford that has a very bright future.
There are two fundamental questions today. First, is there a competitive and sustainable future for our domestic automobile industry? And second, is a government bridge loan through these difficult economic times better for our country than inaction?
I believe the answer to both of these questions is yes. As a relatively newcomer to this industry, I have the benefit of seeing the auto industry and its transformation clearly. I see parallels with what I witnessed at Boeing after the 9/11 tragedy and the steps we took to transform the commercial airplane business. I can tell you that the transformation at Ford is even more aggressive, and the progress we are making is even more remarkable.
Our plan for the past two years has been focused and consistent: aggressively restructure to operate properly at the current lower demand, and also the changing model mix; accelerate the development of safe, fuel-efficient, high-quality new products that our customers want and they value; finance our plan and improve our balance sheet; and work together as one team leveraging our global assets worldwide. Our goal is to create a viable Ford Motor Company and a lean global enterprise delivering profitable growth for all. Few companies have restructured more aggressively.
We have taken out excess capacity, closing 17 plants and reducing our workforce by 51,000 vehicles. We negotiated a new contract with the UAW to improve our competitiveness. We shifted to a balanced product lineup, offering high quality, proven safety and good value. We're delivering the best -- or among the best fuel economy with every new vehicle we are launching today.
The speed and breadth of our transformation is evident by the actions this week alone. Yesterday we submitted our application for direct loans authorized by Congress last year to help us speed advanced technologies and vehicles to market. Today, at the Los Angeles Auto Show, we'll introduce two all-new hybrids.
Our new Ford Fusion Hybrid beats the Toyota Camry Hybrid by at least six miles per gallon. It's just a friendly competition. On Friday we will end large SUV production at our Michigan truck plant and begin converting to fuel-efficient, small car production at that same facility.
To fund our new products and restructuring, we went to the capital markets early and we divested all of our non-core assets. Our Fort Credit business has consolidated abroad to preserve capital in support of our U.S. customers and our U.S. dealers.
We appreciate the recently induced asset-backed commercial paper funding facility, and we anxiously await the administration's term securitization facility in work. In addition, the FDIC's approval of Ford Credit's pending industrial loan bank application will enable us to meet the financial needs of our dealers and our retail customers.
As a result of all of these actions, we were profitable in the first quarter of this year, 2008, and well on our way to sustainable profitability before the current economic and credit crisis stopped us cold. We have taken decisive action to deal with the current new crisis.
We have reduced production to match the dramatically lower demand. We have further reduced employment and we have eliminated all raises and bonuses for 2009. We took these measures while protecting the new vehicles that will secure our future.
Now, we believe we must join our competitors in asking for your support to gain access to an industry bridge loan that will help us navigate through this difficult economic crisis. We suggest the loans be structured in a revolving format so exposure to the taxpayer would be limited. And if used, would, of course, be repaid with interest.
We at Ford are hopeful that we have enough liquidity, but we also must prepare ourselves for the prospect of further deteriorating economic conditions in 2009. In addition, the collapse of one of our competitors would have a severe impact on Ford and our transformation plan because the domestic auto industry is highly interdependent. It would also have a devastating ripple effect across the entire U.S. economy. I am more convinced than ever that we have the right plan to transform Ford. We at Ford will continue to deliver our plan to create a thriving auto business to the benefit of all of us. With your help, we will create a safeguard to deal with the growing economic uncertainty.
This is a really important industry. This is a pillar of our economy, and we look forward to working with you to be part of the solution on the road to economic recovery.
Thank you very much.
FRANK: Mr. Ron Gettelfinger from the United Auto Workers.
RONALD GETTELFINGER, PRESIDENT, UAW: Mr. Chairman, on behalf of the men and women of the UAW, thank you for the opportunity to testify today on the state of the domestic automobile industry.
The UAW strongly supports legislation to amend (INAUDIBLE), to clarify that the Treasury Department should use the existing financial rescue program to quickly provide a $25 billion emergency bridge loan to General Motors, Ford and Chrysler, to enable these companies to continue operations. The situation now facing GM, Ford and Chrysler is extremely dire. Because of the credit and financial crisis, overall vehicle sales have plummeted to the lowest level in 25 years.
As a result, GM, Ford and Chrysler are burning through their cash reserves at an unprecedented rate. The stark reality is that these companies could be forced into a Chapter 7 liquidation with their operations ceasing entirely.
If this happens, as we all know, the consequences would be truly devastating. In addition to the hundreds of thousands of workers who would directly lose their jobs at the Detroit-based auto companies, a total of almost three million workers would see their jobs eliminated. This includes people who work for auto dealers, suppliers of components and materials, and thousands of other businesses that depend on the auto industry.
Furthermore, retirees from the Detroit-based auto companies and their spouses and dependents, about one million people, could suffer sharp reductions in their pension benefits and the loss of their health insurance coverage. An especially devastating blow to the roughly 40 percent who are younger than 65 and thus not yet eligible for Medicare. If the automakers' pension plans are terminated, the PBGC would be saddled with unprecedented liabilities and the federal government would be liable for a 65 percent tax credit for the health care costs of pre-Medicare auto retirees.
The liquidation of the Detroit-based auto companies would severely aggravate the current economic downturn. Government revenues would shrink even further, forcing harmful cuts in a wide range of social services.
The UAW submits that it would be far better for the federal government to take prompt action now to prevent the imminent collapse of the Detroit-based auto companies. The human toll will be far less and the ultimate cost to the government will be far cheaper.
The crisis facing the Detroit-based auto companies is not attributable to overly-rich contracts negotiated by the UAW. In 2005, the UAW agreed to reopen the contracts midterm and accepted significant cuts in workers' wages and health care benefits for retirees. Then in the 2007 collective bargaining negotiations, the UAW agreed to slash wages for new hires by 50 percent. New hires will not be covered by the traditional retiree health care and defined pension benefit plans.
In addition, beginning January the 1st of 2010, the liability for health care benefits for existing retirees will be transferred from the companies to an independent VEBA fund. The changes in our 2005 and 2007 contracts cut the company's liabilities for retiree health care by 50 percent.
As a result of all of these painful concessions, the gap in labor costs between the Detroit-based auto companies and the foreign transplant operations will be largely or completely eliminated by the end of the contracts. Thus, the UAW active and retired members have stepped up to the plate and made the hard changes that were necessary to make our companies competitive in terms of their labor costs.
GM, Ford and Chrysler are now facing a crisis, not because of their labor costs, but because of the larger credit and economic crisis that have engulfed our nation. And with it, the unprecedented drop in the auto sales that has affected all automakers.
For all of these reasons, the UAW strongly urges Congress to provide immediate assistance to GM, Ford and Chrysler to enable them to continue in business and to avoid the devastating consequences that a collapse of these companies would have for millions of workers and retirees across our country.
Thank you.
TONY HARRIS, CNN ANCHOR: Well, you have heard from the top executives from the big three, and the man leading the UAW. They all claim their engines are stalled and jobs are on the line. And they're looking for a jump-start from taxpayers, you and me.
If you'd like to continue to watch the hearing live as it unfolds, you can just go to CNN.com/live.
Back on Capitol Hill, this time before the House Financial Services Committee, they're trying to make the case for a $25 billion loan from the financial bailout program. Without it, the companies say they could go bankrupt and the blow to the U.S. economy would be catastrophic. But critics say taxpayers shouldn't reward failed business practices.
While the auto executives have gotten an earful from the critics, at the hearing a short time ago one lawmaker actually came to their defense.
(BEGIN VIDEO CLIP) REP. CANDICE MILLER (R), MICHIGAN: The domestic auto industry literally created the middle class of this great nation. The middle class was not created by AIG or Bear Stearns or Lehman Brothers, or whatever. They might have created the upper class, but they did not create the middle class. The middle class was created by this great industry.
We are facing some tough economic times. And we're asking for a loan, not a bailout.
(END VIDEO CLIP)
HARRIS: OK. So let's get the latest on the hearing and the prospects for an auto industry loan.
Congressional Correspondent Dana Bash live from the Hill.
Dana, good to see you.
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Good to see you.
HARRIS: Now Dana, let's go to work on this a bit. I want to be clear on the kind of congressional action that we're talking about here. So to what extent has the auto bailout conversation sort of shifted from crafting new legislation, to cover a $25 billion loan, to recrafting the TARP legislation to cover such a loan?
GREGORY: Well, there are actually two camps, and both are talking about both of those things that you talked about. For the most part, Democratic leaders in the Senate and House are still insisting, at least publicly now, that they say the only way that they are going to approve this $25 billion loan to the auto industry is by taking the money out of the $700 billion already approved for Wall Street. They are still, at least publicly, dug in on that.
On the other hand, you have heard Republicans over and over say, no, no, no, that is a mistake. And what they have wanted to do is use $25 billion already approved for a loan for the auto industry.
Now, that was approved specifically to help develop fuel- efficient vehicles. And so Democrats have said that they're not for that because they don't want to take away from modernization, because that is key.
What we're hearing now, Tony, is that the delegation from Michigan, some senators from Ohio and Missouri, they're trying to work on some kind of compromise with regard to that $25 billion loan and say, look, let's take that loan, give it to the auto industry to bail them out, basically, with the promise that they pay back the money specifically for fuel efficiency, you know, back into the same pot that it's coming from the. Whether or not this is going to fly specifically with Democratic leaders is a big question mark.
I was just e mailing with a senior Democratic aide in the Senate who said, you know, it's up in the air. We're trying to figure out what the next steps are. But I can assure you that Senator Carl Levin from Michigan, Debbie Stabenow from Michigan, and also senators like George Voinovich from Ohio, they are working incredibly hard behind the scenes to try to figure out some way to do something before Congress adjourns at the end of the week.
HARRIS: You know, Dana, speaking of things up in the air, and what will or won't fly, maybe this is a bit off topic, but I don't think it is. Have the execs explained yet flying to Washington for these hearings in plush corporate jets as they cry broke here?
BASH: You know, it's going to be very interesting to see if they're questioned on that. We just heard the opening statements from the CEOs over on the House side. And so it would not surprise me. It actually would surprise me if at least one member of Congress doesn't ask them about that, because, you know, this is the kind of thing that lawmakers get an earful from their constituents on -- you know, wait a minute, you're asking or even potentially contemplating the idea of spending my money, my taxpayer money for these companies because they're crying poor, and they're flying down on -- this is an ABC News report. According to one report, said one of the corporate jets was a $20,000 round trip.
Now, you know, some people might say, well, CEOs, that's what they do, they fly on corporate jets. But in this environment, particularly when we're hearing for two days straight from these CEOs that they're having major financial problems, it might not sit well with these members of Congress. So I wouldn't be surprised if they get asked about it at all.
HARRIS: Maybe it's what CEOs do, but you said it right, not in this environment.
All right. Dana Bash from Capitol Hill following the hearing for us.
Dana, good to see you. Thank you.
BASH: Thank you.
HARRIS: Chief Business Correspondent Ali Velshi is on the air right now hosting his radio show. We will check in with Ali in about 90 seconds.
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(BEGIN VIDEO CLIP)
SEN. JIM INHOFE (R), OKLAHOMA: Keep in mind this has never been done before. There's always been some type of oversight, congressional oversight or otherwise. Now there's none whatsoever. And so one of two things can happen.
When we peel out of here on Friday, or whenever Harry Reid let's us go, we're going to be adjourned. That means that we're not going to be there to stop him if he wants to access another $350 billion.
Now, the other possibility is it will go off to the next administration. That's a scary thought, to think that the Obama administration is going to have $350 billion sitting out there to do whatever they want to do with. I'm very much concerned about it.
And I think our only chance to stop this thing is by legislation. And I doubt seriously that Harry Reid will allow it to get on the floor.
(END VIDEO CLIP)
HARRIS: Bailout fallout? A senator raises concerns about the lack of oversight. And -- OK. What about helping homeowners facing foreclosure? And now the auto industry wants a piece of this pie. How big is this pie anyway?
Chief Business Correspondent Ali Velshi live from New York, where he is taking your calls and listening to your concerns on his radio show. Let's listen to a bit of this. And maybe as he wraps this call we'll get an opportunity to ask a question or two.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Hi, Sebastian.
Hey, listen, Sebastian. Hold on a second.
I just want to give you all the phone number. It's 877-266-4189.
Sebastian, go ahead. Go ahead. What's going on?
UNIDENTIFIED MALE: Good. Hey, I was just wondering -- I think it's a great time, personally to buy GM and Ford. And I'm just trying to think if you think the same thing. Because either way it goes, I think they'll come back. And I think it's a great time to get in.
VELSHI: Yes. There are great deals right now on cars made in North America, great deals on everybody's cars, because typically at the end of the year you seen those kind of deals.
UNIDENTIFIED MALE: No, no, no. I'm actually talking about investing in the company.
VELSHI: Stock?
UNIDENTIFIED MALE: Yes.
VELSHI: No.
UNIDENTIFIED MALE: No?
VELSHI: No. No, no.
UNIDENTIFIED MALE: OK.
VELSHI: People don't buy stock of distressed companies. This is a -- maybe -- look, if the choice of buying stock in an auto company or maybe spending a weekend going out to Atlantic City or Las Vegas, if you understand that that's money that you're not investing, that's fine. But there is a general rule with the average investor who doesn't do this for a living not to go and invest in distressed companies.
That is not to say that neither of these two companies will come back and come back strong in terms of the stock market, but that is just not a sound investment strategy. There are mutual funds which invest in distressed equities and distressed debt. That's -- please think about that. I get that call a lot.
Tony Harris I believe is with us right now.
Hey, Tony.
HARRIS: Hey, we've been listening in. That was good stuff.
Sebastian, no, don't buy it.
VELSHI: Buy GM or Ford. I thought that's actually a neat idea. They've got great cars. Then I realized he was talking about the stock.
HARRIS: Yes.
VELSHI: No.
HARRIS: No, no, no. Not now, anyway.
VELSHI: Not now.
HARRIS: But you can get it for cheap.
Hey, Ali, I'm wondering, what's the sort of general tone that you're getting from your listeners on the idea of this bridge loan to the auto industry?
VELSHI: Not as vehement as I might have thought.
HARRIS: Yes.
VELSHI: There are people who would like to know -- I think they realize the danger of the auto industry failing.
HARRIS: Yes.
VELSHI: I think the auto CEOs have made that point clear. So they're asking, what are the other options?
HARRIS: Hey, do you buy the case they've made on why we need to do this and if we don't, dire circumstances -- do you buy it?
VELSHI: Tony, you know when it came to the other bailout that we discussed, the $700 billion bailout, we talked about this. What is my main theme whenever I talk to you? It's jobs.
HARRIS: Jobs, yes.
VELSHI: If these auto companies fail, we lose jobs. So my -- I always come down on the side of, how do we save jobs? Because it's cheaper to maintain them than to try and find them again.
I am concerned that if an automaker fails, jobs will be lost. But I do think there should be strings attached to any bailout. And I'm getting that feeling from a lot of our callers.
What will they do differently to make sure that this is not just taxpayer money that's going into a sinkhole? Can we change the auto industry fundamentally? And most people believe they can, and they have been making some strides in that direction.
HARRIS: I've got to ask you, it's something that -- in watching the hearing yesterday over the TARP -- that came to me -- Sheila Bair, as you know, runs the FDIC.
VELSHI: Right.
HARRIS: She wants $24 billion to help mitigate foreclosures. Secretary Paulson was a couple chairs away from her yesterday.
VELSHI: Right.
HARRIS: And the secretary has, what, $60 billion left to spend before needing to go to Congress to ask for more money?
VELSHI: Right.
HARRIS: Why doesn't he cut a check to that lady right there on the screen, Sheila Bair?
VELSHI: Right. Sheila Bair is really smart. And she -- you know, when they first took over IndyMac, which was the first big bank failure -- there had been about 10 before that this year -- they took the opportunity to try and use that as a model for how you can restructure some mortgages.
HARRIS: Yes.
VELSHI: And she's come up with a very good suggestion that's worth discussing. She's saying, yes, let's use some of this money to go right to people who are in danger of losing their homes, people who are two months late on their mortgages. Right now you have to be in foreclosure, which means more than three months late.
I think it's a neat idea worth discussing. Henry Paulson is still resisting resisting.
Now, Paulson's idea is that you loosen the credit markets from the top, right? You trickle down from the banks. And they're supposed to let people have money.
But we know from at least one bank, Citigroup, that the money they received from the government is not going to trickle down into loans. It's being used to make other acquisitions of banks.
That might be a sound business idea. It does not help people in distress. Sheila Bair's plan is to try and help people in distress. And this is a little bit outside of her range. I mean, this is not what the FDIC does.
HARRIS: Yes.
VELSHI: But she's come up with a great idea. And I think that that's worthy of great consideration. We should be thinking about that.
HARRIS: You know, there are a lot of people who hear that that whole idea that you just shared with us, it feels more top-down than bottom-up.
VELSHI: Right.
HARRIS: And we all are reminded that this is a crisis that started where? In the housing sector.
VELSHI: That's right. So why not help folks out in the housing sector?
My cab driver said the same thing today. He said, "When do we get to lineup for my bailout?"
HARRIS: Pay (ph) now.
VELSHI: I think there's something to be said for, let's just figure out a way to do this. We think that we have more than what we needed in the $700 billion bailout as far as the banks are concerned. What did somebody tell me the other day? TARP, which is what this is called, the Troubled Asset Relief Program, has become BARF, the Bank Asset Relief Fund.
HARRIS: I like that.
Hey, Ali. Get back to your radio show.
VELSHI: All right, buddy.
HARRIS: I know you have callers lined up. Good to talk to you.
VELSHI: You too, Tony.
HARRIS: All right. Still to come up in the NEWSROOM, a new audiotape from al Qaeda. What should we learn from it? That's next.
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HARRIS: We are following a developing story this hour. A message from al Qaeda warning and insulting President-elect Barack Obama. The audio message reported to be from al Qaeda's second in command, Ayman al-Zawahiri, was posted on Islamist Web sites. It warns Obama that quote, "A heavy legacy of failure and crimes awaits you." And it refers to the President-elect and other black leaders in derogatory language calling them, quoting them here, "house Negroes." Justice correspondent Kelli Arena joins us live now.
And Kelli, before we get to the message on the audiotape, do we know for sure that this is an audio message from al Qaeda's No. 2?
KELLI ARENA, CNN JUSTICE DEPARTMENT CORRESPONDENT: Well, the intelligence community is looking at that, Tony. But, we don't have any reason to believe it isn't. It was put out by al Qaeda's media arm, which is called As-Sahab. And it's a way that al Qaeda has put out lots of tapes in the past, both video and audio. So there's no reason at this point to think that this is a fake.
HARRIS: Got you. So, Kelli, what is the goal of an audiotape like this?
ARENA: Well, intelligence analysts believe it's an effort for al Qaeda to remain relevant. It's propaganda. They see that Barack Obama is very popular overseas. They probably never thought that the United States would elect a black president with a Muslim father. And so this is an effort by them to say, hey, we're here. You know, this guy isn't as great as you think he is. Here's what we've got to say about him.
And as you mentioned, some personal insults, comparing him unfavorably to Malcolm X, saying he's not as honorable as person as that. Saying that he denied his Muslim faith and accepted Christianity. They have pictures over the audiotape of him with some Jewish people, you know, which of course is one of the things they keep rallying about. Is the U.S.'s alliance with Israel.
He also al-Zawahiri mentioned Afghanistan and Barack Obama's plan to put more troops in Afghanistan saying, hello, that's going to be a big failure just like everybody else who tried that before you. You know, trying to already put a wedge there as best they can. Al- Zawahiri is the operational head of al Qaeda, according to intelligence officials. As you said, he is the No. 2 in this organization. So, trying to rally the troops, if you will.
HARRIS: I see. All right, our justice correspondent Kelli Arena for us.
Kelli, appreciate it. Thank you.
ARENA: You're welcome, Tony.
HARRIS: You know, when you think about it, it's the truth here. It would be an historic choice. Two prominent Democrats telling CNN the president-elect has settled on an attorney general. White House correspondent Ed Henry, with the Obama transition team in Chicago.
Ed, good to see you.
Before we get to the choice for attorney general, has there been any reaction from the Obama camp to the purported tape from al Qaeda's second in command? ED HENRY, CNN WHITE HOUSE CORRESPONDENT: No. I spoke to a senior Obama transition aide this morning. And basically what I'm getting is they do not want to comment because they basically do not want to get into a tit for tat with a terrorist group.
As you hear from Kelli reporting so accurately that in fact, this is largely -- these kinds of tapes -- a recruiting tool for al Qaeda to try to bring more people to their cause. And so it's not unexpected. The Obama camp knew this would come at some point during the presidential transition.
And I think we also have to recognize a that both the Obama transition team, as well as the current White House from President Bush on down, has been expecting that al Qaeda and other terror groups will try to use this time, this hand off, if you will, to try to take advantage of the situation. We've seen in Spain and Scotland in recent years, terror attacks during sort of transfers of power.
And so the U.S. government, the current one and the incoming administration have been preparing for the possibility of U.S. terror attacks -- terror attacks on U.S. soil by al Qaeda, or others taking advantage of this. So, they're expecting a tape like this. And they feel like they're on top of the situation. And they frankly do not want to get into sort of a sparring match with al Qaeda's No. 2.
HARRIS: And Ed, some pretty significant transition news there in Chicago.
HENRY: That's right. Eric Holder, as you mentioned. This is going to be a historic pick. We're told by two officials close to the transition, that he in fact, is the President-elect's choice to be attorney general, the first African-American attorney general.
Very interesting as well that where he really caught Barack Obama's eye is by co-chairing the vice presidential vetting process, really impressed Barack Obama we're told by sort of his discretion, professionalism and sort of carefully screening all those perspective V.P. nominees. And then presenting the information, the pros and cons, to Barack Obama.
He also cut his teeth, it should be noted, in the Clinton Justice Department as deputy attorney general. And it's interesting when you look around for you know, when it was a campaign and not a transition. The Obama campaign talked a lot about change, turning the page and especially in the primaries about turning the page on the Clinton years. And now we're seeing a lot of Clinton veterans from John Podesta, running the transition; to Rahm Emanuel, he'll be running the Obama White House. A possibility of Hillary Clinton being secretary of state.
Certainly a lot of old Clinton hands showing up in this incoming administration -- Tony.
HARRIS: Yes. Good point. All right. Our White House correspondent Ed Henry, with the Obama transition team in Chicago.
Ed, good to see you. Thank you sir.
HENRY: Good to see you.
HARRIS: So where will you be in one week? On the road? Stuck at the airport? Personal finance editor Gerri Willis has some top tips to save money this holiday season.
(COMMERCIAL BREAK)
HARRIS: Let's do this. Top tips now. House swapping, couch surfing. What are we talking about here? Nothing unseemly, I hope. Just holiday savings. Personal finance editor, Gerri Willis, has come up with some pretty clever ways to cut your lodging costs this season.
Gerri, good to see you.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: House swapping, house swapping. It's house swapping.
HARRIS: House swapping --
WILLIS: How many times do I have to say -- it's house swapping.
HARRIS: All right. I've got to pay close attention here.
What is first on your list there, Gerri?
WILLIS: It is house swapping. So instead of booking a hotel, some folks are house swapping. Basically it's just two families agreeing to swap homes for a vacation. I've done that myself. It's really fun. It's going to save you a lot of cash, thousands of dollars in some cases since you don't have to eat out all the time. And what's more, you feel like a local because you're staying in somebody's home.
Check out homeexchange.com. Here you can search for potential house swapping buddies all over the world. There's a $100 fee to join this Web site, though. You can also find potential house swapping mates at craigslist.org.
But you know what, Tony? It's not for everybody because some people just can't stand the thought of somebody sleeping in their bed and using their stuff.
HARRIS: Touching my stuff. Get away from my stuff. It's my stuff.
WILLIS: It's so cheap though, Tony.
HARRIS: I bet it is. But of concern to me is safety. Is it safe to have strangers in your home?
WILLIS: Well you know, you've got to do your homework, make sure you've gone through vetting these people who are going to be in your house. Ask for referrals about prior exchanges. Make sure you've had a few conversations over the phone or through e-mail. You may decide to lock up that jewelry or other precious items. And make sure to ask questions about the home you'll be staying in. Get photos. That's a great way to get a sense of where you're going. And understand the peculiarities of the home. You know there's always something freaky in every house, right, that you have to know about -- jiggle the key to get in the door.
But I have to tell you, this is a better option than what people are talking about now which is couch surfing.
HARRIS: What is couch surfing? What on earth is what really want to say.
WILLIS: Well I think as college students we all did this, right? You know, when you're young, some folks staying on -- people you know, their couches, to save a few bucks, maybe mom and dad's, maybe a relative.
HARRIS: Just bunking out for the night or something.
WILLIS: Yes, but now there's a Web site to hook up strangers for couch surfing. It's called couchsurfing.com. Most stays last about three days. You can expect a bed, but you really have to take precautions here. And I think it's probably -- I'm not sure that I would recommend it. Let me put it that way.
HARRIS: Yes, I think I'm with you on that.
Any good deals on hotel rooms out there right now, Gerri?
WILLIS: Well here is some good news, if you don't want to couch surf and you don't want to house swap, you can rent a hotel room, and the rates are lower than last year. They're going to fall even more, get this, between Thanksgiving and New Years.
Good news here is that hotels are dolling out more discounts. You need to negotiate. First out, find out what those deals are on the web. There are a million Web sites with hotel prices out there, hotels.com, all the major travel Web sites. Then call that hotel directly. Tell them the rate that you found and ask for any packages, any discount rates that are available.
Do you know that 33 percent of the time you are going to be successful in getting that rate lowered?
HARRIS: I like that.
WILLIS: And then keep checking the web to see if the rates drop more. Call back and say I want an even lower rate now. If you call around to a few hotels this season chances are you're going to get an e-mail.
Send me e-mails. I want to hear from you -- gerri@cnn.com.
HARRIS: Awesome tips as always.
Thank you, Gerri. WILLIS: My pleasure.
HARRIS: And make sure you protect your vacation during the holiday. Ron Burley of AARP has some tips before you book that cruise, and ask for travel insurance. Saving you some cash coming up in the next hour of CNN NEWSROOM.
(COMMERCIAL BREAK)
HARRIS: As you know, we've been following the Nebraska legislature as it works to re-do to Safe Haven Law there that has become so controversial. We understand that the state legislature, which has been meeting this morning, has voted 41-6 to give second- round approval to a limit, a 30-day age limit, in the Nebraska Safe Haven Law. That does appear now to be headed for final approval. Every state has a Safe Haven Law that is meant, as you know, to protect newborns from being dumped in trash bins and worse. But Nebraska's law is the only one that lacks an age limit. And now we understand that a 30-day age limit in the Nebraska Safe Haven Law appears to be headed for final approval.
Our Sean Callebs is following the story. We're going to talk to him next hour right here in the CNN NEWSROOM.
Two weeks after Election Day and Democrat Mark Begich declaring victory in the Alaska Senate race. The Anchorage mayor on track to replace 40-year Senate veteran Ted Stevens. Stevens convicted of felony charges just days before the election. Begich leads by 3,700 votes with 2,500 absentee ballots to be counted. If Begich is certified the winner, that would give Democrats 58 seats, just two short of a filibuster-proof Senate majority.
And there just happens to be two more seats still up for grabs. Minnesota is one of those races. A mandatory recount getting under way today. CNN's Mary Snow now live for us in Minneapolis.
And Mary, let's be clear here, this is a recount triggered by law because of the closeness of this race.
MARY SNOW, CNN CORRESPONDENT: Absolutely, Tony.
This is the first time Minnesota has had to order a recount in a U.S. Senate race. Norm Coleman, the Republican, was leading by 215 votes, too close to call. So just a short time ago, a recount began across the state. As you see behind me right here, this is the scene being played out across Minnesota. You have election officials manually going through these ballots. And there are nearly three million of them to be recounted throughout the state. They're surrounded by election observers from both campaigns, lawyers from both campaigns and of course the media. Because the state wants this process to be as transparent as possible.
Now, as this recount got under way, there are still legal challenges. The Franken team contends that there are absentee ballots that should have been counted but were rejected. And they are fighting to get those ballots counted. That is still being worked out. The Secretary of State, Mark Ritchie, was asked whether he thought there would be major interruptions with court actions along the way. He thinks that that will be avoided.
(BEGIN VIDEO CLIP)
MARK RITCHIE (D), MINNESOTA SECRETARY OF STATE: I think people feel really confident that we're going to move forward and just get this done. That is the feeling you get, and I think that's the commitment that people have. So that's how I feel about it, too.
(END VIDEO CLIP)
SNOW: Now, Tony, the state canvassing board thinks or hopes that it will have a final winner by the middle of December.
Now this morning, as this recount is taking place, Al Franken is on Capitol Hill. He is meeting with Democratic leaders, briefing them on the recount. And a spokeswoman also says, should he be elected, he wants to be hitting the ground running.
His contender, Norm Coleman, a spokesman saying that he calls that visit very presumptuous. This all going on -- it's still a bitter battle between these two candidates --
HARRIS: It sounds like it.
SNOW: -- as the recount takes place.
HARRIS: All right, Mary Snow in Minneapolis for us.
Mary, appreciate it. Thank you.
Whether you're traveling to the city or the country next week, a lot of you will get there in a car, SUV or minivan. What you need to know before you get behind the wheel. That is next.
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HARRIS: The holidays are here and for some that means road trip.
Why were we playing the Beatles?
Anyway, take a look at this map. It shows all the states that have gas for under $2 a gallon. Veronica De La Cruz has been surfing the web for us this morning, finding out everything you need to know before you go.
Veronica, good to see you.
VERONICA DE LA CRUZ, CNN CORRESPONDENT: You don't like the Beatles? You have a problem with the Beatles?
HARRIS: Well I just want it all to come together. So, if we're talking about a road trip, that feels like --
DE LA CRUZ: Like, get your motor running, that one? HARRIS: Yes, or taking it to the streets, right?
DE LA CRUZ: Yes, exactly. I've got you.
HARRIS: Will you help us plan our trip next week please?
DE LA CRUZ: Absolutely. OK, so we're looking at this map with all the cheap gas. We're going to get to that in a second. I'm going to tell you all about gasbuddy.com.
But first I want to show you how can be organized on your trip.
HARRIS: Awesome.
DE LA CRUZ: Tripit.com, that is a great Web site. Check this out, Tony. You e-mail the site your travel plans and then it will organize everything for you. You can access it via your mobile device. Here is the best part, tripit.com automatically adds useful information from the web, like weather and maps, that you can use along the way. So that's tripit.com.
Now gasbuddy.com, that is going to help you locate the cheap gas. It's also going to help you calculate the entire cost of your trip. Let's say, Tony, that you're going to come visit me in New York for Thanksgiving.
HARRIS: All right.
DE LA CRUZ: Yes, I'm hosting the turkey. You drive a, what? You drive a what?
HARRIS: I drive a smart car.
DE LA CRUZ: OK.
HARRIS: A Prius.
DE LA CRUZ: Let's just for the sake of --
HARRIS: OK, for the discussion?
DE LA CRUZ: -- say a 2005 Honda Odyssey minivan.
HARRIS: OK.
DE LA CRUZ: Because you're bringing the whole crew with you.
HARRIS: All right.
DE LA CRUZ: OK, so you guys are going to be spending, let's see -- $121.78. That's what it's going to cost you round-trip. So you can calculate that on gasbuddy.com. You can also upload the mobile device, find out where to find that gas along the way.
Now, Tony, do you have a lead foot? Is that you?
HARRIS: No, no, no. I'm pretty slow.
DE LA CRUZ: No? OK, well, I do.
HARRIS: You do? Yes, you do, as a matter of fact.
DE LA CRUZ: I do. So I really like trapster.com. Trapster.com is going to help you avoid those speeding tickets on the road. All you do, Tony, is register with the site. You give them your mobile number. And check this out, your mobile phone is going to act as a GPS to alert you to where those speed traps might be. So that is trapster.com.
Finally, finally, Tony, you're going to be traveling with the kids. And I'm sure it's challenging to keep them quiet, right?
HARRIS: Who are you telling?
DE LA CRUZ: On the way to grandma's house --
HARRIS: Are we there yet? Are we there yet? Are we there yet?
DE LA CRUZ: -- maybe on the way to my house. Right, check out this Web site. It's momsminivan.com. The site is full of downloadable games, ideas for the little ones.
HARRIS: I like that.
DE LA CRUZ: Yes, so that's momsminivan.com.
So, one more time, it's tripit.com, that's the first site, gasbuddy.com, trapster.com, momsminivan.com.
There you go, Tony. You're all ready for your road trip.
HARRIS: Now that is awesome. I am ready. It's not going to happen, but I am ready.
All right, Veronica. Thank you. See you next hour.
Today is the last day you can vote for your favorite CNN hero. Just go to cnn.com/heroes to see their stories, and we want you to vote. Then join Anderson Cooper Thanksgiving night to find out who will be CNN's hero of the year. Vote now at cnn.com/heroes. Vote today, the last day.
(COMMERCIAL BREAK)
HARRIS: Hello, everyone, I'm Tony Harris in the CNN NEWSROOM. Here are the headlines from CNN for this Wednesday, the 19th day of November.
A racist insult from al Qaeda directed at President-elect Barack Obama. The terrorist group also warns the new American leader about Afghanistan.
Auto execs on Capitol Hill again today driving for dollars, predicting catastrophe if Congress refuses a loan.
You are in the CNN NEWSROOM.
