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When Will the Housing Market be Repaired?; Retail Sales Still Suffering; Automakers Ask for Government Help
Aired December 04, 2008 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: It is Thursday, December 4. And here are the top stories we're following for you this hour in the CNN NEWSROOM.
(BEGIN VIDEO CLIP)
SEN. CHRISTOPHER DODD (D), BANKING CHMN.: If they can back Citigroup to the tune of more than $300 billion, then there ought to be a way to come up with a far smaller dollar figure to protect this economy from the unintended consequences that would be unleashed by a collapse of the automobile industry.
(END VIDEO CLIP)
HARRIS: Well, they're not selling cars. Can the Big Three sell Congress on a bailout? G.M., Ford and Chrysler make their case again for billions.
You're browsing but not buying. Stores say sales for November were just awful. Oh, yes, there's one big exception.
In the market you already know you can get a great price on a house. How about a fixed rate mortgage in the fours? Good morning everyone. I'm Tony Harris and you are in the CNN NEWSROOM.
Crunch time for the big three, GM, Ford and Chrysler, their CEOs are on Capitol Hill to plead with the senate banking committee to help them out of a huge economic pothole. They want $34 billion in loans, up from an original request of 25 billion.
Congress, skeptical this morning. Senators are hearing specifics on how the big three plan to use the money. Our money team is covering this story from bumper-to-bumper. Brianna Keilar on Capitol Hill, Brooke Baldwin in Warren, Michigan with reaction from auto workers. Richard Roth is at a Ford dealership in Hackensack, New Jersey and Christine Romans is in New York.
They learned their lesson the last time. This time the CEOs of the big three parked their private jets and arrived in D.C. in fuel efficient hybrids. Brianna Keilar is on Capitol Hill for us. Brianna, good to see you. You know, so far the hearing is being dominated by the committee chair and ranking member. I am wondering, will we hear from the CEOs any time soon?
BRIANNA KEILAR, CNN CORRESPONDENT: Yeah, we will. What we're hearing right now is actually the first panel, that is, the acting comptroller general of the government accountability office, really representing the government's interest, talking about oversight if the government does get into this bailout loan program, one of the ideas he floated was maybe phasing in some of this money over time, not giving a lump sum right up front. We're going to be hearing from the automakers, all three of them. They're going to be pushing these plans that they put out on Tuesday, talking about reducing annual salaries of the CEOs to just a dollar per year, pairing down some of their car lines that aren't doing so well, increasing fuel efficiency.
One of the things they're really stressing is how cataclysmic it would be for the entire economy if the automakers were to fail. This is what they say. That's also what we've heard from some economists and some experts. We're also hearing that from the top democrat on the committee, Chris Dodd.
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SEN. CHRIS DODD, (D) BANKING COMMITTEE: In my view we need to act, not for the purpose of protecting a handful of companies. If that were the extent of the issue, I would let them fail. I acknowledge that those who advocate such a course on the assumption that pressure from the outside will produce the desired results. My concern with such an approach is that it plays Russian roulette with the entire economy of the United States.
(END OF VIDEO CLIP)
KEILAR: In addition to the automakers, we'll be hearing from the United Auto Workers Union about the concessions they're making to help automakers cut some of their costs. We'll also be hearing from retailers and suppliers, everyone involved in the whole equation of the auto industry. The bottom line here, Tony, there's disagreement on whether or not there should be any sort of bailout loans period, and then there's disagreement among those who think there should be on just where that money should come from.
HARRIS: Brianna Keilar for us on Capitol Hill. Brianna, thank you.
Assembly line jobs on the line. Auto workers are hoping for help from Washington to save the industry and their jobs. The union says it is willing to make concessions. Brooke Baldwin live from Warren, Michigan with reaction from auto workers. Brooke, what kinds of concessions are we talking about here?
BROOKE BALDWIN, CNN CORRESPONDENT: We're talking about two different kinds of concessions, Tony. UAW President Ron Gettelfinger told hundreds of us yesterday in a news conference that he used to shy away from the word concessions, now he's accepting it.
They talked about suspending the jobs bank and deferring this multi billion dollar payment to the retiree health care trust. So what do auto workers think? People have just slowly started to trickle in here to Bamboozle Bar and Restaurant as you said in Warren, Michigan. You can bet in about half an hour, this place will be packed with those auto workers.
They will be here watching the hearings that are unfolding now on all the TV screens around me on what's happening on Capitol Hill as it directly affects them and all of this happening one day after an unprecedented meeting among UAW leaders in downtown Detroit.
(BEGIN VIDEOTAPE)
CINDY ADAMS, PRESIDENT, UAW LOCAL 1413: Anything that happens to General Motors, Chrysler, Ford, is going to happen to us, too.
BALDWIN (voice-over): A show of solidarity. That is why 525 UAW delegates including Cindy Adams traveled to Detroit. Their mission, discuss concessions that the union could make to help car companies get government loans.
ADAMS: One in 10 jobs belongs to somebody in the auto industry. So we've got to do whatever we have to do to make General Motors and Ford and Chrysler survive.
BALDWIN: According to UAW President Ron Gettelfinger, the union discussed two major concessions in a closed-door meeting. One, suspend the jobs bank, a jobs guarantee program that pays laid off workers up to 95 percent of their regular pay. Two, allow the big three to delay making billions in payments to retiree health care trust in 2010.
UNIDENTIFIED MALE: No more concessions.
BALDWIN: But this GM retiree says America needs to take wider action. Frank Hammer says to level the playing field with other nations, the U.S. should pay for universal health care.
FRANK HAMMER, RETIRED GENERAL MOTORS EMPLOYEE: It's long overdue, President-elect Obama has talked about nationalizing health care so that not only auto workers have health care, but all the other workers that are working without health care have health care as well.
BALDWIN: While the U.S. auto industry is fighting for survival, many Americans worry about a domino effect this federal intervention could create among other ailing industries.
UNIDENTIFIED FEMALE: Where do we draw the line from getting federal funding from the government?
RON GETTELFINGER, UAW PRESIDENT: We help the economy, help keep it going. This industry is so important to our country and to our economy that I think this is an exception to the rule.
BALDWIN: A necessary exception according to this Alabama auto worker for the economy and the big three.
ADAMS: When they don't have work, we don't have work. So we all have to be here together.
(END OF VIDEOTAPE) BALDWIN: A couple questions I plan on asking some of these auto workers who have now just started to trickle in this bar. Number one, what is their reaction to those concessions that we heard about yesterday in Detroit.
And number two, what would these workers be willing to give up in order for the big three to survive? We've seen that CNN Opinion Research poll that 6 out of 10 Americans oppose the idea of some sort of federal intervention in helping the big three. I want to know what these guys have to think, Tony.
HARRIS: You know what, are they working, maybe even ask for me, are they working in a flat-out dying industry right now? And are they giving any thought to retraining and possibly looking for work in other industries? Just a thought as we go through this day. Brooke, good to see you. Thank you.
The devil is in the details here. Christine Romans has been looking at the plans for each of the big three. Christine, good to see you and talk to you. I'm curious about two things here. First of all, let's deal with the first thing first here. I'm listening in to the hearing, and what I hear is the committee chair talking a lot about using T.A.R.P. funds for this bailout, bridge loan, whatever we're calling it today. Fill us in on that.
CHRISTINE ROMANS: This is the big $700 billion question, right?
HARRIS: Yes.
ROMANS: Some of the democrats want to use money they have already allocated for helping the financial system, they want to use that for the auto industry. The Bush administration has resisted that. The comptroller, the GAO comptroller basically said that he thinks they could legally do that, they could use that money for the auto industry if they wanted.
He also basically said that the Federal Reserve could loan money to the auto industry, something that Chris Dodd, the democrat there on the committee who runs the committee said that he asked the fed chief, he said is there anything that prevents the Federal Reserve from simply making these loans to the auto industry itself, much as it's making loans to all kinds of different companies -- Bear Stearns, Fannie and Freddie.
We can go down the line in the hundreds of billions of dollars the fed is already loaning to companies. So that's one question, why is congress all worked up about this in the first place? Is there a way to fund this some other way? The second question is, should it be funded at all? The second question is, is this an industry that when you take away the global economic meltdown it's still in trouble? Are these plans really transformational plans? Do they really bring these companies back to viability?
That's what the CEOs of these companies, Tony, have to sell to this congress today and frankly to the American people. They've really go to do a fantastic sales job, that they have transformational plans that will remake this industry and make it competitive and viable.
HARRIS: That's what I need to hear. I'm sitting here on this perch, if I'm sitting at my home in front of the television set, if I'm at the office and I'm just sort of dialing in on this, I need to know what's in these plans on quality control, labor costs that make these automakers competitive again. What are you going to do to turn around market share?
ROMANS: Let's take a look, I want to talk about GM's viability plan quickly. GM is the one that is seen in the most trouble. Ford has said it needs a bridge loan -- a credit line actually, hopes it doesn't have to take it.
Take a look here at what GM has sort of put forth there. It may have to eliminate or sell the Saturn, the Saab, the Hummer lines, shrink Pontiac and focus on its core brands of Chevy, Cadillac, Buick, GMC, Pontiac, it will be -- they'll have some of those brands but it will be kind of a showcase brand, not as many of them. Close nine factories, reopen contract talks with the UAW. Cut Rick Wagoner's salary to $1.00. I'm going to interject here and say that I think that that really appeals to sort of this populist outrage about these companies.
HARRIS: Yes, but I need the companies more efficient. Everyone needs the company -- I understand that symbolically. But the nuts and bolts and the rubber meeting the road, how you streamline these companies, that's what we really need to understand from these plans.
ROMANS: That's absolutely right. Also cutting the corporate jets and all that. All of that is important symbolism after they've really gotten burned when they went to congress last time. But what it is, they have got to convince congress that they have a model and a plan that they can return to profitability and that, as Senator Chris Dodd said, that it is not simply throwing good money after bad for taxpayers to offer them any kind of loans. So a couple of wrinkles here. One of the wrinkles is could they just get the money out of the T.A.R.P. and it's already been approved? Could the Federal Reserve simply extend a lifeline to these companies like it has extended a lifeline to so many others? Right down to it, can these CEOs do the most -- this will be the most important presentation of their professional lives this afternoon.
HARRIS: This is a critical moment, is that overstating it, a critical moment for the big three right now, these CEOs have to weather the interrogation and then talk about a plan in a way that is not only about the current crisis, but is transformational for these companies as well?
ROMANS: It's do or die for these CEOs.
HARRIS: Good stuff Christine, thank you.
The economy, issue number one and it is impacting all aspects of your life, even how and when you get entertainment. iReporters share their views.
(BEGIN VIDEO CLIP)
ANGELA PARKER, KENTUCKY: Do I think that we're headed for a depression? Yeah, I think that we probably are. We're already in a recession. Whether or not that turns into a full-blown depression is going to make itself known over the next few months.
It's affecting my bottom line. All of the people that I know, all of my peer group across the U.S., the small business owners, the entrepreneurs, those people who are the backbone of this country are feeling the hit.
(END OF VIDEO CLIP)
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(WEATHER REPORT)
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(BEGIN VIDEO CLIP)
SEN. RICHARD SHELBY, (R) ALABAMA: In our last hearing, I asked whether this was the end or was it just the beginning. We now have an answer, I believe. In just two short weeks, the price tag has jumped from $24 billion to $34 billion -- $25 billion to $34 billion in two weeks. I'm interested to hear what changed and why we should believe that things will get better as our economy continues to contract.
(END OF VIDEO CLIP)
HARRIS: Skeptical lawmakers looking for answers from auto executives. The auto execs back on Capitol Hill right now asking for billions in loans to keep their companies from going under. The United Auto Workers Union has vowed to make concessions to help the industry. Concessions, let's talk about that. Joining us from Lansing, Michigan, Mike Green president of UAW local 652,
Mike good to see you, and Harold Foster, president of the Lansing Automakers Federal Credit Union. To whichever guy who wants to take this on first.
I'm curious to what extent did you have a hand in the shaping of these new plans that are being presented now before the senate banking committee? I'm particularly interested in what's in the plans on labor costs.
MIKE GREEN, PRESIDENT, UAW LOCAL 652: Well, some of the things that have already been done is in the '07 agreement is the wage was cut in half, and you don't have 30 and out, you don't have health care after you retire unless you pay into it. You don't have a retirement unless you pay into it.
There was a lot of things done to collective bargaining at contract time to address the things that helped the company be more competitive and also taking care of the members at the same time. Unfortunately the economy has caught up with us and it never had a chance to really play out to where you can see it working.
HARRIS: I'm sorry. Let me get a little clarity here. Am I speaking with Mike now or with Harold?
GREEN: This is Mike Green.
HARRIS: OK. Mike, appreciate it. Harold, to you, what's in the plan in terms of concessions or possible concessions say on health care? Is that an area that's going to have to be reopened?
HAROLD FOSTER, LANSING AUTOMAKERS FED. CREDIT UNION: Well, I think you see like Mike just said, earlier there, in the last contract for legacy people, they've gone to a VEBA account and they're also paying in, plus they went to higher co-pays and so on. So those are some of the things that they're trying to do to curtail the cost of health care. They've done that since the earlier '60s to try and keep costs down on health care.
HARRIS: I'm just sort of curious, and Mike, let me ask you, have you been consulted in this latest round in formulating this plan that's going to congress and before congress right now? Have you been consulted at all maybe on bringing more efficiency to your operations?
GREEN: Well, that's kind of what come out of the meetings and stuff yesterday. They put a package together that they took down to congress that they're going over today.
HARRIS: Is that the package that's being worked over right now?
GREEN: That's one of the packages down there. What it brought out yesterday was, each department is going to go back through (INAUDIBLE) and our vice president, GM department and how we're going to handle things in our individual plants like we asked GM and you know Chrysler to do the same thing, Ford do the same thing, what we can do to help the company out.
HARRIS: Harold, make the case here. You're talking to people all across the country right now. Make the case for this bridge loan for the industry that I know you've worked in for a long time now.
FOSTER: Well, that's exactly what it is. It isn't a bailout --
HARRIS: I'm not calling it a bailout. Make that case for us.
FOSTER: That bridge loan is just like Chrysler did years back. They paid that back and with interest. The auto companies need this right now. We need the opportunity. We're talking of three million people being unemployed. That's what's related to this auto industry if we just let them go. I think we deserve the opportunity to put the business back in place, and they say for the future, you're building the big SUVs and stuff that nobody wants. Let me show you right here -- I don't know if you're able to see this. There's over 30 vehicles that we build in GM that get over 30 miles to the gallon. And they're good-looking products. You've just got to give them a test.
HARRIS: Hey Mike, too little, too late. You're losing market share. The American people are being asked to prop up a failed business model right now.
GREEN: Well, I guess I don't know if it's too little too late. Those products are already being built. We give the customer what they want. Up until the point that gas was $4.50 a gallon they preferred SUVs and the big cars. At the point they no longer wanted, all these cars are already available, they're already top quality. Cadillac CTS, Motor Trend car of the year we build right here in Lansing.
I guess what we're asking you know when it comes to a loan is to reinvest in America. This isn't all just the auto industry. This is manufacturing and all the lives that it touches across the nation, everything that's attached to it. I guess we're saying, if you listen it's starting to get a little bit repetitive. Everybody is saying the same thing. But you know, the truth never changes.
HARRIS: I'm wondering, Mike, and then Harold on this, if you're an auto worker right now, I'm just curious, the size of the industry seems to be shrinking, maybe 16 million cars last year, maybe 11 million cars this year. Are you working for an industry that is fundamentally downsizing right now and you just won't need as many auto workers in the next two years as you even need today? And is this a situation where some auto workers need to decide that this is an industry that is no longer viable for me? I should start developing other skills and maybe look for other work?
GREEN: I mean that's already been going on, as they've downsized and they tore plants down. I mean right here in Lansing it was no mistake they built three brand new plants in Lansing because of the workforce that's here. We've been lucky in that because as things went away, we've had new plants and you have years we have a lot of people that's hired in, so you have years where a lot of people retire. It's kind of taken care of itself along with the -- as the car demands.
Our job is to get some of the market share back that maybe we've lost. But we have to do a better job with the perception of the quality. How often do you hear, you have 30 products to get over 30 miles to the gallon. We're top in quality. You have some people who live in the past on how it used to be. We can compete with anybody. You bring it and we'll build it and we'll build it with quality.
HARRIS: Harold, you want to take a final swipe at that?
FOSTER: Well, there's competition all over the world. We've got countries over there, car companies all over that are supported by their own government and so on. We're having to compete with that and those lower wages.
It's a race to the bottom in our industry about how far down will our people go as far as -- is it wrong to be in a middle class? Is it wrong to be able to send your kids to college? That's what we're facing with our membership. Are you going to be at $14.00 an hour? There's not very many people at $14.00 an hour that can buy a brand new car, buy a brand new home. If we take a look at the rest of the industry that's going on in this country, we could make the same case with Wall Street, health care, the professional side of everything, city government, state government, everything. I mean we woke up one morning and the whole world is in this mess. The auto industry did not bring down the economy. We're caught up in it. We all woke up and we're all in the same boat. We're just trying to figure out a way to survive this.
HARRIS: Mike Green, Harold Foster, thank you both for your time.
Still to come in the NEWSROOM, lower mortgage rates ahead for homeowners and buyers. Personal finance editor Gerri Willis shows us what's in the works.
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HARRIS: You know, a lot of people are working on plans to help homeowners struggling with bad mortgages, huge mortgages in many cases. Sheila Bair is chairman of the Federal Deposit Insurance Company and she has a program to help people facing foreclosure.
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HARRIS: Chairman Bair, how many money would it take to expand your program across the country and what are the chances of you getting that money -- let me not make it personal here -- I was going to say from the treasury secretary, from the T.A.R.P., let me take that approach.
SHEILA BAIR, FDIC CHAIRMAN: We've estimated for a program that would last through 2009 with some loss sharing for loan modifications, providing incentives to modify loans, providing some loss sharing if the loan was modified and re-defaults, this would cost about $24 billion to cover modifications to the end of 2009. We think we can prevent about 1.5 million foreclosures with this program. These are the cost estimates that the FDIC economists have gone up with.
We have completed fairly conservative estimates. So yes, we would love to have some funding from the T.A.R.P. funding, but we continue our discussions with a variety of policymakers about this. We have a lot of interest in it. But I think it is a large amount of money in one sense and a fairly modest compared to some of the other amounts we are spending.
The thing about foreclosure prevention is you're really tackling the problem at its roots, providing assistance to institutions, this is something that has to be done. The institutions are suffering losses by and large because of distress in the mortgage markets. Trying to tackle the problem at the borrower level we think is really fiscally responsible and smart to do.
(END OF VIDEO CLIP)
HARRIS: OK, Realty Trac follows foreclosures nationwide. It reports that nearly 280,000 homeowners got some kind of foreclosure notice in October. That is a 25 percent increase over October of last year. Would you buy a house right now if you could get a mortgage at, say, 4.5 percent? Did I mention that's a 30-year fixed rate?
The Treasury Department is toying with a plan to force rates down. Personal finance editor Gerri Willis, there she is. Gerri, this sounds like a pretty good idea. If you would, take a couple of moments here and outline the proposal for us.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Let's talk about this. It's just becoming a little clearer today. This plan would encourage banks to lend at rates as low as 4.5 percent as you said.
Now that's almost a full point lower than standard 30-year fixed rates right now. Here is how it would work, mortgage finance companies, Fannie Mae and Freddie Mac, those are government entities, they would expand their buying of mortgage securities.
This would help to drive down borrowing costs. The lower interest rates would be available only to borrowers who were buying a home, not people in the refi market. Details on the plan are still sketchy but an announcement could come as early as next week.
HARRIS: But anyhoo. What is the bottom line here for homeowners, Gerri?
WILLIS: Well, let's take a look at this in detail.
HARRIS: OK.
WILLIS: Put it in perspective. Say you're buying the average house, the median price is $191,600. Now if you finance that at today's mortgage rate of 5.47 percent, your monthly payment would be a little over $1,000, $1, 084 each and every month,
OK. Now let's figure that out at 4.5 percent. You'd be paying only $970 a month. That's a savings of $114 a month. And that's not nothing. That's a big deal to many people across the country. It would make a very big difference.
HARRIS: Will this boost the housing market? Or, is there potential here to create another bubble?
WILLIS: Well, it's interesting, you made a good point, I wish it was -- this was offered to people on re-fis. The government has been under incredible pressure to do something for homeowners. There's hope that with this plan, more home buyers would be encouraged to come and snap up houses and refire that market.
But experts say, hey, they are a bit cautious. Listen to this from Greg McBride at bankrate.com.
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GREG MCBRIDE, BANKRATE.COM: Reducing fixed mortgage rates to 4.5 percent, does that ultimately become what the Fed funds rate at 1 percent in 2003 and 2004 became in terms of inflating the credit bubble? Might this be inflating the next bubble?
(END VIDEO CLIP)
WILLIS: All right. So, could this actually cause another bubble?
We don't know. And you have to keep in mind, there are other problems with this, too. People are still losing their jobs. Home values are still falling. So whether this is going to be a incentive enough to get people to start buying again, we just don't know yet.
Other analysts say that this won't help the folks who are really in trouble, the folks who can't pay on the mortgage they have for the house right now.
And of course, if you have any questions, send them to us at gerri@cnn.com. I love to hear from you, and we answer those questions right here every Friday.
HARRIS: You know I'm wondering if you'll have to put any money down to take part in this program. Maybe that's something we can --
WILLIS: That's one of those details we really want to know. 4.5 percent, I've got to tell you, that is an incredible rate of interest.
HARRIS: That really is.
WILLIS: The lows we got to only a couple of years ago were just above five. So that's pretty darn tasty.
HARRIS: That really is. It is.
All right, Gerri, appreciate it. Thank you.
WILLIS: My pleasure.
HARRIS: OK. Logon on to CNNMoney.com to get advice and answers. Check out our special report "America's Money Crisis," again that's at CNNMoney.com.
The CEOs of the Big Three automobile companies say you, the taxpayer, can't let them fail. Why? Because so many of you will be out of a job. Well guess what? Millions of you are already there.
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(BEGIN VIDEO CLIP)
BARACK OBAMA (D), PRESIDENT-ELECT: Certainly my expectation is that we should maintain a viable auto industry, but we should also make sure that any government assistance that's provided is designed for a -- is based on realistic assessments of what the auto market is going to be and a realistic plan for how we're going to make these companies viable over the long term.
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(BEGIN VIDEO CLIP) RON GETTELFINGER, UAW PRESIDENT: I'm not sure where you draw the line. But let's just look at this, let's look at the backbone of our economy as Barack Obama describes it. Let's look at the millions of jobs that will be lost in this country if we lose this industry.
(END VIDEO CLIP)
HARRIS: Well, we are waiting for Ron Gettelfinger to testify before this Senate Banking Committee. We will bring you his comments live when it happens.
The nation's automakers are wheeling and certainly trying to do some dealing today. Is Congress buying? Top execs from G.M., Ford and Chrysler are about to take questions from the Senate Banking Committee. They're asking for $34 billion in loans. Without them, G.M. and Chrysler say they will collapse at the end of the month.
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SEN. CHRISTOPHER DODD (D), BANKING CMTE. CHMN.: In my view we need to act, not for the purpose of protecting a handful of companies. If that were the extent of the issue, I would let them fail. I acknowledge that those who advocate such a course on the assumption that pressure from the outside will produce the desired results. My concern with such an approach is that it plays Russian roulette with the entire economy of the United States.
Inaction is no solution. Inaction would only add more uncertainty and instability to our economy. These are the ingredients that in currently we have an overabundance.
(END VIDEO CLIP)
HARRIS: G.M. is looking for a $12 billion loan and a $6 billion line of credit. Chrysler says it needs an immediate $7 billion loan to stay afloat past December. Ford wants a $9 billion line of credit. The company says it doesn't need it right now, but just -- just -- in case.
Automobile dealerships are struggling right along with the Big Three. Their trade group predicts 900 of 20,000 dealerships will fail this year. CNN's Richard Roth from a Ford showroom in Hackensack, New Jersey.
And Richard, good to see you. How is that dealership doing?
RICHARD ROTH, CNN CORRESPONDENT: Well we're going to find out. I'm here with Art Lieberman, general manager of All American Ford.
How is the dealership doing with this crisis?
ART LIEBERMAN, GENERAL MANAGER, FORD DEALERSHIP: We're doing good. We're not doing great, but we are doing good.
ROTH: Senator Dodd said this bailout would be the biggest Christmas gift in history. Is he the Grinch? LIEBERMAN: It should -- maybe he is the Grinch -- but it should be because it will bail out not just us but the whole country.
ROTH: Some senators and critics have said the auto industry should transform itself, not be given a big handout. What should Ford and the Big Three do differently in selling and making cars?
LIEBERMAN: Well, they should continue making better cars, which Ford is doing. And the bailout is only going to help us.
It's a loan. It's not just a bailout.
ROTH: Briefly, why are auto dealerships so crucial in this economic engine recovery?
LIEBERMAN: Trickle down theory. Everything is affected by the car industry in this country.
ROTH: Art Lieberman, thank you.
There's a little bit more active you should know about going on in this All-American Ford dealership. We're going to the service area where I've observed one couple watching for hours the Senate hearing.
Let's ask Hector Masid (ph) what he thinks of the government bailout effort.
You've been watching the congressional hearings. What are your thoughts? Should they get the money, the Big Three?
HECTOR MASID, CONSUMER: Well, I feel it's something that should have never happened to begin with. But now, that being said, now that they're in trouble, I think we should bail them out because these are American institutions which employ thousands and thousands of people. And it's hard to see -- to imagine an America without a Corvette.
ROTH: You just bought a Ford Taurus. What do you think? Why did you buy? Did you have trouble? Did you get a good deal?
MASID: Yes. Yes. My wife is the one that drives it. And she's in love with it.
ROTH: What do you think about the Big Three auto industries? They're in big trouble.
UNIDENTIFIED FEMALE: I'm very nervous about it. I believe -- I love this country and I believe in supporting our country and I believe that we should keep these institutions. I believe we should do what we can to save them.
ROTH: That's the view of the Masids. They're waiting here for some oil servicing at this Ford dealership.
Many consumers we've talked to here favor the Big Three getting some financial assistance -- Tony.
HARRIS: Sounds like it, Richard. Appreciate it. Thank you.
Richard Roth for us.
Car expert, Lauren Fix, has been listening to the hearing going on right now with the auto executives. She is the author of "Lauren Fix's Guide to Loving Your Car" and she is with us from Buffalo, New York.
Lauren, always great to talk to you.
LAUREN FIX, AUTOMOTIVE EXPERT: Great to talk to you, too, Tony.
HARRIS: I get this question twice, maybe three times a day: Are the Big Three in danger of failing, really in danger? These people look me in the eye and they ask me, Tony, what do you think? And I'll do the same with you, Lauren.
What do you think? Are the Big Three really, truly in danger of failing?
FIX: I think of the three, the one who is actually paying attention right now is Ford. They're not in too bad a situation. They've got hybrids out there. They are one of the first ones to have hybrids hit the markets. So they have done some correct things. So I think that they're looking for a line of credit which is smart.
But when you're looking at a company at the other end, when you're looking at a company at the other end, when you're looking at Chrysler, who is not willing to concede closing any dealerships, cutting down some of product lines, they didn't put a good package together if you get out on the Internet and you read it.
HARRIS: Really?
FIX: It's not as concise as General Motors who is actually willing to cut back salaries, cut back jobs, cut back product lines, sell Saturn, get rid of Hummer, cut back Pontiac to a niche market. That's some pretty aggressive moves from Wagoner. He's a very smart man. He's already talking to the UAW, as are the other two.
But really, the truth is, if nothing happens it's going to be a much bigger domino theory than what it looks like on the surface. If Ford tries to make it and Chrysler fails, for example, and someone like Johnson Controls, who is also going to be speaking on Capitol Hill today, they fail if that happens because they can't get their money. Then, it's going to affect other companies because they can't supply them.
Yes, there's other suppliers out there. They may not be domestic suppliers. So again we're helping companies overseas. It may not help us. So I think it's really going to affect every little teeny community. And the people that you interviewed just before me really are what the core of the U.S. feels.
When you really get down to those smaller cities, we don't want to lose jobs, no one does. But if we have to all get a little bit of a haircut, then that may be the only answer.
My only concern is that we shouldn't have a car czar. Advice from the government may be fine from a group of people. I just don't want them telling us all to be driving beige, boring vanilla cars, no sports cars, no convertibles, because if they get their fingers in it, they're going to try and tell us -- the government will try and tell us what to drive. And that's what I definitely don't want to see if they help us with this loan.
HARRIS: Answer this question in the framework of what you just talked about with Chrysler. Because I'm interested in the plan they put forward, and your analysis of it is not being quite enough there.
FIX: No.
HARRIS: My question is, will the money, in your view, guarantee some kind of success? Transformationally, what do these car companies look like, in your view, in the next two years as opposed to the way they look right now?
FIX: I think you're going to see a lot of changes.
Ford has already decided to bring in some of their European product. And I think that will very much help. Diesel and turbo- diesel cars like the Germans developed, bringing that over here will help as well. I think Ford and G.M. are right on board with it.
Chrysler has got a lot of other issues. They have seven product lines that are very successful. And their Jeep product line is very strong. However, they need to cut back and get rid of the product that doesn't make money. I mean that's just plainly obvious. If you were selling anything and you weren't making money on it, you wouldn't be selling it anymore. But for some reason, Chrysler continues to want to put out -- they put out a little press announcement yesterday, they're going to bring 10 more products to market. Don't bring more product to market. Get rid of the stuff that doesn't sell, work with what does sell, their minivans, their Jeep line, their Dodge trucks are great.
And cut back some of the dealers. They're going to have to do something. I don't see as much give in Chrysler as I do on Ford and General Motors.
But two years from now, G.M. will be stronger because of the UAW agreements that are in place that start in 2010.
Ford will be strong.
And if Chrysler can really get their arms around this problem, as a private company we don't get to see very much, they could actually become successful as well. They've done it before. They can do it again. But it will require a restructuring.
HARRIS: Awesome. Outstand as always.
Lauren Fix -- Lauren great to see you -- FIX: Thank you.
HARRIS: -- great to talk to you. Thank you.
FIX: Thank you, Tony.
HARRIS: After making their pitch on the Hill today, the heads of General Motors and Chrysler join Wolf Blitzer in "THE SITUATION ROOM" at 4:00 p.m. Eastern. Do they deserve a bailout loan? Send your questions to ireport.com/situationroom.
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JUDY REAGAN, IREPORTER: Two partners and I opened a restaurant here in New Orleans, post-Katrina, in an effort to help bring back the area. We had wonderful food, we had wonderful customers, we had a great time, had a great place. But at the end of the second year we just knew we couldn't keep going financially. Things have gotten very, very tough here for small business, maybe it always was. But it's worsened even in these two years.
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HARRIS: An i-Report from a former small business owner in New Orleans talking about how the financial crisis is hitting home for her. Judith Reagan says the closing of her restaurant put three full- time employees out of work.
More and more of you are finding yourselves without jobs. Today we have job cut announcements from AT&T, Credit Suisse, DuPont, State Street and Viacom. The cuts total more than 20,000 positions.
The number of people filing for new unemployment claims dipped last week, but the trend remains a big problem. More than four million people continue to receive benefits. That is a 26-year high.
As people lose their jobs, they find ways to cut back, and as new numbers indicate, one of the first things to fall by the wayside is shopping. Susan Lisovicz is at the New York Stock Exchange right now with details on retail sales.
And how are those numbers looking, Susan?
SUSAN LISOVICZ, CNN CORRESPONDENT: They're not looking good.
We're cutting back everywhere we can, which is why that restaurant in New Orleans closed. Eating more at home, for instance, and not shopping for discretionary items. Even those folks who haven't lost their jobs are scared that they could be on the chopping block, so people are cutting back.
Most retailers reported down right terrible sales for November. Abercrombie and Fitch, Kohl's, Macy's, Target posted percentage drops of more than 10 percent. The one stand out, Wal-Mart. Its sales rose nearly 3.5 percent since so many people are trading down to lower- priced items and sticking to essentials. Wal-Mart shares are up right now 1.5 percent.
But overall concerns about the economy persist, and it's playing out. The Dow Industrials right now under a little bit of pressure, down 66 points or .75 percent. The Nasdaq is down .5 percent, Tony.
HARRIS: Hey Susan, earlier this week we were talking about black Friday and how strong sales were. Did that help a bit?
LISOVICZ: It did help a bit. And it did estimates, and it was certainly welcome news. It helped a bad situation from being worse.
But remember that retail sales have been under pressure for quite some time. So it would take more than a one-weekend bounce to really have a big effect. And keep in the mind many shoppers who were out on black Friday focused on those door busters, big bargains. And their shopping lists were shorter than usual. That's a trend that is expected to continue.
But Tony, you've been nice, not naughty. And you remain high on my list.
HARRIS: I love it. I love it. I love it.
All right, Susan. Can't wait. See you next hour.
Iraqis taking control of their country and setting a deadline for U.S. troops to head home.
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HARRIS: A three-year timetable for U.S. troop withdrawal from Iraq, now a done deal. An Iraqi spokesman says the country's presidential council today approved a security pact with the United States. The final step for ratification by Iraq's government.
Our Michael Ware explains how the pullout will play out.
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MICHAEL WARE, CNN CORRESPONDENT (on camera): President-elect Obama will be able to draw his troops down as he sees fit, whether he listens to his commanders as he says, or not. Under the terms of this agreement. And indeed, the Iraqis have insisted, despite what Washington originally wanted, that all American troops will be out in three years, regardless. No questions, no negotiation. And it's up to the Iraqis.
From here on, the Iraqis are in the driver's seat in this war and they're going to be able to in so many ways take control and guide the actions of U.S. combat troops.
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HARRIS: Well, the security pact will replace a U.N. mandate for the U.S. presence in Iraq that expires at the end of the year. Airports on high alert across India right now. Officials responding to new warnings of possible airborne attacks. One week after the deadly terrorist siege in Mumbai.
India insists the Pakistani militant group with ties to al Qaeda, helped plot the Mumbai massacre. It left 179 people dead and raised tensions between India and Pakistan. Secretary of State Condoleezza Rice now trying to ease those tensions. She in Islamabad today, sounding optimistic about Pakistan's commitment to fighting terrorism.
Military men and women in harm's way. A new study out just this hour shows just how damaging war is.
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JESUS VIDANA, WOUNDED IN IRAQ: They don't have any injuries. They come back and they're changed. Not all change is good, I guess. The war doesn't end when you come home. It goes on in your head.
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HARRIS: That was Marine Jesus Vindana with the man who saved his life, CNN chief medical correspondent Dr. Sanjay Gupta. Dr. Gupta, as many know, is a neurosurgeon. He performed a battlefield operation on Vindana after he was shot by a sniper in Iraq.
He is one of thousands of U.S. troops returning battle with traumatic brain injuries. A report just released from the Institute of Medicine says not enough is being done to help. Our medical correspondent Elizabeth Cohen joins me now to put this into a bit of perspective.
And Elizabeth, first of all, what do we mean when we say, exactly here, traumatic brain injury?
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: You know what, Tony? It can be anything from the incredibly dramatic thing that happened to Mr. Vindana. I mean, it can mean a bullet going into your skull. But it could be something that is much more subtle, but still a big problem. And a bigger problem than we used to think it was.
So, let's take a look at this. There are explosions that go on in the field, and as you can see, there's a lot of rattling that goes on. And if you look at it, look at the brain sort of rattling against the skull there. Now, after an injury like that, a troop may not say, you know, hey I think I need to be checked out. But, really, damage has been done.
HARRIS: How common are these traumatic brain injuries?
COHEN: They are quite common. The numbers that we get, it's at 5,500 troops have returned from Iraq and Afghanistan, with these kinds of injuries. In fact, that is the reason why this kind of injury, a traumatic brain injury, is called the signature injury of Iraq and Afghanistan.
HARRIS: And what kinds of damage can these injuries cause?
COHEN: Oh, a whole host of damage. From the mild TBI's, to the severe TBI's, they can cause seizures, dementia, Parkinson's, psychiatric problems even possibly brain cancer. So, really a whole host of things.
HARRIS: How do you help? What's the solution here?
COHEN: Well, the Institution of Medicine report that just came out today, Tony. What they say is, first of all, troops should be screened for brain injury issues before they're sent into the field. And that everybody, not just people in accidents, but everybody should be screened when they come back.
Now, we just got a press release from the Pentagon. They said we have been screening everyone upon their return for about two years now. And they said they have just started screening people as they leave.
HARRIS: (INAUDIBLE) as we can.
COHEN: That's right. Exactly.
HARRIS: Elizabeth, appreciate it. Thank you.
Let's see that live picture again. The big three automakers with big plans to restructure themselves. Is it worth it to the taxpayers to help keep them afloat?
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