Return to Transcripts main page
CNN Newsroom
Osama Bin Laden Calls for Jihad Against Israel; Confirmation Hearings Continue for Cabinet Picks; Congressional Panel Examines Bailout Spending; Charges Expected for Runaway Pilot
Aired January 14, 2009 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: Captured at a campsite. A pilot accused of faking his death in a plane crash is found.
It's Wednesday, January 14th. I'm Heidi Collins. You are in the CNN NEWSROOM.
More confirmation hearings on Capitol Hill this morning. Senate committees questioning President-elect Obama's nominees.
Retired General Eric Shinseki, his choice to head Veterans' Affairs. We're going to check out some of that hearing this hour.
Also appearing today, Lisa Jackson, nominee to head the EPA, and former Iowa governor, Tom Vilsack, being considered for agriculture secretary.
Also live on Capitol Hill, a Congressional oversight panel looking at the financial bailout money. With $350 million left to hand out, there are questions you can count on.
CNN Congressional correspondent Brianna Keilar is joining us now live with the very latest.
What, Brianna, do we expect to be sort of the main sticking point, if any, today?
BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Well, and just to touch on that hearing that you were looking at, Heidi, that is actually a congressional oversight committee that is looking at how the first $350 billion was spent.
So they're kind of taking a retrospective. But, of course, the big sticking point overall is whether this other $350 billion should be made available to President-elect Barack Obama, and, you know, at this point, basically, what you have is a vote looming on whether to block that or not.
You've got Democrats who say, you know, not enough was done with the first $350 billion. Homeowners facing foreclosure weren't helped. You've got Republicans saying the auto industry got a chunk of it and they shouldn't have.
But what we're looking at is this vote that could happen in the Senate as soon as Friday. If anyone can come through for President- elect Barack Obama on this, it is Senate Democrats. But we're hearing a lot of reticence on their part, Heidi, about whether they're going to throw their weight behind this.
They -- all of them, Democrats and Republicans, just really feel burned about how that first chunk of money was spent and they're very wary of there being a repeat, Heidi.
COLLINS: OK. So -- they're going to place anymore conditions on this money this time around?
KEILAR: I'm sure you noticed yesterday, Barney Frank, chairman of the House Financial Services Committee, he held a hearing to talk about different conditions, maybe to put on this other $350 billion. But the fact of the matter is, once that request went in by President Bush at the request of President-elect Obama, a clock started ticking.
And the sense here on Capitol Hill is that no legislation with conditions on how it should be spent can be put in place before there's actually this vote on whether or not the money should be blocked.
So that's really, again, Congress feeling that they're very rushed, and this is what you're hearing from some of these Democrats who say, hold up, you know, I'm not quite comfortable with this, I'm not saying yes to this. They feel rushed, Heidi.
COLLINS: All right. We're going to stay on top of this one today certainly.
Brianna Keilar, thanks so much from Capitol Hill this morning.
President-elect Barack Obama threatening his first veto. The "V" word came up at a meeting with congressional Democrats during a discussion on what to do with the rest of that federal bailout money.
CNN White House correspondent, Suzanne Malveaux is joining us now live.
Hi there, Suzanne. Just wondering how different this is, before you get into office, to use such a powerful word like veto.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: It's really kind of extraordinary. I was getting a little echo in my ear here. It's really kind of extraordinary when you think about it here because, obviously, he needs the cooperation of the Democrats.
And one of the things that he's trying to do, he knows that this is a tough sell, talking with aides and those who are in that meeting with Barack Obama yesterday, saying that he is really trying to use his rapport, the kind of trust, the camaraderie that he has developed with his fellow lawmakers to convince them to say, look, this is an urgent matter, we need this money.
There are a lot of things that are happening that are unknowns, in terms of this bailout money, $350 billion, you know, where would it go, how would it be used?
Barack Obama is trying to reassure those lawmakers that, look, even if you don't trust what I'm saying, I'll put it in writing. There will be a chunk of it that will be used to help those stay in their homes. There will be a clause, if you will, or a stipulation that says, hey, look, we'll hold some of the CEOs accountable, we'll make sure that people are not abusing this money or not accounting for this money.
One of the things that he's hoping to tap into as well is there are Democrats who were elected and re-elected who really were on the bandwagon of hope and change and -- got into the feeling that as voters had about bringing something new and fresh and different to Washington.
And Barack Obama says, look, you know, he can't do it without his fellow Democrats here. He does not want to fight. But he is willing to veto this, if necessary, Heidi.
COLLINS: And quickly, you know, maybe I'm crazy, and I don't want to simplify things. But when you're talking about this much money, or maybe even just $1 billion, don't you put somebody in charge who then is responsible for accounting for it, and letting everyone know, specifically the taxpayers, where that money went?
Is that going to be what this new position, a chief performance officer, could possibly entail?
MALVEAUX: Well, sure. I mean, that's the one person who is going to take a look at all of this. But there's a whole economic team that he's put in place.
You know, Larry Summers, who's his top economic adviser, who was meeting with the same group of Democratic lawmakers over the weekend, the same person who sent a letter out to them, basically outlining all of those assurances that Barack Obama is promising here, saying, we are going to take a very close look, a very careful look, at where all of this money is going, that we are going to do essentially a better job than President Bush and Secretary Paulson did the last go-round.
Now, if perhaps it is a leap of faith for some of these lawmakers who've been burned the first time around, but there is a relationship with Barack Obama. People say that he is convincing, but not convincing enough, not to have this actually in writing. And that is something that they're actually working on.
COLLINS: All right. Very good. Sure do appreciate that.
CNN White House correspondent Suzanne Malveaux. Thanks, Suzanne.
A new sales number to tell you about this morning. Not sure you want to hear it. Not a very good one.
Retail sales fell for the sixth straight month in December, the longest consecutive stretch of monthly declines in 40 years.
Our Christine Romans is live in New York.
So, Christine, what does that mean? CHRISTINE ROMANS, CNN CORRESPONDENT: That means that people are going to the mall, going to the stores, and they're buying a lot less. Even if they're going and they're keeping up their normal shopping...
COLLINS: Yes, I was going to say, are they even going?
ROMANS: If they're -- even if they're going. And some of the traffic patterns are showing that people -- traffic is down a little bit, but the spending is down a lot. When you look at a 2.7 percent decline in the month, the sixth in the row as you pointed out, Heidi, if you take out autos and auto parts, it's even worse, it's down 3.1 percent.
So -- a 3 percent decline, if you don't count autos, I mean, you know, we just don't see numbers like this, and it shows the incredibly challenging environment for the retailers and it shows that people are concerned about their jobs.
We lost 2.6 million jobs last year almost. They're concerned about their house. We've got foreclosures still continuing to rise here, 2 million more expected in the ballpark of 2 million more this year.
People in some cases can't get the credit to buy the big-ticket items, at the electronic store. And so you're seeing this all spill out here. It shows a consumer that's strapped, a consumer that's nervous.
In some cases, what I'm hearing from the retail analysts is you've got people who are in a perfectly fine position to be buying who aren't, because they're nervous, they're looking at their 401(k) and they're pulling back at the mall.
They're just concerned about things right now. And you're much less likely to have an impulse buy, quite frankly, if you're reading the headlines about jobless and foreclosures and home prices going down.
It's not good for the economy. It's not good for the economy, when people who can afford to be spending in the normal spending patterns aren't. But it's good for people's personal finances, of course, if you were spending more than you earned, if it you were too stretched, some people quite physically can't spend more money, and so they aren't. And we're seeing these new numbers.
COLLINS: Yes, no question about it. All right. Christine, thanks for that.
In fact, want to take a look at the big board now and see if there's any sort of reaction to these retail sales numbers. We were kind of expecting a lower open today, and there you have it, down about 175 points. Triple digits there.
Yesterday, we ended the day down about 26. So we'll see what happens by the time the market closed today.
Much of the country in a deep freeze today. Bone-chilling temperatures in the middle of the country, heading east now.
In Wisconsin, it was so cold lakes turned into sheets of ice. In some places, the windchill temperature dropped to 40 or 50 below. The severe cold is actually blamed for one death in Wisconsin. Sadly, more below zero temperatures are on tap for there today.
CNN meteorologist Rob Marciano standing by now to tell us more about this.
That's the big question everybody wants to know. You know, when is it going to get warmer, when are they going to get a break?
ROB MARCIANO, CNN METEOROLOGIST: I'm -- thinking April, May.
COLLINS: No, come on. Wow.
MARCIANO: Well, obviously, I'm kidding. But this pattern has shifted. And the atmosphere is kind of flip-flopping here a little bit and I think the eastern two-thirds of the country, basically, we're just getting tons of cold air that's been sitting up in Alaska near the North Pole for the last couple of weeks where they have been setting records.
And now, finally, the steering mechanism of the atmosphere has allowed that cold air to release southward and we're just getting it all right now.
The good news is, Alaska currently is warming up, so eventually this cold air will run its course and -- be done with it. But it's going to take, I think, at least five days for it to do so.
(WEATHER REPORT)
COLLINS: Yes, I know. The family has been calling saying they're not doing anything, staying inside. Yikes.
MARCIANO: Good idea.
COLLINS: All right, rob. Thank you.
MARCIANO: OK.
COLLINS: He was on top of the world, a successful financial adviser who loved to fly. But now his world has come crashing down, along with his plane.
(COMMERCIAL BREAK)
COLLINS: A mystery solved. Two days after a plane crash in Florida, the pilot is found. Not at the crash site, but a campsite far away. Now that man is expected to face serious charges.
CNN's Brooke Baldwin has the latest.
(BEGIN VIDEOTAPE) BROOKE BALDWIN, CNN CORRESPONDENT (voice-over): A pilot whose personal and financial world was in tatters allegedly performed his own bailout over the skies of Alabama. The stunt, which police say was supposed to fake his death, came to an end at a Florida campsite.
JOHN BEEMAN, U.S. MARSHAL: We believe that the plane crash was part of his plan to make it look like he had died in the crash.
BALDWIN: Police say Marcus Schrenker's story started Sunday during a flight from Indiana to Florida, when he radioed that his plane was in trouble and that he was bleeding. After being trailed by military jets, his single-engine plane crashed in Florida. But Schrenker, nowhere to be found.
Police believe Schrenker parachuted to the ground just outside of Birmingham, Alabama.
JIM ATTERHOLT, INDIANA DEPT. OF INSURANCE: If these allegations are true, he is clearly a crud ball, because anyone that would do this to their friends and neighbors and be so brash about it, deserves the -- full penalty that's coming to them.
BALDWIN: After telling police in Alabama he was involved in a canoeing accident, authorities say Schrenker quickly disappeared, using a motorcycle he apparently stashed the day before.
According to Indiana secretary of state, Schrenker, a financial manager, was the subject of a securities investigation in Indiana. He's accused of stealing potentially millions of dollars from investors. One former investor of Schrenker says he felt he got the run-around by the missing pilot.
MIKE KINNEY, SCHRENKER INVESTOR: I've never in my life seen anybody that could tell the dishonest, untruths that he told over and over again and expect you to believe.
BALDWIN: A former attorney for Schrenker isn't buying it.
JEFF MCQUARY, MARCUS SCHRENKER'S FORMER ATTORNEY: But there is absolutely nothing in his -- that I ever observed in him that would make me think that any of these allegations are true.
BALDWIN: Court filings show Schrenker's wife recently filed for divorce. A friend of Marcus Schrenker said he received a disturbing e-mail from someone who identified himself as Schrenker shortly after the news broke of the plane crash.
TO BRITT, MARCUS SCHRENKER'S FRIEND: He said he was -- he panicked, he blacked out. He was disoriented when he landed. So he was -- he was trying to explain to me his side of the story. You know, he also wanted to talk about his securities -- the fraud allegations that the warrant was served on.
And basically, that he had no wrongdoing in that. And then at the end of the e-mail, the most disturbing part was he said, by the time you read this, I'll be gone. And I interpreted that as a suicide note.
(END VIDEOTAPE)
BALDWIN: U.S. Marshals tell me that they are now just waiting for Marcus Schrenker to recover and be released from the hospital. Tallahassee Memorial General. And once he is, they will be booking him as a fugitive of justice.
No word yet if he will be charged here in Florida. But there is a possibility that he will be. If not, he will be extradited to Indiana, where he is currently facing securities fraud charges, Heidi.
COLLINS: Yes, well, a -- lot ahead for him, obviously. It's just such an incredible story. We know that he actually has three children, Brooke. Are -- Marshall service agents telling you how they actually tracked him to this campsite, though, as well?
BALDWIN: You bet. I'm asking the question. And I can't really go on the record just yet. They have told me it is not because of a tip. It's because of their own intelligence, and the marshals' own investigation that this lead came out of the Birmingham, Alabama office. They were able to locate him. That is basically what we can tell you at this point in time.
COLLINS: OK. Understood. Well, let us know if you learn anymore on that. Sure do appreciate it.
Brooke Baldwin coming to us live from Tallahassee this morning.
A New Year's Day shooting captured on video, and now a former police officer arrested in the case.
Johannes Mehserle was picked up in Nevada on a fugitive warrant. He's accused of shooting an unarmed man on an Oakland train station platform. The shooting of Oscar Grant has led to protests in the Bay Area.
Mehserle resigned his transit officer's job days after the shooting.
A 22-minute audio message believed to be from Osama bin Laden. It was posted on a radical Islamist Web site today, calling for a jihad or holy war against Israel. The speaker invites his followers to stop what he calls the aggression against Gaza. The White House has responded through National Security Council spokesman Gordon Johndroe.
His statements reads, in part, "While I won't speak to the authenticity of the audiotape, that is for others, it appears this tape demonstrates his isolation and continued attempts to remain relevant at a time when al Qaeda's ideology, mission and agenda are being questioned and challenged throughout the world."
And just yesterday, President Bush talked about finding the elusive bin Laden in a conversation with CNN's Larry King.
(BEGIN VIDEO CLIP)
LARRY KING, HOST, "LARRY KING LIVE": Are we ever, ever going to find bin Laden?
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Yes, of course. Absolutely.
KING: You're confident based on...
BUSH: Because we've got a lot of people looking for him. A lot of assets out there. And you can't run forever. Just like the people who allegedly were involved in the East African bombings. A couple of them were brought to justice. Reasonable.
KING: Did we ever come close?
BUSH: I don't know. I can't answer that.
KING: You don't know or you...
BUSH: I really don't know. I'm not -- I'm not trying to hide anything.
(END VIDEO CLIP)
COLLINS: To the Middle East now, where the United Nations secretary-general is on a mission of his own. Ban Ki-moon wants a cease-fire now between Israel and Hamas.
He met with Egypt's president today before heading to Jordan and Israel. He says he also wants to go to Gaza, but he's not sure that will be possible with all the fighting.
The Israeli offensive in its 19th day, and Palestinians say the death toll in Gaza is nearing 1,000 about a third of them children.
CNN's Paula Hancocks is monitoring all of the developments for us from Jerusalem and she joins us now.
Paula, there was also more rocket fire into Israel today.
PAULA HANCOCKS, CNN CORRESPONDENT: That's right, Heidi, yes. At least a dozen rockets were fired from Gaza into Israel. Showing that even though many Israeli officials say that they believe the goals of the operation are almost accomplished. They are not quite yet accomplished, because that was the whole point of this operation, according to Israel, to stop the rockets hitting neighboring Israeli towns around Gaza.
Now there's also a three-hour lull for humanitarian aid to be distributed today between one and four Israeli says from 111 trucks were allowed in to Israel. But still ad agencies are saying that it is not it is not long enough to be able to give this -- the food aid, the water, the fuel, cooking oil, the very basics to up to 1.5 million residents. Now, there is, as far as we understand from the Israeli military, ongoing fighting between the military and Palestinian fighters in and around Gaza City. The military really have pushed into the more densely populated areas. And, of course, the fear is that the civilian count of those dying could rise significantly, if they are fighting street by street.
And certainly, Israel's worry, as well, is that Israeli soldiers could be killed in that fighting, too.
So as you say, almost 1,000 Palestinians killed, a third children. And also, the injuries, more than 4,400 have been injured since the 27th of December. And, again, almost a third of those are children. Heidi?
COLLINS: All right. CNN's Paula Hancocks reporting for us from Jerusalem this morning. Thanks so much, Paula.
Women who call 911 with heart attack symptoms may not get help as fast as men. We'll have the findings of a new report that might surprise you.
(COMMERCIAL BREAK)
COLLINS: If you are a woman, and you call 911 with heart attack symptoms, you may not get emergency care as fast as men. That's the finding of a new report. So we want to talk a little bit more about it with our senior medical correspondent, Elizabeth Cohen.
What's the deal with this?
ELIZABETH COHEN, CNN SR. MEDICAL CORRESPONDENT: You know, we've heard a lot about how doctors sometimes don't recognize the signs of a heart attack in a woman. They don't take women as seriously.
A lot of people still think of heart disease as a men's problem and not as woman's problem. We've been hearing about this for a number of years.
Well, now this study, which is in the "Journal of Circulation," this study finds that emergency workers in ambulances perhaps are not as attuned as they should be to this issue.
What this study found was that women are 52 percent more likely to experience delays in the EMS cares, in the EMS care when they are having heart attacks. And other studies have said that really what's happening here, in part, is that people are just still think of heart attacks as a men's disease.
COLLINS: And we've reported it so many times. So it's just not the case.
COHEN: I know. I know.
COLLINS: So we're reporting that again.
COHEN: Again, right, exactly.
COLLINS: So is -- it true, or not true, then, that the symptoms are different between men and women?
COHEN: Right. This is the other part of the problem, is that the symptoms can be very different for women than for men. So if you think of heart attack as, well, you must be having terrible pain in your chest, and if you're waiting for the person to clutch their chest, sometimes the classic signs for a male heart attack don't always show up for women.
So let's talk about what some of the signs are for women...
COLLINS: That's right.
COHEN: ... that are different than from men. Women have neck, jaw and shoulder, upper back discomfort, which I sort of I see you moving your back around.
COLLINS: Yes.
COHEN: That's sort of a -- that's a little bit different. You don't usually think about that. Or abdominal pain is sometimes common when women have heart attacks, shortness of breath, nausea and sweating, I mean nausea and sweating,. You don't usually think about that but for some reason that is more common to women having heart attacks compared men.
COLLINS: All right. So if you -- are a woman and you feel like, you know, you may have those symptoms, you may be having a heart attack, but you're not getting the attention that you feel like you need right away, what do you do?
COHEN: Well, I asked Donna Mason that, and Donna has been an emergency room nurse for decades. She's the former president of the Emergency Nurses Association. I said, Donna, what would you do if you're at home having a heart attack and you felt like these an emergency workers weren't taking you seriously. So she said, all right. Here's some pointers because there are some very specific things that you can say to get your attention and to make them take you seriously.
So the first thing that she said is she said be specific. Be specific about where things hurt. Don't just say I don't feel well. Try to be as specific as you can. In your illness.
Also, tell the paramedic, this pain is not typical for me. Be very, very specific about that, as well, that this does not usually happen to you, or they might think this is just a recurring kind of thing.
Also, share your family history. You might want to say, you know what, my mother had a heart attack at this age.
COLLINS: Yes. COHEN: Or I had heart problems before. Or my sister had this problem, and it might sort of get them to pay a bit more attention to you as a heart attack patient.
COLLINS: Exactly. They're typically very interested in that family history.
COHEN: Right.
COLLINS: All right. Well, some great advice there. Thanks so much.
COHEN: All right. Thanks.
COLLINS: CNN medical correspondent Elizabeth Cohen. Thank you.
His choices, their questions. Three of president-elect's nominees appearing before Senate panels right now. We're going to listen in on one of those hearings in a moment.
ANNOUNCER: "Daily Dose" brought to you by...
(COMMERCIAL BREAK)
COLLINS: You're looking now at some live pictures of some of the confirmations hearings for key Cabinet positions in President-elect Barack Obama's administration. Former Army Chief of Staff Eric Shinseki is nominated for secretary of veterans affairs. Tom Vilsack is the nominee for agriculture secretary. And Lisa Jackson Mr. Obama's choice to head the Environmental Protection Agency.
More now from the confirmation hearings as Senate committee members question former Army Chief of Staff General Eric Shinseki. He is nominated, as we said, for secretary of veterans affairs. CNN Pentagon Correspondent Barbara Starr is live with the details. And Barbara, boy, General Shinseki really has an incredible life story.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: He really does, Heidi. This is one of the most respected members of the United States military. The retired general wounded twice in Vietnam. As we look at some of the pictures from the hearings, it is a real moment of history here.
General Shinseki this morning at the hearing -- that's an old picture, of course, when he was still on active duty. But at the hearing this morning, he is being introduced by two personal friends, former Senator Bob Dole and Senator Daniel Inouye of Hawaii. Both of those men seriously wounded at the close of World War II in Italy, coming back today to speak their piece about Eric Shinseki. You see that now.
General Shinseki wounded twice in Vietnam, life-threatening wounds, but came back to serve on active duty for many, many years. Now, he will be the voice for the disabled veterans and the wounded veterans of Iraq and Afghanistan at the VA. Top challenges he will face, health care, health care, health care. Getting the disability benefits, some of it for the silent wounds that we've talked about, Heidi, brain injury, post-traumatic stress, mental health, all of that. The VA health system is probably the largest in the United States. Right now, they serve 8 million veterans -- Heidi.
COLLINS: Oh, so sorry, Barbara, I thought we were going to listen in there for a moment. My apologies. So, yes, it truly is an incredible story, and he does have a lot of work cut out for him. Obviously going to be looking to several different people to helping him out and making some of those changes. So we'll be watching and monitoring those confirmation hearings today. Our Pentagon correspondent, Barbara Starr, thank you.
STARR: Sure.
COLLINS: Barack Obama's choice for treasury secretary has a tax problem. We'll get to that in about ten minutes with a reporter coming to us from "The Wall Street Journal." And taking a look at what's left of the federal bailout money.
This, a live picture from Capitol Hill, a Congressional oversight panel discussing the bailout bill now and how the money can be used more efficiently. There are $350 billion left in the fund, as you likely know. President-elect Barack Obama is pushing Congress to release that money now.
On Wall Street, a financial giant begins to dismantle itself in a desperate move to right a listing ship. Susan Lisovicz on the floor of the New York Stock Exchange now with details on Citigroup's fight for survival. Boy, that's for sure. Hi, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Heidi. This is really what you would call a distress sale, because Citigroup is selling one of its crown jewels, that is Smith Barney, to Morgan Stanley. A majority stake, I should say, to Morgan Stanley. What Citigroup will get is $2.7 million it desperately needs. Morgan Stanley, not only that, can raise the stakes over the coming years and assume total control.
And obviously, it will create for Morgan Stanley one of the nation's largest brokerages. And it really is the beginning of the end of Citi's reign as the financial supermarket, offering everything from saving and borrowing to investing and insurance.
Citigroup, remember, is the financial giant that's already received $45 billion in federal aid, and it's still having problems. It's reporting its quarterly earnings in just a few days, and we're expecting more losses. Citigroup shares right now are down 14.5 percent. It's one of the reasons the Dow is down 253 points right now.
But I should mention that the 29 other Dow stocks are also lower today on concerns not only about the financial industry, but also about the economy in general after that terrible government report on retail spending in December. Meanwhile, the Nasdaq is down 4 points, as well. Broad-based sell-off and sixth day of selling, Heidi.
COLLINS: Wow. After getting so much money, though, from the government, is it a fair question to ask how Citigroup can still be in such terrible trouble?
LISOVICZ: It is a totally fair question. And I think, you know, the simple answer is, wrong strategy at a very wrong time. Citigroup made a big bet on the mortgage industry, and it's paying for it dearly. But not only that, now is one of the problems with this nasty recession. It's spreading to other loans, as well.
For instance, credit card loans, auto loans, and as I mentioned, are expecting more losses when Citi reports its quarterly earnings. That would be its fifth consecutive quarterly loss. One analyst says, you know, the new CEO at Citigroup is Uncle Sam. A lot of pressure for Citigroup to make these painful steps.
So, expect a reorganization plan, if not when it reports its quarterly earnings, soon after. Because Citi really does have to right itself, and there are going more changes and a more streamlined company. Heidi, back to you.
COLLINS: All right. Susan Lisovicz on the floor of the New York Stock Exchange. All right, Susan, thanks for that.
LISOVICZ: You're welcome.
COLLINS: An appeal today in another financial story. Bernie Madoff and the case there. Federal prosecutors are asking a judge to reverse the decision allowing Madoff to stay under house arrest instead of going to prison. And this is going on while the same prosecutors are considering a possible plea deal in the case. CNN's Allen Chernoff has more.
(BEGIN VIDEOTAPE)
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT (voice-over): Prosecutors are doing everything they can to get Bernard Madoff out of his penthouse apartment and into jail. But unless a federal judge revokes Madoff's $10 million bail, securities attorneys say it's possible the man who allegedly took billions from wealthy investors will remain out of prison for months and months, because of what could be a protracted legal process.
BRAD SIMON, FORMER FEDERAL PROSECUTOR: It could take years, which means Bernie Madoff is sitting home, not going to jail.
CHERNOFF: In a court filing, the lead prosecutor says, "counsel for the defendant and representatives of the United States Attorneys Office have had discussions with respect to a possible disposition of the defendant's case, and the parties plan to continue those discussions."
Translation?
UNIDENTIFIED MALE: They're trying to figure out if there's a plea bargain that they can come to.
CHERNOFF: The criminal complaint says Madoff admitted to FBI agents he ran an investment fraud. Normally in plea negotiations, prosecutors try to get a defendant to give up the big fish. In this case, though, that would be Madoff.
UNIDENTIFIED MALE: He is the big fish, but there may be other whales out there.
CHERNOFF: A plea deal would likely require Madoff to help the government unravel the alleged investment scam.
SIMON: And they're under enormous pressure to bring in other bodies. It is inconceivable that Madoff could have acted alone. And so therefore, only Madoff can help them figure out what happened here.
CHERNOFF: Former prosecutors say that could involve months of back and forth between Madoff and the government. Perhaps even longer. And typically, a cooperating witness is not sentenced until those he fingers are prosecuted.
(on camera): Madoff is 70 years old. Right now, he faces just one count of securities fraud, which carries a maximum penalty of 20 years in prison. It's possible the government will eventually bring more charges that could increase the potential sentence. Lawyers say Madoff's best bet to stay out of prison is to cooperate with the government and stretch the process out.
Allen Chernoff, CNN, New York.
(END VIDEOTAPE)
COLLINS: Illinois Governor Rod Blagojevich facing his state Senate today, but it's not for his impeachment trial. Instead, he is there to swear in the Senate. It's kind of an awkward and weird twist in the traditional event. Blagojevich will preside over the chamber only until members choose a Senate leader. The Senate is expected to take up his impeachment trial on January 26th.
Back to the big weather story of the day. Look at that. Bone- chilling, brutally cold weather. If you don't already have it, you might want to get ready for it. The blast of cold air, it hit the middle of the country yesterday. It's heading east today. Blizzard- like conditions in Cleveland, Ohio. It makes you just shiver looking at it. That is for sure.
Hair kind of standing up up here, Rob.
ROB MARCIANO, AMS METEOROLOGIST: It makes you appreciate the nice, warm building that we're working in currently.
COLLINS: It truly does.
MARCIANO: You know, a little bit drafty, so be it. I don't think it's minus 2 or minus 20.
(WEATHER REPORT)
COLLINS: All right. Rob, we know you're watching. In fact, you might want to look at this with us as well, Rob, because we are learning that the Coast Guard is right in the middle of a rescue taking place off Virginia Beach. And if you happen to know the area a little bit better, this is specifically, we're being told, Lynnhaven Inlet near Virginia Beach.
So, we're getting these pictures coming in from WAVY, WAVY TV there. Obviously using a helicopter to try and get whoever may be in the water or under the boat. We did see pictures just a little while ago of the capsized boat. Not quite sure how big it is, or how many people may have been on board. But clearly that is a Coast Guard member who has dropped out of the helicopter there.
MARCIANO: That's pretty impressive. That's pretty extraordinary pictures there. (INAUDIBLE) in the water, I suppose, huh?
COLLINS: Yes, exactly, and now motioning to his crew above. Not quite sure exactly what. But I can only imagine how cold that must be there, Rob, because we have been talking a lot about the weather.
MARCIANO: At best, the air temperature, 30 degrees. Water temperature is probably in the 40s or 50s. He's certainly got his dry suit on and all his gear, but whoever he is trying to rescue is ill- equipped for that sort of scenario. So, it may look clear and sunny, but it is certainly not the kind of weather you want to be taking a dip in the Atlantic Ocean.
COLLINS: Yes, absolutely not. So, again, we can see him just sort of scouring the area, visually. I'm sure he's getting help above from the crew inside the helicopter. But in a moment, you may see that boat, unless it has gone completely under water, because just a few seconds ago, as I was looking at this coming in, we did see the boat. And now I don't.
Of course, it may be out of the picture, so, don't want to speculate. But they are obviously, as I have been saying, in the middle of this rescue right now. We may see this crew member get back on the line there to go back up to the helicopter. Again, not quite sure what that could mean. Probably not very good at this point. Again, pictures coming into us from WAVY. You're looking off Virginia Beach in the Lynnhaven Inlet. Rob, you know anything about that? The Lynnhaven Inlet there?
MARCIANO: Not that specific inlet. But, obviously Virginia Beach very near the Chesapeake Bay inlet, which is pretty wide. So, there are several smaller inlets there that go into various other bays and rivers that act as a river -- mouths of rivers that dump into the Atlantic Ocean. So, a complicated shoreline, to say the least. And this looks to be a complicated rescue that they're going to reassess from the air.
COLLINS: Yes, and you know, I should be clear, we don't know anything about any calls, you know -- calls for help that may have come to the Coast Guard. But obviously, they were alerted that there was a boat out there. And, again, you know, just a little while ago, I was able to see that boat. And now we don't.
And someone has gone down from the helicopter, been in the water for a short time, looking around, and now back up in the helicopter. So I'm not quite sure what they will do next or what that call, if there was one, was all about. So, you know, that is not the boat I saw earlier. Obviously, more coast guard vessels there.
So, we'll continue to watch this one for you. Once again, Virginia Beach, Virginia is where we are looking. Those pictures coming in from WAVY. We'll continue to work our sources on this one and bring you any information if we should get it here.
Another problem for the Obama transition team. First it was Bill Richardson. And now another Cabinet pick could be in trouble over money.
(COMMERCIAL BREAK)
COLLINS: OK. Quickly want to get you back to the story that we have been following here just for a little while now. These are pictures that came in earlier to us from our affiliates there in the area of Virginia Beach. That is the boat that I saw before we were actually able to bring this to air. And we have not seen the likes of it since. But, again, these pictures coming into us just a little bit earlier.
We have, however, been able to learn some more information about what is going on there. These are the live pictures now, so I was wrong. I apologize. There you see the same boat that the Coast Guard is working on a rescue. And here is what we are learning now, some new information. Lynnhaven Inlet is the exact area we're talking about, and we're learning according to affiliates there that firefighters and paramedics and Coast Guard, obviously, are trying to rescue several people in the water after this boat has apparently capsized, or close to it, as you see there.
It's near the Lesner Bridge, we're being told. You can see that in the very far background. According to the Coast Guard, there are apparently six people in the water. We are now hearing, as they're telling me directly in my ear, that all six have been accounted for.
So, some great, great news because we haven't been able to see any of these rescues take place live like we have seen in the past. So, that is terrific news.
Once again, we are learning that there were six people are in the water, and all of them have been accounted for. Apparently, this call went in around 9:00 in the morning today. So they've been working on it for quite a while.
In fact, I'm also being told that we have someone from the Coast Guard on the line. Chief Willie Scott (ph), if you are with me, I would love to hear more about what's going on right now. We have the pictures live on our air.
VOICE OF WILLIE SCOTT (ph), CHIEF, COAST GUARD: OK. How are you doing? Basically, around 9:00 this morning, we received a call over Channel 16, a mayday call, vessel in distress. At that time, we established a coordinate that the vessel could possibly be in. Our helo spotted the vessel overturned, as well as a Virginia Pilot Association vessel, who was coming out of Lynnhaven Inlet.
Once they got there, there was one person in the water. They did get that person on board and confirm that there was a total of six people on board. So, at that time, we had five people missing. They then saw two other persons in the water. It's not confirmed, but the situation didn't look good as to whether they are able to revive them. We do have all six persons recovered, and they have been transported to local hospitals via emergency services in one of our helos.
So right now, we're standing by, waiting for -- to recover the boat, and the state of Virginia, marine police, will be conducting a investigation on this casualty.
COLLINS: Wow. Yes, and, again, just want to let you know, I'm not quite sure where you are, if you're able to see us. Some of these pictures that we are showing our viewers live right now. So not a very easy rescue in, you know, all of the cold weather we have been reporting, I'm sure. But good for you being able to get all six of those people to safety.
I imagine now, as you said, that there will be an investigation. What will you be trying to determine here?
SCOTT: What they're going to look at is what caused the vessel to capsize. They're also going to look at the weather conditions, the current the sea state. Also, they'll try to interview the survivors, and find out exactly what happened.
COLLINS: All right. Very good. We sure do appreciate the update on that story. Chief Willie Scott with the Coast Guard. Thanks, again.
SCOTT: You're welcome.
COLLINS: Tax trouble for the man nominated to be the next treasury secretary. Timothy Geithner is now facing questions about unpaid taxes during his time working for the International Monetary Fund.
He has since paid the back taxes with interest. The Obama transition team calls it a, quote, "common mistake."
CNN senior congressional correspondent Dana Bash is now reporting the planned Friday confirmation hearing is being pushed to next Wednesday.
Geithner paid some of the back taxes after an IRS audit in 2006 and the rest was paid after more problems were discovered by the Obama transition team during the vetting process.
We want go ahead and take a moment to bring in our Congressional correspondent Dana Bash with more on this. So Dana, my understanding was that Max Baucus, who's the chairman of the committee, wanted committee members to come to him by this morning. To tell him whether or not they objected to this original hearing that was going to take place on Friday.
DANA BASH, SENIOR CONGRESSIONAL CORRESPONDENT: That's exactly right. And that's what happened, Heidi. A Republican senator, Jon Kyl, one of the most senior Republicans here in Congress, he did object. He objected.
He says, at least a spokesman tells me he says, because he had a conflict; he had another very important hearing at that same time, and that is to look at the -- at Eric Holder, who is, of course, up for attorney general. But I can tell you that there are obviously a lot of other things in play here.
Actually, probably one major thing at play here. And that is what you just reported, Heidi, the fact that this really hit like a bombshell inside of the Senate Finance Committee. This idea that Timothy Geithner didn't pay $34,000 in taxes. And he is up for treasury secretary, the man who is going to be in charge of the agency that is actually going to be collecting taxes.
So what's going on inside the committee right now is particularly for Republicans, the rank and file Republicans, who are just learning about this and have been over the past 24 hours or so. They're saying, wait a minute, we need more information. We need to look at these documents and see what's going on.
And that's why Barack Obama is not going to have a hearing for his treasury secretary now until after he is inaugurated.
COLLINS: Well, yes, and it's interesting, because from some of the information that I've read, they were saying, the transition team, that it was very important that he have a treasury secretary named and in place by the time inauguration day came.
BASH: Exactly. And that this is not going to happen now because of the wrench that was thrown in. Actually, quite some time ago, when the transition team -- and I think it's interesting for our viewers to know that the transition team made the heads of this committee aware of this problem back in early December. We, of course, didn't find out about it for about five weeks. We didn't find out about it until yesterday.
And I can tell you, I'm told by a Republican source on that committee that the reason is because the Obama transition team begged them to keep this confidential as they went through the documents.
So there is a lot going on behind the scenes, a lot of questions. You know, the ranking Republican on the committee, Charles Grassley, he has said that he is going to withhold his judgment. But they have some history and they're being very open about pointing it out, bush appointees for far lesser roles having far lesser tax problems and being pulled by the administration. COLLINS: All right. Dana, we'll continue to let you work your sources on this. And meanwhile, joining me on the telephone now from Washington is "Wall Street Journal" reporter, Jonathan Weisman.
Jonathan, you've done some reporting on this, as well. And now we are hearing from our Dana Bash that, yes indeed, that confirmation hearing that was supposed to take place on Friday is being pushed back to we believe Wednesday.
What does that say to you?
VOICE OF JONATHAN WEISMAN, REPORTER, "WALL STREET JOURNAL": It tells me that Tim Geithner is really in trouble. The Obama transition people wanted to put out to yesterday that these were very minor infractions, that they were common for employees of the International Monetary Fund.
But we are hearing very different stories now from IMF employees, from World Bank employees, and certainly from Republicans on the Senate Finance Committee. They do not believe that a $34,000 tax, you know, delinquency is a minor infraction.
COLLINS: In fact, Jonathan, do me a favor. Let's listen for a moment to Harry Reid and his opinion on this whole thing.
(BEGIN VIDEO CLIP)
SEN. HARRY REID (D), MAJORITY LEADER: Timothy Geithner is a person that is extremely well-qualified to be one of the finest secretaries of treasury this country has ever had. And there is a few little hiccups, but that's basically what they are.
(END VIDEO CLIP)
COLLINS: Senate majority leader saying just a few little hiccups. Is it really a common mistake to not pay your taxes, especially when you're the guy, as we've already been saying, who will actually be in charge of forcing Americans to pay theirs?
WEISMAN: Well, here's -- it depends how you count it. The Obama people are basically putting out statistics showing that employees of international organizations commonly messed this up.
But to get their common number, they are roping in, you know, the cooks and the cleaning ladies, working at all the embassies, stretching up and down Embassy Row in Washington, D.C. They're stretching the definition of international organizations.
In this case, we're talking about a senior economist at the International Monetary Fund. We are not talking about the cleaning lady who didn't realize that she was being counted as an independent contractor at the Irish Embassy. And that changes a lot. You know, expectations for the treasury secretary, especially in the areas of taxes, are going to be above and beyond what ordinary citizens can expect. COLLINS: Yes. And Jonathan, we are completely running out of time, unfortunately, because I know this is going to be end up being a big story. What do you say to the CPA in all of this?
WEISMAN: Look. Somebody made a huge mistake, but frankly, even if the CPA said to Tim Geithner, hey, you're cool, no problem, it is always the taxpayer who is ultimately responsible.
COLLINS: All right. We will be watching for these confirmation hearings, certainly and what may happen next.
Jonathan Weisman, "Wall Street Journal," sure do appreciate your time. Again, we'll be following that story here on CNN.
I'm Heidi Collins. Join us again tomorrow morning beginning at 9 a.m. Eastern.
CNN NEWSROOM continues with Tony Harris after a break.
(COMMERCIAL BREAK)
