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Shinseki's Confirmation Hearings; Will Madoff End Up Behind Bars?
Aired January 14, 2009 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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DANIEL, 5TH GRADE: The innocent Iraqi citizens have to flee their homes in fear of injury, or worse, death.
SEAN, 3rd GRADE: Can you please stop it? Are there any ways top stop the war?
CHRISTOPHER, 3rd GRADE: In Iraq I think you should start withdrawing troops immediately.
CYNTHIA, 5th GRADE: You are going to bring back the soldiers from Iraq.
DANIEL, 5th GRADE: If the Iraqi citizens want a dictator, they will elect a dictator, which is hopefully unlike the last one, terrible.
MOLLY, 3rd GRADE: Please help the Middle East war come to an end. I care about the soldiers.
CYNTHIA, 5th GRADE: My friend's dad is in Iraq. She really wants him back, and she will have him back thanks to you.
ALEX, 3rd GRADE: I wish that you will be happy in your four-year term and stop all wars in the world.
DANIEL, 5th GRADE: I hope you consider this message, from a student 11 years old, at Carpenter Avenue Elementary School. Sincerely, Daniel Menegas (ph).
MOLLY, 3RD GRADE: Sincerely, Molly Thornton Johnson.
ALEX, 3rd GRADE: Sincerely, Alex.
CYNTHIA, 5th GRADE: Congratulations on being our new elected president. Yea!. Love, Cynthia Lopez.
(APPLAUSE)
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KYRA PHILLIPS, CNN ANCHOR, CNN NEWSROOM (voice over): Proven right on Iraq. Today, up for approval to be Barack Obama's point man on veterans affairs.
And fans say he put patriotism above politics.
Neither officer, nor gentleman. Accused scam king, Bernie Madoff, locked up in luxury on house arrest. Ticked-off prosecutors now taking another stab at putting him behind bars.
Hello, every one. I'm Kyra Phillips live in the CNN World Headquarters in Atlanta. And you're live in the CNN NEWSROOM.
All right. From bin Laden to Blagojevich to Bernie Madoff, we've got a lot of ground to cover this hour. Plus a former cop whose fatal shot was heard and seen around the world thanks to the Internet takes another step toward justice. We're expecting a live news conference this hour. We will take it as soon as it starts.
Don't ask, don't tell, don't bet on it being around much longer. The president-elect is about to discharge it from the military after 15 years of what some would call disservice. We want to know, what does General Russell Honore think about it? Good call, or bad?
But first, no time for told-you-so's, the former U.S. Army chief of staff who warned about the pitfalls in Iraq is back with many new battles to fight. Those would be in the Veterans Affairs Department, the second largest bureaucracy in the federal government, the agency - Eric Shinseki has been tapped by President-Elect Obama to lead.
In his confirmation hearing, the nominee tells the Senate Veterans Affairs Committee he will fight to clear out a log jam of disability claims and broaden access to health benefits. You may remember back in February of 2003, Shinseki warned Congress it would take several hundred thousand soldiers to secure Iraq and was publicly contradicted by the then Defense Secretary Donald Rumsfeld. Shinseki retired soon after.
Now a story like that can fast become a legend, as the war in Iraq bogged down. Shinseki's stature and reputation grew. But what about the facts? Jamie McIntyre looks at those.
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JAMIE MCINTYRE, CNN PENTAGON CORRESPONDENT (voice over): For better or worse, General Eric Shinseki's distinguished 38-year Army career has been largely reduced to these 29 words, uttered in a Senate committee almost six years ago.
GEN. ERIC SHINSEKI, FMR. ARMY CHIEF OF STAFF: I would say that what's been mobilized to this point, something on the order of several 100,000 soldiers are probably, you know, a figure that would be required.
MCINTYRE: That off-the-cuff guesstimate just a month before the invasion on how many U.S. troops it would take to secure Iraq turned Shinseki into a poster boy for Bush administration critics. For years they have argued the general's sage advice for a larger ground force was ignored by his civilian bosses. Defense Secretary Donald Rumsfeld, and his deputy Paul Wolfowitz, who famously dismissed the high-end estimate as wildly off the mark. In naming Shinseki as his pick for Veterans secretary, President- Elect Obama seemed to be subtly rebuking Rumsfeld, calling Shinseki someone who always stood on principle.
SEN. BARACK OBAMA (D), PRESIDENT-ELECT: No one will ever doubt that this former Army chief of staff has the courage to stand up for our troops and our veterans.
MCINTYRE: But Shinseki has his critics, too, who say, in fact, he never stood up to Rumsfeld, never pressed for more troops for Iraq, and when asked in a private meeting of the Joint Chiefs, if he had concerns about the war plans, never said a word, according to two people who were in the room.
Asked by "Newsweek" two years ago to respond to the criticism, he didn't press his concerns. Shinseki e-mailed back, probably that's fair. Not my style.
(On camera): The myth about Shinseki is that he spoke truth to power and was punished for it. The facts suggest a different less complimentary narrative that well aware his views were unwelcome at the Pentagon, he simply kept them to himself and retired a few months later. Jamie McIntyre, CNN, the Pentagon.
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PHILLIPS: And just ahead, we're going to get the state of veterans affairs according to retired three-star General Russell Honore. He doesn't mince any words. He will join me at 10 past the hour, right here in the CNN NEWSROOM.
And the confirmation parade rolls on. This is former Iowa Governor Tom Vilsack appearing before the committee that will considering him for Agriculture secretary. (AUDIO GAP) The incoming president's pick for head of the EPA, the Environmental Protection Agency.
But the biggest news may come from two hearings that are not happening, at least not on the schedule. Treasury secretary nominee, Timothy Geithner has some tax issues he has to explain. His hearing is postponed a week; likewise for Transportation secretary nominee, Ray LaHood, a former Republican congressman. A Senate aide blames paperwork issues and denies reports that there may be problems with regard to earmarks.
Well, he could be without a job within weeks. But impeached Illinois Governor Rod Blagojevich is still going about his official business. Just a short time ago at the state house in Springfield, Illinois, some ironic moments. Blagojevich presided over the swearing in of the state Senate. Now, within weeks the chamber will decide whether or not to kick Blagojevich out of his office. He's accused of trying to sell President-Elect Barack Obama's vacant U.S. Senate seat, as you may remember, and was impeached by the Illinois house last week.
The world's most wanted terrorist sees a link between the U.S. recession and Israeli offensive in Gaza. A new audio recording supposedly from Osama bin Laden calls for holy war in the name of Palestinians in Gaza, and revels in the economic meltdown affecting much of the world, and America, in particular.
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UNIDENTIFIED MALE (through translator): America won't be able to carry on its war against us for several decades longer. It indicates 75 percent of Americans are happy to see the current president leave office, because he dragged them into unnecessary wars, and drowned them into a financial abyss. Bush leaves his successor with the worst inheritance. two long guerrilla wars and no options. He either withdraws and faces military defeat or carries on the fight and drowns his nation in financial trouble.
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PHILLIPS: Now, in response, a spokesman for President Bush's National Security Council says this: "While I won't speak to the authenticity for the audiotape, that is for others to do, it appears this 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."
Prosecutors in New York are taking another swing at getting Bernard Madoff behind bars. They're trying, this hour, to get a federal district judge to overturn a lower court ruling and revoke the alleged Wall Street swindler's bail. Madoff is under house arrest in his $7 million penthouse and he's accused of bilking investors out of $50 billion in a Ponzi scheme. Prosecutors say Madoff is trying to hide his assets. They accuse him of already sending out millions of dollars in jewelry and watches to his relatives.
The fact that Madoff is living in a lap of luxury while some of his former investors have trouble just paying their bills has plenty of people pretty ticked off. There's a lot of talk of a possible plea deal for Madoff that could drag this out even longer. Senior Correspondent Allan Chernoff is outside the federal courthouse in New York.
A lot of people wanting to see him in the real slammer, not in his penthouse apartment, Allan.
ALLAN CHERNOFF, CNN SR. CORRESPONDENT: That's most definitely the case. In fact, there's so much hatred of Bernard Madoff, that when he stepped into the courthouse behind me, about 50 minutes ago, a very close look indicated there was a clear bulge emerging from his jacket. It appeared to be a bulletproof vest.
Right now he is inside the courtroom. And in about 20 minutes prosecutors will begin their plea to get Mr. Madoff placed into jail, to have his bail revoked. As you said, Kyra, the prosecutors believe that Madoff violated terms of his bail because he mailed more than $1 million worth of diamonds and gold jewels and watches to friends and family, mailed them on Christmas Eve. This was after he had been arrested, after he - according to court papers -- confessed to two FBI agents that he had bilked investors potentially to the amount of $50 billion.
Also, we do understand, and according to court papers, Mr. Madoff's attorneys have already begun plea negotiations with the government. But that could easily drag on for many, many months. So the prosecutors would like to have Mr. Madoff in jail now. They failed earlier in the week with a lower court. Let's see if they succeed now in the district court.
PHILLIPS: OK, Allan, thanks so much.
It's enough to bring a struggling home owner to tears. They owe more on their home than it's worth. What can they do? Our financial expert has some important tips for us.
And people in ice houses should throw stones. Go ahead, they won't hurt anything. Here's an ice fortress that would make Superman jealous.
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PHILLIPS: The former U.S. Army chief of staff who warned about the pitfalls in Iraq is back, with many new battles to fight. That's for sure. Those would be in the Veterans Affairs Department, the second largest bureaucracy in the federal government, by the way, the agency that General Eric Shinseki has been tapped by President-Elect Obama to lead.
In his confirmation hearing, the nominee tells the Senate Veterans Affairs Committee that he will fight to clear out a log jam of disability claims and broaden access to health benefits. You may remember it was back in February of 2003 that Shinseki warned Congress it would take several 100,000 soldiers to secure Iraq, and was publicly contradicted by the then defense secretary, Donald Rumsfeld.
He's not the only general that's spoken his mind over the years. Russel Honore, retired three-star general, always speaks his mind, continues to do so.
Good to see you.
LT. GEN. RUSSEL HONORE, U.S. ARMY (RET.), CNN CONTRIBUTOR: Good to see you.
PHILLIPS: All right. You know Shinseki. You know what he's like as a leader. You know this is someone who doesn't mince words. Is he the right job for the job and why?
HONORE: I think he is the right man at the right time. Number one, he's a veteran. Number two, he was disabled in Vietnam, then went on to have a distinguished career over 30 years, rising to the rank of chief of staff of the Army. Currently nominated to be the chief of Veterans Affairs. I think he's the - you couldn't find a better choice.
PHILLIPS: Now, previously, as we know, there's a lot of controversy over the various heads of that department. And there were a lot of problems that ensued because it did not have the right head of that department. He's known for speaking his mind. How do you know that this is someone that will not play -- well, I guess you have to play politics in some ways, but will not put up with the bureaucracy of Washington, and do what he's got to do to change that department around?
HONORE: Well, in his own right he's a war hero. Number two, he's been there, done that. He's got skin in the game. He was a general at the helm when we went to war. So his experience, he's used to dealing with the broad aspect of an army across the United States, dealing with the Congress, dealing with the White House, and dealing inside the federal bureaucracy. That office called OMB, that lays the line on the budget, he'll be able to engage with that and he'll be able to engage those congressional staffers and show them why the VA budget needs to be increased.
PHILLIPS: "Budget," key word. Also, conditions, you and I have been talking about this for a year. We shared stories back and forth with veterans of basically getting screwed in the system. I mean, let's just lay it out there. You fought for certain things. We've covered certain things. And it's crazy that Walter Reed and Fort Bragg and all these various hospitals and barracks are in such horrible condition when it comes to our soldiers and also for our vets.
So, if you were to be able to sit down with Shinseki, and honestly he knows a lot of the issues, too, but you were there on the front for so many years, would you start with, OK, this is what you've got to do, sir. Modernize the benefit system. Because when they guys come back they're dealing with mental health issues, they're dealing with large bills, and families that are struggling.
HONORE: You know, we have a large population of our veterans from Vietnam who came back, had mental issues, never resolved. If you go into any veterans' hospital now, one of the largest population in those hospitals - and I just left the Atlanta VA an hour ago -it is Vietnam veterans who are 60- to 65-years old, needing medical care. Many of them never got the mental care they need.
PHILLIPS: OK, look, you're talking about --
HONORE: So they are an expanding population.
PHILLIPS: You're talking Vietnam vets, General.
HONORE: Right.
PHILLIPS: And now we're talking about guys coming back from Iraq and Afghanistan. I mean, this is right here off the Iraq and Afghanistan Veterans of Americans website. It says one in five veterans are returning from Iraq and Afghanistan facing serious mental health injuries, like post-traumatic stress disorder or depression.
HONORE: Great point. So, you've got an expanding young veteran population coming back from Iraq and Afghanistan needing help. At the same time you've got a balloon right in the middle of the VA demographics called Vietnam, that are coming in for medical care because of the economy, because of the absence of good public health care. And they're overrunning the VA hospitals as we speak, demanding - as they should be -- medical care. At the same time we've got a rising population of Iraq and Afghanistan vets.
Look, we've got to transform how we do VA. We've got veterans -- I just left the VA in Atlanta. We've got bumper stickers there from North Carolina, South Carolina, people driving to Atlanta to get medical care. We need to transform VA so those veterans can do just like any congressman and go to the doctor that's nearest to them as opposed to driving two to three hours to get medical care.
PHILLIPS: Not only that, there's a backlog in disability claims.
HONORE: You got it.
PHILLIPS: It's the entire system.
HONORE: Over 6 million veterans, of the 23 million are disabled, over 3 million of them over 65 years old.
PHILLIPS: Unbelievable. This came out today. This was out of the "San Francisco Chronicle," one of my editors brought it to my attention. And it was just Friday, actually, that Robert Gibbs, who's a spokesperson for President-Elect Barack Obama, was responding to a question from a Michigan resident, on the transition team's website. That resident asked if the new administration planned to get rid of the "don't ask, don't tell" policy. Obviously this is very controversial. Obama was for it. Then he kind of back pedaled on it. Well, now, Robert Gibbs coming forward saying, quote, "You don't hear politicians give one-word answers much, but it's yes. Does don't ask, don't tell need to go?
HONORE: The question is, when? Well, look, our military has been in existence over 232 years, 232 years with uniform code of military justice and tradition. It's no doubt this will happen. But this ought not be the first thing. There's a lot of things that have got to get resolved.
Uniform code of military justice change, number one, will gays be able to marry in the military? Will they be able to live in government housing? Will they be able to adopt children? Will they be able to bring their partner in and get military medical care? There's a lot of policy got to go before this one-word answer. It may be yes, but it ought to give to Services and Congress time over a two or three-year period.
Right now, if he said do it next week, you know, most people would salute and execute. But how do you execute that on a mountain in Afghanistan? Or in the desert of Iraq? We need time to execute this. I think the American people have spoke. It's time for a change. What that change looks like has to be preceded by policy - and law. Because right now it's policy and law that tells the uniform services what to do. And he ought to listen to his generals and admirals.
PHILLIPS: All right. Be honest with me, do you have Shinseki on speed dial? (LAUGHTER)
PHILLIPS: Let me see that BlackBerry.
HONORE: He has me on speed dial probably.
PHILLIPS: I bet he does.
HONORE: But he's a good man and he's the right guy at the right time. And we are going to be - all veterans are blessed to have him as our new leader.
PHILLIPS: I know you'll have each other's ear. General, thanks a lot. Appreciate it. Great to see you.
Well, the University of Mississippi, old times there might be gone but they're not forgotten. The school still deals with the past while confronting race issues, like no other place in the country.
Plus, you've got to love this one. A man who was there for Doctor King's dream speech, will get to see a big part of that dream realized right before his eyes.
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PHILLIPS: University of Mississippi where Dixie's old times and new times of the civil rights movement collided nearly 50 years ago. Ole Miss has confronted its racial issues like no other place in the country and the election of the first black president could open new avenues of reconciliation. Here's CNN's John Zarrella.
JOHN ZARRELLA, CNN CORRESPONDENT (On Camera): Kyra, nearly 50 years ago thousands of protesters and federal troops faced off right here where I'm standing, over an African-American man's right to equal education. Great progress has been made, but the healing continues in Mississippi, and many people say the Obama presidency will help that process.
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ZARRELLA: Don Cole got his doctorate from the University of Mississippi. He's now a professor at the same school that threw him out 39 years ago.
DON COLE, UNIV. OF MISSISSIPPI: When I first saw this institution compared with what it is today, and then I've just seen momentous change take place.
ZARRELLA: Momentous may be an understatement. In 1970 Cole was arrested and expelled from Ole Miss after protesting the school's treatment of black students. The atmosphere was still racially charged. Eight years after James Meredith, backed by federal forces, was allowed to enroll. Today the healing continues.
SUSAN GLISSON, WILLIAM WINTER INST. OF RACIAL RECONCILIATION: I think that Mississippi arguably come farther than any other state in the country. Because it has had to be able to honestly engage with its past.
ZARRELLA: Susan Glisson heads the William Winter Institute for Racial Reconciliation at Ole Miss. The nonpartisan organization helps resolve community problems centered around race. In Mississippi, it is still like walking on eggshells.
GLISSON: They're afraid they're going to make it worse, so they think it's easier just not to do anything.
ZARRELLA: Glisson believes the Obama presidency is allowing people to finally be honest about their prejudices. On and off campus, the institute relies on student interns to build bridges.
MEGAN MCRANEY, STUDENT: Living your life in separate spheres that don't overlap unless you have a class together. And I think that's the elephant in the room.
UNIDENTIFIED MALE: The problems of social integration on this campus are not going to go away because Obama is the president. We still have to continue the work we're doing.
UNIDENTIFIED MALE: It's not easy to get students to talk about race, especially in Mississippi.
ZARRELLA: But not impossible either. For Don Cole, the Obama presidency is proof.
COLE: It's the beginning that can provide a great leap forward, if we all take advantage of it.
ZARRELLA: While it won't be easy, there is a belief here that a new Ole Miss can be a voice for reconciliation louder than it was for segregation.
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ZARRELLA: Glisson and Cole say basic issues like health care, housing, criminal justice that underlie racism and prejudice in America have to be addressed for reconciliation to work. Simply saying, I'm sorry, isn't enough, Kyra.
John Zarrella, thanks so much.
We want to check in with our favorite group of San Jose State college students. They've spent a lot of time in Mississippi. They're actually touring the South's civil rights landmarks as they head to the inauguration in D.C. They've been updating us all week on what they've been seeing and learning and reporting on. Nick Dovedot, is now with us on the phone from Birmingham, Alabama.
Now, Nick, I understand you were in Selma yesterday. That's when we talked to you. Tell me what you visited there. And what did you learn about civil rights history?
NICK DOVEDOT, SAN JOSE STUDENT: Hey, Miss Phillips. We were in Selma, Alabama, and we visited the Southern Poverty Law Center yesterday, in which we found out that there are a bunch of hate groups all over the united states, not just in the South. And a majority of them - what I found when I went online to their site, that there were, I think 80 different hate groups in California, which is the West coast, which is not notoriously known as one of the big states with hate groups. And so it was very interesting to learn all of this stuff. And, yeah.
PHILLIPS: Wow, I understand you actually talked with Lecia Brooks, the director of the Southern Poverty Law Center, there. Let's go ahead and take a listen to part of that interview you conducted. And we'll talk a little bit more about this.
DOVEDOT: OK.
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LECIA BROOKS, DIR., SOUTHERN POVERTY LAW CENTER: There's been an increase in membership, this is what white supremacists tell us, that they kind of see it as a boon for their groups. They think that finally whites will wake up and see that, hey, the country's being taken over. You know, this is our country. And now we've elected a black man as president. What are we going to do about it?
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PHILLIPS: You know what's interesting, Nick, is there was a lot of talk about, OK, now that there's going to be a black president, well, does that mean we still have to have a Black Caucus? Does that mean we need all these certain organizations that lift up the rights of African-Americans? And it sounds like from what Lecia Brooks is saying, just because Barack Obama is going to be president, doesn't mean that racism is going to go away. In some instances it looks like it's increasing.
DOVEDOT: Yeah, of course. We need to keep this going. We haven't realized Doctor King's dream yet. It's just the start of it. We're just getting the ball rolling here; 40 years later, it's still rolling and we've got to keep it going for centuries. This is not going to stop here.
PHILLIPS: So what touched you in Selma, Alabama? I'm assuming that you visited the Pettus Bridge and learned about that part of history?
DOVEDOT: Yes.
PHILLIPS: Tell me about it. What kind of conversation did it trigger among all of you?
DOVEDOT: It triggered a bunch of conversations to us, but particularly me and one other student, Angela Hughes. We actually met someone who took part in the march on the Edmund Pettus Bridge. We found out that it was just a horrific, yet inspiring time for these people back then, to do something like that. And that's what we're trying to do ourselves right now.
PHILLIPS: Wow. Well, you are doing it. You're marching across the country. But I guess you -- how are you guys traveling? Are you in cars, buses? Are you flying? How are you making the trip to the inauguration?
DOVEDOT: We have fit a huge number of people, 13 people, inside a big van.
PHILLIPS: All right. You're vanning it?
DOVEDOT: And all of our luggage.
PHILLIPS: Excellent. All right. We'll see you in Atlanta tomorrow. We'll talk more about the sites that you have visited. And, of course, we'll follow you all the way to the inauguration.
Nick, thanks so much.
DOVEDOT: Thank you, ma'am.
PHILLIPS: All right. We are going to follow those students all the way from San Jose, checking on their progress as they wind their way to Washington. The students will join us here in the studio tomorrow. You can actually track them whenever you want, though. Just go to iReport.com. You can follow their journey, see their pictures, check out their stories. They're working it for us.
Well, talk about a front-row seat to history. A 90-year-old Chicago man, who witnessed Martin Luther King's "I Have A Dream" speech 45 years ago, is now heading to Washington to witness Barack Obama being sworn in as president. Timuel Black and his wife got their tickets to the inauguration, thanks to Illinois Senator Dick Durbin.
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TIMUEL BLACK, GOING TO INAUGURATION: I just felt that that was not going to happen to, you know, a guy like me, an ordinary guy. I knew him well enough, in terms of his personality, that the sky was the only limit.
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PHILLIPS: Black said that he actually met Obama when he was a community organizer working on the south side of Chicago. Black is a former college professor, who has written two books, by the way.
He's not even president yet, but Barack Obama is playing hardball, zinging a veto threat to fellow Democrats if they deny him use of the remaining federal bailout funds.
Dan Lothian is ringside with the blow-by-blow.
Hey, Dan.
DAN LOTHIAN, CNN CORRESPONDENT: That's right, blow-by-blow. I haven't seen any punches thrown yet, but certainly there are the threats; it's that veto threat. It's unprecedented coming from President-elect Barack Obama.
It's obviously something that he does not want to use, but he's pointing out how serious he is about wanting to get his hands on that $350 billion from that -- from the TARP funds, and so he's putting it out there. He doesn't want Congress to block the release of those funds.
Clearly, though, there are a lot of questions about how the money will be spent. And from what we have seen, there's still some opposition. Take a listen.
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REP. JOHN BOEHNER (R), MINORITY LEADER: I'm not going to vote for the second $350 billion tranche of this money because the transparency and accountability in terms of how the first $350 billion was spent is not there. And until I know how we spent it, why we spent it, and where it is, and how it's going to be paid back, I think it would be irresponsible for me to vote for the next $350 billion.
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LOTHIAN: So President-elect Barack Obama, that's why you've seen him making that hard sell up on Capitol Hill. And this afternoon, two of his top advisers, chief of staff Rahm Emanuel and Larry Summers, his top economic adviser, will be meeting with Senate Republicans again making that pitch for the need to release that $350 billion.
And talking about, no doubt, how the whole way that this will be handled. It will be transparency. There will be accountability to ensure that this money is spent wisely.
Kyra --
PHILLIPS: Dan Lothian from the White House. Dan, thanks.
And we've been hearing a lot about TARP, since last fall. But exactly what is it?
Well, TARP is an acronym for the federal government's $700 billion bailout. TARP stands for Trouble Assist or Asset Relief Program, rather.
The aim is to stop the massive bleeding of the US economy and financial system. The bulk of the first installment has gone toward propping up the big financial institutions, like banks. Some are under fire for failing to use the loans to help consumers and businesses, though. And Congressional Democrats say that part of the remainder of that bailout should be used to help homeowners facing foreclosure.
It's a job they'll never forget. We're going to meet the sergeant and the first class who are standing in for President-elect Barack Obama and his wife, Michelle, at this week's inauguration rehearsals.
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PHILLIPS: Well, on Wall Street, the selling continues. And In a big way, the Dow is down for the sixth straight session. Dreadful numbers out. The retail sector and well, that's just one of the culprits today.
Susan Lisovicz has all the bad news for us, unfortunately. Hey, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hey Kyra.
(BUSINESS REPORT)
PHILLIPS: Well, it's a problem that too many American homeowners now face. They owe more than their house is even worth. So, how can you bail yourself out?
CNN personal finance editor Gerri Willis has some tips in her housing survival guide.
All right. Lay them on us, Gerri.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, first let's look at some numbers here, Kyra. At the number of mortgages that they are under water. You know what that means, that the owners owe more than the house is worth. There's some $2 trillion in lost home owner value this year. That means 11.7 million folks owe more than their house is worth.
What should they do? Well, first of all, get some real facts here. A lot of people assume that their house has lost value. You don't really know, and you certainly don't know the number. My suggestion here, either hire an assessor or find a real estate agent you trust to help you figure out what that real value is.
And those folks are going to do the same things, frankly, that you could do, which is look at sales in your neighborhood recently. What did houses go for. Houses just like yours. Take that number, divide by the square footage and you'll have the kind of number that makes you do an apples to apples comparison. You can then decide what your house would be valued at in today's market.
But I have to tell you, when you look at this closely, what you find is that neighborhoods that are really losing values are ones that are brand new, new construction, and also urban revival areas, too. We're really at risk here in this horrible, horrible housing market. They're the ones that really lose value.
Now, if you're in an older neighborhood, maybe values haven't moved as much, then you definitely -- definitely want to think about holding on to your house. Because at the end of the day, these cycles come in and out. They move. You will be able to survive this if you have a job that you're confident in having year after year after year. And if you don't have to move because of a job. Now, having said that, Kyra, of course, one thing to think about here is if you absolutely do have to move, maybe you get a new job somewhere, well then you're either going to have to sell, or better yet, rent. That is a great solution for people out there who are actually trying to unload a house. Because you're not selling your home and locking in your losses, you're finding somebody to give you that stream of income that you're going to need so much.
Another solution for people who have to sell is that you can get a new loan that wraps in the old debt. So if you have to sell that house, move, you have to make up the difference yourself between what the new purchase price is, and what you owe on that house. That amount of money can be rolled into a new loan. It's not ideal. It's not the best solution. But some lenders are willing to do that in this market.
So it's something to think about. But what I want people to understand at the end of the day is, even if you are sitting in a house right now that is worth less than what you owe on it, you don't have to lock in that loss. You don't have to sell. You don't have to move. And these markets are going to change. They're changing now. And at some point they're going to change in the other direction.
Kyra --
PHILLIPS: All right. Gerri Willis, thanks so much. Always appreciate the advice.
WILLIS: My pleasure.
PHILLIPS: Almost two weeks after the shocking shooting an ex- transit cop has been arrested in the death of an unarmed man. Both the DA and the officer's lawyer speaking out today.
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PHILLIPS: OK. A bone-chilling cold from the Canadian border all the way to Florida. Parts of the U.S. dealing with their coldest weather in years. Temperatures right now still well below zero in a number of states, including Minnesota. Now, in the couple of day, parts of the south will be feeling that record breaking cold. Feeling it all the way here in the severe weather center with the tear Chad Myers.
CHAD MYERS, AMS METEOROLOGIST: It's getting all the way down to 12 in Atlanta. What are we going to do?
PHILLIPS: I'm telling you -- hey -- we've been lucky. It's been very warm for a couple of weeks. All of a sudden it's like, oh.
MYERS: Yes. The people in Minnesota are going, you're going to get to 12. Get over it. We're not even going to get to 12 as a high.
PHILLIPS: Yes. People in Minnesota are like, hey, buck it up.
MYERS: The R Factor in our houses is like four. Right? We don't have the insulation. They didn't build them that well because they didn't need to when they building.
(CROSSTALK)
PHILLIPS: And the heating bills. That's going to be a nightmare.
MYERS: I know! And yet, we didn't get the gas bills down. The gas is still expensive. Natural gas never really came down. Heating oil never really came down, may be your pump came down.
But number two, diesel fuel, it is still high out there. So, if, you -- you're going to feel the pinch this year. It's going to be because of what you have to deal with just to get your house warm. It is 14 degrees below zero in Fargo. That is not the windchill. That is 31 degrees below zero in Fargo right now is what it feels like. It is 10 right now in Rochester. It is 10 in Albany. It is eight in Buffalo.
And for our friends up north, Toronto, congratulations, you are five. Montreal only up to minus eight, and that is minus eight Fahrenheit, not minus eight Celcius because that would be warmer. For Minneapolis, look at this 19 below. 17 below. You get above zero for the first time Friday afternoon. And it's only going to be brief. Back down to two by Saturday morning.
Chicago's going to be cold. Just frigid cold. So, now, you're talking millions of people here well below zero, well below freezing.
And Kyra, it's a matter of time that maybe your pipes and your house and those things like that don't react well, because now you're 72 hours below zero. And that's just additive.
PHILLIPS: Aren't you supposed to turn on the water and let it drip a little bit when it gets cold?
(MUSIC PLAYING)
MYERS: It's not a bad idea. It's a waste of water. And it's an awful lot better than letting your pipes crack and having all the water go.
PHILLIPS: Which is not funny, but I'm sorry, can you hear the song?
MYERS: What is it?
PHILLIPS: Do you remember this?
MYERS: Is it (INAUDIBLE)?
PHILLIPS: No, this is our era. Think Robby Benson, ice skating.
MYERS: No.
PHILLIPS: You don't remember "Ice Castles?"
MYERS: Oh, no.
PHILLIPS: Oh, so you remember "Ice Castles?" The cheesiest love song of all time. Why are we playing this song? Why are we thinking of this?
This is why. Keep it going, Otis. Roger Hanson celebrated his love for the subfreezing temperatures by building an ice castle in his backyard. It's sculpted some 30 feet high, we're told. 100 feet long. Hanson's actually a computer programmer, but he's pretty good with the ice castle. His real love is science, though. And yes, the cold.
So he forged the ice monument to pay homage to science loves an originality. Which leads us to memories of one of the cheesiest movies of all-time "Ice Castles."
MYERS: And you know what, the last movie I saw was "Shawshank Redemption."
PHILLIPS: Oh, Lord. Chad is going to rent ice castles this weekend, and he is going to report back on Monday. We'll let the music take us to break.
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PHILLIPS: He's got the name tag. So who is this man pretending to be the next president of the United States?
Actually, it's Army Staff Sergeant Derrick Brooks. He and Navy First Class LaSean McRay are filling in for Barack and Michelle Obama in this week's inauguration rehearsal.
And they join me now live from Washington. Good to see you both, Mr. President-elect and Mrs. First lady. How are you? It's good to see you. Now, I've got to say, Derrick, you actually look like Barack Obama.
STAFF SGT. DERRICK BROOKS, US ARMY: Thank you. I was told that.
PHILLIPS: Did people tell you that?
BROOKS: Yes. Actually, my rear admiral (INAUDIBLE) told me that I looked like him.
PHILLIPS: And LaSean, I've got to say, you've got the Michelle Obama look, too. Have folks been saying that to you as well?
YEOMAN 1ST CLASS LASEAN MCRAY, US NAVY: They've been telling me something similar to that, yes.
PHILLIPS: So, Derrick, did you actually take the oath, when you were up there, with your first lady by your side? Did you go through the actual verbiage, as well?
BROOKS: Yes. We went through a couple of words and said the words just to get it down and get the timing right. PHILLIPS: Excellent. And did you kiss the first lady, as well, like you're supposed to do?
BROOKS: Oh, no.
PHILLIPS: LaSean, you didn't let him do that?
MCRAY: No, none of that personal tension going on.
PHILLIPS: Bummer. Well, you guys do look like you would make a perfect couple. But all right, I digress.
All right, so, tell me how you two were chosen. Derrick, go ahead and tell me the story. How did you find it was you and how did it happen?
BROOKS: Well, when we started working on the Armed Forces Inaugural Committee, the admiral that's the deputy chairman of Armed Forces Inaugural Committee said I looked like Obama, or President- elect Obama. And people agreed. So they chose me as the stand-in.
PHILLIPS: I love it. And LaSean, how did you find out? How did it all go down?
MCRAY: Well, my name was submitted by my training commander. I looked most similar to Mrs. Obama. And when I went for my little interview, I got it.
PHILLIPS: Wow. So I'm curious, have your friends been giving you a hard time? Derrick, any stories of your buddies, your family, you know, kind of ribbing you.
BROOKS: Yes, I've been getting calls from people I haven't heard from for forever.
PHILLIPS: That's great. LaSean, what about you?
MCRAY: Every time I'm in the hallways, they refer to me as Mrs. Obama. Even my mother calls me that now.
PHILLIPS: I love it. Can you do the Obama fist bump?
MCRAY: Sure.
PHILLIPS: All right, let's see it. You forgot the thumbs up. Don't forget that now.
MCRAY: I forgot about that.
PHILLIPS: You've got to do it right. There you go. I love it. So, now, do either one of you have kids?
BROOKS: Yes, I have a daughter. She's 6 years old. Her name is also Malia.
PHILLIPS: Really? BROOKS: Yes.
PHILLIPS: OK, this is just too freaky. All right. This is really weird. Now we're going to know, like if you're put in as a fill-in, what is that, a double, there you go --
BROOKS: I'm also a mix, too.
PHILLIPS: Oh, my gosh. Now, from what I understand, though, they really did look at all the specifics from look to weight to height to all of that, right, you guys?
BROOKS: Yes.
They had to use that for the positioning of the cameras and make sure that the shot of President-elect Obama on that day is going to be perfect.
PHILLIPS: Wow. On a serious note, I'm going to end it on a lighter note, but on a serious note, I mean, you also had to prepare for the inevitable. They don't want anything to go wrong, but it is a possibility. So did you have to go through the emergency scenarios as well in case something were to go wrong on the big day?
BROOKS: Yes. That wasn't part of the rehearsal, but we've been working that within the Armed Forces Inaugural Committee behind closed doors.
PHILLIPS: Wow. I tell you what, Derrick Brooks, Army Staff Sergeant, also U.S. Navy First Class LaSean McRay, I bet you guys will never forget this moment. And the good thing, you won't have to worry about running the country you guys.
MCRAY: That's the easy part.
PHILLIPS: Well, it's remarkable for, on many that you got to do this. It's a big moment in history. Thank you both so much.
BROOKS: Thank you.
MCRAY: Thank you.
PHILLIPS: All right.
We've all seen it. He's got game. But where will the president- elect hoop it up once he moves into his new digs? I should have asked Derrick if he played basketball. Elaine Quijano looks at that pressing situation.
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PHILLIPS: Well, updating a story that ushered in the new year, left a family in mourning and a city in chaos. The ex-transit cop accused of putting a bullet in the back of an unarmed man at a train station in Oakland, California has been arrested. Johannes Mehserle surrendered to police in Nevada and has just waived extradition. He's being charged in the murder of the death of 22-year-old Oscar Grant. And just a few minutes ago, the D.A. explained why murder versus homicide or other charges.
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TOM ORLOFF, ALAMEDA COUNTY, CALIF., DISTRICT ATTORNEY: The murder charges were filed because at this point, what I feel the evidence indicates is an unlawful killing done by an intentional act, and from the evidence we have, there's nothing that would mitigate that to something lower than a murder.
(END VIDEO CLIP)
PHILLIPS: Now, the shooting was witnessed by dozens and dozens of people. Some got it on video, some on their cell phones. And once it went online, as you can imagine, the outrage grew. And protesters took it to the streets of Oakland. Some of the crowds turned violent, and at one rally, dozens of businesses were attacked, prompting more than 100 arrests.
Sure, the bowling alley's great, the tennis court's nice, but the White House basketball court? Not so presidential. Will the new guy jump through some hoops to change that?
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PHILLIPS: Well, when the president-elect move into the White House next week, he'll have his work cut out for him. And we're not talking about a fix for the economy. We're talking about his basketball jones. How about that ball? How's it going to bounce? Here's CNN's Elaine Quijano.
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ELAINE QUIJANO, CNN CORRESPONDENT: He may have that laid-back aloha vibe...
BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: You know, he's tough.
QUIJANO: ... but on the basketball court, President-elect Barack Obama makes clear he is in charge and out to win.
SEN. BOB CASEY (D), PENNSYLVANIA: Well, it's a quiet intensity.
QUIJANO: Pennsylvania Senator Bob Casey knows. On Election Day, he played hoops with Barack Obama just hours before Obama was elected.
CASEY: When he plays, he plays very seriously. He has a sense of command about the way he plays, and he always picks a good team.
QUIJANO: In fact, the president-elect has joked about his incoming administration's basketball prowess.
OBAMA: I will say that I think we are putting together the best basketball-playing Cabinet in American history.
QUIJANO: But if he wants to play pickup games at the White House, some renovations could be in order.
OBAMA: We are going to take the bowling alley out of the White House. We are going to be putting in a basketball court.
QUIJANO; 600 Pennsylvania avenue does have an outdoor basketball court. It's a short walk from the Oval Office. But it's not even half regulation size.
The White House does reflect past presidential pursuits: a tennis court where President George H.W. Bush played doubles with tennis pro Pete Sampras is nestled under tall trees on the south lawn. A bowling alley built during President Nixon's tenure sits under the north portico. And on the south lawn, there's a running track built during President Clinton's administration.
While it's not clear yet whether the Obama era will mean a regulation-size basketball court, Senator Casey says if he scores another invitation to play, wherever it is, he'll be there.
CASEY: But I still want to play with a president, not just a candidate or a president-elect. So, if I am called, I will serve.
QUIJANO (on camera): As for whether there might be a game on Inauguration Day, no comment from the Obama transition team. But Chicago businessman John Rogers, who plays regularly with Barack Obama, tells me he thinks Mr. Obama might be a little too busy on January 20th.
Elaine Quijano, CNN, Washington.
(END VIDEOTAPE)
PHILLIPS: I'm Kyra Phillips. I'll see you back here tomorrow. Rick Sanchez takes it from here.
