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Bush Holds Out on Auto Bailout Decision; Obama Names SEC Chair, Labor Secretary; Mastermind Behind the Ponzi Scheme; Former Tuskegee Airman Looks Ahead to Historic Inauguration
Aired December 18, 2008 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEOTAPE)
KYRA PHILLIPS, CNN ANCHOR (voice-over): It's beginning to look a lot like -- recession. No cars, no trucks, no SUVs, no minivans. Just silence. Assembly lines gathering dust. Chrysler turning out the lights at every plant for at least a month.
Barack Obama talked about bringing people together. Easier said than done. It's starting to look like the Big Ten just isn't big enough.
WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I did not have sexual relations with that woman, Ms. Lewinsky.
PHILLIPS: Ah, the classic. Can you believe it's been ten years since the impeachment? Yes. We're feeling old, too. And a bit nostalgic. We'll look back at President Clinton's claim to shame, and how he's worked to rebuild his reputation.
(END VIDEOTAPE)
PHILLIPS: And hello everyone. I'm Kyra Phillips live in the CNN World Headquarters in Atlanta. You're live in the CNN NEWSROOM.
Let's get right to it.
Chrysler, going into hibernation for a while, hoping the climate is a little better when it comes out of the cave. After the last shift tomorrow, the company will shut down its plants, all 30 of them, for at least a month. They're normally closed over the holidays anyway, but this adds two weeks to the shutdown.
The 46,000 idled employees will get checks, but they won't get their full pay. Last week GM said it was cutting back capacity by nearly a third during the first quarter of 2009. And yesterday, Ford says several plants would be closed an extra week.
Chrysler says that the customers are out there. They just can't get loans to buy the vehicles. Now, that credit freeze apparently not thawing fast enough.
President Bush said if those credit markets don't warm up in a big hurry, today's recession could be tomorrow's depression.
Let's get straight to CNN's Kate Bolduan in Washington. Hey, Kate.
KATE BOLDUAN, CNN CORRESPONDENT: Hey, there, Kyra.
Well, the president spoke earlier today on a wide range of topics. But on the topic that is on top of many people's minds today, the auto industry, well, the future of the American auto industry today remains uncertain, the White House today saying that it's still considering its options on what actions it will take to help the American auto industry.
President Bush in this event that I mentioned earlier today -- it was labeled as presidential perspectives on policy making -- said that he has not made up his mind. He also talked about the big picture of the struggling economy and the financial crisis that his administration has faced.
Listen here.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I have concluded these are not ordinary circumstances, for a lot of reasons. Our financial system is interwoven domestically, internationally. And we got to the point where a -- if a major institution were to fail, there is great likelihood that there would be a ripple effect throughout the world, and the average person would be really hurt.
(END VIDEO CLIP)
BOLDUAN: Now, a White House spokesman, Dana Perino, saying today that the White House is very close to making a decision, just saying they're not there yet and not offering a timetable.
She did say that there are many options still remaining on the table for what they're considering. One that we've heard before they're considering dipping into the troubled asset relief program for possibly an emergency loan for automakers.
But we're now also hearing that the White House is considering some type of, as it was put in the White House briefing, orderly bankruptcy proceeding. We'll see what happens with that, Kyra.
PHILLIPS: All right. Kate, thanks.
Let's talk more about the troubles now in the auto industry. Christine Romans joining us live from New York.
And that was the first thing that we started talking about, Christine. We saw you actually in the morning. We thought, oh, boy, here we go. This is exactly what employees were afraid of.
CHRISTINE ROMANS, CNN CORRESPONDENT: Absolutely right. I mean, they've literally run out of time here, and now closing out the lights is exactly what's happening at these Chrysler plants. And 46,000 workers, they'll get some pay, not all of it, as you pointed out. And this is something that affects a lot of different towns and cities across the country, including Mexico and Canada, where there are plants there that will be shut down for a month, too.
We normally see shutdowns this time of year. It's what normally happens, but this time, a month, and it feels to so many of those workers like they just don't know what it's going to be like on the other end.
Ford, the Big Three automaker in the best position of these, is also extending its shutdown by an extra week, so it will be three weeks. And GM, we've already heard that GM is idling some 30 percent of its manufacturing capabilities for the first quarter of next year.
So we know that they're pulling back here. I mean, they are trying to cut costs. And that means they're not going to make cars. And that's how -- how dramatic this whole thing is.
Now, one thing that was interesting about the Chrysler news, I think, Kyra, is that they said part of the problem is the dealers are telling them that people are walking in, and they want to buy Chrysler vehicles, but they can't get the credit for it. The credit crunch has made people who normally would be buying these cars unable to buy them. So that's part of this problem, as well. And it's you know, really a dire situation. Exactly what the CEOs said would happen when they went to Congress.
What will the White House do? Well, Dana Perino says they're nearing some sort of a decision, as Kate pointed out. We don't know what that will be. We know that the language has been very careful. We don't know if it will be something out of the Troubled Asset Relief Program, the $700 billion Wall Street bailout, if it will be something different than that, if it's some sort of managed bankruptcy.
What we're hearing from people, you know, who are watching these sorts of things is that -- there's a lot of negotiations happening right now about this. What it will look like.
PHILLIPS: All right. Christine, thanks. We're going to also continue this discussion next hour. Chief business correspondent Ali Velshi will join us to talk about the ongoing drama in the auto industry and what it means to the economy as a whole.
It's a classic conflict in the health profession. Do you give a patient the care he or she wants, even though goes against your personal beliefs? Well, a new regulation might protect those professionals who feel like they're throwing their conscience under the bus. Here's chief medical correspondent Dr. Sanjay Gupta.
(BEGIN VIDEOTAPE)
DR. SANDY CHRISTIANSEN, OB/GYN: How are you doing?
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT (voice-over): Twenty years ago when Dr. Sandy Christiansen went to medical school, she never thought she'd face discrimination. Yet, because of her anti-abortion views, she says she was repeatedly denied the opportunity to perform medical procedures that another intern was allowed to do. When she pressed her superiors, she didn't like the response.
CHRISTIANSEN: She's doing that because she's working hard at the abortions and you haven't. And so she gets that perk.
GUPTA: Even after she got her license, Christiansen says she felt unaccepted by some of her peers because of her views. Now a medical consultant for a pregnancy resource center in Frederick, Maryland, she's nerve are performed an abortion and refuses to refer patients to abortion clinics.
CHRISTIANSEN: Just in the same with that my conscience would not allow me to perform an abortion, I wouldn't ask another colleague to do that.
GUPTA: But many health-care organizations, including the American Medical Association, believe health-care providers like Christiansen have an obligation to their patients to advise them of the options, despite their own beliefs.
Now a new regulation introduced by the Department of Health and Human Services would support Christiansen's right to refuse referrals and withhold information that goes against her own beliefs.
Critics argue there are already laws on the books protecting health-care professionals when it comes to refusing care for personal reasons. The new proposal goes further by making it so that all health-care workers from doctors to janitors who work in the hospitals may refuse to provide services, information or advice to patients if they are morally against it.
Critics fear that could mean anything from fertility treatments to abortion, to stem cell research.
ADAM SONFIELD, GUTTMACHER INSTITUTE: This regulation explicitly allows that doctor, or that nurse or any other health-care provider, to withhold information that would be relevant for a patient trying to make a medical decision.
GUPTA: Organizations like the American Nurses Association already have a code of ethics for their members. They believe nurses and other health-care professionals are there for the patient, and it's the patient's prerogative to make decisions on care based on their own beliefs, not the health-care provider's.
MARY JEAN SCHUMANN, AMERICAN NURSES ASSOCIATION: We don't go to school to learn how to make God-like decisions. That's not what it's about for us. It's about trying to get to where the patient is and helping the patient make their own decisions. You know, nobody appoints to us the ultimate person to pass judgment.
GUPTA: But Christensen says she's not playing God, just exercising her code of ethics, along with the Hippocratic Oath. CHRISTIANSEN: Why would you want to eliminate people, you know, who have these certain held beliefs and conscience from a particular field of practice? Frankly, all the more reason to held them there.
GUPTA: Dr. Sanjay Gupta, CNN reporting.
(END VIDEOTAPE)
PHILLIPS: Well, the president-elect is focusing on the markets today, specifically how to keep them accountable to investors. Brianna Keilar keeping a watch on the Obama transition, joining me live from Chicago.
Hi, Brianna.
BRIANNA KEILAR, CNN CORRESPONDENT: Hi there, Kyra.
Obama said today it's time to rethink financial oversight. He said he wants to overhaul the Securities and Exchange Commission, and he started by putting his pick forward for the chairman spot on the SEC, Mary Shapiro.
She's a former commissioner of the SEC and also at this very moment, she's the CEO of what's called the Financial Industry Regulatory Authority. It's a mouthful, as you can see. But what it is, is it's the largest regulator, the largest nongovernmental regulator, of all securities that do business with the U.S. public.
This is someone who, obviously, Obama sees as an answer to some of the criticism that those who are supposed to have kept an eye on Wall Street have not been doing a good job.
(BEGIN VIDEO CLIP)
BARACK OBAMA (D), PRESIDENT-ELECT: I think the American people right now are feeling frustrated that there's not a lot of adult supervision out there. Whether it's in the political world or in the financial world, there's a sense that anything is -- anything has been going on. That whatever's good for me, I do.
(END VIDEO CLIP)
KEILAR: Shapiro would replace the current chairman of the SEC, Christopher Cox, a Republican, who had said that he was on his way out at the end of this administration. He has been embattled not only for what is seen as some perhaps lax oversight contributing to the financial crisis, but also some missed information that some people pointed to, especially recently in this Ponzi scheme, this alleged financial fraud on the part of, allegedly, the former head of the NASDAQ.
A couple of other announcements today by the president-elect also, on his federal -- or his financial regulatory team. Gary Gensler, chairman of the Commodities Futures Trading Commission, and Dan Tarullo, his pick for a governorship on the Federal Reserve board. All basically fulfilling this role that the president-elect sees as policing the financial markets, Kyra.
PHILLIPS: Let me ask you about something else. You know, Rick Warren, the author of "Purpose Driven Life." He also conducted one of the presidential debates. President-elect receiving a lot of criticism for selecting him to do the invocation.
I mean, no matter who the president-elect picks, all these Christian leaders, religious leaders, will have certain opinions about certain issues. So I don't think anyone would go without controversy.
KEILAR: Well, but in particular, Rick Warren is certainly garnering a lot on controversy and a lot of criticism from a core Democratic constituency: social liberals who completely disagree with Warren's rules on abortion rights and same-sex marriage.
Warren, of course, was a big supporter of Proposition 8, which just passed in California, banning same-sex marriage. So some people very, very upset.
President-elect Obama spoke about this at length today when he was asked about it in this news conference. He said that he, Obama, is a fierce advocate of equality rights for gay and lesbian Americans. He said that that doesn't change by this pick. He will continue with that through his presidency.
But he also said it's important to bring in people who have differing views. You can see he's walking a fine line here, and a key constituency very upset, Kyra.
PHILLIPS: All right. Brianna, thanks.
As we just said, Pastor Rick Warren's role in the inauguration ceremony is dividing the president-elect's supporters and political pundits. That divide was in full view last night on "AC 360." Here's a taste.
(BEGIN VIDEO CLIP)
ROLAND MARTIN, CNN POLITICAL CONTRIBUTOR: Look, Obama believes in marriage is between a man and woman. Is that controversial?
Not only that, you have two people who have speaking today who are preachers. You have Rick Warren, who is against gay marriage, giving the innovation. You have the Reverend Joseph Lowery, who is for gay marriage, giving the benediction.
HILARY ROSEN, DEMOCRATIC STRATEGIST: This is not a -- this is not a policy difference. This is not even about gay marriage. That can be as political or policy difference that, obviously, Barack Obama has with many gay and lesbian people.
This is about the way that Pastor Warren has used homosexuality as a weapon, that he uses religion as a weapon.
(END VIDEO CLIP) PHILLIPS: President-elect Obama says that a wide range of viewpoints will be presented during his inauguration ceremonies, and we'll all see it.
A power -- power lunch like none other leads off our political ticker. President Bush plans to host President-elect Obama and the nation's three former presidents for lunch next month. Former presidents Carter, Clinton and Bush will join Obama and the current President Bush on January 7. It will be Obama's second post-election visit to the White House. Obama takes office January 20.
Democrats picked up a win in the nation's last undecided House race. The recount confirms that Tom Perriello knocked off Republican incumbent Virgil Goode by 727 votes in Virginia's Fifth District. Overall, Democrats picked up a total of 21 House seats in the November elections.
Caroline Kennedy is meeting with the Reverend Al Sharpton in Harlem today as she continues to make the rounds seeking support for a New York Senate seat. President Kennedy's daughter wants to succeed Hillary Clinton when Clinton becomes secretary of state.
New York Governor David Paterson says he won't make an appointment until Clinton is confirmed. Kennedy told reporters today that she's eager to serve.
(BEGIN VIDEO CLIP)
CAROLINE KENNEDY, JOHN F. KENNEDY'S DAUGHTER: You know, I think it's something I care about and I understand that, really, I have been trying to work on that, and I have tried to -- (INAUDIBLE) and I feel if asked, in the last two years, and I'd love to (INAUDIBLE).
(END VIDEO CLIP)
PHILLIPS: Sorry about that. I couldn't understand a thing she was saying. You probably couldn't either. So we'll try and get that fixed and bring it to you again.
Meanwhile, check out our political ticker. For all the latest transition news, just logon to CNNpolitics.com, your stores for all things political.
Well, if you're betting on no snow in Las Vegas, you'd lose big time. Check this out. Tons of the white stuff coming down on the Vegas strip. We're going to get the latest on what's happening there and across the country.
(COMMERCIAL BREAK)
PHILLIPS: Crisis for hundreds of thousands of people in Congo. Actress Mia Farrow has just returned from a good-will mission there. She's in the NEWSROOM next hour.
(COMMERCIAL BREAK)
PHILLIPS: Checking news around America right now.
Mixed marital -- or martial arts fighter and his wife have been found dead in what police say was an apparent murder/suicide. Justin and Sarah Levens both had gunshot wounds.
Her mother found the bodies in the bedroom of their condo near Los Angeles.
Justin Levens had competed in the Ultimate Fighting Championship.
His third wife was killed, his fourth wife is missing and presumed dead, but still Drew Peterson's managed to find love again. Former Chicago area cop is engaged to a 23-year-old woman, even though he's still legally married to Stacy Peterson, who was 23 when she disappeared last year. Police have named him a suspect in the case.
And the original honest Abe would be proud. A New York man named Abe Lincoln found a wallet the other day stuffed with almost 3,000 bucks. Well, a tempting Christmas fund for sure, but Mr. Lincoln tracked down the owner, a migrant worker from Jamaica, and he returned it.
What are the odds of seeing this on the Las Vegas strip? Slim to none, pretty much. But there it is. A big snowfall in the desert city, a storm that blew in from the Pacific, dropped some four inches of snow in Las Vegas.
The National Weather Service says it's the heaviest snowfall there in a month -- or in the month of December since record keeping started in 1937. And it's the eighth biggest snowfall ever in Las Vegas.
And yes, snowflakes also in Malibu, California. The Pacific storm pretty much covered the entire state of California with snow, rain or fog. Up to four feet of snow fell in the mountains just east of Los Angeles.
Then in Seattle, what a great backdrop for a snowstorm. Look at this. It was really coming down at the city's famed Space Needle. And this morning, there was even thunder snow with lightning. Thunder and snow all mixed together.
Chad Myers is keeping track of what's going on right now.
Hey, Chad.
(WEATHER REPORT)
CHAD MYERS, CNN METEOROLOGIST: OK if you get home early tomorrow afternoon. Get home, get the rush hour over with. But by tomorrow night, don't be staying late at work, if you don't have to -- Kyra.
PHILLIPS: I like that advice! Thanks, Chad.
MYERS: But I have to now.
PHILLIPS: Oh, I know. It's going to be a busy weekend for you.
MYERS: That's all right. I like it.
PHILLIPS: All right.
Well, cautious moves on Wall Street as investors weigh new jobless and corporate earning reports. We're going to go live to New York for a check of the markets.
And can you believe it's been ten years since Bill Clinton was impeached? We're going to look back at those turbulent times, the former president and that infamous intern.
(COMMERCIAL BREAK)
PHILLIPS: All right. This just in. It looks like President- elect Barack Obama has picked his woman for labor secretary. This is according to the Associated Press. This woman right here, California Representative Hilda Solis.
Here's a little background. She was first elected in 2000 as congresswoman, and she's serving her fourth term in the House of Representatives. She represents California's 32nd congressional district. That includes parts of East L.A., a heavy Hispanic area, and also the San Gabriel -- the San Gabriel Valley.
She also became the first woman to receive the John F. Kennedy Profile in Courage Award for her pioneering work on environmental justice issues in California. And in 2003 she became, as we rerack that video there. Sorry. She became the first Latina appointed to the powerful Committee on Energy and Commerce.
There you go. Associated Press coming out now, saying through a source, that Barack Obama has picked California Representative Hilda Solis for labor secretary. We'll follow up on that.
Well, relief for credit-card holders is on the way. Federal regulators are voting today on new rules aimed at protecting consumers. Susan Lisovicz on the floor of the New York Stock Exchange with all the details from there.
And Susan, I've been reading about this. And it looks pretty good, what it could do for us, if indeed, this goes through?
SUSAN LISOVICZ, CNN CORRESPONDENT: Well, I think it's definitely a sore subject and one that I think a lot of consumers have been clamoring for a while, and we're expecting it in the next hour.
The Federal Reserve expected to pass new credit-card rules that would take effect mid-2010. The changes have passed would mean that the interest rate you pay can be hiked only if the amount, the payment due, is over 30 days late. That's late payments on one card would not affect the rates on your other credit cards, and that consumers would be given 45 days' notice if the terms change. That is expanded from 15 days. The new rules, Kyra, you probably remember this, were first proposed in May. And the Fed got an earful, got a record amount of e- mails and letters and calls from the public, 65,000, mostly in favor of these kind of changes, Kyra.
PHILLIPS: All right. Well, obviously, it's a hot issue for all of us. So what took regulators so long?
LISOVICZ: Well, not everybody is in favor, Kyra. Think about the banking industry, for instance. I mean, there's a study that says the banking industry could lose $10 billion a year in interest payments, and there's a lot of companies that issue credit cards. Roughly 16,000 companies in the U.S., believe it or not, issue credit cards.
There are also some downsides to this, because for instance, there may not be as much solicitation on the one hand. Maybe that's not so bad. Because so many of us have gotten into trouble with our credit-card debt. But for people with low -- low credit ratings, they may not have as many options available to them.
Also, the initial rates may be higher, because bank companies, credit-card companies, won't have the option. They won't have that flexibility of raising them so easily in the future. So those are some of the down sides.
In any case, we're expecting to you come down in the next hour. Remember, revolving credit, a huge problem for Americans. We're talking about the federal funds rate that went down close to zero. Anybody who pays, is paying off revolving credit knows it's not close to zero on a credit card interest rates. Double digits usually the case.
Double digits for moves on the stock market. The Dow is down 55 points. NASDAQ is down 1 point. It's just a -- kind of a quiet day.
And oil is below $40 a barrel. That's your bonus. Oil continues to decline, and you've seen it at the pumps, just about every time you go there, Kyra
PHILLIPS: All right. Susan, thanks. We need something good. Some little bonus.
LISOVICZ: Just something for you to feed on, Kyra.
PHILLIPS: All right.
LISOVICZ: The pickings are slim these days.
PHILLIPS: I know. See you again in a little bit.
LISOVICZ: You got it.
PHILLIPS: The war in Afghanistan is far from over. We're going to find out what President-elect Barack Obama will face as he makes that country the central focus in the war on terror. (COMMERCIAL BREAK)
PHILLIPS: Right now it's 1:31 Eastern time. Here are some of the stories we're working on in the CNN NEWSROOM.
President Bush says he hasn't decide what he might do to help the U.S. auto industry, but his press secretary says today the president is considering what she described as an orderly bankruptcy. Chrysler is shutting down its factories for the next month and GM is also temporarily closing some of its plants.
President-elect Obama says federal regulators dropped the ball when it comes to regulating the financial industry. He made his remarks made as he named three veteran regulators to his team, including the first woman to lead the Securities and Exchange Commission.
Meantime, the Bush administration has issued a new federal rule strengthening legal protections for doctors who refuse to take part in abortions because of religious objections. Critics argue that the rule is too broad and will limit a patient's right to get care and accurate information.
Barack Obama has vowed to make Afghanistan the central focus of the war on terror more than seven years after 9/11. There's still no complete victory over the Taliban and reaching that point could be years down the road.
Here is CNN's Pentagon correspondent, Barbara Starr, with a "Memo to the President."
(BEGIN VIDEOTAPE)
BARBARA STARR, CNN PENTAGON CORRESPONDENT (voice-over): Mr. President, some say the war in Afghanistan isn't going well. It's one of the reasons you asked Bob Gates to stay on as Secretary of Defense.
OBAMA: As Bob said not too long ago, Afghanistan is where the war on terror began, and it is where it must end.
STARR: But how to end it? You will soon be to asked to approve sending an additional 20,000 troops to join the 30,000 already there.
ROBERT GATES, DEFENSE SECRETARY: We are hopeful that we will be able to send an additional two combat -- brigade combat teams by late spring.
STARR: The first wave arrives here in southeastern Afghanistan where there hasn't been enough U.S. troops or Afghan police to provide security. The Taliban now controls some towns and villages, moving about unchallenged in some cases.
BRIG. GEN. MARK MILLEY, U.S. ARMY: They got areas where they can sleep, where they can eat, where they may have contacts and curriers come and deliver money.
STARR: It's an insurgency fueled by a thriving poppy crop.
Your top military adviser warns with all of these challenges, even 20,000 more troops won't be enough for all-out victory.
ADM. MIKE MULLEN, JOINT CHIEFS CHAIRMAN: I think there needs to be a considered effort economically and a considered effort in the governance rule of law, diplomatic, political side.
STARR: Billions of dollars in aid is urgently needed, so are more troops from our allies. But NATO countries have been resisting getting more involved.
In the Afghan security forces the U.S. is training, the U.S. will pay the tab for them for decades to come.
Your not-so-new secretary of defense seems frustrated.
GATES: I think everybody would agree that holding your own isn't good enough.
STARR (on camera): Mr. President, the clock will be ticking as soon as you take office to try and to get those troops into Afghanistan as quickly as possible. Why? Afghanistan is set to have its own presidential election in September 2009. The U.S. troops will be vital for providing security for those elections.
Barbara Starr, CNN, the Pentagon.
(END VIDEOTAPE)
PHILLIPS: Just a month from Saturday, Condoleezza Rice exits the world stage. In our next hour of the CNN NEWSROOM, the secretary of state talks with our own Zain Verjee about her job, the good and the bad times and she offers us a glimpse into her life away from work.
It's been 10 years since Bill Clinton was impeached. Has Washington moved on? Or, is it the same old town?
CNN's special correspondent, Frank Sesno, takes a look back at the (INAUDIBLE).
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: William Jefferson Clinton, President of the United States, is impeached for high crimes and misdemeanors.
FRANK SESNO, CNN SPECIAL CORRESPONDENT: It was 10 years ago...
UNIDENTIFIED MALE: -- Perjurious, misleading and untruthful.
UNIDENTIFIED MALE: Mr. Speaker, this is wrong, wrong, wrong.
SESNO: The impeachment of a president. It had been tawdry and tortured, this becoming this.
W. CLINTON: I did not have sexual relations with that woman, Ms. Lewinsky.
SESNO: But it was really about truth and consequences.
CLINTON: I never told anybody to lie, not a single time. Never. These allegations are false.
STARR: But they weren't.
UNIDENTIFIED MALE: The I's (ph) have it --
SESNO: Monica Lewinsky, a young White House intern, and the president had what was politely called "inappropriate contact." He got into trouble for what are he told investigators.
CLINTON: It depends upon what the meaning of the word is is.
KENNETH STARR, FORMER SPECIAL COUNSEL: The evidence suggests that the president repeatedly used the machinery of government and the powers of his high office to conceal his relationship.
SESNO: The scandal divided the country.
REP. DICK ARMEY (R), TEXAS: A nation of laws cannot be ruled by a person who breaks the law.
REP. CHET EDWARDS (D), TEXAS: When will this mindless cannibalism end? How many good public officials must be destroyed because of their private sins and human imperfections?
SESNO: It paralyzed the presidency, and made their private lives, and foibles, painfully public. It became about survival. So the Clintons circled the wagons and went on the offensive.
HILLARY CLINTON, WIFE OF WILLIAM JEFFERSON CLINTON: The great story here for anybody willing to find it and write about it and explain it is this vast right-wing conspiracy that has been conspiring against my husband since the day he announced for president.
SESNO: The impeachment hearings live and in graphic detail capped a year of this. The House voted to impeach, but the Senate did not convict.
He's worked every since to reclaim his reputation. She's run the marathon and has gained influence. But there will always be that history. And private lives will always be the quicksand of American politics.
(END VIDEOTAPE)
SESNO: So the quicksand of American politics, Kyra.
They made it through that, obviously. They did it because they circled the wagons, as I said. They stayed together, they adopted a really tough strategy and they made this a political -- a political battle. And in the end the country and the Senate said, you know what? A sex scandal and all the lives surrounding it, not enough to bring a president down.
PHILLIPS: Wow, you know what's wild? And -- I do have a couple questions for you. But just seeing Hillary Clinton, Frank, and talking the way she was talking and how she handled all that, and then you fast forward 10 years, and here she was running for the presidency.
I don't know. It's just fascinating to kind of see her then and see her now.
SESNO: Well, you've got to give her incredible credit. She has taken her lumps -- and we know this -- from all across the spectrum. People have said she should have left her husband, people have said she is part of the vast left-wing conspiracy. And she hung in there, and she deserves a lot of credit for that in the American political system, just to kind of stay with the fight, and stay in the game, and put herself out there.
I mean, regardless of what you think about the Clintons' politics, and they remain divisive by the way, of course, is they are in this game and they are one tough political couple.
PHILLIPS: Now if I remember correctly, I think you were a bureau chief at that time.
SESNO: Yes, you had to remind me.
PHILLIPS: Back in the day. Yes, that must have been hell.
SESNO: Yes.
PHILLIPS: What do you remember?
SESNO: What I remember is being taken in places, Kyra, that we had never been taken before. We had to figure out what kind of language to put on television, how to describe the sexual scandal.
When the president said it depends what your definition of is is, it was -- he was talking about the definition of sexual relations. We put things on television, and we put things out there to the public that we would never have imagined doing. But in this particular case, it came down to whether a presidency was going to survive. And it was day in and day out of this trying to get information, trying to figure out -- there were leaks all over the place. What could you go with? What couldn't you go with?
But really it was about seeing a constitutional crisis built around an intensely personal and really tawdry, nasty scandal like that.
PHILLIPS: And you sort of wonder if that would have happened to a woman, you know, what would have happened to her reputation? It happened to a man, and the guy's still a rock star. He went through a tough time, but he kept his popularity.
SESNO: The questions about the political implications of it, the social implications, the double standards, as you say, the issues of governance and propriety -- I remember we had a lot of conversation about other presidents and people saying, like, Ronald Reagan and others who never took their suit coat off in the Oval Office, and this had somehow, sullied the Oval Office beyond belief and by itself was enough for the president to resign.
Others said the presidency needs to be stronger than this, and this had a lot to do about our institutions of government.
And of course, the way the world looked at us. Some people thought we were out of our minds because -- the French, they have traditions of their own as we know -- and the Europeans. And they thought the Americans have just gone off the deep end.
It was a very -- it was a bizarre, surreal time.
PHILLIPS: Yes. I think in some ways we did go off the deep end. But I can't believe it's been 10 years.
Frank --
SESNO: Well, it's -- you know, you're right.
And what's interesting, if I may very quickly, it really is fascinating to see where the country came down on these issues of privacy and sexual behavior and private lives of public officials. Because I think that may have been the big surprise.
People, I think, in the end, especially observers and people here in Washington, surprised where the country came down on that.
PHILLIPS: And how crafty politicians can be with one or two words.
SESNO: There's that.
PHILLIPS: Thanks, Frank.
SESNO: Thanks, Kyra.
PHILLIPS: All right. Well they've held the highest office in the land. Barack Obama will soon be turning to President Bush and the men who came before him in the Oval Office for advice. More on this big meeting of the minds in the next hour of the CNN NEWSROOM.
Well accused investment guru, Bernard Madoff, is under house arrest in his $7 million Manhattan apartment with a special hi-tech accessory adorning his ankle. He is accused of ripping off investors to the tune of some $50 billion. He wanted to go free on $10 million bail, but despite all his friends in rich places, he couldn't get four to sign his bail request.
Donald Trump sure as heck wasn't going to do it. And here is what he said on CNN's "AMERICAN MORNING."
(BEGIN VIDEO CLIP) DONALD TRUMP, REAL ESTATE MAGNATE: The people in Palm Beach, many of those people have been just ripped off by this sleazebag. And they'll never see the kind of money that they've seen.
You have some people that gave 100 percent of their net worth to him, in trust, because they trusted him, they trusted his family, they trusted everybody. And now they literally are selling their houses in order to live and some of them mortgaged their houses in order to give that money to this Madoff. And it's really a terrible thing.
I'd see him around Mar-a-Lago, I'd see him around Palm Beach. And he's a disgrace.
(END VIDEO CLIP)
PHILLIPS: Madoff is accused of creating a massive Ponzi scheme. So what exactly does that mean? Josh Levs at the CNN magic wall to kind of talk us through how it works, what it means, and where the word Ponzi comes from.
JOSH LEVS, CNN CORRESPONDENT: There you go. Yes, we're going to break this down Schoolhouse Rock style, Kyra. You like that?
PHILLIPS: Oh my gosh are you taking me back. I'm just a bill. A lonely -- OK, I won't go there.
LEVS: All these years later we remember it because this stuff works.
PHILLIPS: I do.
LEVS: And the Ponzi scheme is a perfect example. A lot of people hear the term, you hear pyramid scheme. I want to show you how this works.
So we're going to start off with this one right here. This right here, this is the guy who's creating the Ponzi scheme. And he will be very recognizable to you as I talk from this Pac-Man face. Everyone over here is potential investors. This guy, Mr. Ponzi Scheme, is saying to everybody, hey invest $1, and you'll make $1,000 off of this. Now, it's not always that extreme. But the basic idea here is it starts with the promise of a ton of money from a simple investment. Hard to believe that you can actually get that much money that fast.
But people line up, they start to invest. They say, you know what? I want to get in on this. I want some of that money. So these are the investors.
Now, this is where your Ponzi scheme gets under way. Right here. Check this out. This means it's happening because more people come along, they say, I want to be a part of that scheme. So here is what they do. They buy in, they pay their money to him, he then gives their money to these guys, which means they're starting to get everything that was promised to them. So they start to say, hey, this is actually working. Then even more people come in. Check it out. This is the -- we're going to end (ph) the pyramid. These people come along, and they're like, I want in, too. They take their money, they buy in, these people and these people get their return. But that is when everything falls apart, Kyra.
That is why, ultimately, these things fall apart. Because even if every person in America bought in, in the end, it wouldn't work out, because eventually you'll run out of investors. So the people who were at the bottom wrung are left with nothing. Everybody who was ahead of them on the pyramid runs away with their money. And that is how -- that's what a Ponzi scheme is. And that is how to not fall for it.
Watch out for those huge promises in the first place. Investigate.
PHILLIPS: I liked your --
LEVS: Make sure you know.
PHILLIPS: -- your gingerbread Pac-Man there.
Real quickly, Ponzi, it came from an Italian name, right?
LEVS: Yes, it is. It's an Italian name.
He's the guy who in the 1920s got away with it. And guess what? We have his mug shot right here. That's him back in the 1920s, in the U.S.
We have his -- I didn't know they had mug shots at the time. We have his actual mug shot from all those decades ago. And it was named after him because he managed to bilk investors out of so much money at the time, Mr. Charles Ponzi (ph).
PHILLIPS: Slick Italians.
Josh, thanks.
LEVS: A little. Thanks, Kyra.
PHILLIPS: Well the men who made history are about to witness it. The Tuskegee Airmen head to Washington for the presidential inauguration. And one of them joins me live, right here in the CNN NEWSROOM.
(COMMERCIAL BREAK)
PHILLIPS: Well a group of men who made history are going to witness it. President-elect Barack Obama has invited the famed Tuskegee Airmen, America's first black aviators, to his inauguration. Val Archer was one of those airmen and he plans to be in Washington on January 20th.
Now when Val was just 15 years old, he lied about his age so he could enlist in the Army Air Corps. His mother had died when he was just 12 of pneumonia and he was not close to his father. So Val's grandmother believed that enlisting in the military would save him from a life in gangs. Well, he says that she was right. While in the army, Val Archer served with distinction for more than 20 years. He joins me now live in the NEWSROOM.
VAL ARCHER, FORMER TUSKEGEE AIRMAN: So good to have you.
Thank you.
PHILLIPS: And you and I were just kind of talking in the break about, there you were at 15, working odd jobs, you were working on the railroad, but everywhere were advertisements to join the military, right?
ARCHER: Right. Uncle Sam needs you.
PHILLIPS: And you were like, OK, I'm going to join.
OK, tell me, was it because you felt, really, there was no other option? What was the trigger?
ARCHER: The trigger, I think, mostly was that I was being deserted by my compadres, again, who were older than I.
But that was all I had at the time. I wasn't -- I didn't have any stable situation, and so I latched on to that. That was my way of life and that's who I was at the time.
PHILLIPS: So let me ask you, did you ever think about discrimination or racism or segregation when you thought about joining the military?
ARCHER: Well, you know, segregation was a part of everyone's life in the United States at that time, and to the extent that we were all part of it, whether we were on the receiving end or the giving end. It was just part of our culture. So obviously, you know, I was quite aware of it, but as in anything else, it wasn't something that was going to stop me from doing anything. So --
ARCHER: And it didn't. It's amazing what you went on to do within the military.
PHILLIPS: I know the highlight of your career, I was reading, working on an atomic weapon. Tell me about that. And were you surprised you got assigned to that?
ARCHER: I was -- certainly surprised.
I thought I was on my way to another destination, and mid-ocean the captain of the ship announced that we were going to a different location, and that wound up to be in the west Pacific, and to join a special task force that was there to test a weapon. So, of course, I didn't work on the weapon itself, but I did work on some of the instruments and checking out the status and making sure that everything was OK from my position. PHILLIPS: Well, I knew you were an instrument specialist and you worked on a number of the aircrafts as well.
ARCHER: Yes.
PHILLIPS: So let me ask you this, you remember when the military was finally integrated. Tell me what that was like. And at that point, as you sort of saw integration starting to happen, did you ever think, maybe one day we will have a black president, too?
ARCHER: Sure.
(LAUGHTER)
PHILLIPS: You laughed.
ARCHER: Yes, well, it would have been humorous, I think, at the time.
But, no, it is part of that culture that we lived in. Segregation was definitely a part of it. And it was a sort of place where depending on what opportunities we had to get to a certain position, that is who we were, and that is where we were.
PHILLIPS: Because you were even promoted to a sergeant, but they still didn't want to put white guys underneath you, right?
ARCHER: That is true. Yes.
PHILLIPS: Gosh.
ARCHER: Well that was -- at that particular time, the idea of an integrated armed forces, that was revolutionary as well. So --
PHILLIPS: And what do you remember -- when it became integrated, did you -- what was that moment like? Do you remember thinking, OK, it is about time, here we go?
ARCHER: No.
PHILLIPS: Really? What was going through your mind?
ARCHER: What my next assignment was, and who would I be working for or working with, would there be other opportunities. Because the idea of having a desegregated service meant that there would be opportunities for -- equal opportunities, I think.
And over the period of -- say from 1949 to 1967 or so, we were well into the Vietnam War before the new cadre of people in the Equal Employment Opportunity Program really got a grip on it. And they did an amazing job. They turned -- I think I give them credit for turning the armed forces around to what it is today.
PHILLIPS: Well, now, look at our country. Talk about being turned around.
What do you think of Barack Obama as president?
ARCHER: I'm still absorbing it. It's more than a breath of fresh air; it's what I hoped for and what I expect and what -- I know this guy's -- his abilities are incredible.
And he has demonstrated a good deal of that during the campaign. And I expect great things from him. I just want to be ready to do my part.
PHILLIPS: Well, and you have done that for decades.
So final question, Val, let me ask you, you remember desegregation in the military, but still, look at how long it took to get a black president. Obviously, he can't end racism, he can't completely cure all the ignorance in this country, but this is a definitely a start.
What are you looking for in him? What are you hoping at least he achieves while you are still alive and watching this piece of history?
ARCHER: Well, from a leadership point of view, I think the first thing is that he has developed -- surrounded himself with a cadre of outstanding people to staff the programs and operations that he will be responsible for. I think that is the first step.
And how that is accomplished, I am sure that he will have their back in supporting them and turning this country around. And it's well overdue for that to happen.
PHILLIPS: It is going to be exciting to watch.
And as we go to break, I have to point out to our viewers -- turn around, show them your ponytail here.
I said, OK, Val, this is quite the dapper ponytail. Turn your head a little bit this way. Step up. And that is because his wife says he's got wings that she's got to tie back so he doesn't fly away.
ARCHER: Yes. Well, my hair is getting very thin, so --
PHILLIPS: Well, you are a very handsome young man.
ARCHER: Wow. Thank you.
PHILLIPS: Val Archer, it was great meeting you, and I can't wait to hear about the inauguration. You'll come back and tell us about it, right?
ARCHER: I'll do it.
PHILLIPS: Fabulous.
Thanks, Val.
ARCHER: Thank you.
PHILLIPS: We're going to take a quick break. We'll be right back.
(COMMERCIAL BREAK)
PHILLIPS: This is coming into us right now as you are looking at a live picture there of the Capitol. Apparently, police are ordering the evacuation of one of the House office buildings right now on the Hill after receiving reports of smoke or steam coming from an office.
Now, you see some steam within that shot, but that is not the building that has been evacuated. That is actually normal, it's coming up there from the underground. But according to Capitol police, that they are investigating the source of the trouble in the Longworth House Office Building.
And we will just follow-up. Apparently fire trucks and police vehicles are lined up there along Independence Avenue trying to figure out what is going on. So we will update you.
Well more bad news for the economy. Automakers plan some extended shut downs. We're going to have more on that next hour.
(COMMERCIAL BREAK)
