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Treasury Secretary Holds Press Conference on Unfreezing Credit & Consumer Concerns; How Safe Will the Nation's Capital be on Inauguration Day?; Obama's Money Team: Gearing For Credit Crisis
Aired November 25, 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: Making it easier for you to get a loan, the Fed aiming to free up the credit market. We are live this hour. And the Treasury secretary has details on the new program.
Also, forced to cut back on your traditional holiday spread? Well carve out an alternative Thanksgiving. It is Tuesday, November 25th.
Hello, everybody. I'm Betty Nguyen in for Heidi Collins. And you are in the CNN NEWSROOM.
Wall Street's two-day surge, will investors take a big step back today? Well this morning new measures of the ailing economy and new action to keep the financial crisis from getting even worse. A news conference just minutes away with Treasury Secretary Henry Paulson. We'll bring that to you live. But right now let's take a live look at the big boards today. The Dow up 116 points. That's a little bit of good news. We'll continue to follow that for you.
In the meantime though, it has been a morning of big developments. And CNN's money team is in place to break it all down for you. Let's start with CNN's Christine Romans in New York with the big picture for us.
Talk about the bailout plan. We're going to hear more about it in just minutes from the Treasury secretary.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: We are. In just minutes we're going to be hearing from Treasury Secretary Henry Paulson about the bailout and where we are and what he's doing next with consumer lending and trying to free up a frozen market for consumer finance. This is what we know today. Hundreds of billions of dollars more money being deployed into this economy to try to get things moving again.
Here is sort of how it breaks down. $200 billion from the New York Fed, through the New York Fed for consumer debt, for the companies that are lending and in the consumer debt market. Consumer finance. That's credit cards, student loans, autos. $500 billion from the Federal Reserve Bank in Washington, D.C. to buy back mortgage-backed securities, these are mortgage backed securities from Fannie Mae, Freddie Mac and the government, the GSEs. These are the 500 billion of those.
And then another additional $100 billion in mortgage debt as well. So altogether this is something like $800 billion worth of new funding, new stimulus into this economy, trying new liquidity, if you will, into this economy. It's a remarkably big -- one analyst this morning calling it a landmark liquidity bump. So a lot of money going in here. $20 billion of that is from the troubled asset relief plan, the T.A.R.P., $20 billion is of that money left over that the Treasury Secretary has at his disposal. That will be going to that -- the consumer finance part of this picture to try to free up lending for consumer finance issues.
So all of this is about getting the money flowing again for mortgages, for consumer finance and trying to free up sort of the clogs in this economy. We'll hear more from the Treasury Secretary about this in just a few minutes. But a couple of numbers this morning, Betty, telling us why this is necessary.
You know GDP was down 0.5 percent. In a healthy modern, western economy you don't have GDP shrinking. And many people think it did again in the fourth quarter and many people are quite fearful or some sort of prolonged contraction into next year. you know, this is something that's a very big concern, and there's global recession fears. Also we got a housing number that was pretty ugly again, no surprise. But pretty ugly again, another ugly housing numbers.
So the economic numbers are reminding us why we have these officials who are doing so much and spending so much of our money trying to get this economy back on track. Were do we get the money? I mean, I say this over and over again. We don't have the money; we're already spending way more money than we have.
We've been doing it for some time. We borrow the money. So taxpayers footing the bill? Where do the taxpayers get the money. We borrow it. We borrow it from overseas, we borrow it from ourselves. Treasury bonds we sell to ourselves as well but we also borrow them from overseas.
NGUYEN: All right. So the money is coming from us, the taxpayers. And I bet at the same time they're asking us, the government, to the taxpayers, to go ahead and go ahead and spend. We need to get this economy moving again. And then we look at the GDP numbers and it just seems like a downward spiral.
ROMANS: It absolutely does. But this is what it looks like when you have an economy that is shrinking and an economy that is not doing well. This is why you know you like to have the economy going in the right direction. It just makes it easier for everyone. And that's why you know some people talk about what's going on and you know we're so concerned about all the money that our government has been spending on our behalf, we're told. We're concerned about all of that.
And at the same time, you don't like to see an economy that is faltering like this because it hurts people and you don't like to see it feed on itself. It's one of the reasons why the president-elect is talking about spending so much more money in the a stimulus. A lot of them - I see the Treasury Secretary, I see him there.
NGUYEN: Yes. Right there we see the Treasury Secretary Henry Paulson stepping to the microphone. Let's take a listen.
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HENRY PAULSON, TREASURY SECRETARY: ... Today the Treasury and the Federal Reserve are announcing a facility to finance issuance of non-mortgage asset-backed paper in order to support lending to consumers and small businesses which is vital to our economy. The consumer asset-backed securities market is a source of liquidity to financial institutions that provide federally guaranteed small business loans and consumer lending such as auto loans, student loans and credit cards.
Issuance of ABS in these areas reached $240 billion in 2007, but credit market stresses led to a steep decline in the third quarter of 2008, and the market essentially came to a halt in October. As a result, millions of Americans cannot find affordable financing for their basic credit needs. Credit card rates are climbing, making it more expensive for families to finance everyday purchases. This lack of affordable consumer credit undermines consumer spending and as a result weakens our economy.
To address this need and support the return of consumer lending, the Treasury will provided 20 billion of credit protection to the Federal Reserve in connection with its $200 billion term asset-backed securities loan facility. By providing liquidity to issuers of consumer asset-backed paper, the Federal Reserve facility will enable a broad range of institutions to step up their lending, enabling borrowers to have access to lower cost consumer finance and small business loans. The facility may be expanded overtime and eligible asset classes may be expanded later to include other assets such as commercial mortgage-backed securities, non-agency residential mortgage-backed securities or other asset classes.
Throughout this financial market turmoil, our focus has been to stabilize the system and to support the lending that is vital to our economy. Toward that end, we've taken steps to strengthen the capital position of our financial institutions, to stabilize the system and to enable them to increase lending to American consumers and businesses. Similarly we've acted to stabilize the GSEs and to purchase GSE mortgage-backed securities in order to increase the availability of affordable mortgage credit throughout our nation. Today's initiative to support small business and consumer finance market is similarly aimed at increasing the availability of affordable lending.
Today's announcement by the Fed that it will purchase direct debt obligations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks and also mortgage-backed securities guaranteed by Fannie, Freddie and Ginnie Mae underscores our support for the housing market. Nothing is more important to getting through this housing correction than the availability of affordable mortgage finance. It will take time to work through the difficulties in our market and our economy and new challenges will continue to arise.
I and my regulatory colleagues are committed to using all the tools at our disposal to preserve the strength of our financial institutions and stabilize our financial markets to minimize the spill-over into the rest of the economy. Now I'd be happy to take your questions.
Yes.
QUESTION: Does today's action mean that the conservatorship hasn't worked out as you wanted, and also now you only have $20 billion left in T.A.R.P., will you go to Congress and asked for the last T.A.R.P.?
PAULSON: I would say, two things. First of all, the conservatorship has worked out as we had hoped, and this is just a very strong statement of support, and it's a very strong statement of support for the housing market because we have the -- essentially the federal government has guaranteed Fannie and Freddie paper. Mortgage spreads have not come down as much as they might have.
But I would say mortgage financing has remained -- agency financing has remained available and it has not risen nearly as fast as the cost of other credit. But what this does is really supports that market. And in a way in which I think it will help families and get affordable mortgage finance. And it's I think clearly a strong signal of support for those agencies.
QUESTION: And the remaining $20 billion?
PAULSON: Oh yes. What we're doing is, and I think what you saw today with this ABS facility, we're continuing to work, to develop and deploy T.A.R.P. capital in programs that make sense. We have no timeline for drawing down the next tranche, but Congress set a process in place for doing that, and we're focused on the programs. And when the time is right, we'll avail ourselves of that congressional process.
Yes.
QUESTION: How much of what's going on here in the spreads do you think now -- I mean there's the financial market problems, but how much of it do you think is due to the fact that consumers are just tapped out right now and they were over leveraged?
PAULSON: In terms of spreads?
QUESTION: Yes.
PAULSON: In the ABS market, yes, I think that - I think what's going on is something else here. What's going on is the financing markets aren't working as we'd like them to work. And hen you have AAA-rated paper that is a conventional paper that's been outstanding for a long time and the markets used to sing, and when there's no market for that at any reasonable price. That tells us we're seeing some distortions and dislocations as a result of this financial crisis that are not, clearly not right, and this is meant to address that situation.
Yes. QUESTION: Are there any plans or have there been any discussions about allowing insurance companies to access the T.A.R.P.?
PAULSON: Well, what we've -- our approach with the insurance companies has been unless we have institutions where there's a federal regulator, and there are a number of insurance companies that are bank holding companies, and those insurance companies that are bank holding companies have applied using their bank holding company status, and we have a federal regulator there. And so we are dealing with those applications as they come in. But to broadly go to insurance companies, we have not made that decision yet.
QUESTION: How concerned are you that consumer spending has dropped by the -- shrank by the most in 28 years with GDP shrinking by some 0.5 percent from July through September? How concerned are you about that? And will this do anything to help?
PAULSON: That's what we're focused on. And I think what we've consistently been saying is that you know there are two issues that people sometimes confuse, but they're very closely related. There is the strength and the stability of our financial system. And it's very important that that system remain stable and remain strong and lending is very important to consumers.
Secondly, the economy. And what has gone on in financial system is impacting the economy. And as the economy is turning down, it is very important that lending continue to be available and be available to consumers. So what we're doing with this facility is to support -- is to support consumer lending.
QUESTION: How concerned are you about today's numbers?
PAULSON: Well, I'm saying this action shows that we are concerned and we're addressing it.
Yes, Debra (ph).
QUESTION: I'm curious, how much you think the broad guarantee of banks that hurt the ability or for the desire of folks to buy agency- backed debt and whether this measure will sort of counteract some of those unintended consequences?
PAULSON: You're looking at, Debra, two different actions. What we had said in early October after the Congress gave us the T.A.R.P. authority, that this authority and this capacity is very important, and at that time what we said very clearly, that we were going to work very closely with the other federal regulators and we were going to combine creatively our combined powers to effectively stabilize and strengthen the banking system.
So what you saw with the -- in the situation with Citigroup and with the guarantee of the tail risk on that group of assets, you saw the combination of these authorities, using these tools in the most effective way possible.
This Fannie-Freddie agency action is something that is separate, and it's aimed at the housing market and mortgage financing. And for some time we've said the root cause of the economic problem in our nation was a major housing correction. Now it has spilled over into other parts of the economy. But that continues to be a very major focus, and I think the most important thing we can do is have mortgage financing be available and rates continue to decline here.
QUESTION: Maybe I didn't make it clear. Why do you think people aren't buying agency-backed debt?
PAULSON: People are buying agency-backed debt. You know this is the -- there's plenty of agency-backed debt being sold. So Fannie and Freddie have been -- had their market share increase. There's plenty of buying of agency-backed debt. I think what we're doing in Treasury with our program and what the Federal Reserve is doing is doing something that is aimed at getting rates lower, number one.
And number two, it's a great investment for the taxpayer because if the government is ultimately behind that paper, which it is, you know that that's money good. And so when you can finance you know with Treasuries and buy and hold, there's no way that the taxpayer is going to lose money on that. And so it's just a -- it's a very effective transaction.
Yes.
QUESTION: Is there a T.A.R.P.-related program coming to deal with mortgage foreclosures? Or is that something that will be left to the next administration?
PAULSON: Well, we are continuing to work on this. As I've said, we're working all the time to develop and deploy programs when we think we've got programs that are effective and meet the needs and will work. And we're continuing to work every day on coming up with a program to mitigate -- a T.A.R.P. program to mitigate foreclosures. I'm glad you made that differentiation. Because we've done a lot in terms of other programs.
QUESTION: As you know, I mean you are, in the setback, on the clock here, and you know some might say the intention is to run out the clock and leave the problem for the next administration.
PAULSON: I tell you, I am going to run right to the end, OK? If you've got any doubt about that, I tell you, you're missing the point. Because we are working to deal with this situation in the most effective way possible. And we're going to continue to develop programs, deploy them when they're ready to go and work on having a very seamless, very seamless transition here.
Yes.
QUESTION: How quickly do you expect consumers to see a direct impact from today's announcement? How did you come up with $200 billion? Where did that come from?
PAULSON: Well, remember that $200 billion is a starting point. This is going to take a while to get this program up and going. Then it can be expanded and increased overtime. It can be expanded to include new commercial mortgage-backed securities that are highly rated or new highly rated residential mortgage-backed securities. It can be expanded to just be bigger within the asset class as we've laid out. But the first thing is to get it up and going.
And to get to your question in terms of timing, I wish and I know you all wish that there was just sort of one action we could take and all of this would end and the economy would turn around and the financial system would be in the kind of shape we'd like it to be. But that's not the world we live in today. So what we're doing is coming up with programs that deploy the T.A.R.P. assets as effectively as possible to address what we believe are the major issues.
And they are the stability and strength of our financial system and lending. And this asset-backed program addresses both. Because it gives institutions liquidity, institutions that are holding these securities. And it's clearly direct lending that will help consumers.
Yes.
QUESTION: Sir, when you do go back to Congress to ask for the second $350 billion in the T.A.R.P., do you anticipate that they will require you to broaden the focus of the program either to provide direct mortgage relief or to include the automakers?
PAULSON: As I have said all along, what we're doing is we're developing the programs that we think are going to be most effective in dealing with the issues we have before us. We're working on programs for relief for -- to help mortgage holders facing foreclosures, to give them relief. We're working on those.
And as I've said, we have no timeline for going to Congress. Congress has set a process, when it's right to avail ourselves of that process, we'll do that and we'll describe if and when that comes, we'll describe the programs we have and the challenges before us. '
Yes.
QUESTION: Mr. Secretary, a week ago you told Congress that the financial system was largely stabilized and concerns over a systemically important institution failing has largely abated. How do you reconcile that with the need to rescue Citigroup and how do you characterize the stability of the financial system right now?
PAULSON: I'd say two things. First of all, we're dealing with a historic situation here. It's once or twice in a hundred-year situation. So there's -- and if we've seen one thing over the last number of months, there's an unpredictability to certain events.
But the point I've made then and the point I'm going to make now is that by virtue of the T.A.R.P. and the authorities and the capacity we have in the T.A.R.P., we are in a much different situation.
And I just want to go back a bit. In early October after getting the T.A.R.P. authorities, we stood up with our fellow regulators and we said, we now have more capacity, more authority, and we are going to work together -- all of us are going to work together to creatively and effectively generate solutions to make sure that the financial system is stable and to strengthen the financial system.
We also stood together with our G-7 finance ministers and Central Bank governors around the world and again also said we globally are going to work together, and we laid out the strategy to integrate the various authorities we have to stabilize the global financial system. And I continue to believe very strongly we're in a much different situation today after receiving the T.A.R.P. authorities than we were before receiving them.
We're in a different situation domestically and globally. I would look at -- if the Citi action is being evidence of that. That is, we laid out the strategy. We said stability of the financial system is critical. We said the strength of the financial system is critical. We said we have these new authorities and we're going to work together and creatively use them to stabilize and strengthen the financial system. That's exactly what we did in the case of Citi.
Yes.
QUESTION: When the bailout was being discussed, the whole reason was to unfreeze the credit market. Is it fair to say now that that bailout in T.A.R.P. was not enough, and are you surprised today to prescribe more medicine?
PAULSON: Again, let me step back and say I wish, and I know everyone wishes that one piece of legislation, a bill would suddenly be passed and then magically the credit markets would unfreeze or that there could be a single action that was taken. And magically they would unfreeze. But we went to Congress, we said the credit markets are frozen.
We need the capacity to strengthen the financial system and to stabilize the financial system. It's on the verge. And we need to -- we need to stabilize the financial system.
The authorities we got from Congress were what we needed. We have strong capacity right now and now it's a matter of using that in conjunction with other regulators.
What?
QUESTION: It didn't work, it didn't unfreeze -
PAULSON: I would say the only way you can say it didn't work is if you magically thought you could just -- naively thought that there could be a piece of legislation and there would be a single action and that a hundred -- once or twice in a hundred year historic situation would immediately be resolved. That's not the kind of situation we're dealing with.
But what you saw is us move very quickly, first of all with our counterparts around the world. And we now had the wherewithal to be able to effectively work with them on a strategy which stabilized the global financial situation and in the U.S. what we did, we're able to work with our fellow regulators to have the tools we need to stabilize this situation.
Now let's look at the economy. I think this is part of the issue that exists in helping the American people understand the challenge before us. When we went to Congress, we were talking about the financial system. But we repeatedly made the point that we were not doing anything for the banks just to help the banks. This was about the American people and it was about credit and credit availability and the economy was turning down pretty dramatically, partly as a result of what was going on in the credit markets.
And so we then got the authorities and the American people see the economy continuing to turn down and the situation worsened. This was not a surprise to us because we saw it happening. And I know it's a hard sail, to tell people, if you hadn't done this, it would be worse. But this is -- the fact is it would be much worse if we hadn't done it. The fact is we now have the tools and the capacity to stabilize the system and work to get credit flowing again. It will take a while to do that. This is --
QUESTION: Isn't it there are members of Congress think that it would be that one piece of legislation?
PAULSON: I can't speculate what various people thought. I can just say that it is -- it is naive for any of us to think that when you're dealing with a situation of this magnitude, that a bill could be passed or a single action could be taken to make all the issues go away. And I just would say our focus is on stability and strengthening the financial system.
And we now have the tools and powers we need to work with others. And the other point I would make is this let's us much more effectively deploy the T.A.R.P. assets in a way in which we get as much impact from them as possible.
One more.
QUESTION: Did you, Mr. Secretary, did you consult with your counterpart, Mr. Geithner about this action in advance? And going forward, will you consult with them, and if they have any serious objections to any of your initiatives, will you take that into account?
PAULSON: Well, let me say two things. First of all, Tim Geithner is the president of the New York Fed. And so we worked on this together, OK, as we have every one of these situations. We've worked as a team. He was working right with us all weekend. And that's his job as Ben Bernanke and Sheila Bair. So we've all worked together. And this is an important part of what we do.
Now, in looking at Tim's new job as Treasury Secretary, an incoming Treasury Secretary, we will obviously work seamlessly with the next administration on a first-rate transition and on -- and we will discuss with them very, very carefully any programs that we are developing and any programs that we implement because it's very important that the next team understand everything we have in place and be able to -- be able to carry them out effectively. And I would say that Tim is very well positioned for that, because he understands every thing that we have in place today and participated very actively in helping put it in place.
Yes.
QUESTION: Back to the foreclosure mitigation issue. Is Treasury considering specifically directing institutions that receive T.A.R.P. funds to rework mortgages under the FDIC model?
PAULSON: What we have -- in terms of what Treasury is doing, I want to step back and say the regulators came up with a statement that I think was very clear in terms of wanting and requiring financial institutions to be proactive in modifying mortgages, number one.
Number two, Treasury played a lead role in working with the GSEs, Fannie and Freddie, in developing their master servicing guideline which can be a standard for the nation. And that was based on the basic FDIC protocol, the so-called IndyMac protocol.
And so that is something that we have been very active in supporting the GSE services guideline. Now, in terms of the T.A.R.P. funds, we have been and continue to work to say how do we develop programs that are going to be most effective. And the challenge in developing these programs is how to get the balance right between you know helping those homeowners who need it the most and not providing government funds to those homeowners who don't need it or government funds for modifications that would be taking place anyway, given all the various things that are going on.
And again, how to get the balance right between the homeowners and the banks. This is a -- this is a challenging area, to come up with programs that are going to be effective. And we're working hard and we're making progress.
One more question, yes.
QUESTION: Do you know if tax-exempt paper might be included yet? Or is that something that would be -- tax-exempt asset-backed paper, or is that included now or is that something that might be included as it expands later?
PAULSON: Well, there's a number of ways - again, we're looking at programs that and thinking broadly about dealing with state, local, governments, municipalities that do tax-exempt financing. And we are not looking at the T.A.R.P. doing that directly. And so whenever we think about these -- this area, we think about it in terms of some of the insurance programs that would make sure that these issuers had a strong AAA rating that would let them do funding. So, the asset- backed paper program is not focused on tax-exempt financing.
OK. Well, enjoy your Thanksgiving turkey and have a good holiday. Thank you.
NGUYEN: We have been listening to Treasury Secretary Henry Paulson talk about this new plan that is supposed to stimulate the economy by making it easier for consumers to borrow money. Let's get down to it and understand it a little more fully if we could. Joining us now to talk about it, of course, CNN's money team, that being Christine Romans, and personal finance editor, Gerri Willis. Got you all on the case today.
Let's start with you, Christine. We just heard from the Treasury secretary. He covered a lot of ground in those questions there. But when it comes to this program which, is going to make it easier for consumers to borrow money, how exactly is that going to work?
ROMANS: Well, a couple of different programs there that he's talking about. There's one -- there's a lot of jargon there. I'm impressed when people sitting (ph) through some of this jargon that is about the asset-backed securities market, the mortgage backed securities --
NGUYEN: Sometimes your eyes just glaze over.
ROMANS: True. But what he's telling you is he is telling you that the financing markets in this country aren't working right. And he is telling you that the consumer finance market, which is a huge market, it essentially came to standstill in October and they're trying to get that going. Because without it, you can't get a student loan, you can't get a car loan, you can't get a credit card loan. You can't get all kinds of different consumer financial loans. And so they're trying to get that jump-started again.
In addition, the Fed, he's sort of speaking for both the Treasury and the Fed up there, the Fed is going to buy back up to $500 billion of mortgage-backed securities and then another $100 billion in debt directly from Fannie and Freddie and some of the other GSEs.
So this is, what he says, a vote of confidence in Fannie and Freddie, a vote of confidence in the mortgage lending system, a vote of confidence in the consumer lending system.
And he is saying, he answered a lot of questions about that T.A.R.P., you know one reporter saying, look, it didn't work, did it? Are you saying that the original T.A.R.P. didn't work? He said, look, you can't sign a piece of legislation and expect to wipe away all of our problems. He said, we're in a very unprecedented, unpredictable was the word he used, situation. He's not ruling out that they're going to do more. He's not ruling out that as conditions change, they might have to do more.
One thing that we keep saying is when will it be over? When is the end? When is the end of this series of bailouts? And people like Treasury Secretary Paulson, and others who really intimately know how the financing system works in this country, keep saying this is just the beginning. They are finding new and creative ways to try to keep this thing going --
NGUYEN: Yes, when he was talking about that $2 billion plan, he said, look, that's a starting point.
ROMANS: That's right. NGUYEN: We can expand it, we can increase it. There are things to be done in the future with it. So like you said, yes, this could be just the beginning.
Christine, thank you for that.
ROMANS: You're welcome.
NGUYEN: I want to get over to CNN's Gerri Willis for just a second to understand what this means to the consumers.
And here is my big question with all of this. You can free up as much credit as you want, Gerri, but unless I, the consumer, have the money to go and take out these loans and go and get this credit, what good is it?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well that's partially true, Betty. But the reality is you can't even borrow on a credit card that you will pay overtime because limits have been declining. And as Treasury secretary said, interest rates on these credit cards have been going up. Even if you had the money to pay for it, you couldn't get these loans.
So I think that's what the Treasury secretary is looking at today, is making credit more freely available to consumers who are frustrated because they can't get mortgage loans, frustrated because they can't get a mortgage loan because the requirements, the credit scoring requirements, have risen, and risen dramatically. The amount of money you have to put down for that loan has risen, and risen dramatically.
There was a time when money was too loose in this country and you could get a loan for any reason or no reason with no money down. But that time is over. And perhaps the pendulum has swung too far in the other direction.
You know, Betty, we got some interesting numbers that give you an idea of the spot consumers are in right now and how dramatic it is for them. The S&P/Case-Shiller Price Index came out for housing, to give you an idea of where prices are going -- down 16.6 percent. And the quarter ended at the end of September. Those prices are down. Consumer confidence has been down, though it ticked higher by a little bit in this month.
But you see that consumers continue to struggle with more debt and they have no chance of even refinancing some of this stuff. And, as you know, as we talk about all the time, consumers are responsible for two-thirds of the economic performance in this country. We saw GDP economic growth decline and decline dramatically. And it's partly because consumers are staying home.
NGUYEN: Yes, absolutely. And they're staying home because many of them are losing their jobs, they're worried that they may not have a job and not have that extra income. So there are a lot of factors at play here.
All right. Gerri Willis, breaking it down for us.
Thank you so much for that.
We also have other news to tell you about, dealing with President-elect Obama and his transition team. And some news coming from that arena. We'll have the latest from Washington right after this.
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NGUYEN: Your money, it is issue #1 for the Obama presidency. And its mission, getting control of the nation's financial crisis. Well today, a new decision maker emerges to face the nation's largest economic challenges in decades. Our White House correspondent, Suzanne Malveaux, joins us now with more on the financial team that is taking shape.
And Suzanne, when will we hear the specifics on Obama's economic plan?
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Betty, I want to start off first by just reacting to Secretary Paulson. One of the things that he said that I thought was good news that stood out, is that he has been working with Tim Geithner, as you know the Fed chair for New York, obviously on this new plan to deal with the housing giants. He says he's very well positioned for the transition. And that is good news for the Obama team, that they're in constant communication, Geithner being the next Treasury secretary.
But Obama's team -- his economic team -- says essentially they're going to start today in crafting a recovery plan. We don't expect to get a lot of details on it until some weeks away. But we do know what is central in Obama's plan. First and foremost, this huge economic stimulus package. It has to be passed by Congress obviously. But he believes it's going to jumpstart the economy, create 2.5 million new jobs in two years, that's what Obama believes.
Second, a plan to figure out how to best allocate the rest of that $700 billion bailout we heard about to shore up the markets.
And third, a way to start cutting the budget where there's wasteful spending.
So those are the kinds of things that Obama is already talking about for the immediate future.
NGUYEN: And speaking of the immediate future in fact, in just -- what -- about an hour and a half, we're going to hear another appointment at a news conference.
What do you know about this, Suzanne?
MALVEAUX: Peter Orszag is going to be named the director of office of management and budget. Now he is head of the Congressional Budget Office now. He is another one who comes out of the Clinton White House. We also expect, at a later date, New Mexico governor Bill Richardson, another -- a former rival turned friend, expected to be named the commerce secretary.
And Betty, what's really important, when you look at these appointments, there are some key themes that are emerging. One is the need for consistency. That's why you've got this guy, Tim Geithner, as Treasury secretary, New York Fed chair intimately involved in the bailout plan, really a link between what's happening in the Bush administration and what will take place in an Obama administration.
And then Betty, the other thing seems to be accountability. Yesterday, we heard Barack Obama slamming the Big Three automakers for not having a plan themselves to get out of their own financial mess when they approached Congress last week for money.
So you're talking about accountability, as well as consistency.
NGUYEN: And Obama has been very visible as of late. We've seen him yesterday in his news conference, we're going to see him yet again today. Is this a change in strategy?
MALVEAUX: We're seeing a lot more of him obviously. And we expect that that will continue in the coming days.
He is rolling out his full economic team this week. After Thanksgiving, we expect to hear about Hillary Clinton's role, very likely as secretary of state. And then he's going to work on his national security team.
So obviously, Betty, trying not to step on President Bush, but making it very clear that he's taking charge and becoming much more visible.
NGUYEN: All right. CNN's Suzanne Malveaux, in the know as always.
Thank you, Suzanne.
Well calling all empty-nesters, young couples, single people. Not a part of some big holiday feast? Not to worry; try out an alternative Thanksgiving.
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NGUYEN: All right. So some people changing it up this year. You know, the economy taking a big bite out of many people's plans for a traditional Thanksgiving. But that doesn't mean that it can't still be special. Sue Perry from "ShopSmart" magazine joins me now from Yonkers, New York, with some tips on Thanksgiving alternatives.
And Sue, these are some interesting ideas. No. 1, you say, hey, you don't need a whole turkey. Really?
SUE PERRY, "SHOPSMART": No you don't need a whole turkey. If you just like the white meat, just make a breast and put some cranberry glaze on it. You don't have the fuss and mess and bother of the whole bird.
NGUYEN: And is it cheaper though?
PERRY: It is much cheaper just to get the breast.
And if you're dark meat fans, just cook up the legs. Anything you do to a chicken you can pretty much do to turkey legs.
NGUYEN: And speaking of money, a lot of that goes to the fixings, the drinks, the appetizers, the desserts, all these extras. That's a place where you can save some cash.
PERRY: Yes, they can -- the appetizers, the hors d'oeuvres and the booze can all be budget-busters because at this time of year you want to put something fancy on the table, the pate, fancy cheeses. So this is an area that you can watch.
Just pick one nice cheese. You don't have to get the whole fancy cheese platter at the store already prepped for you or the piles of crudites platters. In fact, you can look at those and pretty much make them up yourself and you'll save a lot of money.
NGUYEN: For single adults who really would like to go home and spend time with their families but, one, they can't afford the ticket home, or the gas to get there, or maybe their job just won't let them get home -- what should they do?
PERRY: They could do something -- they could start their own tradition. One great thing to do, I don't know about your house, but in my household the games are on all the time. And you can invite friends in to watch the game. You could actually have turkey club sandwiches, a little cranberry sauce on the side and some sweet potato chips and you've got all the -- the traditional flavors are there, but you've made game food.
NGUYEN: So are you suggesting a potluck for Thanksgiving?
PERRY: You could do a potluck for Thanksgiving. That is just great.
When I first came to New York, my friends and I would get together and we'd all do potluck. I'd make one thing and then all my friends would bring a dish. And it was just so much fun. I think people enjoy that. They like to share and they like to bring; this is a great holiday to do that.
NGUYEN: Absolutely. Because so many times we focus on the food, but it's really all about just being thankful and being with those that you care about. I guess in tough times like this you really need to shift your focus.
PERRY: You do need to shift your focus, and be grateful for everything you have and be thankful. And if you have good friends and some -- what I always like to say, the orphans who can't get home for some reason, bring them over. And pool your resources and get together and still make it festive and fun. You can have people just over for the pies and coffee.
NGUYEN: And for those who don't want to do the potluck, who don't want to make their own dinner because maybe there's just a couple of them, should you really go out to eat? Or is that just against all Thanksgiving traditions to go and buy your Thanksgiving dinner?
PERRY: I think whatever works for you works for you. And I say, by all means, go out to eat. You don't have to go to a fancy restaurant. I have friends who are empty-nesters, and they have created a new tradition where they go to a family restaurant that's pretty cheap in their neighborhood. And they go at an early time when young families are eating, so they get all the fun and festivity of being with young families and multi-generational, lots of kids.
And they can order whatever they want. They don't have the muss and bother of clean up or prepping. And they really love it. So you can do that, you can go to a family friendly restaurant. They're all doing Thanksgiving meals on Thursday. And so you don't really have to spend a lot of money.
NGUYEN: Yes, and you know what? It's the best time right now, especially in the financial situation that many of us find ourselves in, start a new tradition for Thanksgiving.
All right. Thank you so much, Sue Perry. We appreciate your time today.
PERRY: Thank you.
NGUYEN: Listen to this folks. A judge in Miami ruling just a short time ago against a state ban on adoptions on gay people. The judge said there was no rational basis for stopping gays from adopting children. The ruling does clear the way for Martin Gill (ph) who challenged the law to adopt two foster children that he has been raising for four years. Attorneys for the state plan to appeal.
Off-label drugs. Is your doctor filling out a prescription for a drug without government approval?
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NGUYEN: OK. Medication for what ails you. Maybe, maybe not. A new study shows more doctors are prescribing drugs without evidence that they actually work. Our medical correspondent, Elizabeth Cohen, has more on these off-label drugs.
When you hear something like that, the big question is, oh my goodness, how often are they being prescribed?
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: Often.
NGUYEN: Really?
COHEN: It's actually quite common. It's a very common practice for doctors to prescribe off-label. Now let me explain what that means. People don't always understand this. When the FDA approves a drug, they approve it for a specific diagnosis. But then, once it's on the market, sometimes doctors find that drug will work for other problems, too, and they are free to prescribe it. A doctor can prescribe chemotherapy for toe fungus if he wants to. Of course they don't do that because that would be stupid.
But, here are two drugs that are often prescribed off-label according to a new study by Stanford University -- Celebrex is on label, used on label for pain, stiffness, inflammation, that's what it is approved for. But off-label, sometimes it is used to treat certain kinds of tumors.
Zoloft is approved to treat depression, OCD, some other illnesses. It is not approved to treat bipolar disorder, but often it is used.
Now the concern among these Stanford University researchers, Betty, is that doctors maybe are getting a little too willy-nilly, that they are going too broad and they're prescribing things when the drug is not approved to work for that specific problem.
NGUYEN: OK. But is the drug always bad though? Is it always a bad idea for you to get that drug?
COHEN: Right. That's a great question. Is off-label prescribing always bad?
And the answer is no, it's not. Drugs are prescribed off-label sometimes for very good reasons, they really do work and sometimes they even save lives. Again, what the researchers here are concerned about is that maybe doctors are prescribing things off-label where there's absolutely no proof, no proof that they work. That can be problematic.
NGUYEN: Oh, absolutely.
OK, so if someone is getting an off-label drug and they're seeing this report, and they're worried, oh, my goodness, what do I do? What should they do?
COHEN: Well what they should do first is they should say to the doctor, if they're concerned, Doctor, is this an off-label prescription? You're doctor will understand what this means. So that is the first question. Find out.
And then, secondly, you can say, is there proof that it works? Because there may be proof that it works even if it is off-label and you want to take advantage of that.
And then thirdly you can ask, what are the side effects for people like me with my particular problem? So in short, what you need to do is you need to advocate for yourself, you need to be an empowered patient. To learn more about how to stick up for yourself in the doctor's office and ask the right questions, you can go to cnn.com/empoweredpatient. We have all sorts of advice about how to ask your doctor good questions.
NGUYEN: Knowledge is power.
COHEN: That's right.
NGUYEN: Thank you. Appreciate it, Elizabeth.
Inauguration day 2009, it is going to be a history-making day on many fronts, not the least of which will be the unprecedented crowd. So how do you keep everyone safe?
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NGUYEN: We are 56 days away now. Anywhere from a million to five million people could be in the nation's capital. It's a daunting crowd. And they're estimating that there's not (ph) a lot in place to ensure that safety is top priority for this inauguration.
Now CNN's Jeanne Meserve looks at the plans that are in place.
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JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT: Inauguration, a moment of history but also a time of risk.
FRED BURTON, FMR. STATE DEPT. SPECIAL AGENT: Any kind of contingency that you can think of, the Secret Service has game boarded and has got a plan in place to deal with it.
MESERVE: One scenario, a gunman. Countermeasures, snipers who can shoot with tremendous accuracy at a distance of 1,000 yards, surveillance with thousands of cameras, some mounted in helicopters, and police, thousands of them, some in plain clothes. In addition, every visitor to an inaugural event can expect to be screened.
Another scenario, a truck bomb. Countermeasures include extensive street closures around the capital and parade route, searches of vehicles, explosive-sniffing dogs.
Yet another possibility, a weapon of mass destruction. Countermeasures, monitors to sniff the air for chemical or biological hazards.
And what about protection against a nuclear or radiological threat?
MALCOLM WILEY, U.S. SECRET SERVICE: I won't talk about that.
MESERVE (on camera): Some parts of this still off limits?
WILEY: Correct. MESERVE (voice-over): Another avenue for attack, the Internet. To counter that possibility, the Secret Service is partnering with other law enforcement, the military, private industry, universities, to protect critical infrastructure.
Of particular concern, an attack disrupting electricity.
WILEY: It could hamper our ability to communicate with one other potentially.
MESERVE (on camera): And more?
WILEY: And more. Absolutely and more. It could hamper the ability of elevators to move within the Capitol. And if we had a protectee there, that could be an issue.
MESERVE (voice-over): And security plans aren't finished yet. They will continue to evolve as the threat picture does.
(on camera): A word of warning if you're planning to come to Washington early, if you are too early, it will be a wasted effort. The Secret Service will be kicking everybody off the mall, the Capitol grounds and the parade route to do a security sweep the morning of the inauguration.
Jeanne Meserve, CNN, Washington.
(END VIDEOTAPE)
NGUYEN: And we will have live coverage of President-elect Obama's news conference. It is now scheduled for noon Eastern, 9:00 Pacific.
I'm Betty Nguyen. Join us again tomorrow morning starting at 9:00 a.m. Eastern.
For now, though, CNN NEWSROOM continues with Tony Harris.
