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Illinois Governor Taken into Federal Custody; Speculation Swirls Around Meeting Between Former VP and President-elect; President Bush Speaks at West Point

Aired December 09, 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 Tuesday, December 9th. And here are the top stories we're following for you this hour in the CNN NEWSROOM.
The governor of Illinois taken into federal custody, under arrest on corruption charges.

As Congress and the White House wrestle over details of the $15 billion auto loan, G.M. hints it may need even more of your money.

Disturbing new census numbers, souring poverty rates and dwindling incomes for families all across America. And the trouble started long before most of us realized.

Good morning everyone. I'm Tony Harris, and you are in the CNN NEWSROOM.

(BEGIN VIDEO CLIP)

GOV. ROD BLAGOJEVICH, ILLINOIS: I don't believe there's any cloud that hangs over me. I think there's nothing but sunshine hanging over me. Let me answer that.

True question is -- by the way, I should say if anybody wants to tape my conversations, go right ahead, feel free to do it. I appreciate anybody who wants to tape me openly and notoriously and those who feel like they want to sneakily and wear taping devices, I would remind them that it kind of smells like Nixon and Watergate. But I don't care whether you tape me privately or publicly, I can just tell you that whatever I say is always lawful, and the things I'm interested in doing are always lawful.

(END VIDEO CLIP)

HARRIS: That was Illinois Governor Rod Blagojevich just yesterday proclaiming his actions are lawful. Today federal investigators say otherwise. They've taken Blagojevich into custody for alleged corruption. Among the allegations, seeking financial gain in return for appointing someone to fill Barack Obama's Senate seat. The long list of charges include conspiracy to commit mail and wire fraud as well as solicitation of bribery.

A 76-page FBI affidavit says the Democratic governor was intercepted on court authorized wiretaps over the last month. Chicago bureau chief Fuzz Hogan joins us on the phone. Fuzz, a couple of straight-up questions for you, why was the governor arrested?

VOICE OF FUZZ HOGAN, CNN CHICAGO BUREAU CHIEF: It's remarkable Tony, you're right.

The complaint is long and it's full of amazing detail, at least according to federal authorities. Three basic things, one, what folks in Illinois had been sort of expecting, Blagojevich had been under investigation by the federal authorities for some time for old- fashioned pay-and-play politics. You wanted to get an appointment for a state board or get some state business, you need to give us some money. That's the allegation in the complaint filed this morning. That was expected.

What was new and sort of a surprise to Illinois observers was, one, as you mentioned, that Blagojevich was allegedly trying to sell the seat that Barack Obama vacated when he became president-elect and sell it for money, sell it for business for himself, sell it for business for his wife if the allegations are to be believed. The third thing which will probably get overwhelmed by the first two things, he also tried to get "Chicago Tribune" employees (INAUDIBLE) fired in exchange for moving along the sale of Wrigley Field and the Chicago Cubs which involved sort of a state approval process. It's remarkable.

HARRIS: Fuzz, one more quick one here, you mentioned the Senate seat formally held by President-elect Barack Obama, what comes next in that process?

HOGAN: It's funny. It's not really clear. I'm trying to find out myself frankly. We're all digging through Illinois law to figure out what the status is. Can he appoint somebody while he's under federal charge or conceivably in jail? Does it fall to Lieutenant Governor Pat Quinn who may have a different set of priorities for that Senate seat. The Senate seat if it doesn't pertain -- the list of who might get that seat sort of turns upside down so say some observers.

HARRIS: CNN Chicago bureau chief Fuzz Hogan on the line with us.

Fuzz, appreciate it. Thank you.

Some members of the Illinois congressional delegation stunned by the arrest of Governor Blagojevich. Kate Bolduan joins us live from Capitol Hill.

Kate, good to see you. What are you hearing?

KATE BOLDUAN, CNN CORRESPONDENT: Hi there, Tony.

We were able to speak with Illinois Congresswoman Jan Schakowsky just a few minutes ago. She said she was still learning the details of what was going on in Chicago in the Illinois area with Governor Blagojevich. She says she was surprised. She said she was shocked. This is also interesting that we were able to speak with her because, Tony, she is one of the candidates, one of the people that has thrown her hat into the ring to be considered to fill President-elect Barack Obama's Senate seat.

I asked her specifically about that part of this developing story just a few minutes ago. Listen here.

(BEGIN VIDEO CLIP)

BOLDUAN: In your conversations with the governor, nothing along the lines of paying to play or any kind of selling of the Senate seat came up in any conversations?

REP. JAN SCHAKOWSKY, (D) ILLINOIS: Not even close. The governor all along has said that he would welcome a recording or whatever. So I don't know what kind of evidence there is, and I think we probably all will see pretty soon.

(END VIDEO CLIP)

BOLDUAN: She continued to repeat that she was shocked, that she was surprised, that she herself was waiting to see how things would develop and was also wondering something that many of us are wondering here on Capitol Hill as well as I'm sure, Tony, in Illinois, is who will now take on the responsibility of filling this Senate seat.

I can tell you that Congresswoman Schakowsky is definitely wondering that, possibly maybe the lieutenant governor. She says she's waiting to hear really how far this fallout reaches and what the implications mean, not only in Illinois, but here on Capitol Hill.

HARRIS: We have no idea the ripples on this story at this point.

All right Kate, good to see you. Kate Bolduan on Capitol Hill for us.

We will bring you full details in the next hour in the CNN NEWSROOM. The U.S. Attorney's Office will hold a news conference in Chicago. You can watch it live right here, that's noon Eastern.

Governor Blagojevich in the news a lot recently pushing for help for laid-off workers at a window plant in Chicago. A factory sit-in now in day five. Workers meeting again today with representatives of the failed company and its creditor, Bank of America. This comes after last night's talks failed to produce a fix. Negotiators not giving up hope.

(BEGIN VIDEO CLIP)

REP. LUIS GUTIERREZ, (D) ILLINOIS: I think I'm relatively optimistic. I feel the meeting went very, very well, the tone that the bank officials took and the discussion really wasn't a debate in the discussion between the members of the union and my office and others was a tone of reconciliation, a tone of wanting to find an end to this situation.

(END VIDEO CLIP)

HARRIS: The factory closed abruptly last week after Bank of America canceled the company's financing. Since then about 200 workers have taken turns occupying that factory.

More layoffs making headlines, electronics giant Sony says it is slashing 8,000 jobs, 4 percent of its global workforce in the next year and a half. It also is closing several plants as part of a plan to save more than a billion dollars a year. Another big employer, Wyndham Hotel group eliminating 4,000 jobs in the next quarter.

Did you know most Americans are feeling this economic pinch? It is something most of us don't want to admit.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: They want to go see Santa, and I don't want them to not go see Santa, but at the same time I don't want to give them false hope.

(END VIDEO CLIP)

HARRIS: Time is running out for this mother's holiday wish.

(COMMERCIAL BREAK)

(WEATHER REPORT)

(COMMERCIAL BREAK)

HARRIS: Is it just a chat about global warming and the environment, or something more? Speculation swirling around President- elect Barack Obama's meeting today with former Vice President Al Gore. Live now to Chicago and our Elaine Quijano.

Elaine, good morning to you. I'm intrigued.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Yes, you know what? A lot of raised eyebrows. A lot of people are intrigued on this one Tony. But Democratic officials insist that President-elect Barack Obama is not, is not looking to tap former vice president Al Gore for a cabinet level position or any other job inside the Obama administration.

In fact, transition officials here in Chicago say this is a meeting that will focus on energy issues and climate change issues as well. That, of course, makes sense. Al Gore, as you know, won the Nobel Peace prize for his efforts to raise awareness about global warming. His documentary on the subject, "An Inconvenient Truth" won two Oscars.

However, it is still a fact that the president-elect has yet to name his pick for energy secretary as well as EPA administrator. A close friend of Gore told our John King something interesting Tony, saying, quote, "The Gore trip is for more than for just a chat. He wouldn't burn that much carbon flying to Chicago just to talk."

Tony --

HARRIS: Elaine, one more quick question. The story of the morning so far. I'm wondering if there has been any reaction at all from President-elect Barack Obama's camp on the news that Illinois' governor is now indicted on serious corruption charges.

QUIJANO: No comment from the Obama transition team at this point. Certainly they have seen the news. It is all over the news here in Chicago. But right now, Tony, they don't have anything to say. They're, of course, looking to see what develops. There's as you know a news conference coming up. So nothing, nothing right now from the Obama transition team on this.

HARRIS: Elaine Quijano in Chicago for us.

Elaine, good to see you. Thank you.

President Bush arriving at West Point shortly. He will be addressing the cadets and guests in just a couple of minutes. We will have those remarks for you when they begin right here in the CNN NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: Very quickly here, another look at the site, West Point is the location. President Bush arriving at West Point shortly, he will be addressing the cadets and guests there. In just a couple of minutes we will bring that event to you live right here in the CNN NEWSROOM.

A moment ago we talked to you about the big high profile meeting between Al Gore and President-elect Barack Obama. Another meeting getting a lot of buzz, Secretary of State Condoleezza Rice and pending successor, Hillary Clinton together for dinner. Let's get details on the talks from our state department correspondent Zain Verjee in Washington.

Zain, I trust it was a healthy dinner and a healthy conversation.

ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: It certainly was, Tony. Senator Clinton had dinner with Secretary Rice for about two hours. It was one-on-one at Secretary Rice's apartment here in Washington, D.C. On the menu last night, Tony, America's crises and how to handle them.

State department spokesman Sean McCormack wouldn't really get into a lot of specifics on that. But just a short while ago, here is what he did say.

(BEGIN VIDEO CLIP)

SEAN MCCORMACK, STATE DEPARTMENT SPOKESMAN: It's the first of several of these meetings. They talked just very generally about policy, the challenges, the opportunities, talked a little bit about the job of the secretary of state, talked about the, quote, unquote, building here and managing the big operation.

(END VIDEO CLIP) VERJEE: And what did they have for dinner, Tony? Mushroom soup, sea bass, wild rice and fruit for dessert. A pretty healthy meal there. Secretary Rice did not cook, although apparently she is a pretty good cook. Sean McCormack added two at the briefing just moments ago that the two of them have a pretty good and easy relationship, they have met before. Secretary Rice has said that Clinton would do a great job as the next top diplomat.

One other note, Tony, Senator Clinton was in fact at the State Department Monday for the first time as well meeting the transition team and getting briefed and getting a lay of the land.

HARRIS: It is a big department, probably more of these meetings, you would think, these get-togethers in the days to come.

Zain, good to see you.

VERJEE: You too, thanks.

HARRIS: How about this, actress Fran Dresher, star of the 1990's TV sitcom "The Nanny" has her eye on Hillary Clinton's Senate seat assuming Clinton moves into the secretary of state job. Dresher, a cancer survivor, was recently appointed as a U.S. diplomat for women's health, another big name asking questions about that Senate opening, Caroline Kennedy. It is up to New York Governor David Paterson to fill the vacancy.

Illinois Governor Rod Blagojevich is in federal custody at this hour. He could face federal corruption charges. We will hear all the details in the next hour of CNN NEWSROOM. The U.S. Attorney's Office will hold a news conference in Chicago and of course we will bring that to you live.

Authorities are searching for a person missing after a military fighter jet crashed that killed three people. It happened in a San Diego neighborhood yesterday. Military officials say the jet was returning to a nearby airfield when the pilot reported trouble. He ejected safely before the F-18 slammed into some homes. Two of them burst into flames, and one of the houses, the bodies of two adults and a baby.

When news happen, our i-Reporters are there. This video was sent by Chris Morrow, he lives just two doors down from the jet crash site, can you imagine. He was the first to call 911. Check out these pictures shot by Jeremy Gimble who works nearby. Plumes of smoke rocketing into the air. Gimble says as a San Diego resident you're aware of the military presence and jet accidents but you don't ever expect something like this.

Let's check in now with our Veronica De La Cruz in New York. She has been monitoring some other stories making news around the globe.

Veronica, more on that cholera outbreak in Zimbabwe.

VERONICA DE LA CRUZ, CNN CORRESPONDENT: That is absolutely right, Tony. A desperate situation there in Zimbabwe where a cholera outbreak has killed hundreds of people. Now, Tony, there is a shortage of relief supplies. The Red Cross and requesting agencies say they're out of emergency supplies for the area but they are bringing in more experts and they are trying to reach remote spots in the country. The cholera outbreak in Zimbabwe is now the worst in more than a decade. The UN says 589 people are dead, nearly 14,000 are sick. Refugees are fleeing across the border into South Africa where there are more than 400 cases and nine deaths.

New violence to report to you breaking out in Greece this morning ahead of a funeral for a 15-year-old boy shot and killed by police. Riots over the boy's death have been going on since Saturday. Police say 12 officers have been injured and dozens of protesters arrested so far. Two officers have been charged in the shooting.

Finally Russians from all walks of life are paying their final respects to the patriarch of a Russian Orthodox church. Alexy II died Friday after 18 years as head of the church. He is credited with a religious rival in the country after the fall of communist rule. Services are being held at Moscow's Christ the Savior Cathedral where his funeral is being attended by thousands of mourners including Russian President Dmitri Medvedev and Prime Minister Vladimir Putin -- Tony.

HARRIS: Veronica, appreciate it, thank you.

We want to take you back live, a live look now at West Point, President Bush arriving shortly. He will be addressing the cadets and guests in just a couple of minutes.

We will bring you his remarks live, right here in the CNN NEWSROOM.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MAYOR RICHARD DALEY, (D) CHICAGO: First of all, like you we just found out this morning. It's a sad day. You have to wait for the press conference to find out the information why he was arrested. No one knows. It's all speculation so far.

QUESTION: (INAUDIBLE)

DALEY: No, I haven't. Unless you know specifically, Fran, no one knows this.

UNIDENTIFIED FEMALE: -- laid out in the indictment and it states that --

DALEY: I haven't seen the indictment. Is the indictment laid out already? I haven't seen it yet.

UNIDENTIFIED MALE: -- basically that he tried to sell the Senate opening to a variety of candidates. DALEY: If it's true, it's a very, very sad comment because the selection of a U.S. senator is vitally important to the future of this state and of this country. And if it's true, it's a very, very sad day and very sad comment.

(END VIDEO CLIP)

HARRIS: OK, let's take you quickly now to West Point and President Bush.

Let's listen in.

(JOINED IN PROGRESS)

(APPLAUSE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ... Thank you. Please be seated. Thank you, General, for your warm welcome. Thank you for inviting me here to West Point.

I now know why you're so happy I'm here. All classes were canceled.

(APPLAUSE)

I had the honor of sitting next to the general and Judy during the game over the weekend. I am disappointed I could not bring the commander in chief's trophy with me. However, you just get the commander in chief. This is my last visit to a military academy as president. So I thought I would exercise a certain prerogative of office one last time. I hereby absolve all cadets who are on restriction for minor conduct offenses, as always -- always I leave it to General Hagenbeck to determine what minor means.

Really I'm proud to be with you today. I appreciate General Mike Lennington and his wife Brenda. It turns out Brenda is a 1981 West Point graduate. I appreciate being here with General Pat Finnegan and Joan. Today on Air Force One, Congressman John Shimkus, 1980 West Point graduate, Congressman Jeff Davis, 1981 West Point graduate, flew down with me. It was my honor to let them fly on the big bird. There are many honors that come with the presidency, but none higher than serving as commander in chief in the greatest armed forces on earth.

(APPLAUSE)

Every one of you is a volunteer. You came to this academy in a time of war knowing all the risks that come with military service. I want to thank you for making the noble and selfless decision to serve our country, and I will always be grateful to the men and women who wear the uniform of the United States military. As West Point cadets you're part of a generation that has witnessed extraordinary change in the world.

Two decades ago the Cold War was nearing its end and the Soviet Union was about to collapse. You were just beginning your lives. About the same time another threat was quietly gathering. In hidden corners of the world violent religious extremists were plotting ways to advance their radical aims and their grim ideology. We saw the results in a series of horrifying blows. Truck bombing of the World Trade Center, the attack of the Kobart Towers, bombing of embassies in Kenya and Tanzania and the strike on the USS Cole. For many years, America treated these attacks as isolated incidents and responded with limited measures. And then came September 11th, 2001.

In the space of a single morning we realized that we were facing a worldwide movement of fanatics pledged to our destruction. We saw that conditions of despair on the other side of the world could bring suffering and death to our own streets. As a result America reshaped our approach to national security.

Here at home we hardened our defenses and created the Department of Homeland Security. We gave our national security professionals vital new tools, like the Patriot Act and the ability to monitor terrorist communications. We reorganized our intelligence community to better meet the needs of war against these terrorists, including increasing the number of intelligence officers. We deployed aggressive financial measures to freeze their assets and to cut off their money. We launched diplomatic initiatives to pressure our adversaries and attract new partners to our cause.

We also made dramatic changes to both our military strategy and our -- the military itself. We resolved that we would not wait to be attacked again. And so we went on the offense against the terrorists overseas, so we never had to face them here at home.

We recognized that we needed strong partners at our side. So we helped strengthen the counterterrorism capabilities of our allies. We understood, as I said here at West Point in 2002, if we wait for threats to fully materialize, we will have waited too long. So we made clear that hostile regimes sponsoring terror, or pursuing weapons of mass destruction, would be held to account. We concluded that we are engaged in an ideological struggle. So we launched an effort to discredit the hateful vision of the extremists and advance the hopeful alternative of freedom.

We saw the urgency of staying a step ahead of our enemies. So we transformed our military, both to prevail on the battlefields of today and to meet the threats of tomorrow.

These changes will have a direct impact on your military careers. This morning I'm going to give you a report on where we stand in each of these areas and the challenges that lie ahead.

First, within weeks of September the 11th, our armed forces began taking the fight to the terrorists around the world. And we have not stopped. From the horn of Africa, to the islands of Southeast Asia, to wherever these thugs hide, we and our allies have applied the full range of military and intelligence assets to keep unrelenting pressure on al Qaeda and its affiliates. We have severely weakened the terrorists. We've disrupted plots to attack our homeland. We have captured or killed hundreds of al Qaeda leaders and operatives in more than two dozen countries, including the man who master mined the 9/11 attacks, Khalid Sheikh Mohammed.

The terrorists continue to pose serious challenges, as the world saw in the terrible attack in Mumbai last month. Al Qaeda's top two leaders remain at large, yet they are facing pressure so intense that the only way they can stay alive is to stay underground. The day will come, the day will come, when they receive the justice they deserve.

(APPLAUSE)

HARRIS: And President Bush at West Point -- his last stop at West Point today.

We want to get back to our breaking news story of the day, and that is the indictment of Illinois governor, Rod Blagojevich. Political reporter Carlos Hernandez Gomez, from our affiliate CLTV, joins us now.

Good to see you, sir.

If you would, from all of your years of reporting on politics there in Illinois, would you frame this story for us, for those of us who have not been watching the twists and turns of this investigation?

CARLOS HERNANDEZ GOMEZ, CLTV CHICAGO POLITICAL REPORTER: Well Tony, this federal criminal complaint, many, many pages. It details the most detailed and explicit examples of alleged corruption in Illinois history.

HARRIS: Wow.

HERNANDEZ GOMEZ: Governor Rod Blagojevich has been under federal investigation for years now. And his predecessor, as some may know, former Governor George Ryan, is in federal prison for corruption charges.

What he's been charged with today is slightly unrelated to what he's been accused of for many years. In Illinois we call it pay to play. Essentially using your government office to benefit yourself. Now these charges today involve an alleged scheme to try and sell Barack Obama's Senate seat. Of course, Barack Obama is now the president-elect. He has left the Senate, and Governor Blagojevich would choose his replacement.

What the feds are saying here is the governor was using three criteria, legal, for his personal legal situation with the feds; personal, his financial situation, and his political situation as the criteria in which he would use to fill that Senate seat. But it's not just allegations that he put a for sale sign on the vacant Senate seat.

They're also saying he was trying to use the state's financial resources, which may have helped the Tribune Company which owns the Chicago Cubs and their Cubs sale, trying to use that potential, that carrot of state aid to induce the Tribune owner, Sam Zell, and other folks, to fire members of the "Tribune" editorial board who were critical of Governor Blagojevich and who were actually calling for his impeachment.

So it is incredibly detailed. They have the governor on, according to this criminal complaint, they have Governor Blagojevich on tape. They say they have his wife on tape, using expletives and foul language talking about punishing the "Tribune" for not firing members of the editorial board who were critical of Blagojevich and trying to use the carrot of aid from the state's finance authority to help in this Cubs transaction to try and get these --

HARRIS: Got you.

Carlos, just another quick question, we're going to eventually learn and hear the names of a lot of folks that we don't necessarily know. One of course is the chief of staff who has also been indicted here.

What role did he allegedly play in all of this? And give me one more name -- I believe is it John Wyma who apparently played a pretty key role in this? Apparently he began to cooperate with authorities. And that seems to be the moment that the investigation really started to move forward quickly.

HERNANDEZ GOMEZ: John Wyma was Governor Blagojevich's chief of staff when he was a U.S. Congressman, Rod Blagojevich --

HARRIS: I see.

HERNANDEZ GOMEZ: -- back in the 1990s. Wyma, after Blagojevich became elected governor, Wyma was an important adviser, a member of his kitchen cabinet, somebody who made a lot of money as a rainmaking lobbyist in the Blagojevich administration, using his -- trading on his clout with Governor Rod Blagojevich.

Of course, this investigation had been in high gear for some time. Just last year -- earlier this year, actually, the governor's former top fundraiser, Tony Rezko --

HARRIS: Yes.

HERNANDEZ GOMEZ: -- incidentally somebody who also raised money for Barack Obama in his early career, was convicted of pay to play corruption, allegations that he basically used his clout with the administration to fill state boards and commissions and used that to try and raise campaign money for the governor.

So this has been building up for some time. And perhaps the most mind-boggling aspect of this investigation is that if this is true and Governor Blagojevich did do these things, it's just shocking because he had the cautionary tale of the indictment, conviction and now imprisonment of his predecessor, former Governor George Ryan.

HARRIS: Wow. Great reporting. Carlos Hernandez Gomez for us.

We appreciate it.

The news conference with the U.S. Attorney's office beginning in about -- let's see -- less than 30 minutes at the top of the hour. We will bring it to you live, right here in the CNN NEWSROOM.

A quick break.

(COMMERCIAL BREAK)

HARRIS: And breaking news this hour. Illinois governor, Rod Blagojevich in federal custody. His chief of staff also under arrest. FBI spokesman, Ross Rice, explained the charges on the phone to CNN earlier.

(BEGIN AUDIO CLIP)

VOICE OF ROSS RICE, FBI SPOKESMAN: About 6:30 this morning Illinois governor, Rod Blagojevich, and his chief of staff, John Harris, were arrested without incident by FBI agents here in Chicago.

Both men were charged in a criminal complained that was filed in U.S. District Court here in Chicago on Sunday with two violations of federal law. One, solicitation of a bribe, and the second is mail fraud.

The complaint alleges three separate and distinct areas of corruption that the two were allegedly involved in. One, as you mentioned, was the selling of President-elect Obama's Senate seat. The second was financial dealings involving the "Chicago Tribune." They were going to try and get assistance to them from the state for the sale of Wrigley Field in exchange for a purge of their editorial board. And the third was the solicitation of campaign funds from people that want to do business with the state of Illinois.

(END AUDIO CLIP)

HARRIS: Wow. We will bring you more details in about 20 minutes from right now. The U.S. Attorney's office set to hold a news conference in Chicago. Watch it here live, noon Eastern, right here in the CNN NEWSROOM.

Let's get a little more background and perspective on the story. Joining us on the phone right now is Lynn Sweet, Washington Bureau Chief for the "Chicago Sun-Times."

Lynn, always good to talk to you. Thanks for your time.

LYNN SWEET, "CHICAGO SUN-TIMES": And good to talk to you.

HARRIS: Boy, Lynn, why wasn't the man even allowed to turn himself in? What does that say about the charges and what the federal prosecutors think of Governor Blagojevich at this hour?

SWEET: Well I don't know if they thought he was a flight risk. I don't know why they had to arrest him at home like that. That I don't have any insight to.

What I can offer up is that he -- Governor Blagojevich -- had been trying to draw out the drama of the process. I had a long conversation with him last week about how he was going about selecting the new senator from Illinois. And it's a very thorough indictment, it talks about -- he was thinking of every angle you could think of as to how he could leverage the appointment for, as it said in the complaint, for his political and personal gain.

HARRIS: He talked to you about those things?

SWEET: No, no, no, no. I'm talking about the indictment.

HARRIS: OK. Got it.

SWEET: No, no, no. I'm just saying I had a conversation with him where he talked about the process that he was going through in picking the replacement.

HARRIS: Yes.

SWEET: I'm saying, now, under -- by that with what the complaint says -- I just came away with the impression that he was having a very long process.

HARRIS: Got you.

Well, Lynn, if you would, give me your general reaction to this news. These are obviously serious charges. And there is at least a suggestion of wire-tapped conversations, recorded conversations, in which we may learn down the road that his wife may face a little bit of jeopardy. She is certainly not indicted at this point.

But what's your general reaction to this breaking news story?

SWEET: Well he had been in trouble before. Patty Blagojevich had also figured in some of the investigations even before this.

Here is what's most interesting about what is happening today and what you'll hear at the press conference. And that is that the governor has been under a cloud for years. What the feds seem to have focused on, and in a sense nailed him on, is what has happened just in the past few weeks -- just in the past few weeks and with the stuff that is, frankly, the most sexy: the selling of a Senate seat and the purging an editorial board of a newspaper in exchange for getting some deals on Wrigley Field.

The complicated story on the schemes that he was alleged to have been in, the pay for play , and commissions of boards, that stuff has been going on for years at this point. What's interesting here is that what the indictment is focusing on is stuff that has just happened in the last few weeks, especially with the Senate seat when Governor Blagojevich could have known that he has already been under some scrutiny.

HARRIS: Lynn, the idea that pay to play has been going on for years in Chicago -- it's still a shocking allegation and shocking news to many around the country. That is, in fact, what goes on in Chicago politics and we shouldn't be surprised?

SWEET: Well, if you're a student of Chicago politics, I've been covering this my whole career, pay to play is a fact of life. What most of the elected officials figure out is a way not to cross the line.

And when we get more details, it may be that what Governor Blagojevich did is what some other officials do, and they'll say, thank God, it wasn't me. But usually people aren't -- are more subtle, and certainly you don't have tape-recorded conversations on it. But the history of corruption in Illinois, fueled by campaign contributions in exchange for this or that or appointments, is something that has been a common theme in almost every corruption story that has come out of Chicago and the state of Illinois for decades.

HARRIS: Well, Lynn, it is good to talk to you. And thanks for that primmer on Illinois politics for those of us who aren't as aware of what goes on there as you certainly are. Lynn Sweet, "Chicago Sun- Times."

Lynn, appreciate it. Thank you.

SWEET: Thank you.

HARRIS: We're going to take a quick break -- no, we're not.

Let's get some financial news here before the top of the hour. What caused the collapse of mortgage giants Fannie Mae and Freddie Mac? That is the focus of a House committee hearing this hour. Four former executives from both companies testifying on Capitol Hill right now. You are looking at live pictures.

Lawmakers demanding answers about their role in the subprime lending industry which is blamed for the country's mortgage meltdown. Fannie and Freddie own or guarantee about half of all home mortgages in this country. Federal regulators seized the companies in September to prevent total collapse.

Brand new figures out today put the economic crisis in a slightly different light. Information from the census bureau shows things had gotten bad well before the housing and financial industry's crash. Our Josh Levs joining us now with more on that.

Good to see you, Josh.

JOSH LEVS, CNN CORRESPONDENT: Tony, you know what? Amid everything else, this is another piece of news we got today. This is really interesting and it casts everything in a different light.

I want to start off showing you two maps that can really bring this home. They come to us from the "Associated Press." Let's zoom in on the screen right behind me. Check it out. All the blue circles that you're seeing here, these blue, represent places where this decade the average incomes have gone up. So you can see in some places that did happen.

Now, here is what I want to do, go to the next graphic. Let's take a look at what we see there. Look at all that orange. Now that -- and it's a little tough to see -- but this whole section of the country has some orange in it, lots of it over here. Much more of the country had incomes drop. All those places that you're seeing, your income on average dropped.

Now these are all based on new figures from the census bureau, which just released today, the "A.P." had an early look. I'm (INAUDIBLE) through them myself right now.

Let me show you a couple key points from what the "A.P." says in its analysis. Let's start off with this, Tony. This is pretty much the summary. They say, things are really bad all over -- "they had gone bad even before the housing and finance industry crashed and sent the economy into a tailspin." This new data shows that, "throughout the first half of the decade, the slumping economy touched nearly every community in the entire country."

Let me show you one more thing --

HARRIS: Sure.

LEVS: -- just a few of their points that they're making here.

Look at this. So they looked at U.S. cities and towns all across the country this whole decade. Median household income went down in 79 percent of places in this country; poverty rate up 70 percent of places in this country; unemployment up in 71 percent. And notice that that's just through last year.

So Tony, all this stuff shows how bad it was before the official recession, I guess, has now been declared -- December 7th.

HARRIS: That's right. That's right.

LEVS: So it was already that bad before all this.

HARRIS: Well, Josh, what does the report say, if anything, about why things got so bad? Why are we here?

LEVS: Yes, well they do offer some ideas about how this happened. The "A.P." is quoting an economist who says it's not surprising that many communities were doing better back in 2000. That was the end of an economic boom, and also the dot-com bubble hadn't burst yet on Wall Street.

There's also another economist who says a lot of Americans were on a binge this decade, you know, of spending beyond our means, treating our houses like ATMs. So that is their explanation for why these figures are just so ugly, Tony.

HARRIS: Appreciate it. Thank you, Josh.

All right. Enough already, huh? The doom and gloom, starting to get to me, probably you too. So let's turn up the sound a bit. We'll hear some -- a little louder -- we'll hear some great tunes from the dot-com department, "Viva La Vida," Coldplay and more coming up next.

(COMMERCIAL BREAK)

HARRIS: Illinois governor, Rod Blagojevich, in federal custody on construction charges. The U.S. Attorney's office is holding a news conference in Chicago in less than 10 minutes. Of course, we will bring that to you live when it begins.

The best music of 2008, industry insiders made their picks last week when they announced the Grammy nominees. What do you think? What tunes just won't leave your head?

Let's take a trip. Gear it up, let's hit the gas pedal here, head on down to CNN.com's i-Report desk. Let's check in.

Where is Tyson? Tyson Wheatley -- Tyson's Corner -- manning the operation down there for us.

Our i-Reporters are weighing in --

TYSON WHEATLEY, CNN.COM PRODUCER: Hey, Tony. How's it going?

HARRIS: I'm great. I'm great.

-- with some of the tunes that they really love from 2008, Tyson?

WHEATLEY: Yes. This is really -- this is something we're kind of really excited about it. It is a new assignment that we've created, and it is a way to let i-Reporters really interact with our -- with CNN.com's "SHOWBIZ" producer, Todd Leopold. And so every week we're going to start asking these sort of showbiz related questions.

And, of course, last week with the release of the Grammys, we got excited about wanting to -- you know, this is what the experts are saying is the best music of 2008. But what we want to know is what, of course, you think is the best. Maybe it wasn't an album that was released in 2008. We just said, hey, what's the best thing you heard in 2008? And it's really generated this great discussion on ireport.com.

And I just wanted to share one the best responses that we got with you. It came to us from Kyle Cameron Starr, and he lives in Irvine, California. And he actually made a top 10 list of his best 2008 picks. We don't have time to show the whole video. But let's go ahead and take a look at this top two.

HARRIS: Great, great.

(BEGIN VIDEO CLIP)

KYLE CAMERON STARR, IREPORTER: .. "Viva La Vida," this was gigantic. Coldplay's new record, kind of went away from the whole pop feel. Still has that tinge to it, but it's very artsy, at least for them. A lot of different timing structures and things like that. Different sounds, different ambient voice. I think a lot of that has to do -- is due to Brian Eno's kind of hand that was in it. So check that one out. And last, but not least, I would say Cold War Kids. Another big surprise. I was kind of hesitant on picking this album up just because I didn't want to hear more of the same. But they actually took, again, a gigantic leap ahead.

(END VIDEO CLIP)

WHEATLEY: Hey, not bad, right?

HARRIS: Yes, that's not bad. That's not bad at all.

WHEATLEY: And not a bad looking beard on Kyle there. So some style points for sure.

HARRIS: Yes, yes, yes.

WHEATLEY: I'm a little partial, yes.

HARRIS: Yes, very good. Very good.

All right. I guess the -- what else are you working on there, Tyson?

WHEATLEY: Well actually, we have another assignment that is music related. And it's really cool. You remember the album, Nirvana's album, "Nevermind," right?

HARRIS: Sure. Sure.

WHEATLEY: And it had a classic album cover of a naked baby -- right -- in the pool. And that baby is now a 17-year-old high school grad and -- it's true. I know, it's been 17 years. And CNN.com is actually going to do an interview with him. And so in the spirit of this, we wanted to also engage our readers and we wanted to ask them about, "Nevermind" itself.

And the question is, what is -- what did "Nevermind," that album, what did it mean to you?

And so we're inviting people at ireport.com/desk to share their thoughts about this album, and also share some photos from the grunge era, right?

HARRIS: Yes, yes. Absolutely.

WHEATLEY: So if you had long hair and wore the flannel, go ahead and show us.

HARRIS: That's the Seattle sound, right?

WHEATLEY: Yes, that's right.

HARRIS: Yes, yes.

All right, Tyson. Appreciate it. Thank you, sir. See you tomorrow. WHEATLEY: Take care, Tony.

HARRIS: Possible tornadoes, plenty of snow and rain. Busy day in the severe weather center. We will check in for the forecast in just a couple of minutes.

(COMMERCIAL BREAK)

HARRIS: And once again, we are just minutes away from a news conference in Chicago where prosecutors will outline their case against Illinois governor, Rod Blagojevich. When that news conference begins, we will bring it to you live.

He is in custody on federal corruption charges. The U.S. Attorney's office just minutes away now from a news conference in Chicago. And we will bring that to you live.

Very quickly now, let's see if we can get a check of weather. Rob Marciano is in the severe weather center.

Rob, Good to see you.

ROB MARCIANO, AMS METEOROLOGIST: Hey, Tony.

Watching this cluster of thunderstorms rolling through this severe -- tornado watch box. It's now in effect until 5:00. And we do have a tornado warning that is in effect for the next few minutes here. It's still in Rapides Parish, sliding across Highway 49 -- Interstate 49 -- this is near Alexandria. So, no indication of this having touched down, but certainly a pretty strong rotation on the radar scope.

And still, north of Chicago and through Milwaukee, the tailend of this snow event headed towards Michigan, we could see anywhere from 6 to 12 inches total in spots, Tony.

Winter is here. Back to you.

HARRIS: All right, Rob. Appreciate it. Thank you, sir.

Once again, a live picture for you. We are awaiting the details of the indictment against Illinois governor, Rod Blagojevich. When that news conference begins, any moment now, we will bring it to you.